'Regressive' Budget will hit poor hardest
Cuts announced in the emergency Budget will hit families and the poor hardest, a leading think tank has found.
Research from the Institute for Fiscal Studies, published today, found the coalition government’s cuts to the deficit will hurt families with children more than any other group in society.
The report calculates families in the bottom income decile will lose more than 5 per cent of their income, compared to less than 1 per cent for households in the top decile.
The IFS based its findings on all the Budget’s proposed changes up to 2014, including housing benefit reform. The report says: ‘The measures announced in the June 2010 Budget are regressive as they hit the poorest more than the seventh, eighth and ninth deciles in cash, let alone percentage, terms.’
In his Budget statement, chancellor George Osborne claimed it was a ‘progressive’ Budget because lower earners would pay less than those at the top of the income scale.
James Browne, one of the report’s authors and IFS senior research economist, said it was difficult to make any cut to housing benefit progressive as it is handed out to low-earning families.
He said: ‘The caps to the amount of LHA [local housing allowance] paid out per bedroom are probably the most progressive as they hit housing benefit claims for very expensive properties.’
The End Child Poverty campaign, which commissioned the report, is calling for the government to rethink its cuts to housing benefit and disability living allowance. Spokeswoman Fiona Weir said: ‘The coalition has committed to ending child poverty by 2020, but its cuts are hitting the poorest families hardest.
‘It’s not fair that children should have to pay for the cuts and shocking that the poorest families are bearing the brunt of them.’
Leslie Morphy, chief executive of Crisis, said: ‘The cuts to housing benefit in particular risk pushing people into rent arrears, debt and homelessness.’
The Treasury rejected the IFS’ assessment, claiming it was selective. A spokesperson said: ‘Not taking action would have been regressive - burdening current and future taxpayers with the ever-rising cost of economic failure.’
Inside Housing is running a campaign calling for a fairer way to cut the housing benefit bill, which has been backed by 1,078 people. Visit our What’s the Benefit? page for more information or sign our petition to support the campaign.
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Readers' comments (11)
michael barratt | 25/08/2010 9:18 am
Talk about stating the bleeding obvious- another self referential group informs us of what every reader and contributor to Inside housing already know. The only mystery is why the Liberal Dimwits signed up to such unjust discrimination were they taken in by the Tory boys talk of a just society? I think that most who voted for the Liberal Democrats as an alternative to New labour and could not bring themselves to vote Tory are now completely disillusioned. I think it inevitable that the Liberal Dimwits will be à la brochette (for those readers who prefer frog speak to English) at future local and general elections
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Sidney Webb | 25/08/2010 9:48 am
You'll probably hate this Michael but the outcomes you describe is precisely why people should vote for something rather than against. It rarely happens, and I'll plead guilty too. I voted for the abolition of Trident and for the raising of the tax allowances but look likely to get neither. I voted against the continuation of 30-years of extreme right-wing policy but look definately to get at least another three years worth.
At least one can take some satisfaction that the lessons from 1983 have not been learned, namely that reducing the ability of the poorest to spend severely damages the economy and results in short-term investment losses in the markets. Moving cash to the privilaged simply results in moving cash abroad. Moving cash to the poorest results in more spending in the high street, increasing demand and activity in the real economy.
I look forward to the inevitable comments from the rottweiler tendency, but will relish the day when they finally realise that they are part of the exploited class rather than gaining from the cuts. Or perhaps they will not be able to work that out for themselves unless they read it in their gospels!
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Anonymous | 25/08/2010 10:41 am
Yes the budget will hit the poor that is it's purpose.
We do like blame the vulnerable in our society while the privileged take all. Drive those that cant earn enough or are unable to work out of our gated cities and enclaves. Send them to the place they can afford. And where is that? Is this big society?
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Anonymous | 25/08/2010 11:30 am
But isn't it nice to have something constant in our lives.
When the Saxon Kings needed to go to war, they taxed the lords who taxed the peasants to pay for it.
When the Norman Kings needed to go to war, they taxed the lords and the peasants to pay for it; the lords taxed the peasants to pay the king their share.
By the time the Tudors needed to go to war, they had a tax system in place that paid the lords to tax the peasants.
Now, we have the fairness of market capitalism, so the Lords get paid by the State, by their companies, by their employees, and from their investments, and avoid paying tax wherever possible such as, in order to pay for the Blair Wars us peasants have to pay even more than we did to pay for the Thatcher class wars, Heath in Vietnam, all the way back to our enslavement to the USA thanks to the 50% Yank, Churchill.
But of course, being a British peasant, one simply says, thank you sir, please do screw me some more!
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Mr P | 25/08/2010 3:02 pm
Peasants with PCs and internet access????????
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michael barratt | 25/08/2010 3:38 pm
Peasants - Mr P? When Eve spun and Adam delved what then the gentleman? Good old John Bull - It is inevitable that idle minds will make for the devils work - Let us hope there will be many more of us.
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Sidney Webb | 25/08/2010 3:56 pm
I see Mr P is using the modern Conservative definition of peasant - 'he without any means nor asset'. Nice to have something to aspire to!
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Mr P | 25/08/2010 5:13 pm
Just pointing out that there is a slight difference between the living conditions of a medieval peasant and Mr Anonymous.
On a serious note take a look at the link below to find something a bit closer to a peasant. How insulting to these people that someone over here can sit in their armchair on their PC complaining that they're a downtrodden peasant. Quite pathetic
www.habitatforhumanity.org.uk/
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Chris | 25/08/2010 10:42 pm
I saw a bear going into the woods today carrying a copy of the Daily Mail. I wonder if the Institute for Fiscal Studies could explain to me just what was about to occur!
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michael barratt | 26/08/2010 9:17 am
Clegg appears not to deny the Institute of Fiscal Studies report that the very poorest in Society will loss the most in the LibCon’s June budget. In response Clegg claims the report does not include the things the LibCons want to do to get people of benefit and into work. Bearing in mind the 5% cut is off what the Government says is the minimum claimants need to live, Clegg is acting like Mr Bumble telling Oliver Twist not to ask for more gruel just because he is hungry and focus upon Bumble’s costly efforts to get him off benefits and into work with the funeral director or anyone that wants a boy for sale.
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