The Budget may hit the poor harder than the rich, tax experts warned today.
The respected Institute for Fiscal Studies also warned that Britain is facing “the longest, deepest and most sustained” period of public services spending cuts since the Second World War.
Significantly, it casts serious doubt on attempts by Chancellor George Osborne and Deputy Prime Minister Nick Clegg to portray their economic plan as “progressive”.
The independent economists accused the coalition of using a specific time scale — 2012/13 — and plans already in the pipeline from Labour to justify its claims.
Robert Chote, director of the IFS, said: “The Budget looks less progressive, indeed somewhat regressive, when you take out the effect of measures that were inherited from the previous government — when you look further into the future than 2012/13 and when you include some other measures which the Treasury has chosen not to model.
“Perhaps the most important omission in any distributional analysis of this sort is the impact of the looming cuts to public services which are likely to hit poorer households significantly harder than richer households.”
The IFS said that the Government’s £113 billion deficit reduction package would mean that the cut in central government public services spending as a share of national income would more than reverse the entire increase seen under Labour.
Mr Chote said: “We are looking at the longest, deepest and most sustained period of cuts in public services spending at least since the Second World War.”
The conclusions by the IFS will almost certainly harden Liberal Democrat opposition to the Budget with a number of MPs and peers already voicing deep concerns.
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