Poverty to deepen due to coalition tax and benefit decisions, says report

Poorer groups have been worst affected by changes to direct taxes, benefits and tax credits despite the Coalition’s promise that the rich would carry the burden of austerity, according to a new report.

The study by academics from LSE and the Universities of Manchester and York finds that as a result poverty has been increasing and will get worse in the next five years.

The report also reveals that families with young children have been hit harder than any other household type under the Coalition’s cuts despite early rhetoric highlighting the importance of the “foundation years”. Real spending per child on early education, childcare and Sure Start services fell by a quarter between 2009-10 and 2012-13 and tax-benefit reforms hit families with children under five harder than any other household type, says the report.

It adds that the tax and benefit decisions mean that cuts to benefits and tax credits that hit low income families hardest were offset by tax reductions for better-off households and made no impact on the budget deficit. Moreover, it says year-on-year public spending has dropped less than 3 per cent, but cuts of around a third have been made to ‘unprotected’ services, including those for pre-school children under five, vulnerable and older adults needing local authority social care.  In practice, this means people with health and care needs and children moving from pre-school to university frequently cross the boundary between protected [NHS, schools] and unprotected services, states the report, with even ‘protected’ areas such as the NHS facing rising demands on fixed or falling budgets.

The analysis of policy, spending, outcomes and trends across nine different areas of social policy also covers housing, adult social care, adult learners and neighbourhood renewal activity.

Programme leader, Professor Ruth Lupton of the University of Manchester said: “There is more to the Coalition than cuts. Its major legacy may turn out to be its rapid reforms of the schools system, the NHS, and welfare benefits. But its decisions on where to cut and where to spend have limited its scope either to reduce the debt or protect the poor”.

Director of LSE’s Centre for Analysis of Social Exclusion (CASE), Professor John Hills, added: “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.”

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