Tax and benefit changes mean families will be £974 a year worse off by next election, IFS figures show

Tax and benefit changes mean families will be £974 a year worse off by next election, IFS figures show

Households will be £974 a year worse off by the time of the next general election because of tax and benefit changes since 2010, according to Labour analysis of figures from the Institute for Fiscal Studies (IFS).

The figures take into account all tax and benefit changes affecting households between 2010 and April 2015, including increases to the income tax personal allowance, as well as the rise in VAT and cuts to tax credits and child benefit.

Families with children have been particularly hard hit. A family with children where both parents are working will be on average £2,073 a year worse off, and where only one parent is working they will be on average £3,720 a year worse off.

Labour calculations, based on the IFS figures and analysis by the House of Commons Library, show that households will be around £950 a year worse off at the start of the new tax year this weekend, taking into account all changes since 2010.

These figures are in addition to the impact of wages falling in real terms, which have left working people on average £1600 a year worse off since 2010.

Ed Balls MP, Labour’s shadow chancellor, said:

“David Cameron is trying to tell working people they are better off, but he’s not fooling anybody.

“Taking into account all the changes to tax and benefits since 2010, families will be almost £1000 a year worse off on average by the time of the next election. In other words, the Tories are giving with one hand but taking away much more with the other.

“So whatever out of touch claims David Cameron and George Osborne try to make, these independent figures are clear: hard working people are worse off under the Tories.

“These figures also show that families with children, and one-earner families in particular, have been hit hardest of all by David Cameron and George Osborne’s choices. And they come on top of the £1600 a year real terms fall in wages which working people have seen since 2010.

“Yet while millions have seen their taxes go up, millionaires have been given a huge tax cut by this government. The top one per cent of earners have been given a £3 billion tax cut – worth an average of £100,000 for those earning over £1 million.

“Labour has a clear plan to earn our way to higher living standards and deal with the cost-of-living crisis. We will freeze energy bills, get young people into work with a compulsory jobs guarantee, expand free childcare, get more homes built and cut business rates for small firms.

“We also want to cut taxes for 24 million people on middle and lower incomes by introducing a lower 10p starting rate of tax. And to help us balance the books in the next Parliament in a fairer way we will reverse David Cameron’s £3 billion tax cut for the top one per cent of earners.”


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Posted April 4th, 2014 by Ed's team