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Budget cuts will hit poor families

By Dominic Welling dominic.welling@consumerchoices.co.uk

Low-income families are worse off, while well-off people without kids fare better under the new Budget.

An economic think tank has slammed the June Budget for being “regressive” and for hitting poor households harder than the rich.

Low-income households with children will lose the most - as a proportion of income - from the tax and benefit reforms announced in the emergency Budget, according to the research by the Institute for Fiscal Studies (IFS).

Chancellor George Osborne previously claimed that the June 2010 Budget was a “progressive” Budget” and that it would hit the richest more than the poorest.

However, after analysing data from the Department for Work and Pensions (DWP), the IFS said:

“Once all of the benefit cuts are considered, the tax and benefit changes announced in the emergency Budget are clearly regressive as, on average, they hit the poorest households more than those in the upper-middle of the income distribution in cash, let alone percentage, terms.”

The report concluded that those who will lose the least from the Budget are households of working age without children and who are in the upper half of the income distribution.

These people do not lose out from cuts in welfare spending, and they are the biggest beneficiaries from the increase in the income tax personal allowance.