Impact case study database

Based on his many years of experience studying the economic effects of minimum wages, as well as the considerable impact of his research on policy decisions, Dickens was appointed as an independent member of the Low Pay Commission (LPC) in May 2014 and later reappointed until May 2021. The LPC, which is sponsored by the Department for Business, Energy and Industrial Strategy (BEIS), is an independent public body that provides recommendations to Government each year on appropriate increases in the NLW, the NMW and the age-specific minimum rates.

In this role, Dickens has brought evidence from his research to inform LPC decisions. He also commissions research from others and, as one of two academics on the LPC, provides critical evaluation of methods and findings. He has been instrumental in furthering the in-house research capabilities of the LPC secretariat, providing advice and training on the development of econometric analysis.

Dickens’ work has paved the way to substantial increases in the NMW and to the introduction of the NLW in 2016. In 2013, the Government asked the LPC to consider the conditions for a faster increase in the minimum wage. In its 2014 report, the LPC highlighted Dickens’ work, explaining that R3 “found no effect of the upratings between 2001 and 2006” and that R1, “covering the entire period from 1999-2011…found no adverse effects on employment” [ S1, p72]. Sir David Norgrove, Chair of the LPC between 2009-2017, confirms the importance of Dickens’ research in his written testimonial:

“Professor Dickens has made an important contribution to the work of the LPC both through his academic research on minimum wages and since 2014 directly as a member of the Commission. His research contributed to a shift in the prevailing view that minimum wages were bad for employment and fed into LPC decision making over a number of years. Professor Dickens’ contribution has been highly influential in shaping a number of the recommendations on changes to minimum wage policy that were subsequently adopted by the UK Government …This research, in part, fed into our decision in 2014 to recommend to Government that we enter a new phase with progressive real increases in the minimum wage. This paved the way for the Chancellor to announce the National Living Wage in 2015 with an ambitious target for the minimum wage of 60% of median pay.” [ S2]

In late 2013, Dickens contributed to a review led by Sir George Bain (former LPC chair) into the future of the NMW. The review, published by independent think-tank the Resolution Foundation [ S3], cited R1 and R5 and recommended that the minimum wage be increased to 60% of median earnings. In July 2015, the Government adopted this recommendation with the introduction of the NLW. The Treasury’s 2015 report, which outlines the new NLW, links this decision directly to the Bain Review [ S3] and to a summary of existing research from the 2011 LPC report (in which R2, R3 and R5 are all discussed). It states: “The consensus of the research findings on the impact of the NMW in the UK is that it has not significantly adversely affected employment” [ S4]. Since 2016 the NLW has increased by more than 30%, raising the pay of 1.6 million workers. Low-paid workers have benefited from earnings growth that is double that of the average worker [ S6].

Following a review of the structure of the youth rates in 2019, the LPC recommended lowering the age of eligibility for the NLW from 25 to 21 in two steps. In September 2019, the Chancellor announced that the age of eligibility would fall to 23 in April 2021 with a plan to lower it to 21 in 2024. Dickens’ research on the age structure of the minimum wage [ R2] played a crucial role in shaping this recommendation, as a testimonial letter from Bryan Sanderson, Chair of the LPC, corroborates:

“Richard’s work in association with Riley and Wilkinson on the impact of the minimum wage on the younger workers accelerated progress towards implementation of the agreed two step reduction in the age threshold of the NLW from 25 to 21.” [ S5]

In preparation for the age threshold reduction, the LPC recommended a 6.5% increase in the rate for 21- to 24-year-olds to close the gap with the NLW. As such, around 220,000 young workers received a faster pay rise than they otherwise would have in April 2020 [ S6, table 9.2]. The testimonial letter from Harry Ravi, Head of Labour Market Analysis at BEIS, confirms the influence of Dickens’ research:

“As a consequence of taking onboard his work, in September 2019 the Government announced the lowering of the National Living Wage age thresholds from 2021, which resulted in a faster increase in the 21-24 National Minimum Wage in April 2020 in order to close the gap with the adult rate.” [ S7]

Despite concerns about the youth labour market in the pandemic, Dickens’ research has been key to the LPC’s recommendation that the Government pushes ahead with lowering the age of eligibility. The LPC’s 2020 report [ S8] states that Dickens et al [ R2] “is particularly pertinent evidence as we will again be changing the age threshold of the main rate in a time of economic uncertainty .” The rate for 23- to 24-year-olds will therefore rise by a further 8.7% in April 2021.

In March 2020, following the Treasury’s review of minimum wages led by Arin Dube (University of Massachusetts), the Chancellor announced the Government’s intention to abolish low pay and set a significantly higher NLW to reach two-thirds of median pay by 2024, increasing the earnings of up to 4.7 million workers. Dickens’ work fed directly into this review, as Harry Ravi attests:

“His work with Professor Arin Dube proved important in leading Government’s decision in March 2020 to set a new target for the NLW…Dickens presented to BEIS and HM Treasury officials and Professor Dube about the impacts of minimum wages…bringing to bear his deep and specific expertise around methodologies and the low pay context within the UK”. [ S7]

The report of Dube’s review [ S9] (which cites R1, R3, R5 and R6) concludes that “the evidence to date is consistent with exploring a higher post-2020 NLW up to two-thirds of median hourly earnings”.

Dickens’ research also influenced South Africa’s decision to introduce a national minimum wage in May 2018, raising the pay of 6 million workers. As a globally-recognised expert on minimum wages, Dickens was invited by the country’s government to speak at a workshop in June 2015. Following the announcement of South Africa’s minimum wage, [text removed for publication] at the International Labour Organization thanked Dickens for his participation, highlighting the value of his contribution in the decision-making process:

“The experiences presented at this workshop kept being referred to during the intense and sometimes tense deliberations that went on since then at NEDLAC [South Africa’s National Economic Development and Labour Council] between the government, the workers, the employers and civil society... I take this opportunity to thank you very much again for your greatly appreciated contribution to this process .” [ S10]

The UKTPO’s central objective has been to guide the formulation of UK trade policy in a way that delivers the best achievable outcome from Brexit and post-Brexit trade policy. While politics has ultimately dominated decision-making, the Observatory’s broad-based engagement has strongly influenced post-Brexit trade policy by shaping debate and facilitating public scrutiny. It has widened understanding, changed attitudes and improved capacities among policymakers – and thus influenced policy indirectly as well as contributing to policy directly, including the ’prevention of harm’.

Shaping the debate

In addition to academic outputs and frequent public events, from June 2016 to 30 December 2020 the UKTPO published 51 briefing papers, 187 blogs on its own website (over half a million total views), and a range of multimedia outputs on trade policy: infographics, podcasts and animated videos. UKTPO researchers have written numerous guest blogs and contributed to hundreds of media articles through their publications and interviews each year (214 in 2020 with a potential combined audience of at least 1.14 billion, based on official audience and readership figures for each media outlet - S1). The animated videos have been used by third parties to explain trade: e.g. ‘Which?’ used them in its National Trade Conversation and commented “Your videos really helped people to understand the issues” ( S2). UKTPO research has contributed to informing public understanding of trade policy challenges, often being the first to introduce key issues to the public. The Department for International Trade’s (DIT) chief economist wrote “We value UKTPO’s contribution to raising standards, which adds significantly to the quality of public discourse on trade and on trade policy” ( S12).

Providing public scrutiny

Since June 2016, UKTPO fellows have submitted written or oral evidence to four government consultations and 37 UK parliamentary inquiries on trade issues. These submissions have been cited in several of the resulting committee and House of Commons Library Reports. The latter’s report on services trade made 27 references to UKTPO analysis ( S3). UKTPO inputs have been acknowledged [text removed for publication] as influential, highlighting issues of concern to parliamentarians, aiding the scrutiny of policy proposals and contributing to their analysis of trade policy [R3, R6]:

[text removed for publication] (S4a).

[text removed for publication] ( S4b).

Key contributions to scrutiny include:

The difficulty of signing trade agreements: The UKTPO has consistently noted the challenges of merely rolling-over existing trade agreements – and challenged UK Government announcements about them. Only seven out of 40 that needed rolling over had been signed by the initial Brexit Day (29 March 2019) and none replicated the status quo precisely. [text removed for publication] ( S4a; S7: D, F, G) .

The costs of ‘no deal’ for manufacturing industry: The UKTPO published detailed modelling results of the effects of ‘no deal’ [R4]. This led to a project with EURIS, a trade association of manufacturers with a combined turnover of around £148 billion and 1.1 million employees, to help members comprehend the challenges and engage with government to explain the importance of frictionless trade with the EU for UK manufacturing. Much of this was done privately, but the final report was discussed with ministers and received strong media attention ( S1). The Legal Director of BEAMA (Legal Advisor to EURIS) remarked:

“UKTPO’s work on this project was extremely valuable, indeed essential in allowing the EURIS trade bodies and their members to understand … the enormous challenges which fundamental changes in international trading terms would present. Further it also allowed EURIS to present this analysis to the UK government … and achieve significant changes to government policy to mitigate the damage that a full severance of UK alignment with EU structures would cause” (S5, S7: L).

The local effects of Brexit on jobs: Building on [R2], the UKTPO estimated the effects of Brexit by constituency and region [R5]; the results were discussed extensively in the media (S1) and were mentioned six times in Parliament (S7: M, O, Q, S, T, V).

Northern Ireland (NI): Winters submitted Expert Witness Evidence to the Scottish Court of Sessions in November 2019 showing that 75% of imports into NI would be subject to tariffs defined by the EU rather than the UK. The UK Government’s eventual response was to propose an Internal Market Bill that abrogated that part of the Withdrawal Agreement. Subsequent analysis for the Welsh Government explored the effects of the NI Protocol on Wales and underpinned that Government’s decision to refuse consent for the Withdrawal Act in January 2020 ( S6a).

[text removed for publication] (S6b). See also in Parliament ( S7: W).

Influencing policy

UKTPO research has been cited in Parliament 31 times ( S7) and regularly used by DIT. DIT’s chief economist wrote:

“at the working level, colleagues make substantial use of the wide range of briefing papers and blogs which UKTPO have published…. We have good access to expertise and thought leadership … of the UKTPO… These sessions strengthen the advice that we forward to senior officials and ministers as the basis for policy decisions, such as drawing up priorities in negotiations of trade agreements”, and “We know we can rely on high-quality analysis but also a solid understanding of the policy framework we operate within. Crucially, within DIT we often talk about whether our own analysis will pass "the UKTPO test" when it gets into the public domain: notwithstanding our highly collaborative relationship, we know UKTPO will be first to challenge our analysis if we do not maintain the same high analytical standards” ( S12).

Transitional arrangements: The UKTPO outlined the need for a transition period in October 2016 (Briefing Paper 2 and **[R6]**) and explicitly noted that it needed to replicate current conditions. Following private meetings with the UKTPO, the opposition made the case “to stay inside the single market and abide by all EU rules during the transitional period and possibly beyond” ( S8b). Subsequently, the Government accepted the former as policy in July 2017 ( S8c).

Customs Union: This was a contentious issue in the debate about what kind of Brexit should be pursued. In February 2018, following further meetings with the UKTPO, Labour argued for seeking a customs union in the long run. During spring 2019 the debate and cross-party talks revolved almost entirely around Labour’s demand that the future trade arrangement with the EU include a customs union. Referring to these discussions, [text removed for publication] ( S8a).

Trade policy with developing countries: In September 2016, the UKTPO explained the overwhelming case for continuing ‘Everything But Arms’ trade preferences for least developed countries. In July 2017, the UK Government stated its intention to do so in accordance with UKTPO recommendations ( S9a). [text removed for publication] ( S9b).

Freeports: Widely publicised UKTPO research has shown that Freeports offer little prospect of significant economic benefits for the UK. This “help[ed] shape thinking surrounding freeports” in the Scottish Parliament ( S7: Y), which subsequently defined policy “that it would turn down Chancellor Rishi Sunak’s offer of introducing free ports in Scotland” ( S10).

Export Restrictions: UKTPO research on export restrictions (Briefing Paper 40) was the first to describe a reciprocal trade bargain for COVID-critical goods whereby WTO members commit not to increase import restrictions on medical goods after the COVID crisis abates and, in return, exporters constrain (not abolish) their ability to limit exports of such goods. This, and many of the practical details provided in that paper, was adopted as UK policy ( S12), and was described in the following terms by the UK Prime Minister in his speech to the UN General Assembly:

“So I would urge every country to take a fifth step and lift the export controls wherever possible – and agree not to revive them – and cancel any tariffs on the vital tools of our struggle: … The UK will do this as soon as our new independent tariff regime comes into effect on 1st January and I hope others will do the same” ( S11).

The economic effects of changes in trade policy, notably preferential agreements, are difficult to assess and require analytical and negotiating resources that are scarce. Via a University spinout company (InterAnalysis), economists at Sussex have developed two software tools for trade policy-making and capacity-building, as well as providing training and analytical input into trade policy formulation.

Capacity-building has been delivered through training courses and the software applications. The training is based on the principles of trade policy and the application of the diagnostic indicators (developed in R2, R4, R5) integral to TradeSift. This is designed to enable policymakers to understand, for example, how to maximise the benefits from a free trade agreement or identify offensive or defensive interests in a negotiation. TradeSift was developed as a time- and cost-effective tool for policymakers designed around the principles of international trade that led to the Sussex Framework [ R1, R4]. The software cuts through the challenges of obtaining those scarce analytical and negotiating resources by providing a logical basis for assessing trade policy in a clear, rigorous, consistent way, and identifies how and why to use diagnostic statistics from readily available trade, tariff, and trade barriers databases. It deals with both shallow and deep integration [ R2, R3, R5]. The software provides officials with the means to formulate policy options and engage in trade negotiations.

TradeSift delivers a rapid, easily comprehensible analysis of international trade, and can be applied to a wide range of trade policy issues including: regional trade agreements, multilateral or unilateral trade liberalisation, trade disputes, identifying export opportunities and general trade performance monitoring. TradeSift enables the user to identify and analyse at a granular level the structure of a country’s trade hence the conditions under which trade creation or trade diversion may occur. The software comes with a set of built-in indicators and provides a toolkit, framework, and conceptual manual to help users understand how and why to apply various indicators for different types of trade analysis [ R4, R5]. It helps to shape policymakers’ trade priorities and policy without technical and high-cost econometric or CGE modelling which has both a high financial and personnel cost.

Informing trade negotiations and building capacity:

Since August 2013, 13 training courses have been delivered across Pakistan, India, several African countries, and the Ukraine. This has equipped officials with analytical and technical skills and provided policymakers with insights, which have then been used to: a) identify trade priorities, b) inform trade policy decisions and trade negotiations, and c) build capacity for trade policy analysis and more effective trade policy-making.

Anonymised training feedback on the courses indicates that 80% of participants found the training very useful to their daily work, 82% expected to use TradeSift in their daily work, and 86% saying that their colleagues would benefit from such training [ S1].

On the provision of TradeSift and TAPES to the Government of Pakistan (2014, 2019 and 2020), Robina Ahmed, National Tariff Commission, Ministry of Commerce, writes:

“The government of Pakistan has found its collaboration with InterAnalysis extremely impactful. Since August 2013, 54 Pakistan trade officials have attended TradeSift training courses. The courses have enhanced our analysis and formulation of trade policy in our bilateral negotiations with trading partners. As a result, 40 TradeSift licences reside within the Ministry of Commerce for use by its officers. This combination of training in trade policy analysis and the installation of the software has been put to use in our trade negotiations with Turkey, Thailand and China.” [ S2].

The success of these programmes led to requests for an online training module on trade policy and use of TradeSift. Delivered in spring 2020, this is a required module for all incoming civil servants in the Ministry of Commerce.

In 2015, training for ECOWAS member states was provided as valuable preparation for WTO tariff-schedule negotiations and for negotiating priorities for the Africa Continental Free Trade Area:

“Several member states are using TradeSift as a tool to generate negotiating priorities based on trade and economic performance. The tools allow for the identification of priority sectors for export and development using checklists of issues and ‘rules of thumb’… This provides a basis for countries to prepare a market access schedule for liberalization .” Kola Sofola, Principal Programme Officer – Trade, ECOWAS [ S3].

Similarly, training officials in India’s Department of Commerce as well as influential think-tanks such as CUTS and IIFT has contributed to negotiations on India’s free trade agreements:

“The software has further added value to our quarterly dossier on Preferential Trade Agreements, the contents of which have been appreciated by senior officials in the Department of Commerce, Government of India ”. Pradeep Mehta, Secretary General, CUTS International [ S4].

Training for Ukraine’s Ministry of Economic Development and Trade (MEDT) in 2018 facilitated analysis of the country’s export markets and growth potential:

[text removed for publication] [ S5] .

Identification of trade priorities:

Whereas TradeSift uses historical data to infer the impact of policy options and choices, TAPES, builds upon [ R1] and [ R6], and provides a more formal and technical approach to simulating the future impact of different trade policy choices. It thus provides ‘forecasts’ of the impact of different policy choices and is useful for understanding the possible economic consequences of those choices. The model has been used by the Scottish Government (July 2017 – March 2018) to assess the impact of Brexit on the Scottish fishing industry:

[text removed for publication] [ S6].

The researchers are also currently using the model to evaluate the impact of the Northern Irish (NI) Protocol on the NI economy for the Department for the Economy:

“We are also delighted to be partnering with you in a research project concerning the potential implications of the Northern Ireland Protocol and in the PE modelling of outcomes for the NI economy. The results of this research will be made available at a Ministerial level and will help us to better understand the consequences of the Protocol.” Director, Analytical Services Division, Northern Ireland Department of the economy [ S9].

The research led to the development [ R6] of an advanced variant of the model (G-TAPES) which incorporates changes in intermediate input costs. This was developed for the UK Government (July – November 2018 and January – March 2019) and is being widely used by the Department for International Trade (DIT) and across Whitehall, to assess the impact of future free trade agreements and as an input into post-Brexit trade negotiations:

“We are very satisfied with the model… it has been used in a wide range of trade policy applications across various government departments (including DIT, BEIS & DEFRA and to a lesser extent HMT) to help inform officials and Cabinet develop government trade policy.

For all such work it has helped… inform us of potential offensive and defensive interests for both the UK and other countries…The scale of interest can probably best be indicated by the number of analysts who are now regularly using the model. Within DIT there will shortly be ten analysts, with another four in BEIS and a couple in DEFRA. It is also now classified as one of DIT’s business critical models.” Chris Alexander, DIT, UK Government [ S7a].

In addition, from 2017 to 2019, the researchers have provided training on trade statistics, trade modelling and using TradeSift to more than 100 UK government staff, including analysts from various UK government departments (most notably DIT), economists from the Scottish and Northern Irish governments, and the UK Regulatory Policy Committee. This has helped to inform national trade priorities and develop policy and negotiating positions [ S6, 7b and 8]:

“The use of the trade indicators and comparative statistics generated from TradeSift helped to inform Scotland's current trade position and will be used on an ongoing basis to inform Scotland future priorities.” Steven Morton Office of the Chief Economic Adviser, Scottish Government [ S8].

[text removed for publication] [ S7b].

[text removed for publication] [ S9].