Budget pushes incomes of poorest families £900 below cost of basics, and boosts incomes of richest £5000 above costs
23 September 2022
The 10% poorest families are set to see annual incomes fall a further £900 below rising costs for basics between April 2022 and April 2023. Meanwhile the richest 10% will see their incomes rise by £5000 more than the increase in cost of essentials, according to new research published by the New Economics Foundation (NEF) in response to today’s mini-budget.
The analysis takes account of all income growth between April 2022 and April 2023, including higher earnings, benefit uprating, previous support for the cost of living crisis and the latest tax cuts announced by the Chancellor today. The rise in incomes is then compared to the effects of inflation (after the energy price cap freeze) on every families’ basic basket of goods and services needed for a decent quality of life.
The research uses the Minimum Income Standard (MIS), which is the UK’s leading approach to measuring living standards based on need and is used to calculate the‘real’ Living Wage paid by companies like Ikea and KPMG, and football clubs like West Ham, Liverpool, and Everton.
Sam Tims, economist at the New Economics Foundation said:
“This mini-budget was totally divorced from reality. As our analysis shows, today’s announcement amounts to a massive transfer of income to the very richest at the height of the cost of living scandal, when millions on low and modest incomes are being hammered.
“The Chancellor chose to cut taxes for those that need it least, and who are most likely to stash away the proceeds in savings, rather than support those who need it the most and would have been most likely to go out and spend in their local economy.
“The costs will likely be borne through less funding for future public services. The Chancellor has chosen to look after the top 10% of earners and bankers in the city while the cost of living crisis deepens, queues for food banks grow and the NHS struggles to look after everyone else.”
Contact
Becky Malone /becky.malone@neweconomics.org /07925950654
Notes
The New Economics Foundation is a charitable think tank. We are wholly independent of political parties and committed to being transparent about how we are funded.
NEF analysis has been conducted using the the IPPR tax and benefit model based on data from the Family Resources Survey (FRS), the forecasts for key economic aggregates from the National Institute of Economic and Social Research, and the ‘minimum income standard’ basket of goods and services based on the work by the Joseph Rowntree Foundation and the Centre for Research and in Social Policy.
