Fact Service (May 2017)

Issue 18

Tory benefit cuts will hit poorest families


Cuts to benefits have been small as yet, but government plans for future cuts would significantly reduce the incomes of low-income working-age households, particularly those with children, according to the independent Institute for Fiscal Studies (IFS).


The impact of tax and benefit changes since May 2015 on the incomes of different kinds of households — including those already implemented as well as those planned by the current government — are analysed in an IFS election briefing.


Although the average impact of tax and benefit changes since 2015 has been relatively small so far, planned benefit cuts will reduce government spending by about £15 billion a year in the long run, with the poorest working-age households facing losses of between 4% and 10% of income a year, the IFS says.


The impact of the planned cuts on the poorest working-age families over the next five years will be much greater than those imposed during the 2010-15 Conservative-led coalition government.


If the Tories' planned cuts were fully in place now, nearly three million working households with children on tax credits would be an average of £2,500 a year worse off, with larger families losing more. And the one million households with children and no one in paid work would be an average of £3,000 a year worse off.


The scheduled cuts for lower-income families come alongside tax breaks worth £5 billion a year that predominantly benefit middle- and higher-income households.


https://www.ifs.org.uk/uploads/publications/bns/BN196.pdf


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