The above graph from the Appendix A of the Budget shows the actual material impact of all measures on each income decile by 2012/13. It has not appeared on the left-wing blogs currently claiming the Budget is highly regressive.
Instead they use this one from the Institute for Fiscal Studies.
Even in that graph though does not support their arguments. What we can clearly see is that from decile 2 to 9 the effect of changes are broadly progressive or proportional. From 9 to 10 highly progressive, and only from 1 to 2 slightly regressive. This one difference is from where all this week’s attacks on coalition ‘progressive’ claims have stemmed.
However as we can see from the first graph, the actual cash impact of the changes is about £25-50 a year between those on £14,000 and those on less.
Does anyone, even in the Social Liberal forum, sincerely believe that this £25-50 a year represents a great injustice that condemns the entire Budget?
At the other end those on £50,000 or more will be paying an average of £1,000 a year more than those around £38,000, or £1,650 a year in total. This disproportionate assault on a minority apparently is ‘fair’ to the left, yet has gone largely unnoticed by Liberal Democrat malcontents.
One response to that analysis has been that the Budget graph goes up to 2012/13 not 2014/15 where the IFS indicate more welfare reductions kick in. However actually looking at that analysis, the difference between 2012 and 2014 looks like a reduction of about 0.4% of income (-2.2% to -2.6%), or another £10-£20 for the bottom decile, with similar reductions across the board up to decile 9.
For the top decile the increase is a near doubling of their loss from -3.9% to -7.5% or around £3,000 on average, for many then considerably more. That this goes unnoticed speaks to Tuesday’s point that the distributionalists are group who will never be satisfied.
The other point of attack is that to be progressive the Budget depends on previously introduced measures not yet implemented, for example the 50% tax rate. There is something in that, however it is the case that the Coalition could have reversed those measures. It is the Coalition, not Labour implementing the changes.
Broadly then the ‘regressive Budget’ narrative is not supported by the evidence bar in one small part of the distribution where there has been gross partisan exaggeration of a tiny difference. One more than made up at the other end of the income scale if that is your notion of fairness.
From bottom to top the facts show the impact of changes this Government will introduce are progressive, just not uniformly for every group. Liberal Democrats of any stripe should not find it difficult to rebutt this dishonest attack.
Or better still ignore it, most normal people don’t base their happiness or political decisions on the percentile differences between their loss and someoneelse. It’s the actual loss that matters and in that regard a lot more people on high incomes will have a reason to resent this government by 2015 than those on benefits.