Spending Cuts Make Britain A Cold Place for Families says CARE

Social policy charity CARE has today expressed grave concern following the publication of the Institute of Fiscal Studies Spending Review Report which demonstrates that the burden of the spending cuts will fall proportionately more on families than people with no dependents.

This trend was already apparent from the Child Benefit announcement at the beginning of the month which CARE pointed out constituted an over 40% increase in the tax burden on one earner families with two children on £45,000, whilst single people on £45,000 saw their tax burden remain unchanged.

Nola Leach, Head of Public Affairs said, ‘There is no question about the need for cuts but it is imperative that the burden of those cuts is shared out in a fair way that does not disproportionately benefit those on lower incomes and with family responsibilities.’

CARE has previously pointed out – prior to the changes announced this month – that Britain already allocates its tax burden in a way that leaves one-earner married couples with two children on an average wage paying a much higher tax burden than in most other OECD jurisdictions. On average OECD countries place a tax burden on these families that is just 55% of what they place on a single person on the same wage whilst in the UK they pay 75% of what a single person pays!

After this week’s announcement the figures will have certainly got worse.

The IFS report that the average family with children will be losing £1,964 of its £29,242 net income a year by 2014-15. This loss will be equal to a 6.7 per cent drop in income, whilst single people with no dependents will experience only a 2.7 per cent drop in income.

Nola Leach continued, ‘Our fiscal arrangements in the UK are already very individualistic and in urgent need of review. This month’s announcements, whilst inevitably introducing cuts and increasing the tax burden, could have been used to correct this individualism by sharing out the new tax burden fairly, recognising the added burdens and responsibilities of families. Sadly they have in fact made things significantly worse.’

A one-earner couple with two children on £45,000 will now bear a tax burden that is 100% of that on a single person on the same wage with no dependents.