Chancellor George Osborne’s Budget will make everyone a bit richer but, over the long term, the poorest half of households will still be £375 a year worse off.
An analysis of Osborne’s budget from the Resolution Foundation shows that if you look at the distributional impact of all Osborne’s policies announced since the 2015 election, the poorest are still being hit hardest.
The budget contained a pretty big cut to income tax. The threshold for paying the basic rate will rise to £11,500, and the higher rate will rise to £45,000 in April next year. As you can see from the chart below, everyone’s a winner with these changes but the actual impact on poor households will be minimal.
So far, so OK for the poor — they’re not getting a boost but at least they’re not getting screwed.
But the Resolution Foundation took into account all changes to the minimum wage, benefits, tax credits, capital gains tax, and fuel duty brought in by Osborne since last year, and modelled what the impact of those changes will have on households by 2020.
The results from this analysis are very different: they estimate that the average loss to the net income of the poorest 50% of households will be £375 a year, while the richest half will gain £235.
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