John Hills - Good Times, Bad Times: The Welfare Myth of Them and Us

First edition published in Great Britain in 2015

Revised edition published in Great Britain in 2017 by

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Good times, bad times

The welfare myth of them and us

Revised edition

John Hills

To Tony, Howard and Julian

B ENEFIT EROSION

Situation where benefits fall in value relative to average incomes, for instance, because they are increased each year in line only with prices, when incomes are growing in real terms

C ASH TRANSFERS

Cash benefits and tax credits from government

D ECILE GROUP

One-tenth of a population divided up in order of income, wealth, etc

D EFINED BENEFIT

Kind of pension where the amount paid depends on final salary (or other measure of earnings) rather than on investment returns

D EFINED CONTRIBUTION

Kind of pension where the amount paid depends on how much is paid in and on subsequent investment returns

D ISPOSABLE INCOME

Income after direct taxes

D IRECT TAXES

Taxes paid by an individual or a household where the amount paid depends on their circumstances; they include Income Tax and National Insurance Contributions

E FFECTIVE MARGINAL TAX RATE ( OR DEDUCTION RATE )

The proportion of any increase in earnings or other earnings that is taken in direct taxes and reduced means-tested benefits

E QUIVALISED INCOME

Income adjusted for family size

F ISCAL DRAG

Situation where tax takes a greater proportion of peoples income because tax allowances and brackets grow more slowly than average incomes

G INI COEFFICIENT

Index of inequality (equal to zero if all households or individuals have the same and 1 or 100 per cent if one person has everything and the rest nothing)

I NDEXATION

Adjustment each year of benefits, tax allowances, etc, for inflation or to keep in line with earnings or income growth

I NDIRECT TAXES

Taxes where the amount paid does not depend on an individuals income, but on things such as spending on particular goods, and often collected via businesses, such as Value Added Tax

M ARKET INCOME

Income from wages, private pensions, interest and other investment income, before taxation or state benefits

M EDIAN

The middle level of income, wealth, etc, in a population, with half having more and half having less

N ET INCOME

Income after direct taxes

P EN S PARADE

Way of showing income or wealth distribution, with the height of each column in proportion to the amount received by each group in order

P ERCENTILE

Value separating each 1 per cent of a population arranged in order of income, wealth, etc

P OVERTY TRAP

Situation where people on low incomes gain little from any increase in gross income because of combined effects of taxes and reduced means-tested benefits

P ROGRESSIVE TAXATION

Tax system where those with higher resources pay taxes that are a greater proportion of those resources

Q UINTILE GROUP

One-fifth of a population divided up in order of income, wealth, etc

R EGRESSIVE TAXATION

Tax system where those with higher resources pay taxes that are a lower proportion of those resources

T RIPLE LOCK

Guarantee that pensions rise each year by the higher of prices, earnings, or 2.5 per cent

W ELFARE STATE

Public spending on and provision for healthcare (such as NHS), education, housing, personal care, pensions and cash benefits of all kinds (as opposed to welfare, as used in the US, referring narrowly to means-tested cash benefits for out-of-work working-age people)