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Categories:Politics

IFS claims spending review is "regressive"

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The Government’s £81bn cuts package is “regressive”, according to research by the Institute for Fiscal Studies.

Chancellor George Osborne told the Commons on Wednesday that the comprehensive spending review’s measures would ensure those with the “broadest shoulders” bear the brunt of the pain.

However, IFS acting director Carl Emmerson contradicts the Government’s repeated assertion that the CSR is progressive.

He says: “Our analysis, published in August, shows that including a wider set of benefit reforms announced by this Government leads to the conclusion that the impact of all tax and benefit measures yet to come in reduces the incomes of lower income households by more than that of higher income households, with the notable exception of the richest 2 per cent of the population who are hardest hit.

“Therefore the tax and benefit changes are regressive rather than progressive across the income distribution. And when we add in the new measures announced on Wednesday this finding is, unsurprisingly, reinforced.”

The IFS analysis was followed by claims from the Chartered Institute of Personnel Development that public sector job losses could reach 750,000, some 50 per cent higher than Treasury estimates, the Daily Telegraph reports.

CIPD chief economic adviser Dr John Philpott says: “The comprehensive spending review does not acknowledge the likelihood that the very large percentage cuts in the cost of administration across Whitehall, local authorities and even ostensibly ring-fenced areas of spending such as NHS, will have a disproportionately negative effect on some of the most labour intensive parts of the public sector.

“As a result, the CIPD estimates that the public sector jobs impact of the CSR to 2014-15 will be above 500,000, with total job losses rising close to three quarters of a million by 2015-16 if the coalition sticks to its existing longer term spending plans.”

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Readers' comments (3)

  • It is utterly senseless to judge the cuts because they are regressive/progressive. What counts is the final situation. Judging cuts alone is like saying "I've drive 20 miles North, is that good?" It depends on where you were and where you want to go. What is clear is the Tax & Benefits system in the UK means higher earners subsidise lower earners; massively. The terms "regressive" and "progressive" are being used because large numbers of people see them as synonymous with "bad" and "good". It would be interesting to see net tax/benefit positions across income ranges and geographical regions (and party allegiances). Who is supporting whom, (and why)?

    Imagine: Tom and Dick are similar blokes except Tom earns £600/week. Dick £300. Tom pays £89.99/week in tax, Dick pays £45. Tom is subsidising Dick to about £22.50 per week. But at £89.99 Tom doesn't pay to make then system progressive, it is still regressive. Is that "fair"? (Whatever that silly word means).

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  • Lets hope that these 750,000 job losses includes this left wing IFS quango that is costing the taxpayer £6.8M.
    They could always apply for a job at the FSA which appears to be still expanding even in its death throws.

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  • Surely it is the case that these institutions will continue with a reduced work-force.
    If these institutions continue to run efficiently with a reduced workforce it will have been demonstrated that they were massively over-manned in the first place.
    As all of these jobs were at the tax-payers expense it makes much more sense for the surplus to return to the private sector and be paid what their ability and work ethic can command in a competitive marketplace.
    It will be the speed of the re-absorbtion of these workers into the real world that will decide the immediate future prosperity of the country.

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