Tax and benefit changes bleed families – how will the Coalition spin this?

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The Coalition’s changes to taxes and benefits have hit low-income, working-age households the hardest – costing the most hard-up (those with children in the lowest 10 per cent of earners) a massive £1,223 per year.

A report by the Institute for Fiscal Studies also states that the richest 10 per cent of households with children lost £5,350 a year, on average. This means that those in the lowest income decile have lost the most, in both real-money terms and as a percentage of their income.

Hang on! Hasn’t the Coalition been saying that top-earners have been hit the hardest by their ‘reforms’? Have ministers been lying to the nation yet again?

We may as well answer that straight away: Yes.

It is only when changes introduced by the previous, Labour, government are included in calculations that those in the highest-income group are shown to be feeling the pinch more than the poorest in society.

Let’s think about that for a second. Doesn’t this show that the last Labour government had its heart in the right place, was doing what it could to protect low-earners and was aiming its version of austerity where such policies belonged – at the rich?

We may as well answer that straight away, as well: Yes. Yes it does.

And Labour has moved to capitalise on this. Shadow treasury minister Cathy Jamieson said: “For all the government’s claims, this report shows that they have raised tax by over £13.5 billion a year. And for millions of working people the rise in VAT and cuts to things like tax credits have more than offset changes to the personal allowance.

“Families with children have been hit hardest of all by David Cameron’s choices – a clear betrayal of his promise to lead the most family-friendly government ever.

“The Tories are now promising to cut tax credits again for millions of working families and refusing to rule out another VAT rise to pay for their unfunded promises. It’s clear working people can’t afford five more years of this government.”

She said Labour’s plan “will ensure we earn our way to rising living standard for all”, reversing the Coalition’s “£3 billion a year” tax cut for the top one per cent of earners and helping 24 million working people by restoring the popular 10p starting rate of tax.

Before we start ringing the victory bells for Labour, though, the IFS report also states the following: “Middle-income working-age households without children have gained the most from the Coalition’s changes. They have gained significantly from the Coalition’s large increases in the income tax personal allowance and are much less affected by benefit cuts.”

It follows that those on middle incomes – that’s not the average income; it means incomes in the middle of a range that continues into the stratosphere, due to rises in executive pay levels – are likely to support the Tories, along with pensioners who have also been largely unaffected (so far – it’s future pensioners who have been hit hard).

The question is, will these groups be happy to sit in their own, insulated little world, selfishly ignoring the collapse of the country all around them – the deliberate underfunding-to-destruction of the NHS, the institutionalised torture of benefit claimants, moves that deny the justice system to those who can’t pay for it, plans to end human rights in the UK, plans to allow fracking under their homes, an economic policy that relies on them going into debt by almost twice as much as they earn (enough to have them legally declared bankrupt if they have trouble paying it back)… the list is endless…

Are middle-earners and pensioners so selfish that they will vote the Tories back into power just because, in a country that is collapsing around them, as the saying goes:, they’re “all right, Jack”?

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10 thoughts on “Tax and benefit changes bleed families – how will the Coalition spin this?

  1. Andy

    If everyone on lower to average income voted Labour they would have an outright majority. Unfortunately so many average working people believe what they read in the likes of the Daily Mail that they will vote against their own self interest, and you can’t blame middle earners from voting in theirs.

  2. wrjones2012

    Not to worry Mike,the most famous joke of all time is doing the rounds.All political parties are the same!You were right to contrast the measures taken 2008-2010 and since 2010.As you have mentioned during the first period we admittedly had severe austerity.Though through measures such as the fall in Vat and bonus payments to those on Benefits,Alastair Darling at least tried to protect the sick and vulnerable from the worst of the recession.

    Since 2010 we have had the Bedroom Tax,which can only be described as a full frontal attack on those who have nothing.We have also seen the harassment of JSA claimants, until death in too many cases.We also saw a rise in VAT which proportionately hits the poor far more than it does the rich.Also we have seen the soul destroying effects of Zero Hours Contracts.No one can say that we have seen austerity since 2010.All we have seen is a redistribution of wealth from the poor to the rich.

    1. Mike Sivier Post author

      That’s an excellent point – we haven’t had austerity, just a redistribution of wealth from the poor to the rich.

  3. Mr.Angry

    Excellent article albeit daunting, listened to a radio 4 program about sanctions recently I could hardly believe what I heard nor could the presenter of the program. Yet again no one available from the DWP to comment.

    I believe there was another similar TV debate on the same subject either dispatches or channel 4, I missed that, anyone know when it was on and which channel would be appreciated.

    Mike one point I must make, I am now a pensioner and suffering under this shower, believe me I do not think we are better off under the tories, things could not be any worse and this view is shared amongst many pensioners I meet.

    So I truly feel many pensioners will not support the tories in the next election if they have any sense.

    1. Mike Sivier Post author

      I hope you’re right about the pensioners. Over on Facebook, a vocal minority has tried to criticise me for pointing out that pensioners are among those who have benefited from the changes and suggesting that they might be encouraged to vote Tory as a result – but they don’t seem to have read the article or looked at the graph, otherwise they’d know which pensioners this indicated.

    2. hugosmum70

      well said Mr Angry… and Mike, don’t forget a lot of pensioners don’t understand graphs. took me a while to work it out and i am not too bad normally (more difficult when 3 lines converge like that and colours are so similar. )…
      one thing that is continually overlooked when talking about cuts/austerity measures, sanctions etc. all the things that adversely affects wages, benefits etc.. is the council tax that benefit claimants now have to pay. £20 a month doesn’t seem much but £5 a week is a lot out of £71. difference between eating all week or 5 possibly 6 days of the 7. my sons 20yr old daughter as ive said before lives with him/ this has brought his council tax bill up to £44 a month (should be £53 but instead of paying for only 10months hes paying it over 12.).. but he cant afford to pay the £20 in the first place. so i pay that. as i do his sisters. so thats 40quid a month out of my own money and with cost of living, fuel prices, (in spite of the 5 or 6% the fuel companies have lowered prices by,) are still high. my last bill was just under 200quid. god knows what next one will be .and thats for a 1 bed bungalow. 4 rooms n small hall.. counting bathroom.and i don’t have it on all the time. from around between 7/9am to about 11-11.30am. then on again bout 2pm. for couple of hours or maybe 3. off again till about 5pm ish then its on all evening till i go to bed. anytime between 12mn and 3am. soooooooooooo (sorry to go on),… this pensioner wont be voting tory. (not that i ever have done since i became politically aware 50 years ago). it will be labour. no one else. no matter how bad or good our Ed is, it would be suicide for us to vote the lot in we have now, both for the country and its people.

      1. Mike Sivier Post author

        I can’t make any assumptions about readers’ ability to do anything – that would only make it possible for this site’s critics to claim I’m prejudiced (and we’re in an election year – this site suddenly has a LOT of critics).
        You’re absolutely right about council tax. It’s something that (I’m sure you remember) I raised when it was first suggested but it has faded into the background behind the many other atrocities that have been perpetrated on us since. Thank you for reminding us of this continuing burden.

  4. Keith Jackson

    The ‘Im allright Jack’ attitude definitely exists in this country, its scary to think that Tories still have 30% and change, support.

  5. Dave

    I hate to say it Mike, but the quick answer is probably “Yes, they really are that selfish”. I hope they might prove me wrong but I really doubt it. The community spirit that endured for much of the last century was destroyed in the late ’70’s and early 80’s (around the time I was born), partly because some of the unions started stepping past lines that the captains of industry were not ready to allow to be crossed, but mostly because of Ms. Thatcher’s disastrous policies and ideologies.

    1. Mike Sivier Post author

      There are a few people – at least on the Facebook page – who would deny your claim to the bitter end.

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