The Equatorial Guninea Ammbassador H.E A NZE NFUMU celebrated hsi countyr independece in style wih his community at his residence in Boreham wood,ELSTREE-England
Press release by the Labour Party
Thursday 21 October 2010
For immediate use
IFS confirms children hit hardest by Spending Review
George Osborne’s Spending Review continued to unravel today as the Institute for Fiscal Studies took apart his claims to be fair and progressive.
Alan Johnson MP, Labour's Shadow Chancellor, said:
"It's now clear children have been hit hardest by this Government. And it's a double whammy. At home, they lose the most from George Osborne's tax and spend changes. And at school, children will see the money available for their education cut."
Andy Burnham MP, Labour’s Shadow Education Secretary, said:
“This regressive spending review is a blow to families in the squeezed middle. Far from investing in our children's future as the Chancellor claimed, the spending review cruelly takes away hope and life chances from young people from less well off backgrounds.
"At home, families will shoulder a huge burden, with cuts in child tax credit, child benefit and the child trust fund.
"While at school, children and young people will suffer the coalition’s cuts to further education, the Educational Maintenance allowance that helps poorer pupils stay in school after 16, and to school capital.
"Children who have lost out can see that claims of 'we're all in this together' bear as much resemblance to reality as the High School Musical show it comes from."
Angela Eagle MP, Labour's Shadow Chief Secretary to the Treasury, said:
"George Osborne's smoke and mirrors have well and truly unravelled. On any measure his plans hit the poorest hardest. And the IFS have all but called him a liar for his ridiculous claim that he is cutting less than Labour planned."
Children losing out from cuts to schools
The IFS finds that total schools spending will be cut in real terms by 0.6% per pupil. 60% of primary school pupils and 87% of secondary school pupils will be in schools where real funding falls.
– total schools spending per pupil to be cut in real-terms by 0.6% per year (total of 2¼%)
– Assuming flat-rate pupil premium of £2,400 (stated total cost £2.5 billion) and underlying funding per pupil frozen in cash-terms
– 60% of primary school pupils in schools where real funding falls
– 87% of secondary school pupils in schools where real funding falls
– 43% of pupils in (less deprived) schools would see cuts of 5% or more
– 1 in 8 pupils in (very deprived) schools would see increase of 5% or more
IFS, "Where did the axe fall?", 21 October 2010, slide 28
Taxes and benefits: families with children are the biggest losers
Before the election, David Cameron said that he wanted his Government “to be the most family friendly Government we’ve ever had in this country”
“And let me just say something about the organisation that I think is the most important of all in fighting for a, and delivering, a responsible society and that is the family. I want the next Government to be the most family friendly Government we’ve ever had in this country and that is about everything we do to support families and it’s about supporting every sort of family. It’s about saying to parents you should have the right to request flexible working because parents suffer from not having enough time with their kids as well as not having enough money to spend with them. It’s about saying when a new child comes along you should be able to share the maternity leave and the paternity leave in whatever way you think is right for your kids."
David Cameron speech, Mending our Broken Society, 22 January 2010
But the IFS finds that the families with children are the biggest losers – even before factoring in cuts in public services.
• HMT say that package of tax and benefit reforms to be introduced by 2012-13 is progressive (apart from bottom income decile)
• We disagree. Having considered all welfare cuts:
• Reforms by 2012–13 are slightly regressive or flat within bottom nine-tenths of households
• Reforms by 2014–15 are more clearly regressive within bottom 90%
• The regressive impact is the result of reforms announced by the current Government both in the June Budget and in SR
• Families with children the biggest losers
• HMT said that reforms will not increase relative child poverty over next two years. Maybe, but what about future years?
• Of course, this all omits cuts in public services…
IFS, “Distributional analysis of tax and benefit changes”, 21 October 2010, slide 11
Regressiveness – poorest hit hardest
The IFS’s analysis of the distributional impact of welfare measures announced in the Spending Review, to be in place by 2012-13, finds that the poorest 10% will be hit hardest as a percentage of their net income.
IFS, “Distributional analysis of tax and benefit changes”, 21 October 2010, slide 4.
While the impact of welfare measures will be less regressive by 2014-15, people in the poorer half of society will still lose out more.
IFS, “Distributional analysis of tax and benefit changes”, 21 October 2010, slide 5.
Osborne’s smoke and mirrors
The IFS finds that the Treasury claim that the Spending Review is progressive relies on omitting the impact of reforms to Housing Benefit, ESA, DLA, tax credits and Council Tax Benefit, which “are all likely to affect poorest half more than richest half”.
• HMT omit impact of following reforms
– Housing Benefit
– Employment and Support Allowance
– Disability Living Allowance
– the way in which in-year income changes affect tax credit awards
– Council Tax Benefit
• These are all likely to affect poorest half more than richest half
• We think we can roughly estimate the likely distributional impact
• Means our estimates will be more complete, but less precise
• Throughout we assume that there is no behavioural response, and that reforms do not change pre-tax prices in the economy
– More plausible in some cases than others (e.g. VAT, Housing Benefit)
IFS, “Distributional analysis of tax and benefit changes”, 21 October 2010, slide 3
Cuts to departmental spending are “larger than implied by March Budget despite Chancellor’s rhetoric”.
• Deep cuts to departmental spending by 2014-15
– average cut of 13% compared to Labour’s 2010-11 baseline
– larger than implied by March Budget despite Chancellor’s rhetoric
IFS, "Where did the axe fall?", 21 October 2010, slide 33
Nick Clegg’s IFS u-turn
Today Nick Clegg attacked the Institute for Fiscal Studies, saying that “they are frightening people and sort of claiming that we are doing unfair things when we are not”.
"And I think what I would say to people who are trying to take only one bit of the equation, and saying 'ah that shows it is all very unfair', they are not being very straight with people and frankly they are frightening people and I think that is not right they are frightening people and sort of claiming that we are doing unfair things when we are not and they are not talking to people about how all of us, about how all families actually live their lives, which isn’t just as recipients of benefits but also of people who care about their children, care about childcare costs, care about what happens in the tax system, put all that together, put all our decisions together, and yes, to be fair some decisions taken by the previous government in their latter months and very, very clearly I’ll be really clear about this the richest pay the most and this is the fairest possible way of doing this very difficult thing that we are doing."
Nick Clegg, PM and DPM Direct, 21 October 2010
But before the election, Clegg was only too happy to quote the IFS when it suited his purposes.
"I was really delighted at the Institute of Fiscal Studies when they compared the three parties' manifestos this week said very, very clearly, and very directly, that our proposal to lift the income tax threshold to £10,000 is the best incentive to work."
Nick Clegg, Leaders Debate, 29 April 2010
"The Institute for Fiscal Studies this morning assessed the parties’ policies on the deficit and taxation. And concluded that the Liberal Democrats’ plan is the most credible – even if there’s still much more work to do, we have gone further in spelling out how to cut the deficit."
Nick Clegg, Speech to the Royal College of Nursing, 27 April 2010
Ends
