Tax And Benefit Changes Mean Households Are £974 A Year Worse Off Under The Coalition, Say Labour

Tax and benefit changes introduced since the coalition government took office in 2010 mean households will be worse off by an average of £974 a year by 2015, say Labour.

Figures released by the Institute for Fiscal Studies (IFS), and analysed by the Labour Party, take into account tax and benefit changes affecting households since 2010; including Personal Tax Allowance, cuts to tax credits and child benefit, and also the rise in VAT to 20%. The figures do not appear to include changes to disability benefits and other welfare reforms.

According to Labour, families with children have been the hardest hit. A household with children where both parents are working will be on average £2,073 a year worse by the next General Election.

Labour say the figures from the IFS show that families will be on average £950 a year worse off by the time the new tax year begins this weekend, rising to £974 by 2015.

Taking into account the real-terms fall in wages since 2010 in addition to the above figures, Labour claim working people are on average £1,600 a year worse off under the coalition.

It’s bad news for unemployed people too. An unemployed lone parent is £1,901 a year worse off since 2010, according to Labour’s analysis, and a workless couple with children have lost £2,114 – largely due to benefit cuts. Some of these households may include a disabled adult, with their partner being their full-time carer.

The figures suggest a couple with children where one person works have taken the hardest hit of all the groups analysed. These households face the unenviable position of being as much as £3,720 worse off under the Tory-led government.

A single pensioner will see the income fall by £247 a year by 2015 while a pensioner couple will be £222 a year worse off, Labour say.

Shadow Chancellor Ed Balls MP 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.”

Labour’s complete analyses can be seen below:

  • All households: £974
  • Single, no work: £1,186
  • Single, in work: £488
  • Lone parent, no work: £1,901
  • Lone parent, in work: £1,335
  • Couple, no children, no work: £844
  • Couple with children, no work: £2,114
  • Couple, no children one earner: £822
  • Couple, with children, one earner: £3,720
  • Couple, no children, two earners: £438
  • Couple with children, two earners: £2,073
  • Single pensioner: £247
  • Couple pensioner: £222
  • Multi-family household, no children: £425
  • Multi-family household, with children: £1,400
Show More