Editoral-UK budget to ‘hit the poor harder’

BRITAIN’S leading experts on tax and spending on Wedneday strongly challenged UK chancellor (finance minister) George Osborne’s claims to have delivered a “tough but fair” budget, concluding that the measures in the emergency package would hit the poor harder than the rich.

The Institute for Fiscal Studies said the chancellor and the deputy prime minister and leader of the UK coalition’s junior partner Nick Clegg could only assert that the better off were the big losers from the austerity move by including reforms announced by Labour, such as the changes to pension contributions.

The think tank gave its view as the prime minister David Cameron came under House of Commons pressure to justify the insistence that the budget was fair, and as Osborne admitted he was looking for extra welfare savings to spare government departments, other than health and international development, from cuts averaging 25 per cent during this parliament.

Noting that Britain was facing the “longest, deepest, sustained cuts in public spending since the Second World War, Robert Chote, the IFS director, said: “Osborne and Clegg have been keen to describe the measures as progressive in the sense that the rich will feel more pain than the poor. That is a debatable claim. The budget looks less progressive — indeed somewhat regressive — when you take out the effect of measures that were inherited from the previous government, when you look further into the future than 2012-13, and when you include some other measures that the treasury has chosen not to model.”

The IFS estimates that the squeeze on poorer families would increase in the second half of the parliament as welfare cuts kicked in and the two-year increase in child tax credit ended.

Yvette Cooper, the Labour opposition work and pensions spokeswoman, said: “The IFS has confirmed today exactly what we thought yesterday: that George Osborne’s budget was a typical Tory budget — unfair and hitting those on lower incomes hardest. So much for ‘we’re all in this together’.”

Osborne’s aides said that it was legitimate for the government to include pre-announced measures in its analysis of fairness. It was arbitrary to look at Wednesday’s measures in isolation. “What matters is what happens over the course of this parliament,” one said, adding that the richest 10 per cent of the population suffered most from the budget once both (previous chancellor) Alistair Darling’s and Osborne’s measures were taken into account.

The IFS found that the richest 10 per cent would be 7.5 per cent worse off by 2014-15 because of measures coming into force during the current parliament but that almost seven percentage points of that was due to Labour changes.

— The Guardian, London

Posted in: