Coalition Budget hits poor

According to the Institute for Fiscal Studies, the coalition government’s first Budget of austerity has hit the poorest families hardest. It has said the measures announced in the Budget in June were regressive.

The IFS said the poorest 10% of families would lose over 5% of their income as a result of the budget compared with a loss of less than 1% for non-pensioner households without children in the richest 10% of households. It added that the budget contrasted with the “progressive” plans for 2010-14 inherited from Labour, under which the richest 10% of households bore the brunt of the cuts.

The analysis suggests that cuts to areas such as housing benefit and disability allowance would hit the poorest to the tune of £422 between the Budget and April 2014.

The report also questioned the government’s decision to use the Consumer Prices Index (CPI) instead of the Retail Prices Index (RPI) when calculating certain benefits.

More from the BBC here or the full IFS report can be found here.

A summer hat tip to Stephen Lightfoot from Blue Coat School Oldham for flagging up that the IFS data on UK income distribution can be downloaded from their site. Stephen writes:

“The IFS website gives access to the report but perhaps more interestingly has a link to a ZIP file which provides income distribution data for the UK since 1961. An edited version would almost certainly provide some good discussion opportunities as well as ICT based analysis.” The data can be found here

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Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Video Resources on UK Relative Poverty [7 Mar 2011]
Tony Atkinson on Inequality - LSE Lecture Notes [1 Mar 2011]
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Economics Q&A: Will the rise in VAT harm the UK’s economic performance? [17 Jan 2011]
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A2 Economics Revision - Direct and Indirect Taxation [9 May 2010]
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Links to recent IFS Research [27 Apr 2010]
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Economics Snapshot - The Impact of Tax and Benefits on Inequality [30 Jul 2009]
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Revision: Progressive and regressive taxes [10 Apr 2008]

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