The respected research body the non-political Institute for Fiscal Studies (IFS) has proved what we all knew intuitively: the cuts announced in the emergency budget will hit the poorest hardest. This is their conclusion in their report issued at the end of August 2010 on the effects of the emergency budget. The only thing progressive about these cuts is that it the poorer you are the more you will bear the burden of the cuts. This puts to bed all the spin from Nick Clegg and George Osborne about making the better off take the greater share of the cuts.

The IFS describes as “not true” the government’s assertion that last June’s emergency Budget would hurt the richest more than the poorest, adding that cuts will fall disproportionately on households with the lowest incomes.
“The tax and benefits 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 IFS research report states.

The budget will take more than twice the income from the poorest 10% of households as a share of their annual incomes than from the second-richest group (richest 80% to 90%) which has four times as much income a year after tax and benefits the report says. The richest 20% of households has 16 times the income of the bottom 20% of households before tax and benefits are taken into account.

While the poorest 10% of households which have incomes inclusive of benefits of £9,900 on average will see their take home cash drop by 5% by 2014, all other groups apart from the top 10% will see their incomes drop less.

The second top 10% with an average income of £43,600 will only see their income drop by 2%.

This analysis completely contradicts what George Osborne said in the emergency budget speech: “People at the bottom of the income scale will pay progressively less than the people at the top. It is a progressive budget”

The coalition has also stressed that its plans for cuts seek to avoid exacerbating child poverty. Yet the cuts planned by 2014 fall much more on families with children than on the childless and pensioners. The single beneficiaries of the budget the report concludes are childless households in the richest half of society. This to bed the lie Nick Clegg’s claim that what the coalition’s budget is setting out to do is create the opportunity for greater social mobility.

Poor families are being hit harder by the Budget cuts because they receive a larger share of welfare payments than other groups, while the new and higher personal tax allowances has no effects on the poorest groups, who do not pay income tax. The IFS calculations include the effect of post-Budget cuts in incapacity benefit allowance, housing benefits and tax credits.

As well as further limiting social mobility the cuts are likely to increase inequality. In the 1990s similar cuts to public spending where implemented to reduce public debt in Finland, Sweden and Canada. Income inequality increased after the cuts by 12% in Finland and Sweden and 16% in Canada. The three countries had some of the highest levels of poverty in the developed nations of the world.

We must resist this happening in the UK by resisting the cuts and putting forward an alternative way of running the economy that focuses on wealth redistribution, taking the banks under public control as well as ownership and providing everyone with free basic services to enable them to lead a dignified and fulfilling life.