Poorest hardest hit by austerity

 

The poorest members of society bore the brunt of tax and duty hikes under Chancellor George Osborne's deficit-busting austerity measures, official figures revealed today.

The research by the Office for National Statistics (ONS) covers the amount households were left with after paying taxes and receiving benefits in the year to April 2011.

The poorest fifth saw the chunk of average disposable incomes that they spent on indirect taxes, such as VAT and duties on alcohol, fuel and tobacco, rise from 28% in the previous year to 31%, or £3,365 out of £10,858, squeezing living standards further.

The richest tier saw the proportion they spent on indirect taxes rise from 12% to 13%, or £8,339 out of disposable incomes worth £63,890.

This means after indirect taxes the richest fifth had post-tax household incomes that were more than seven times those of the poorest fifth, the ONS added.

Meanwhile, the research revealed a fall in average disposable income across all households of £200 a year to £30,300 as wages came under pressure.

While the proportion of household income paid in indirect taxes increased for all groups due to the increase in the standard rate of VAT from 15% to 20%, the poorest were hit the hardest.

The amount of indirect tax each household pays is determined by how much they spend on goods and services that attract these taxes, the ONS added.

However, the figures showed that average households paid £7,500 per year in direct taxes such as income tax and council tax, with the richest fifth paying 24% or £19,700 of their gross income, while the poorest fifth paid 10% or £1,300.

Families last year faced the biggest squeeze on household incomes since the 1930s with high inflation, slow wage growth and a weak economy.

The largest fall in disposable incomes was seen in the middle fifth of households, dropping from £25,500 to £24,400, the ONS said.

The amount of cash benefits, such as tax credits, housing benefit and income support, received tends to be higher for poorer households than for richer households.

The largest cash benefits were received by households in the second fifth of households, at £8,300 on average, compared with £7,000 for households in the bottom group.

This is largely because more retired households are in this sector and the state pension is classified as a cash benefit.

The richest fifth only received £2,100 in cash benefits on average, with the main source being the state pension.

PA

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Photographer / Floorplanner / Domestic Energy Assessor

£16000 - £25000 per annum: Recruitment Genius: A Photographer/ Floor planner /...

Ashdown Group: Front-End Developer - Surrey - £40,000

£30000 - £40000 per annum: Ashdown Group: Front-End Developer - Guildford/Craw...

Recruitment Genius: Customer Service Assistant

£13500 - £15000 per annum: Recruitment Genius: A Customer Service Assistant is...

Recruitment Genius: Sales Executive - OTE £35,000

£16000 - £35000 per annum: Recruitment Genius: An ambitious and motivated Sale...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence