Coalition government has 'shifted money from poorest to better-off' through welfare cuts and tax reductions, study claims

Figures show that benefit claimants are worse off since 2010 welfare reforms

Lamiat Sabin
Sunday 16 November 2014 10:06

The Coalition government's welfare cuts and tax reductions have transferred funds from the poorest to the pockets of the better-off, an academic study reveals.

The reductions in low-income and disability benefits financed tax breaks for the more financially privileged, although the richest were also hit, and this transfer of wealth made no net effect on public funds.

The groups hit hardest are single-parent families, large families, children and middle-aged parents, who make up the poorest 5 per cent of the country.

The most financially-disadvantaged experienced cuts of nearly 3 per cent of what they would have earned if Britain's tax and welfare system of May 2010 was retained.

Those who gain from the changes include couples who both work and those in their 50s and early 60s, with an increase of between 1.2 and 2 per cent in disposable income.

The study's authors, Dr Paola De Agostini and Professor Holly Sutherland from ISER and Professor John Hills from LSE, wrote: "Whether we have all been 'in it together', making equivalent sacrifices through the period of austerity, is a central question in understanding the record of the coalition Government," as reported by The Observer.

The top 5 per cent of the country's highest earners lost one per cent of their potential income, however the reduction in top rate income tax from 50p to 45p meant that the one per cent earning the most also had a small monetary net gain.

The Treasury said the changes implemented since 2010 had ensured the richest households had made the biggest contribution to reducing the deficit.

"The Government has published groundbreaking, cumulative distributional analysis with every budget and autumn statement of this parliament," a spokesman said.

"We will go on working through the plan that is securing a resilient economy and a brighter future," they added.

Almost 3,000 people paid more income tax in the current financial year than the poorest nine million, figures obtained from HM Revenue and Customs through a Freedom of Information Act request show.

But shadow chancellor Ed Balls said: "This is a damning analysis of David Cameron and George Osborne's record. It demolishes any last pretence that we are somehow all in this together."

"Ed Miliband and I are determined that Labour's economic plan will deliver a recovery for the many, not just a few. And our plan to balance the books in a fairer way will start by reversing David Cameron's tax cut for the top 1 per cent of earners," he added.

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