The distribution of social security transfers in the UK

The distributional impact of different transfer programmes is one of the basic criteria on which decisions such as those on resource allocation may be based. This paper examines the spread over the UK size distribution of different transfers, using data from the Family Expenditure Survey (FES). In addition to analysing the distribution of current transfer receipts by actual current income, estimates are developed which allow the spread of annual receipts by annual income to be examined. The results show that the short-term unemployment and sickness benefits have a considerably greater degree of concentration towards the bottom of the distribution than some previous studies have indicated. This is particularly true for current income, but even for annual receipts and income the degree of concentration is greater than might have been expected. The impression that these benefits have a very low redistributive effect may have had a major influence on recent policy decisions. This is shown to be particularly misleading in the case of unemployment benefit.