Poorer groups have been worst affected by changes to direct taxes, benefits and tax credits despite the Coalition’s promise that the rich would carry the burden of austerity, according to a major new report led by Professor Ruth Lupton, of the University of Manchester, with LSE and the University of York.

The report also reveals that families with young children have been hit harder than any other household type under the Coalition’s cuts despite early rhetoric highlighting the importance of the “foundation years”.

Real spending per child on early education, childcare and Sure Start services fell by a quarter between 2009-10 and 2012-13 and tax-benefit reforms hit families with children under five harder than any other household type.

The authors acknowledge that the Coalition faced a high level of debt and current budget deficit following the global financial crisis.
In response it made some strategic choices: not to cut the NHS (in cash, though not in need terms) nor schools; to increase spending on pensions; to raise the income tax threshold and to cut the top rate of tax.

Its tax and benefit decisions meant that cuts to benefits and tax credits that hit low income families hardest were offset by tax reductions for better-off households and made no impact on the deficit.

Meanwhile its choices to protect very large areas of public spending meant that its austerity programme was more limited in practice than its rhetoric suggested, and that austerity measures were concentrated on particular policy areas.

Year-on-year public spending has dropped less than 3 per cent, but cuts of around a third have been made to ‘unprotected’ services, including those for pre-school children under five, vulnerable and older adults needing local authority social care.

In practice, people with health and care needs and children moving from pre-school to university frequently cross the boundary between protected and unprotected services. Even ‘protected’ areas such as the NHS have faced rising demands on fixed or falling budgets.

Programme leader, Professor Ruth Lupton of the University of Manchester said: “ There is more to the Coalition than cuts. Its major legacy may turn out to be its rapid reforms of the schools system, the NHS, and welfare benefits. But its decisions on where to cut and where to spend have limited its scope either to reduce the debt or protect the poor”.

Professor John Hills, director of CASE at LSE, said: “Protection of some of the core parts of the welfare state from the greatest cuts, and initial protection of the value of benefits, meant that those at the bottom and important services were initially shielded from the worst effects of the recession. But in the second part of the Coalition’s period, selective cuts to benefits and to unprotected services have begun to take their toll, leaving the next government, of whatever kind, with much greater social policy challenges than the Coalition inherited.”

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