New analysis confirms austerity has hit the poorest hardest

The coalition's selective cuts have had a disproportionate impact on low-income families - but austerity still hasn't helped the deficit

A major new report into the effects of austerity reveals that young children and poor households have been the worst hit by the coalition’s cuts.

Researchers from LSE and the Universities of Manchester and York predict that poverty will get worse over the next five years.

Early on in their government, the coalition repeatedly promised that the burden of austerity would be shouldered by the rich. But the study finds that it is poorer groups who have been the worst affected.

Its findings highlight that early coalition rhetoric highlighting the importance of the ‘foundation years’ turned out to be empty. Real spending per child on early education, childcare and Sure Start services fell by a quarter between 2009-10 and 2012-13.

Furthermore, low-income families with children under five were found to have been hit harder by tax reforms than any other group.

The research group based their conclusions on analysis of policy, spending, outcomes, and trends across nine different areas of social policy.

They found that government decisions on cuts to tax benefits and credits for low-income families had been offset by tax reductions for better-off households, meaning that the strategy had not impacted the deficit.

The report shows how the government’s choices to protect very large areas of public spending meant that its austerity programme was more limited in practice than in theory, and that ‘austerity measures were concentrated on particular policy areas’.

In other words, there have been disproportionate cuts to certain services, almost all of which impact people who are already vulnerable.

So while year-on-year public spending has fallen by less than three per cent, cuts of around a third have been made to ‘unprotected’ services, including those for pre-school children under five and vulnerable and older adults needing social care from local authorities.

There has been a ten per cent rise in the population aged 65 and over during the coalition period; but the number of adult social care users fell by seven per cent over each year. The report finds that care at home and other community-based services were hit especially hard.

Professor John Hills, Director of LSE’s Centre for Analysis of Social Exclusion (CASE) which published the reports, said:

“Protection of some of the core parts of the welfare state from the greatest cuts, and initial protection of the value of benefits, meant that those at the bottom and important services were initially shielded from the worst effects of the recession. 

“But in the second part of the coalition’s period, selective cuts to benefits and to unprotected services have begun to take their toll, leaving the next government, of whatever kind, with much greater social policy challenges than the coalition inherited.

The government took steps to stimulate home ownership through its Help to Buy scheme, but in real terms spending on housing was cut by 35 per cent, and spending on new homes by 44 per cent between 2009/10 and 2013/14. Meanwhile, housing benefit expenditure continued to rise.

The report says that growth in self-employment has driven recovery in the labour market, but dramatic falls in average real earnings for all types of workers has affected households’ living standards, consumption and government tax receipts.

The outcome, as is becoming clearer by the day, is that household budgets have been squeezed and the government’s deficit reduction plans have suffered.

 Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter

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