Squeeze continues for low and middle income families
The Resolution Foundation said wealthier households will benefit the most from the government’s £55bn giveaway Budget, with 84% of the income tax cuts going to the top half of the income distribution next year.
The richest tenth of households are set to gain around £410 a year from the income tax and benefits giveaways compared to the poorest tenth who will gain around £30 a year.
It also said half of the welfare cuts announced after the 2015 election that hit family budgets are yet to be rolled out – including a £1.5bn benefit freeze next April that will see a couple with children in the bottom half of the income distribution losing £200.
“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,” said Torsten Bell, director of the Resolution Foundation.
“The Chancellor made a very welcome £1.7bn commitment to Universal Credit, but has left intact three quarters of the benefit cuts announced following the 2015 general election. Meanwhile income tax cuts announced yesterday will overwhelmingly benefit richer households, with almost half of the long-term gains going to the top ten per cent of households.”
“This Budget was much easier for Philip Hammond than many expected. But there will be tougher choices for Chancellors in the years ahead. Brexit must be delivered smoothly, public spending will remain tight, and forecasts may not always be so rosy.”
He concluded: “Austerity has been eased, but there are still tough times ahead.”