Britain's austerity drive will hit the poor harder than the better off, a respected independent think tank said on Thursday, opposing point blank the government's claims that its measures were "progressive". The verdict from the respected Institute for Fiscal Studies will add to union anger and turn up the heat on the Liberal Democrats, the junior coalition partner who argued for a slower pace of fiscal tightening before May's election.
Finance minister George Osborne announced the biggest cuts to welfare and government expenditure in a generation on Wednesday as he spelled out where 80 billion pounds of spending cuts announced in his June budget would be found. Osborne has denied criticism that the measures are regressive, saying the top 10 percent of earners would be the hardest hit.
But Britain's Institute for Fiscal Studies said that with the exception of the richest two percent of earners the overall thrust of the five-year austerity drive would hit the bottom half of earners hardest. "The tax and benefit changes are regressive rather than progressive across most of the income distribution," said Carl Emmerson, IFS acting director.
"And when we add in the new measures announced yesterday this finding is, unsurprisingly, reinforced." The government had kept the profile of its planned spending cuts close to that announced in its June budget, but made a few tweaks on Wednesday which meant that investment spending would be cut by less and welfare spending by more.
The IFS said the effect of these tweaks meant that, although planned cuts to government spending overall would be the deepest since World War Two, planned cuts to public services were now only the deepest since 1975 when the Britain had to comply with an IMF austerity plan. It said the biggest losers from the cuts to welfare spending would be families with children, with some groups such as pensioners relatively unscathed.