Spending Review: Cuts 'to affect the poorest most'

  • 21 October 2010
  • From the section Business
A run down area in Hull
Image caption The IFS described the Spending Review's impact as regressive across most of the income distribution

The impact of the government's Spending Review will hit the poorest families harder than the better off, the Institute for Fiscal Studies has said.

It said the tax and benefit changes were "regressive", and would have a greater impact, relative to income, on people at the lower end of the scale.

The think tank added that families with children would be the "biggest losers".

Chancellor George Osborne has denied that the poor will be most affected, saying he had made "fair choices".

The IFS said that while the richest 10% of society - and primarily the top 2% - would pay the most under the government's changes, the poorest families would be the worst off of the remaining population.

IFS acting director Carl Emmerson said: "The tax and benefit changes are regressive rather than progressive across most of the income distribution.

"Our analysis continues to show that, with the notable exception of the richest 2%, the tax and benefit components of the fiscal consolidation are, overall, being implemented in a regressive way."

Mr Emmerson added that the government should review the cuts after two years.

Mr Osborne told the BBC that the Spending Review "involved some hard choices, but I think they are fair choices".

He added: "The richest 10% are hit hardest... the richest pay the most but everyone makes a contribution."

Downing Street has also defended the government against the IFS's claim, with a spokesman for the prime minister saying: "We believe we are addressing the deficit at the right pace."

He added: "Some say we should go more slowly, others say we should do more."

The Labour opposition has criticised the government's cuts, with shadow chancellor Alan Johnson calling them "unfair as well as unwise".

He told the BBC: "This slash-and-burn approach is something we wouldn't do."

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