An Autumn Statement for strivers?

Today’s fiscally neutral Autumn Statement was billed as one for strivers. We have already shown that around 60 per cent of the cut associated with the 1 per cent uprating of most working-age benefits and tax credits will actually fall on working households. But of course, the additional £235 increase in the personal tax allowance from April 2013 will benefit many of those in work. What’s the combined impact?

The chart below highlights that the biggest losers are indeed at the very bottom and top of the distribution – in cash terms at least (the impact on the rich in proportionate terms is very small). But households across the bottom half of the distribution are set to lose out, by up to 1.2 per cent of their household income in 2015. The only households to gain are those in the upper half – deciles 7 & 8 – and even here the amounts are negligible.

Notes:     Includes impact of 1% uprating of most working-age benefits and tax credits for three years from April 2013, £235 additional increase in personal tax allowance in April 2013 and 1% uprating of higher rate threshold from April 2014. We do not consider the impact of the fuel duty cancellation or the impact on public services of cuts in departmental spending.
Source:   RF analysis using IPPR tax-benefit model