Dear All
George Osbourn in his speech on the Spending Review stated;
'The distributional analysis published today shows that those on the
highest incomes will contribute more towards this entire fiscal
consolidation, not just in cash terms, but also as a proportion of their
income and consumption of public services combined.'
see <http://www.hm-treasury.gov.uk/spend_sr2010_speech.htm>
This statement is rather misleading about the distributional effects of the
Spending Review cuts according to the published analysis in Appendix B of
the Spending Review main document
see http://cdn.hm-treasury.gov.uk/sr2010_completereport.pdf)
Which shows that the average household in England will lose £485 pounds of
services. The distribution of these cuts is shown below by income quintile
groups (poorest 20 per cent to richest 20 per cent) after adjusting for
household size and type.
Poorest 20% minus 1.4%
Quintile 2 minus 1.7%
Quintile 3 minus 1.8%
Quintile 4 minus 1.4%
Richest 20% minus 1%
Thus the richest 20% will lose 1% of their their income and consumption of
public services combined, while the poorest 20% will lose 1.4% of their
income and consumption of public services combined as a result of the
Spending Review cuts in benefits and services.
The distributional impact of these changes plus the already announced
Budget changes will become clearer as the gory details of the cuts are
announced over the coming months.
Regards
David Gordon
The details taken from the Spending Review analysis are below;
poorest 20% 13,800 income + 11,500 value of services = 25,300 pounds
q2 19,100 income + 10,700 services = 29,800 pounds
q3 24,200 income + 7,800 services = 32,000 pounds
q4 31,700 income + 6,700 services = 38,400 pounds
Richest 20% 48,700 income + 5,400 services = 54,100 pounds
Spending Review cuts per year
poorest 20% 364 pounds
q2 520 pounds
q3 572 pounds
q4 520 pounds
Richest 20% 520 pounds
----------------------
Dave Gordon
Townsend Centre for International Poverty Research
University of Bristol
8 Priory Road
Bristol BS8 1TZ, UK
E-Mail: [log in to unmask]
Tel: +44-(0)117-954 6761
Fax: +44-(0)117-954 6756
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