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Type: IFS Briefing Notes
Please note: Section 5 of this note has been substantially revised since the initial publication of the report in August 2010: see Appendix E for a list of the changes. These changes do not affect our assessment of the Budget's progressivity/regressivity in Sections 1-4.
The June 2010 Emergency Budget set out a number of tax and benefit changes that will be introduced by 2014-15. For the first time, the Budget documentation contained distributional analysis of the changes by household income, which showed that the measures to be introduced between June 2010 and April 2012 were progressive relative to household income, and in his Budget speech the Chancellor used this as evidence that it was a 'progressive Budget'. In our post-budget briefing, we cast doubt on this claim, demonstrating that many of the progressive tax rises that will be introduced over the next two years were announced by the previous Government, and that the Budget measures scheduled to come in between 2012 and 2014 are generally regressive. Moreover, the distributional analysis in the Budget documentation did not include the effects of some cuts to housing benefit, Disability Living Allowance and tax credits that are likely to affect the poorer half of the income distribution more than the richer half.
In this Briefing Note, we attempt to model the full impact of tax and benefit changes in the Budget, including these additional benefit cuts, on different income and expenditure groups. In Section 4, we show their impact on different sorts of households.
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