The poorest in society are being hit the hardest by changes to tax, social security and public spending reforms, and are set to lose 10% of their income, a new report released by the Equality and Human Rights Commission (EHRC) has revealed.
Ahead of next week’s budget, the EHRC has published its independent report on the impact that changes to all tax, social security and public spending reforms from 2010 to 2017 will have on people by 2022.
Whilst the poorest are set to lose nearly 10% of their incomes, the richest will lose barely 1%.
Undertaken as a ‘cumulative impact assessment’, the report, which looks at the impact the reforms have had on various groups across society, suggests the decisions will also affect some groups more than others:
- Black households will face a 5% loss of income (more than double the loss for white households)
- Families with a disabled adult will see a £2,500 reduction of income per year (this is £1,000 for non-disabled families)
- Families with a disabled adult and a disabled child will face a £5,500 reduction of income per year (again, compared to £1,000 for non-disabled families)
- Lone parents will struggle with a 15% loss of income (the losses for all other family groups are between 0 and 8%)
- And women will suffer a £940 annual loss (more than double the loss for men)
- The biggest average losses by age group, across men and women, are experienced by the 65-74 age group (average losses of around £1,450 per year) and the 35-44 age group (average losses of around £1,250 per year).
Commenting on this report, Kamran Mallick, chief executive of Disability Rights UK, said:
“This report makes for grim but unsurprising reading – disabled people have been saying for many years that they are increasingly struggling to get by.
“The report is clear evidence that the government’s reforms have been having a massive negative effect, driving disabled people deeper into poverty when they already don’t have enough money to live on.
“We’re acutely struck by the report’s conclusion that the reforms will continue to cause ‘particularly adverse impacts on disabled families’.
“This can’t go on. The Government should use next week’s Budget to call a halt to its reforms and review the cumulative impact of tax and benefit changes since 2010. We have to come up with a system which doesn’t penalise people for being disabled.”
David Isaac, the Chair of the Commission, which is responsible for making recommendations to Government on the compatibility of policy and legislation with equality and human rights standards, warned of a “bleak future”.
Mr Isaac said:
“The Government can’t claim to be working for everyone if its policies actually make the most disadvantaged people in society financially worse off. We have encouraged the Government to carry out this work for some time, but sadly they have refused. We have shown that it is possible to carry out cumulative impact assessments and we call on them to do this ahead of the 2018 budget.”
“If we want a prosperous and, in line with the Prime Minister’s vision, a fair Britain that works for everyone, the Government must come clean and provide a full and cumulative impact analysis of all current and future tax and social security policies. It is not enough to look at the impact of individual policy changes. If this doesn’t happen those most in need will face an extremely bleak future.”
The Commission is now calling on the Government to:
- commit to undertaking cumulative impact assessments of all tax and social security policies ahead of the 2018 budget;
- reconsider existing policies that are contributing to negative financial impacts for those who are most disadvantaged; and
- implement the socio-economic duty from the Equality Act 2010 so public authorities must consider how to reduce the impact of socio-economic disadvantage of people’s life chances.
The assessment undertaken by the EHRC considered changes to income tax, national insurance contributions, indirect taxes (VAT and excise duties), means-tested and non-means-tested social security benefits, tax credits, universal credit, and national minimal wage/national living wage.
