Budget delivered major boost for richest families, damning analysis reveals

Posted On: 
30th October 2018

Philip Hammond delivered a tax windfall to the richest households in Britain in his set-piece Budget yesterday, while the poorest continue to face benefit cuts, a damning report has revealed.

The Resolution Foundation said: “Austerity has been eased, but there are still tough times ahead.”
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The income tax cuts announced by the Chancellor will benefit the richest tenth of households by 14 times as much as the poorest, the left-leaning Resolution Foundation said in a new analysis.

Meanwhile, those on the lowest incomes still face deep cuts to benefits and are still on course to be £400 worse off on average under Tory policies announced since 2015.

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But Mr Hammond insisted it was poorer people who would "benefit proportionately the most" from the package of measures he announced yesterday.

Laying out his plans in the Commons, the Chancellor said the amount Brits can earn before they start paying income tax will rise to £12,500 from April next year - 12 months earlier than planned - and to £50,000 for high earners.

He also unveiled a £2.7bn boost to the under-fire Universal Credit programme, after angry Tory MPs demanded more help for those switching onto the flagship welfare system.

Mr Hammond made the changes as he declared austerity was “finally coming to an end” - pumping much of a £78bn fiscal windfall into giveaways on the NHS, the military and roads, among other things.

But the Resolution Foundation said despite the cash injection into Universal Credit, it was the richest households in Britain who were the big winners of the autumn Budget.

In its overnight report, it said almost 90% of the income tax cuts announced would go to the top half of the income distribution by the end of the current parliament - and almost half to the top 10% of households.

Meanwhile, it said half of the announced Tory welfare cuts are yet to be rolled out - including a £1.5bn freeze next April that is set to see low-income couples with children lose £200.

And it said the overall package of tax and benefit changes announced since 2015 would see the richest fifth of households gain £390 and the poorest fifth lose £400.

Resolution Foundation director Torsten Bell said: “While yesterday’s Budget represented a seismic shift in the government’s approach to the public finances, it spelt an easing rather than an end to austerity – particularly for low and middle income families.”

He added: On public services the NHS saw a big spending boost ­– but unprotected departments still have further cuts penciled in.”

And he said: “Austerity has been eased, but there are still tough times ahead.”

But Mr Hammond told the BBC: “When you look at the distributional analysis of how this Budget overall effects people at all income levels you will see that it is people at the lower end of the income scale that benefit proportionately the most from the package of measures that were delivered yesterday.”