The average annual amount lost by low paid working households is equivalent to a year’s worth of school dinners
The poorest households will lose on average £460 a year by 2020 as a result of government changes to tax and benefits, according to new analysis by the TUC.
Meanwhile the richest households will be £670 a year better off.
The research, conducted using the IPPR tax-benefit model, looked at the combined impact on annual incomes in 2020 of changes to Universal Credit, benefits, the minimum wage and tax allowances. It also factored in the chancellor George Osborne’s planned increase in the minimum wage.
Average annual income change in 2020 for working households as a result of policy decisions made in Budget 2015 (2015/16 prices)
While some working households in the middle of the income spectrum stood to make modest gains, it was less than the average gains for the wealthiest working households.
By 2020, the average annual amount lost by low paid working households (£460) was be equivalent to a year’s worth of school dinners, while the average weekly gain for the wealthiest working households (£12.88) left enough to buy a bottle of champagne each week.
The difference between the top and the middle showed up even more starkly in the decile analysis for all households, which found that the average annual gain for the top decile in 2020 (£780) was twenty times the average gain for the fifth decile (£40).
A similar pattern was found when researchers looked at non-working households, with large gains at the top, minor gains in the middle and losses for the bottom.
The analysis looked at the average impacts of changes announced in the Budget across all households in the UK. It also looked at the impacts by whether or not households were in work.
The analysis also assumed that all qualifying households would have been transferred from tax credits to Universal Credit by 2020 – something which is by no means guaranteed. If the transition to Universal Credit is delayed, the poorest households are likely to face even larger losses due to government cuts to tax credits.
James Bloodworth is the editor of Left Foot Forward. Follow him on TwitterLike this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.