Budget 2012: The IFS’s devastating picture that shows we’re not all in it together

Will Straw reports on the IFS’s budget analysis, which shows the richest 10% have done better under this government than the poorest 40 per cent.

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The IFS carried out their customary budget analysis (pdf) today. In among the slides was the chart below, which shows the regressive nature of not only this budget but the totality of tax and benefit changes implemented by the Coalition.

See Chart:

The blue line shows how, with the exception of the richest 10 per cent, the tax changes announced yesterday will benefit those further up the income distribution. Forthcoming analysis by IPPR’s Kayte Lawton breaks down the impact of the tax threshold change in greater detail.

The purple line shows the impact of all changes implemented by the coalition. This includes freezes to tax credits, cuts to support for childcare for low earners, and the switch to CPI for uprating benefits. It clearly shows that even the richest 10 per cent have done better under this government than the poorest 40 per cent of households.

The group that have done least badly are those earning more than 80 per cent of the rest of the population. These are families with a combined annual disposable income of around £35,000 (ie after all tax and benefits have been taken into consideration).

The red line shows how this picture will be largely changed by the universal credit which will target benefits at people working fewer than 16 hours per week. This reform, which is largely sensible, is to be welcomed but will not be fully implemented until 2014 – four years after the coalition came to power.


See also:

Budget 2012: Good or bad? For the few or the many? Vote in our survey 22 Mar 2012

Budget 2012: “Clegg’s face said it all: Distant, pale and sullen” – Sco/Wal/NI reaction 22 Mar 2012

Budget 2012: Osborne hasn’t done enough to help unemployed in the north 22 Mar 2012

Budget 2012: Impact per decile – the poorer you are, the harder you’re hit 21 Mar 2011

Budget 2012: It may do nothing for growth, but the fat cats will purr more loudly 21 Mar 2012


All in it together? Not according to the IFS.


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