The benefit freeze announced on Monday (saving: £3bn) is paying for a tax cut for the top 15 per cent (cost: £4bn).
On Monday, the chancellor George Osborne announced that under another Conservative government there would be a two-year freeze on benefits paid to working age people. The freeze will come in in April 2016 and comes on the back of a 1 per cent cap that was announced in 2012.
The freeze (in reality a cut) will hit 10m households. Half of those hit by the policy are in work.
In other words, George Osborne will make many hardworking people worse off, with families with children set to lose up to £490 a year in child benefit and tax credits.
Contrast this with today, where prime minister David Cameron announced that the threshold at which people will start to pay the top rate of tax will rise from £41,900 to £50,000.
The 40p tax rate is currently only paid by the top 15 per cent of earners, yet the move is being billed by the Conservatives as a boost to those on ‘middle incomes’.
This means that (and it probably doesn’t take me to tell you this) the Tories plan to make 10 million households poorer, saving £3bn, to fund a tax cut for the top 15 per cent of the population (the idea of raising the top rate to £50,000 was first mooted by Tory right-wingers Priti Patel and Kwasi Kwarteng in 2012. The cost? £4 billion).
During his speech Cameron also pledged to raise the tax-free personal allowance from £10,500 to £12,500. However as Left Foot Forward has previously noted, the greatest percentage change in net income from increases in the the personal tax free allowance are seen by those at the upper end of the income scale.
Analysis carried out for Left Foot Forward in 2010 found that some three million households in the poorest quarter of the household income distribution would not benefit from raising the personal allowance to £10,000. Raising the income tax threshold can, after all, only benefit those who earn enough money to pay tax.
The latest tax and benefit proposals from the Conservatives are a naked redistribution of wealth from the bottom to the top. Otherwise known as class war.
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