Gender Budgeting and Macroeconomic Policy

Report
Gender Budgeting and Macroeconomic
Policy
Diane Elson, Chair Women’s Budget Group
Presentation to
WBG Training Day, January 30th, 2015
Managing budget deficits/surpluses
• Government does not directly control deficit/surplus
• Controls only some aspects of expenditure e.g. social security rates
and conditions but not total payments
• Controls only some aspects of taxation e.g. tax rates but not revenue
• Expenditure cuts can cut revenue too and make deficit worse
• Timing and speed of deficit reduction plan should be determined in
relation to state of real economy- fast and untimely deficit reduction
efforts can make a downturn worse and hamper recovery
• A balanced budget or a surplus is not necessarily a good thing
• Capitalist economies are inherently organized around credit and debt
• Government debt may be preferable to private debt and may more
easily be rolled over- depends on specific context
• Currently UK government has no problem borrowing at low interest
rates
Recent Developments at UK level
• Charter for Budget Responsibility passed by House of Commons on 13th
Jan 2015 , supported by Conservative, Liberal Democrat and Labour
parties
• Appears to commit next government to balance current account of budget
by 2017/18
• Implies continued and massive cuts in public expenditure
• Osborne lecture to Royal Economic Society on 15th Jan 2015 set out plans
for further new fiscal policy rules for period after 2017/18 requiring
government to operate an overall budget surplus thereafter in ‘normal
times’
• Office for Budget Responsibility would decide when times are not ‘normal’
• Surplus in normal times is apparently required to reduce debt levels, as
high debt levels leave economy vulnerable to ‘shocks’
• No recognition that likelihood of shocks depends on financial regulation
and can be reduced by better regulation
Gender Dimensions of Budget Deficit/ Surplus
Gender differentiated impacts likely because:
• Social security payments make up a greater share of women’s incomes
than men’s, as women earn less in the labour market
• Women pay less direct tax than men, as women earn less in labour market
• Women make greater use of public services than men, linked to greater
care responsibilities and greater use of care services
• Higher proportion of women’s employment is in public sector than men’s
House of Commons Library research following AFS 2014 found that
changes to direct taxes and social security introduced by Coalition
Government since 2010 had raised £26 bn, of which £22 bn was
taken from women, 85% of the total
To redress this in future:
Cut spending on social security less, raise more revenue from
wealthy people and companies
Impact on Different Households, Including
Indirect Taxes and Cuts to Spending on Services
Research by Howard Reed , member of UK Women’s Budget Group ,
shows total losses of for families in England as percentage of their
household income , for all measures 2010-2015, are as follows:
• single parents lose 15.1%, single women parents 15.6%
• single pensioners lose 11.6%, single women pensioners 12.5 %
• couples with children lose 9.7%,
• single adults with no children lose 9.7%, single women 10.9%
• couple pensioners lose 8.6%
• couples with no children lose 4.1%.
The two groups in which women predominate, single parents and
single pensioners, lose most.
Reducing Adverse Impact on Women of Cuts to
Public Services
• Conservative Party objective of achieving balance in budget
current account by 2017/18 and aiming thereafter for an overall
budget surplus means no chance of reversing the adverse impact
• Care services are not ‘protected’
• Labour Party objective of achieving balance in budget current
account by 2017/18 but allowing a capital account deficit and
borrowing for investment sounds better
• But investment is defined in the budget accounts as spending on
construction of fixed assets
• May get more nurseries , hospitals and care homes - but no staff to
operate them
Challenging Definitions of Public Investment in
the System of National Accounts
• Feminists have already challenged the System of National
Account for ignoring unpaid work and the output it produces
• Now we must challenge the definition of investment, which
has not caught up with the growing recognition of the
importance of investment in people, their health, education,
and well- being
• Care services do not just produce immediate benefits that are
consumed as they are produced
• Care services produce long lasting returns like fixed assets do
• Feminist economists define care services as social
infrastructure , for which borrowing should be permitted , like
physical infrastructure
Investing in Life or Investing in Death?
• SNA classifications can be changed
• European System of National Accounts was revised in 2010
• Among the changes is that expenditures on weapon systems
(comprising vehicles and other equipment such as warships,
submarines, military aircrafts, tanks, missile carriers and
launchers etc.) have been classified as fixed capital formation
• Implication, in relation to Charter for Budget Responsibility:
UK government can borrow to build a new Trident
submarine without breaching Charter, but not to
develop high quality care services
• Gender budgeting requires we challenge this: we want
investment in life not death

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