Alison Garnham of the Child Poverty Action Group, challenges the coalition to defend how the distributional analysis of their tax and benefit changes is fair.
Alison Garnham is the chief executive of the Child Poverty Action Group
The information presented in the charts below comes directly from government.
Chart 1: The fair deficit reduction we were promised:
Chart 2: What we got:
Chart 1 presents what the cuts impact might look like if it is shown to be progressive across the income distribution – a common sense view of what ‘fairness’ means; Chart 2 presents what the government is actually doing.
Chart 2 is reproduced from the government’s own distributional impact analysis and you can find it on page 3 of the “Impact on households: Distributional analysis to accompany the Autumn Statement 2011” document (pdf) they published in November 2011.
It proves that two of the government’s key claims about deficit reduction cannot be sustained:
1. “The deficit reduction will be fair; and those with the broadest shoulders will carry the greatest burden.”
2. “We have no choice but to make cuts to welfare benefits and tax credits because of the state of the nation’s finances.”
For the first claim, it is certainly true the richest 10% of the population are shouldering the greatest burden as a proportion of income. But after that it all goes horribly wrong. The rest of the chart is pretty much completely regressive. People from the poorest third of the population are shouldering a greater burden than four out of every five people in the richest half of the population.
This is not the common understanding of fairness.
The second claim is regularly used when ministers are reminded of warnings from the Institute for Fiscal Studies (IFS) that their approach to deficit reduction threatens to increase child poverty by 400,000 children over the current parliament.
• How the government lost the fairness argument 8 Jan 2011
• CSR 2011: IFS: Tax and benefit changes are regressive 21 Oct 2011
• CSR 2010: Osborne’s fairness claims fall flat. Again 20 Oct 2010
• IFS: Osborne’s Budget is “clearly regressive” 25 Aug 2010
• Emergency budget 2010: IFS: Budget was “regressive” 23 Jun 2010
But there is a choice. There is tremendous room for manoeuvre by increasing the proportion of income contributed from deciles six, seven, eight and nine. Given that their incomes are much larger than the lower deciles, a relatively small rise in their contribution could allow for a large fall in the contribution from the lower deciles.
Please share this graphic with anyone who is defending low income families against the cuts as evidence that there are other options for the government in next week’s budget.