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The Employment Tax Credit and issues for the future of in-work support

How can governments help working people on low incomes?

Written by:
Fran Bennett and Donald Hirsch with contributions by Frank Wilkinson, Mark Pearson, and Stefano Scarpetta
Date published:

One way is to give them money through tax credits, as is the case for families with children and disabled people. The introduction in 2003 of a more general 'Employment Tax Credit', available also to some childless or non-disabled people, is a significant step in extending in-work support of this kind. This report takes stock of the trend towards topping up incomes of low-income families with someone in work. It considers the merits and potential drawbacks.

Overall, the authors suggest a balanced strategy to help these groups - with due emphasis on improving earnings through adequate wages and investment in human capital - rather than overemphasising government top-ups. This volume brings together a range of evidence and thinking on this subject, which was the topic of a seminar for key experts in the field in May 2001. Arguments around the Employment Tax Credit and its design are complex; the report will help people making and influencing policy in this area to take a rounded view - and to reflect on the overall development of strategies to 'make work pay'.


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