Are we really all in it together?

Howard Reed reports on how the coalition's cuts show that the poorest will be hit hardest - particularly single parents families and single pensioners.

In attempting to justify the deep and savage cuts program which the Conservative-led government embarked upon this year, David Cameron and George Osborne have often invoked the rhetoric that “we are all in this together”.

This is an inspirational turn of phrase – but unfortunately for them, completely untrue. Research from a variety of sources show that some of us are much more “in it” than others: pretty much whichever aspects of the cuts one looks at, those must vulnerable are being hit hardest.

To give some examples:

Across the income distribution: research by Tim Horton and myself which allocates the different elements of public spending to households in the UK using survey data has shown that the cuts announced in the 2010 Spending Review are likely to hit the poorest ten per cent of the population around five times harder than the richest ten per cent (measuring the cuts as a proportion of each household’s income plus the value of services they receive).

The graph below, taken from a presentation I gave to the TUC just after the Spending Review, shows this clearly:

By gender:: Analysis of the same data by family type suggests that single parent families and single pensioners are worst affected by the cuts in percentage terms. There are many more women than men in these family types. Thus, the cuts are likely to increase gender inequalities, as explained in more detail in this report by the Women’s Budget Group.

Across local areas: There is a clear – and depressing – correlation between the extent of spending cuts announced by communities and local government secretary Eric Pickles in December and the level of deprivation in each area as measured by statistical indices. Basically, the more deprived an area is, the more its support grant from central government is being cut over the next four years.

This was pointed out separately by Will Straw on this blog and by the New Local Government Network when the cuts were originally announced.

Across regions of the UK: A drastic shrinking of the public sector will have the greatest impact on those areas least able to cope with it. The graph below shows, on the horizontal axis, the employment rate in each region of the UK for working age people, and on the vertical axis the public sector’s share in Gross Value Added (the total value of goods and services produced in each region).

With the exception of London, there is a very clear correlation between regions where the public sector is a large proportion of the economy and regions with lower employment rates (and correspondingly more unemployment and/or working age inactivity). This is particularly worrying given that the Office for Budget Responsibility’s own forecasts suggest that unemployment will not return to pre-financial crisis levels until the second half of this decade.

In summary, across a whole range of measures, the coalition’s spending cuts fail the fairness test and give the lie to Cameron and Osborne’s claim that “those with the broadest shoulders are bearing the heaviest burden”.

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