Spending Review: Clegg attacks IFS over cuts analysis

Nick Clegg Nick Clegg said ministers "fundamentally disagreed" with the IFS

Deputy Prime Minister Nick Clegg has launched a direct attack on a leading think tank over its analysis of the government's spending review.

The Institute for Fiscal Studies has said poorer families with children will be the "biggest losers" of the cuts.

But Mr Clegg told the Guardian newspaper that the IFS's definition of fairness was "complete nonsense".

He said it took account only of tax and welfare and ignored factors like access to public services and social mobility.

Labour has called the planned £81bn cuts over four years a "reckless gamble" with the economy that leaves children "hardest hit".

It has been estimated that the cuts will lead to the loss of 490,000 public sector jobs.

On Thursday, at a public question-and-answer session, Mr Clegg called for a more "balanced" assessment of what the coalition was doing and accused some critics of its measures of "frightening people".

'One prism'

The IFS think tank argues that the Spending Review is "more regressive than progressive," but it held back from branding the cuts unfair, saying "fairness will always be in the eye of the beholder".

Excluding the wealthiest 2% of the population, who the IFS assesses will be the hardest hit, it says the poorest 10% of the population will, on average, lose about 5.5% of their net income compared with roughly 4.5% for the top 10%.

In a direct response to the think tank's criticisms, Mr Clegg told the Guardian that he and other ministers "fundamentally disagree with the IFS".

"It goes back to a culture of how you measure fairness that took root under Gordon Brown's time, where fairness was seen through one prism and one prism only, which was the tax and benefits system," he said.

"It is a complete nonsense to apply that measure, which is a slightly desiccated Treasury measure. People do not live only on the basis of the benefits they receive.

"They also depend on public services, such as childcare and social care. All of those things have been airbrushed out of the picture by the IFS."

He said "shrill allegations" that the state was going to be drastically shrunk were incorrect.

"We are going to spend 5% more of national income on the state at the end of this process than Tony Blair and Gordon [Brown] were in 1997. We are going to employ 200,000 more people in the public sector at the end of this process.

"I think it is a cavalier misrepresentation to claim somehow it is a scorched earth policy."

The Treasury had already rejected the IFS's claims, but BBC economics editor Stephanie Flanders said its analysis had excluded a third of the benefit changes being proposed and did not factor in the impact of all the changes right up to 2014-15.

'Disproved'

Another respected think tank, the OECD, has described the government's measures as "tough, necessary and courageous".

KEY MEASURES

  • £81bn cut from public spending over four years
  • 19% average departmental cuts - less than the 25% expected
  • £7bn extra welfare cuts, including changes to incapacity, housing benefit and tax credits
  • £1.8bn increase in public sector pension employee contributions by 2014
  • Rise in state pension age brought forward
  • 7% cut for local councils from April next year
  • Permanent bank levy
  • Rail fares to rise 3% above inflation from 2012

A ComRes poll for BBC Two's Daily Politics has suggested a majority of the public generally support the austerity measures while harbouring concerns about the extent of cuts being proposed.

Interviewed a day after the Spending Review, 52% of people said they supported the public sector cuts while 39% said they were opposed.

Asked whether the cuts went too far, 39% agreed but 42% said they were "about right".

Among the changes proposed by Mr Osborne are a time limit on some incapacity benefits and reforms to tax credits, housing benefit and child benefit.

Labour said Mr Clegg was "floundering around" in the face of evidence that the Spending Review would hit the poorest in society hardest.

"What the IFS has done is comprehensively disprove the government's claims that what they announced on Wednesday is, in any way, fair," Shadow Chief Secretary to the Treasury Angela Eagle said.

"Perhaps if the cabinet was not made up of nearly 70% millionaires who do not have to worry whether the money is going to run out at the end of the month, then they would not take such a cavalier attitude to the cuts they have just imposed on far more vulnerable people than themselves."

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