Families with children are the biggest losers from the UK Government spending cuts and tax rises, according to a .jpg)
leading UK think-tank.
In a study of Chancellor George Osborne’s spending review, the influential Institute for Fiscal Studies (IFS) found that in every income group, from the richest to the poorest, parents with school age children will lose more than single people, childless couples and pensioners.
Mr Osborne has outlined £81 billion of spending cuts, which he says will combine with £29 billion of tax rises to eliminate the structural deficit in the public finances in five years’ time.
However, many of his cuts disproportionately affect families with children, in spite of David Cameron’s promise to make Britain “the most family-friendly country in Europe”.
Middle-class parents will lose Child Benefit, while poorer families will have their tax credit payments cut. Benefits for pensioners, by contrast, were largely protected, with the winter fuel allowance, free television licence and free bus pass left intact.
The IFS calculated that the average family with children will be losing £1,964 of its £29,242 net income a year by 2014-15, when the spending cuts and tax rises announced by this Government and the last have taken effect.
That loss will be equal to a 6.7 per cent drop in income, the IFS said. By contrast, the average pensioner will lose 2.9 per cent, and childless adults will lose 2.7 per cent.
Carl Emmerson, of the IFS, said the Coalition had started to reverse Labour’s agenda of favouring parents, instead prioritising spending on pensioners.
“The cuts to welfare spending mean that benefits will be focused more on pensioners and less on families with children,” he said. “Across every income group, families with children are the biggest losers.”
The IFS calculated the impact of planned tax rises, spending cuts and benefits changes on different households according to their position on the income scale. In every group – each representing one tenth of the population – parents will lose more than others by 2014-15.
In the second wealthiest group of families with children – who are better off than 80 per cent of the country – a household with a total net income of £58,000 will be £2,875 worse off, a loss equivalent to 5 per cent of their income. By contrast, the second wealthiest group of pensioners – with a net income of £35,500 – will lose £826, equivalent to 2.3 per cent of their income.
The second wealthiest group of childless adults lose £719 of their £41,953 net income, or 1.7 per cent.
In the poorest group, the six million people on the lowest income, the figures show a similar pattern.
Here, a family with children has a net income of £15,900 and will lose £1,112, or 7 per cent.
Pensioners in the bottom group will lose £252 from their £8,636 income, a 2.9 per cent loss. And a childless adult in the bottom group will lose £492 from their £8,178 net income, a 6 per cent loss.
Government sources insisted the Coalition had taken action to protect low-income families from the impact of the Comprehensive Spending Review and Budget changes.
“The spending review maintains free early learning for three and four year-olds implemented by this Coalition, and creates a new entitlement to 15 hours a week of free early education and care for all disadvantaged two year-olds from 2012-13,” said a source. “We are increasing the child element of tax credits by an additional £30 next year and a further £50 the year after, in addition to the increases announced at Budget.”