Government insists Budget is fair

25 Aug 10
The government has forcefully rejected the Institute for Fiscal Studies'’ claim that the June Budget will hit the poor the hardest
By Lucy Phillips

25 August 2010

The government has forcefully rejected the Institute for Fiscal Studies’ claim that the June Budget will hit the poor the hardest.

Deputy Prime Minister Nick Clegg said the highly respected think-tank’s analysis of the coalition’s emergency Budget was ‘by definition partial’. The IFS report, publishedtoday, ‘does not include the things we want to do to get people off benefits and into work’, the Liberal Democrat leader told the BBC during an engagement in London this afternoon.

His comments came after the financial secretary to the Treasury, Mark Hoban, accused the IFS of being ‘quite selective’ in the evidence it used for its analysis. In another interview with the BBC this morning the Tory MP said: ‘It is a progressive budget... We had to take action to tackle the budget deficit left by Labour. We’ve gone through the most detailed and rigorous assessment of the distributional impact of this Budget on families.’

In the immediate aftermath of the IFS report being published, the Treasury released a statement saying the government ‘stood full-square behind our Budget analysis’. The think-tank had ignored the pro-growth and employment effects of the Budget, it added.  

The IFS report said the tax and benefit changes announced in the Budget were ‘clearly regressive’, hitting the poorest households far more than the richest. For example, families earning the least would lose over 5% of their income, compared with less than 1% for top-earning working-age adults without children.

The End ChildPoverty charity, which commissioned the IFS research, said the new analysis took into account all Budget changes up until 2014, not just the short term ones contained in the Treasury modelling. It said the findings contradicted both the government’s claims of ‘progressive cuts’ and its commitment to fairness.  

Fiona Weir, a spokeswoman for the charity, added: ‘The coalition must reconsider its cuts, including changes to Housing Benefit and uprating benefits. The Spending Review will need to show clearly how the government will deliver on the commitment to ending child poverty, ensuring that cuts fall on those most able to pay.’   

The IFS is headed by Robert Chote, who is thought to be a frontrunner to replace Sir Alan Budd as chair of the Office for BudgetResponsibility, the independent body set up by the Treasury to provide it with economic forecasts for the Budget.

Did you enjoy this article?