Coalition cuts will disproportionately affect the poor…

Interesting line from the FT, who argue that because of the structure of public spending under Labour, the cuts planned for tomorrow will disproportionately affect the poor over the rich:

With public money generally allocated according to need, spending cuts tend to take proportionately more money from poorer areas.

The biggest reductions come in areas with the lowest household incomes. When, for illustrative purposes, the FT envisaged a 10 per cent cut in social security payments, the result was a 3.6 per cent fall in household disposable income in Labour-dominated Merseyside, but only 2.1 per cent in Berkshire and Buckinghamshire.

In an alternative scenario, under which almost 20 per cent is cut from spending in sectors dominated by the public services – public administration, education and defence – almost the same pattern is evident. The size of the local economy in west Wales would fall by 3.3 per cent, while the same cut would only knock 1.5 per cent off the economy of prosperous Cheshire, where George Osborne’s Tatton constituency is located.

Whatever the figures used, however, the relationship between poorer and richer areas remains the same, with the former taking half as much pain again as the latter.


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