The poorest in society and those in their 20s have been hit the hardest by George Osborne’s five budgets.
That’s the verdict of the influential think thank the Institute for Fiscal Studies, which delivered its traditional post-budget assessment this afternoon.
The authoritative briefing by Paul Johnson, director of the IFS, said the “poorest have seen the biggest proportionate losses” from the tax and benefit changes introduced by the Coalition.
Meanwhile the age group that saw the biggest falls in incomes were those in their 20s.
It has been a “very different” story for pensioners however, with the over 65s seeing average incomes rise as they benefited from a range of Coalition pension reforms.
Overall, average incomes had “just about regained their pre-recession levels,” Mr Johnson said, but there was “no cause for celebration” as the modest growth represented “by far the slowest recovery in incomes in modern history”.
“We are for sure much worse off on average than we could reasonably have expected to be back in 2007 or indeed back in 2010,” he said.
So who had benefited the most from the government’s changes in tax and benefits? The middle classes, according to Mr Johnson.
“People on middle and upper middle incomes have been remarkably insulated on average from tax and benefit changes.”
This was due to the constant rises in personal tax allowances. The personal allowance was £6,475 when the Coalition came to office. It rises to £10,600 next month, an increase of 64 per cent over five years.
However the higher rate threshold has fallen over the period from £43,875 to £42,385, dragging millions more people into the 40p tax rate.
Those on the highest incomes were hit the hardest by tax rises, the IFS found.Reuse content