Budget hits the poorest hardest, says IFS

Mr_Mumble

Chris Giles, economics editor for the FT, talked about this back in June at the time of the emergency budget: Progressive Budget? You are joking (paywalled*). His conclusion:

This was not a progressive Budget, but a deeply regressive one.

That is not a bad thing. It is ridiculous to confuse the word “progressive” with “nice” or “good”. And it is almost impossible to cut public spending without these being regressive. Public money tends to follow need. Go figure.

and his very rough and ready figures back then (no doubt the IFS figures are more accurate now):



The ConDems have got themselves into an unneeded mess over this. Its virtually impossible to have a 'progressive' budget when making cuts - that they've been able to make the bottom decile less worse off than the middle class is about as 'good' as they could do.

*currently freely viewable via http://blogs.ft.com/money-supply/author/chrisgiles/ near the bottom of the second page (June 23rd 2010)

nickmason

Sir_Humphrey wrote: »

I don't remember the Tory boys here criticising the IFS before the election.

It is the IFS for goodness sake.

With apologies to MarkLV for continuing the political consideration; there's an interesting set of observations about the IFS on
http://www.crashbangwallace.com/2010/08/25/time-for-the-ifs-to-come-clean-they-swing-to-the-left/

In short noting that all think tanks have a political hue (although he doesn't suggest that the IFS are non-partisan).

(Yes, Mark Wallace is definitely of a centre-right persuasion - and I'm not saying he's right, just he puts his argument fairly, and more eloquently than me).

...
As Matt Sinclair at the TPA notes, the IFS’ latest criticism of the Government is founded fundamentally on the assumption that the best way of helping the poor is by handing them cash – that is a big, and controversial, political statement. They’re not just measuring who gets more and who gets less, they are expressing a subjective value judgement about the Budget’s politics.
There’s nothing wrong with being a think tank that comes from a slightly pinko political perspective – plenty do and are successful with it (although the conclusions of such bodies are of course often incorrect).
It is wrong, though, to purport to have no ideology whatsoever when you actually do lean one way more than the other. Maybe, like the BBC, they truly believe themselves to be blank slates in perfect political balance, but I don’t believe that is humanly possible. I believe they truly are non-partisan, but free of all politics? Not a chance.
It is telling that while those on the economic Left yell that the TPA is ideologically of the libertarian right – something it has never disguised – they are at pains to tout the IFS’ reputation as some kind of flawless, superhuman machine pumping our pure facts. It is nothing of the sort – and that is something the IFS should make clear.

daveyjp

Imagine VAT is increased to 50%

but to counter this

£1 a week is given to everyone over 18 to buy a lottery ticket.

Does that mean everyone is actually better off as the Govt have put measures in place for everyone to potentially become a multi millionaire?

That's the argument being put forward by Libcons

flashnazia

In its misguided approach to tackling so-called (relative) child poverty, Labour threw money at families in the form of benefits and tax credits. This only made working more unaffordable for low income groups and stifled productivity.

Its no surprise that the Tories have to make cuts to reverse the trend.

StevieJ

Nick, are the IFS not merely stating a truism i.e. if you reduce the benefits paid to the unemployed all things being equal, they will be worse off.

As Matt Sinclair at the TPA notes, the IFS’ latest criticism of the Government is founded fundamentally on the assumption that the best way of helping the poor is by handing them cash

StevieJ

Really2 wrote: »

So relative poverty increased under labour, actual poverty stayed about the same, would that be correct?

No, actual poverty declined, relative poverty increased. I find it difficult to understand how people can say that Labour have been paying too much out in benefits and then say that we have more poverty.

bendix

marklv wrote: »

What a pathetic thread. Someone posts an article and then you get all the political !!!!!ing to follow. Are people here not capable of commenting without referring to a political agenda?

Pitiful.

The someone who posted the original article obviously did so with a political agenda, you numpty.

Hence the references to both the Tories and the LibDems in a one sentence post.

Good grief.

Graham_Devon

StevieJ wrote: »

Nick, are the IFS not merely stating a truism i.e. if you reduce the benefits paid to the unemployed all things being equal, they will be worse off.

This isn't always the case though is it. Depends on what else has gone on in the budget, which is the part the IFS ignores.

So what is your opinion on this? You appear to be having a pop at the tories for this. Therefore can I assume you would have preffered benefits left unchanged, and linked to the RPI instead of what everyone is linked to?

Perhaps preferred more money for claimants?

bendix

nickmason wrote: »

With apologies to MarkLV for continuing the political consideration; there's an interesting set of observations about the IFS on
http://www.crashbangwallace.com/2010/08/25/time-for-the-ifs-to-come-clean-they-swing-to-the-left/

In short noting that all think tanks have a political hue (although he doesn't suggest that the IFS are non-partisan).

(Yes, Mark Wallace is definitely of a centre-right persuasion - and I'm not saying he's right, just he puts his argument fairly, and more eloquently than me).

Take a look at the IFS's list of funders is a broad mix, to be honest. Lot of Govt departments, but also many do-gooder organisations counterbalanced by groups like the FTSE 100 Finance Directors Group.

Notwithstanding that, i stand by my point that any report commissioned by Child Poverty Action is hardly going to come up with any other finding than the one published this morning, are they?

Really2

StevieJ wrote: »

No, actual poverty declined, relative poverty increased. I find it difficult to understand how people can say that Labour have been paying too much out in benefits and then say that we have more poverty.

I am not saying they are paying more out. I am saying they had more people dependant on benefits.
People on benefits tend to be closer to poverty, and in situations like this if their benefits get cut in some way it makes them closer.

Better benefits should never been used as a way to get people out of poverty IMHO. It is to short term, getting more out of benefits is the long term solution.