Cuts are 'regressive', says Institute for Fiscal Studies

By staff writers
October 21, 2010

The Institute for Fiscal Studies (IFS) says that the cuts announced by the government in its Comprehensive Spending Review (CSR) this week, will have a "regressive" effect, hitting the poor much harder than the rich.

The £7 billion slashed from welfare payments is a major example of that, but social housing and the loss of public and private sector jobs will also have a major depressing effect, both on the economy and the most vulnerable.

The respected think-tank warned that the spending reductions will "reduce the quantity and quality of some public services" to such an extent that the Chancellor may want or need to put some of the money back in.

The possibility of what some term a 'double-dip' recession means that there may need to be further cuts or tax rises along the trajectory the government has adopted, the IFS says in its response to the CSR.

A review of the cuts package after two years would be "a sensible move" in the circumstances, suggests Institute for Fiscal Studies acting director, Carl Emmerson.

The massive £81 billion cuts introduced by George Osborne may not be enough to meet his target of getting rid of Britain's state deficit within four years, IFS said.

The Institute for Fiscal Studies aims to promote effective economic and social policies by understanding better their impact on individuals, families, businesses and the government's finances.

It declares: "Our findings are based on rigorous analysis, detailed empirical evidence and in-depth institutional knowledge. We seek to communicate them effectively, to a wide range of audiences, thereby maximising their impact on policy both directly and by informing public debate."

Welfare groups, unions and community organisations, as well as campaigns and NGOs, have denounced many aspects of the government's plans, saying that it is not true that "we are all in it together". The very poorest will suffer most.

Four people were held after anti-cuts protesters broke into the Department for Business, Innovation and Skills at around 8pm on Wednesday 20 October, police said.

Around 12 people had forced entry into the government building in Victoria Street, central London.

IFS Spending Review Analysis 2010:

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