IFS: families hit hardest by Osborne

THE tax and benefit changes in George Osborne’s spending review will hurt families with children the most, the Institute for Fiscal Studies (IFS) said yesterday.

In a presentation on the distributional effects of tax and benefit changes, IFS analyst James Browne said: “Overall, families with children seem to be the biggest losers.”

The independent think-tank also disputed two of the government’s central claims: that the spending review was “progressive” – i.e. that it hit the rich harder than the poor – and that the departmental spending cuts were softer than Labour’s would have been.

Carl Emmerson, the IFS acting director, said: “The tax and benefit changes are regressive rather than progressive across most of the income distribution. With the notable exception of the richest two per cent, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way.”

He added that while the coalition would make cuts of around 19 per cent in real-terms in unprotected departments, Labour’s March 2010 Budget implied lower cuts of 16 per cent. The Labour party seized on the IFS findings, and said the chancellor’s claim to “fairness” was unravelling.

“At home, families will shoulder a huge burden, with cuts in child tax credit, child benefit and the child trust fund,” said Andy Burnham, shadow education secretary.

But social security secretary Iain Duncan Smith denied claims that 200,000 people would lose their Employment Support Allowance as part of the cuts.