Leading article: The wrath of the squeezed middle will soon be heard

Share
Related Topics

Much of the credibility of the Coalition's case for economic austerity rests on the assertion of the Chancellor, George Osborne, that the rich will shoulder the greatest share of the harsh measures needed to bring down the deficit. The Government's corresponding promise to shield the least well-off and the so-called "squeezed middle" from the worst rigours of the cuts is also the political glue holding this Coalition together. Without delivery on this pledge, it is hard to see on what basis Nick Clegg's Liberal Democrats could defend their remaining in harness with David Cameron's Tories.

This is why new analysis on the impact of cuts conducted by the Resolution Foundation could be politically explosive. According to this independent think-tank, the abolition of child benefit for families with a taxpayer on the higher rate of 40p in the pound will hit tens of thousands of families at the bottom end of the low-to-middle income scale – defined as £12,000 to £30,000 for a couple with no children and as £30,000 to £48,000 for a couple with up to three children.

The financial cost that these families can expect to incur as a result of changes to child benefit rules will, the Resolution Foundation says, be worth an average of £2,016 a year from 2013, when the change comes into effect. Nor will this loss be compensated for by the decision of the Chancellor in the last budget to raise tax allowances. This will take some of the poorest families out of the tax net entirely, but those low-to-middle earners who stand to lose about £2,000 a year from the abolition of child benefit will receive back only an average of £28 from the change to personal tax allowances.

The Government will probably respond to criticism on this front by maintaining that even the most progressive changes to the tax system tend to throw up anomalies in the form of undeserving victims – usually people at the bottom end of the middle-income range who, alas for them, are deemed just prosperous enough to shoulder the burden of cuts but who are not eligible for any of the provisions put in place to support the poor.

Ministers will find it more difficult to parry charges that, as high inflation and low wage rises eat into the disposable incomes of a much bigger slice of middle-income earners than those hit by the changes to child benefit, they are failing in a broader sense to defend the hard-pressed middle classes.

Largely as a result of sharp rises in world commodity prices, inflation is surging at around twice the level of pay rises. Whether this adds up to the sharpest fall in disposable incomes since the 1930s, as some maintain, the pain will certainly be felt across the board, especially outside the relatively buoyant economy of South-east England.

To an extent, the Government is lucky in that it faces its first electoral test since the general election in a few weeks' time, well before the impact of this broad squeeze on incomes is fully felt. The Coalition parties may get their oft-predicted "hammering" on 5 May, with Liberal Democrats bearing the brunt of voters' fury, but if the polls were to take place later this year, middle-class voters might be more vindictive.

Mr Osborne's strategy will be to repeat his mantra, that things must get worse for them to get better – and that by 2015, the benefits of earlier economic rigour will show through and voters will forget the anger they felt in 2011-12. This is a big gamble, presuming even that the Chancellor stays the course, because he is bound to face growing pressure, not least from within his own party, to do more to help Britain's "squeezed middle" survive the coming pain.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

PA / Team Secretary - Wimbledon

£28000 - £32000 per annum + Benefits: Ashdown Group: PA / Team Secretary - Mat...

Mechanical Lead

£65000 - £75000 per annum + competitive: Progressive Recruitment: Mechanical L...

Nursery Nurse

£8 per day: Randstad Education Manchester: Nursery Nurse The Nursery Nurse wi...

Primary Supply Teachers Required

£121 - £142 per day: Randstad Education Luton: primary teacher Hertfordshire

Day In a Page

Read Next
 

Fist bumps will never replace the handshake - we're just not cool enough

Jessica Brown Jessica Brown
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
Countries that don’t survey their tigers risk losing them altogether

Countries that don’t survey their tigers risk losing them

Jonathon Porritt sounds the alarm
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz
A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on