ABSTRACT
The second notable feature of Table VIII.3 is the marked rise in social grants between 1972 and the 1982 Base Run, which is to be explained by the large rise in the payments of unemployment benefit and supplementary benefit due to the large rise in unemployment. But an unexpected feature of the table is the fact that social grants in the Control Run are not much lower than those in the Base Run in 1982, even though the level of unemployment in the Control Run remains close to the relatively low 1972 level. The economic model on which these calculations are based almost certainly underestimates the reduction in social grants that would in fact result from keeping unemployment down to the 1972 level.t In
fact social grants in the Control Run conditions would be less than those shown in Table VIII.3 unless there had been a substantial change in other social policies (e.g. in raising the real value of child benefits) to absorb much of the saving on the costs of unemployment relief. But once again for our present purposes this is of secondary importance. Since consumption is the residual in the control mechanism, it follows that if social grants had been less than as shown in the table for the Control Run, then taxation would have been correspondingly reduced and post-tax employment incomes correspondingly increased to maintain the same level of total consumption expenditure. If we combine post-tax employment income with social grants (i.e. take the 'private' wage and the 'social' wage together) the figure in the 1982 Control Run is 18.8 per cent up on the corresponding 1972 figure. *
This 18.8 per cent increase available in the Control Run to raise the post-tax real disposable incomes from employment and social grants may be compared with the 23.9 per cent increase that the table shows to be available for disposable incomes as a whole. Indeed, while disposable incomes from earnings and social grants together rose by 18.8 per cent, disposable incomes from interest on government debt rose by no less than 203.9 per cent and from other property incomes by 29.1 per cent. These two last rises were markedly greater than in the Base Run where the two corresponding increases in 1972 were 59.3 per cent and 4.0 per cent respectively. The Control Run is thus marked by an appreciable increase in the ratio of incomes from property to incomes from work and social grants.
