In the widespread worry about the gap between the rich and poor in Britian, it seems almost impossible to get a real handle on what the coalition government’s cuts are doing and what their impact will be.
Let’s take three contrasting views: The Economist, The Institute of Fiscal Studies (IFS) and The Treasury.
The Economist sees a positive future. By mending public finances, it says, the coalition government will not pass the buck to future taxpayers now in primary schools. Rather than hitting the poorest, the Economist suggest that the £10 billion savings from the welfare budget could be achieved by means-testing child benefit (which goes to all families) or by scrapping pensioners’ ‘freebies’ such as winter fuel payments.
James Browne, Senior Research Economist from the IFS thinks otherwise (Today Programme, Radio 4, 25th August). The IFS has conducted a second review of the coalition plans, which takes into account the cuts planned beyond 2012 - or in other words the bits that were left out. It believes this budget will hit poorer housesholds harder than those with higher incomes. The elephant in the room, says James Browne, is the fact that tax rises only account for 20% of fiscal tightening – the other 80% will come from spending cuts that affect the poor more than the rich.
So what is the Government’s response? The official line from the Treasury is that the IFS review has ignored the positive impact of the budget on the economy and employment and that its findings are selective. Mark Hoban, Financial Secretary to The Treasury, speaking on the Today programme to Justin Webb (more here http://news.bbc.co.uk/today/hi/today/newsid_8942000/8942261.stm), confirmed that the government had conducted its own distributional impact assessment on the budget. However, he was unable to confirm that the compulsory assessment required by law under the Equalities Act of 2010 to measure the impact on ethnic minorities, disabled and other vulnerable groups, had been completed. Incredible.
Perhaps the real measure of this new government will be its legacy and whether the cost of not passing the buck to future taxpayers will be met by further disadvanting the poorer taxpayers of today.
