Families lose out from Coalition Budget changes

An updated analysis from the Institute for Fiscal Studies suggests that the combined effect of all the tax and benefit changes effective from April 2012 would be an average loss of £511 per year for households with children. In Tax and Benefit changes, excluding those affecting mainly the very rich, the Institute for Fiscal Studies takes into account a long list of changes, some announced as long ago as the 2010 Budget but only coming into force now.

It shows:

  • the skewed impact of the changes, with the biggest losses in income suffered by those on the lowest 30 per cent of incomes
  • households with children will lose compared with working-age households without children, and with pensioner households
  • households with children will lose £511 per year on average, compared with just £156 for working-age households without children.

Similar conclusions are reached by the Child Poverty Action Group in their post-Budget briefing. They highlight the fact that April 2012 cuts to family support will total nearly £2.2 billion (mostly relating to tax credits), rising to an annual £3.5 billion by 2015/16 – with the likelihood that the slow decline in child poverty since 1990 will be put into reverse.

The Institute for Fiscal Studies briefing is available on their website: Tax and Benefit Changes, Excluding Those Affecting Mainly the Very Rich, Robert Joyce.

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