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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  • Drumlin Rock

    So do they also have the figures for how the ongoing massive cuts right across the private sector have affected different areas?

  • andnowwhat

    I look forward to the oncoming crime wave. Poverty drives the poor to the black market which enriches criminals.

    This’ll be fun.

    I really hope that the true heart of the Libs comes through and closes this charade down.

  • daisy

    Dispatches did a good ‘cut the deficit’ programme tonight and thankfully the audience rejected the privatisation of health (and rightfully booed the moron from the private company who suggested it) and backed cuts in ‘defence’ spending. There are other ways, many of which have been suggested here and elsewhere.

    We’re heading back to Maggie Thatcher Milk Snatcher territory I fear.

  • Alias

    Ireland needs to do the same, and then some. Its ‘dole’ payment is almost four times higher than the UK, with a plethora of other benefits on top including free high quality accomodation. Paying folks 215 euros a week to contribute zero to the state is a bad idea even when it isn’t borrowed money…

  • slug

    I am glad if they freeze council tax and put up VAT.

  • bigchiefally

    Poor people get a much higher percentage of their income from the state than richer ones, so is it a surprise when the state is broke and cutting back that they lose out more?

    Here is a suggestion, knock 25% off dole benefits, use 1/5 of the cash to pay off some of our debts and the other 4/5s of the money saved to increase the tax free allowance so that those on lower incomes who actually work dont pay a penny in income tax.

  • Johnny Boy

    Agreed BCA, it’s glaringly obviouse that those who depend most on the state will lose more when state spending is cut.

    I would like to see weekly income support and housing benefit capped at 15% less than a full time employee on minimum wage would take home. I would also like to see overall public spending cuts weighted against their % impact on overall local economies.

    How about scrapping VAT exempt status for any products, surely this would have the added benifit of reducing the red tape asociated with deciding whether a Jaffa Cake is a cake of a biscuit.

  • Neil

    BCA,

    I’d be surprised if that one will fly, the dole is designed to give people the absolute minimum required to stay alive. There’s even a government leaflet detailing what you should buy and eat to stay alive, I saw it years ago.

    Monday: 31/2 potatoes, 2/12 tablespoons beans etc.

    The cuts to benefits I’d imagine will be largel;y about screwing over the very people you’re talking about, no tax credits for working families, no child benefit to middle income families.

    They’ll then be shining a light onto other areas, the VAT increase of likely 2.5% will hit everyone instantly, equally. This will inevitably cost private sector jobs as 2.5% of people’s disposable economy will dissappear overnight. Then the public sector cuts which will have the same impact, more middle income folks lose their shit jobs.

    We shall have to wait and see but I would imagine, this being a Tory government, that the rich will be specifically looked after and the poor will take the pain, and by poor I mean the vastest majority of working people in NI, like myself, who earn less than 3 times the average NI salary.

  • Johnny Boy

    Will the same people who labeled the Labour VAT decrease a gimmick, now see any VAT increase as an unbearable hardship?

  • bigchiefally

    Neil – Do you really think that those on benefits are living on the bare minimum? If it were this harsh I bet many people would be a little keener on getting off it and into work. The Poles who have poured into the country the last 10 years havent had any problems getting or taking low paid work.
    I appreciated we have a massive deficit that needs reduced and eventually closed but I’ll be annoyed if my taxes go up without benefits going down. Incidentally I am all for changes to the tax system that benefit the low paid workers even if it does mean higher taxes elsewhere, the lib dems have the right idea there, reward those, like yourself, who work.

    I dont see how the vast majority of NI workers can be earning only a third as much as the NI average. The only way that could be happening is if there are a very small number of people earning vast vast amounts to push the average through the roof. We have a fair few well paid accountants, lawyers and civil servants but we dont have any investment bankers earning the mega money that would be needed to make this mathematically work.

  • Johnny Boy

    I reckon myself and my family of four could survive on £150 a week. there’d be no take-outs, booze, or treats but it could be done.

  • Neil

    Those who milk the system make more money, but in general I’d say your talking about people who work cash in hand, people on DLA etc. The dole works out at roughly seven pounds a day, which is what the government judges to be enough to survive on. I imagine seven quid in London doesn’t go as far as seven quid here, but it’s still not easy street. You are right of course that there are plenty of people who wouldn’t get out of bed to do a menial job and are prepared to subsist on what the government gives out.

    For clarification what I was saying was folks like me who earn less than 3 times the NI average, i.e. less than 3 times about 16k, or less than 48k p.a. These are the people the Tories will hit, IMO…