The apparent success of making work pay for families with children through Family Credit (later Working Families Tax Credits) encouraged the view that a similar scheme should be made available to people without children. This, though, increased the possibility that wage supplementation would depress the wages of the lowest paid workers. Nor would it guarantee that new jobs would be created but instead might replace one set of low paid workers with another. Without the child premia attached to Family Credit, qualifying wages would anyway be very low.
It was therefore decided that a new benefit for people of working age without children - called Earnings Top-up - would be piloted. This was the first pilot scheme of its kind in Britain. It made extra money available to low-paid workers in eight areas of Britain: four received one version of the new benefit (Scheme A) and four matched areas received a version that was similar but paid more (Scheme B). Different rates were paid to single people and couples while young people under 25 received less. Four more matched areas were selected as Controls.
Research was carried out in all twelve areas:
These surveys were carried out in 1996, just before the introduction of ETU, and in the three succeeding years that the benefit was made available.
In partnership with PSI, colleagues at the Centre for Research in Social Policy, University of Loughborough, carried out a series of qualitative studies. At the Institute for Employment Studies, Warwick University, a programme of analysis of local labour market changes was carried out.
Publications
Marsh, A., Stephenson, A., Dorsett, R. and Elias, P. (2001) Earnings Top-up
evaluation: effects on low-paid workers. London: HMSO
Smith, A., Dorsett, R. and McKnight, A. (2001) Earnings Top-up evaluation:
effects on unemployed people. London: HMSO.