'That means we all have to pull together.' - well not exactly.....

The Treasury reckons in April 2012 we'll be on AVERAGE about £400 a year worse off as a result of all measures announced in the budget.
That ranges from £200 worse off for the poorest tenth, and £1,600 for the richest tenth.

Another way to look at this: how much people lose as a percentage of their incomes – from the poorest 10 per cent of the population to the richest 10 per cent.

The top 20 per cent of the country, those earning above £38,400 do lose the most as a share of their income – so that's progressive.
BUT it's the bottom 10 per cent – the poorest people in the UK, earning below £14,200, who are the next biggest losers, on the Treasury's own figures

VAT a 'regressive' tax

The richest 10% pay one in every 25 pounds of their income in VAT; the poorest 10% pay one in every seven pounds as VAT (Source: Office of National Statistics)

If however we take instead disposable income (after direct taxes have been levied), the poorest 10% are in fact paying a higher proportion (one pound in six) in VAT - an even more striking impact -while the richest 10% are paying one in nineteen pounds.
That again shows how the impact of VAT is very regressive.

Some items are NOT 'luxuries' a family caring for an elderly incontinent member or young children have as great, if not more need, for a washing machine for example

Benefit changes

What sounds a relatively technical change in how benefits were uprated - using Consumer Price Inflation rather than Retail Price Index - would be a major "stealth cut", saving £6 billion on benefits but significantly increasing income inequality, as those on benefits fall further behind average earnings.
It has the potential to be the most significant welfare change in the budget in the long-term.

"The impact from one year to the next won't be huge, but played out over many years this will have a dramatic effect in increasing inequality in society – just as it did in the 1980s, when Margaret Thatcher broke the earnings link for many benefits.

"Many low-income households are reliant on benefits and tax credits for a significant proportion of their income. Reducing the rate at which these benefits increase means the income of the poorest households will fall further and further behind everyone else."

Tim Horton Fabian Society Research Director

Income Tax

The increase in the income tax threshold will do nothing for the millions who don't earn enough to pay income tax.
Three million households in the poorest quarter of the population will see no gain at all from this tax cut – including pensioners, the sick, the unemployed and parents in low-paid part-time work.

Yet ALL these groups will be hammered by the VAT increase!


Additionally, the budget included the announcement that the Savings Gateway, due to be introduced next month, has been cut.
This actually 'progressive' scheme aimed to support people of working age on lower incomes**. The Government would have added 50 pence for each £1 saved into Saving Gateway accounts.

For a Government that claims to be keen to promote hard work and to reward savers this is a slap in the face

**income support;
jobseeker's allowance;
incapacity benefit and employment and support allowance;
severe disablement allowance;
working tax credit (with income below a specified level);
and child tax credit (with income below a specified level).
Recipients of carer's allowance will also be eligble.