London: Britain’s poorest families have suffered the most from the coalition’s welfare cuts and tax rises, according to a study by the UK’s leading tax and spending think tank.
The Institute for Fiscal Studies said households were on average £1,127 a year worse off after the implementation of reforms since 2010.
Figures that assess the impact of the VAT rise to 20% and higher personal tax thresholds alongside a range of benefit cuts, found that the income of the lowest 10% of earners fell by more than 4% while the richest 10% suffered a drop of 2.6%.
The so-called squeezed middle were the least affected by cuts to tax credits and housing benefit that hit the poorest families. Middle income groups also avoided income tax rises and limits on tax-free pension contributions that affected households at the top end of the income scale, it said.
The IFS said it was not possible to assign all of the tax rises and benefit cuts implemented since May 2010 to specific households. Those which could be apportioned amounted to an average loss of £489 per household a year, made up of an average gain of £321 a year from cuts to direct taxes, such as income tax, a loss of £333 a year from increases in indirect taxes, such as VAT, and a £477-a-year loss from benefit cuts.
Labour said the figures showed that families with children were among the biggest losers from the coalition’s cuts. Cathy Jamieson, shadow Treasury minister, said: “Families with children have been hit hardest of all by David Cameron’s choices – a clear betrayal of his promise to lead the most family-friendly government ever.”
