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Outcry over NICs hides the biggest losers of government tax and benefit policy

The analysis published today by the Women’s Budget Group and Runnymede Trust shows that by continuing with planned freezes and cuts to in-work and out-of-work benefits that the poorest women will be £1581 worse off a year, on average, by 2020 compared to if policies in place in 2010 had continued.


Key findings of the cumulative distributional analysis of tax and benefit changes since 2010 are that:


  • Women are hit harder than men across all incomes groups, with BAME women particularly hard hit.Asian women in poorest third of households will be £2,247 worse off by 2020, almost twice the loss faced by white men in the poorest third of households (£1,159). White men in the richest third of households, by contrast, lose only £410 (See Graph 1, Table 1).Black and Asian lone mothers stand to lose £3,996 and £4,214, respectively, from the changes, about 15 and 17% of their net income.
  • Tax and benefit policies of this government are more regressive than those of the Coalition government, with men in the richest 50% of households actually gaining from tax and benefit changes since July 2015 (See Graph 2 and Table 2).Men in the 10% richest households are £564 better off.

2017 March 13th

WBG Co-Director, Dr Mary-Ann Stephenson, said:

“This reveals that the government’s aim to help the ‘just about managing’ is incompatible with the Chancellor’s decision to ‘continue with our plan’. The 1.8 million working families receiving tax credits are the ‘just about managing’, but rising inflation and a freeze in tax credit rates means a sharper fall in their real terms income.

The Chancellor’s decision to continue with the decisions of his predecessor to cut social security for these low income families, at the same time as cutting taxes, is effectively a transfer from the purses of poorer women into the wallets of richer men. The rise in personal allowances does nothing to help those who earn too little to pay tax, 65% of whom are women.

So far most attention this budget has focused on the change to National Insurance Contributions for the self-employed. According to the IFS the greatest loss, affecting those with profits over £45,000 a year, will be £589 a year. This is about a quarter of what the poorest Black and Asian women are set to lose per year by 2020 as a result of tax and benefit changes since 2010.

It is also not the case that we cannot afford to mitigate the income squeeze faced by the poorest households. Rather than addressing the squeeze on the incomes of the poorest, this government has made the changes even more regressive. Those on the highest incomes are actually gaining from tax giveaways by this government. Men in the 10% richest households are £564 better off by 2020 as a result of tax and benefit changes since July 2015.”