Monday, 14 July 2014

How "austerity" hits society

Those of us who had childhoods in the 1940s and 1950s will be rather sceptical of the use of the word "austerity" in relation to the UK's current economic situation. Personal recollections of primitive domestic arrangements and a perpetual feeling of hunger are backed up by documentary evidence. This, about the end of rationing, gives some of the flavour. However, there is no doubt that the virtually all the UK population has suffered a cut in its standard of living since 2009.

The Mainly Macro blog, written by economist Simon Wren-Lewis, publishes a graph taken from a report commissioned by the Welsh Government from the Institute for Fiscal Studies on the impact of tax and benefit changes on Wales. No doubt the IFS report will be picked over in the coming weeks, not least, as Wren-Lewis points out, because the analysis can be extrapolated to England & Wales as a whole.

My first reaction to the graph was that it confirmed feelings I had for some time, that the coalition government is correct in its assertion that the richest are paying more proportionately than they used to under Labour. However, the major beneficiaries of the policies have been those on moderate to high incomes (apart from pensioners, those most likely to vote, presumably) and that the poorest are suffering far more than the richest. The very poorest 10% are doing better than the 20% above them, but still worse than those on above-average incomes.

This is further evidence that the next Liberal Democrat manifesto must aim to restore the fairness which is a major plank of the party's constitution.

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