Our major 2009/2010 programme explores the impact of the recession on low-to-middle earning households and asks how low-to-middle earners (LMEs) can be protected during the recovery. We highlight how LMEs are more exposed by the current downturn than both better-off and poorer households when it comes to work and skills, housing and the cost of living.

Many low earners were in poor financial health before the recession took hold. The downturn has further exposed LME households, with their incomes falling more sharply than any other income group. As in previous recessions, it is those on low and moderate incomes, rather than the very poorest, who have been most exposed to the vagaries of today’s economic circumstances.

Closer to Crisis?, our report published in November 2009, assessed the impact of the recession on LME households in relation to their finances, work and skills, and housing, and made a series of practical recommendations about what government, banks, employers and others could do to protect LMEs. These recommendations were developed through a mix of quantitative and qualitative work, with input from a series of expert seminars. 

For LME households, the fiscal consolidation may prove to be as painful as the recession has been. What’s the Damage? looks at how LMEs will fare as the Government works to bring down the deficit. It conducts an impact assessment of the specific tax and benefit proposals that have been advanced in recent months. These include changes to direct and indirect taxes, welfare payments and public services. We argue that every single progressive taxation measure must be taken before turning to cuts, which must be done with great care to ensure LMEs are not hit disproportionately.

What’s the Damage? is an impact assessment of different options for reducing the deficit, and a practical resource designed to help policy makers as they make tough choices in the months ahead. 

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