ESRI Policy Seminar: "Modelling Distributional Impacts of Public Service Spending: UK Experience"

Venue: ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2

Speaker
Jonas Nystrom, HM Treasury, UK. Jonas Nystrom works as a Senior Economic Adviser at HM Treasury in the UK, where he is responsible for modelling the distributional impacts of public service spending. He started his Civil Service career in 2005, when he joined the Department for Work and Pensions. This is where he first came across microsimulation modelling, using the department’s Policy Simulation Model to analyse the impacts of policies, including leading on the development of their Universal Credit modelling. Jonas has also worked at the Cabinet Office and briefly at the Health and Safety Executive.

Abstract
Like the ESRI through the SWITCH model, HM Treasury in the UK has microsimulated tax and benefit changes since the mid 1980s. While the Intra GOvernment Tax and benefit Model (IGOTM) has had a number of facelifts and updates since its inception, the mechanics of the model have remained unchanged.

In this parliament (since 2010), the model has been used primarily to assess the cumulative impacts of the Government’s policies on households across the income distribution. The tax and benefit analysis has been complemented with analysis of changes in spending on public services, like health, education and public transport, modelled as benefits in kind, to give a comprehensive picture of impacts on households of policy changes. The Budget 14 publication is available here

Up until now, HM Treasury has asked the departments with policy responsibility to provide information on how their spending falls across the income distribution. However, over the last two years, HMT Treasury has been working on developing their own public service modelling, bringing this analysis into the IGOTM microsimulation model. This work has now been completed.

Jonas Nystrom will talk about their approach to modelling public services and explain why HM Treasury decided to extend their tax and benefit analysis to also capture public service spending. He will draw on their modelling of health and education as examples of two different approaches to modelling public services and discuss the main challenges of bringing their analysis into the IGOTM microsimulation model.