British austerity drive 'hits poorest the most': study

25th August 2010, Comments 0 comments

Austerity measures introduced in Britain to help cut the deficit will hit poor people the hardest, a study said Wednesday, contradicting ministers' promises to spread the pain.

Prime Minister David Cameron's coalition government, which took office after May's election, has introduced swingeing cuts in public spending to help pay off a record deficit as the country emerges from recession.

Ministers insist the cuts, tax and benefit changes unveiled in an emergency budget in June will not unfairly hit the poor, and Cameron has promised: "We will make sure that the most vulnerable in society are protected from cuts."

But researchers at the Institute for Fiscal Studies (IFS), a respected think tank, warned this was not the case.

"Once all of the benefit cuts are considered, the tax and benefit changes announced in the emergency budget are clearly regressive as, on average, they hit the poorest households more than those in the upper-middle of the income distribution," they said in a new report.

It notes that childless working adults have the most to gain from the changes because they are not affected by welfare cuts and yet benefit from an increase in the threshold at which people have to pay income tax.

The spending cuts have caused deep unease among some in the Liberal Democrat party, which has seen its poll ratings plummet since joining Cameron's Conservatives as a junior coalition partner in May.

Yvette Cooper, welfare spokeswoman for the opposition Labour party which was ousted in the election, said: "These figures show the government is pursuing a shocking and unfair attack on children and families."

But the Treasury rejected the IFS analysis, saying it was "selective" and ignored the budget measures that would boost growth and jobs, such as reduced business taxes and plans to help households move off welfare into work.

A spokesman added that failing to take swift action to cut Britain's budget deficit "would have been regressive -- burdening current and future taxpayers with the ever rising cost of economic failure".

The coalition claims radical action was needed to restore confidence in the British economy and boost growth, although opponents say the tough measures risk plunging the country back into recession.

© 2010 AFP

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