The chart that debunks George Osborne's myth that Britain is 'in it together'

The poorest half of the UK are losing 8 per cent of their income so the deficit can be cut - while the richest half lose next to nothing

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Indy Politics

The poorest people in Britain have borne the brunt of austerity over the past five years – and by 2020 will have lost more than a 10th of their income compared to 2010, with the biggest cuts to their taxes and benefits still to come.

George Osborne’s changes to tax and benefits are unpicking all of the gains for poorer families made by during the Labour government’s "big increase in tax credits”, according to analysis by the Institute of Fiscal Studies.

The IFS is among the most authoritative think tanks and inspired the Government to set-up the Office of Budget Responsibility.

Their verdict on Mr Osborne’s latest Budget is stark, their experts concluding: “We expect much of the recent fall in inequality to be undone over the next five years.”

Analysis of their data conducted by The Independent suggests the poorest in Britain are paying for the richest.

Changes to taxes and benefits mean the incomes of the wealthier half of the country are being cut by just one per cent over the decade, averaging across the five richest deciles (or groups of 10 per cent).

In contrast, the poorest half of the country are losing eight per cent of their income, with the two very poorest groups losing between 11 and 12 per cent.

The IFS put it plainly.

“The direct effect of government tax and benefit policy has been to take money from those working-age benefit recipients towards the bottom of the income distribution," they say.

“Those in the middle and upper parts of the income distribution – including most pensioners and people on average earnings and above – have been remarkably well protected.”

Pensioners are the exception to the general fact that the poor are paying for the rich.

Whether rich or poor, they have been - and look likely to continue to be - largely protected by this Government, thanks to the triple lock on the state pension and relatively little change to their benefits otherwise.

Few voters would begrudge the elderly the state pension, which is just £6,029 for a single person.

But it means the poorest working-age parents are the ones paying down the deficit, while the rich of all stripes – the working age or pensioners, parents or the childless – are left unscathed.

The poorest working-age parents will lose up to 18 per cent of their income after Mr Osborne’s decade-long changes to taxes and benefits take full effect.

The IFS notes that none of this should come as a surprise.

More inequality was always expected to follow from the Tories’ election pledges to a) cut £12bn in working age welfare benefits, b) protect pensioners, and c) increase the income tax-free allowance and higher rate tax thresholds.

The former is widely perceived a tax giveaway to the richest disguised as a giveaway to the poorest; raising the threshold has long since taken the poorest out of tax, and always helped richer taxpayers the most.

The statistics suggest today's Conservative Party has run government in a way that benefits the older and the richer: groups far more likely to vote than the poorer and the young.

While inequality is, by some definitions, at its lowest level for 25 years, it appears to have fallen in spite of Mr Osborne’s changes to taxes and benefits.

But the equalising effect of the financial crash is being unwound by a Chancellor whose focus has been not just to take benefits from the poor and protect the rich, but to take from the disabled and give a tax cut to the richest 0.3 per cent.