IFS: tax and welfare measures are “regressive”

Osborne caught out on claim that combined tax and benefit changes are “progressive”.

The oracle has spoken. At its media briefing this afternoon, the Institute for Fiscal Studies concluded that the tax and benefit measures announced in the Spending Review are "clearly regressive".

It flatly rejected the Treasury's argument that its combined tax and welfare measures up to 2012/13 are "progressive", a claim that was made possible only by the fact that the government's analysis ignores a third of the changes due to take place. These include some of the most regressive measures, such as the cap on housing benefit, the cuts to council tax benefit and the disability living allowance, and the time-limiting of the employment and support allowance.

The Treasury's justification was the lack of data available to "attribute changes in tax, tax credits or benefits to individuals". But the IFS number-crunchers believe that a "rough estimate" of the likely distributional impact can be made. The graph below is the result.

Graph

As the IFS notes, the white line (measuring the impact of tax and benefit changes as a proportion of income) shows that the changes were "slightly regressive or flat within the bottom nine-tenths of households".

The IFS has also produced another graph (see below), estimating the distributional effect of changes up to 2014/15, which shows the regressive impact even more clearly. As a percentage of net income, the poorest 10 per cent lose more than every other group, including the richest 10 per cent.

Graph

In many ways it's admirable that the coaliton, unlike previous Conservative administrations, is willing to engage in the progressive/regressive debate. But it can't choose to fight on this terrain and then cry foul when it's caught out.

Some on the right are starting to wonder whether a straight-out Thatcherite defence of regressive economics would serve the government better.

George Eaton is political editor of the New Statesman.

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Corbyn's supporters loved his principles. But he ditched them in the EU campaign

Jeremy Corbyn never wanted Remain to win, and every gutless performance showed that. Labour voters deserve better. 

“A good and decent man but he is not a leader. That is the problem.” This was just-sacked Hilary Benn’s verdict on Jeremy Corbyn, and he’s two-thirds right. Corbyn is not a leader, and if that wasn’t obvious before the referendum campaign, it should be now. If the Vice documentary didn’t convince you that Corbyn is a man who cannot lead – marked by both insubstantiality and intransigence, both appalling presentation and mortal vanity – then surely his botched efforts for Remain must have.

But so what. Even Corbyn’s greatest supporters don’t rate him as a statesman. They like him because he believes in something. Not just something (after all, Farage believes in something: he believes in a bleached white endless village fete with rifle-toting freemen at the gates) but the right things. Socialist things. Non-Blairite things. The things they believe in. And the one thing that the EU referendum campaign should absolutely put the lie to is any image of Corbyn as a politician of principle – or one who shares his party’s values.

He never supported Remain. He never wanted Remain to win, and every gutless performance showed that. Watching his big centrepiece speech, anyone not explicitly informed that Labour was pro-Remain would have come away with the impression that the EU was a corrupt conglomerate that we’re better off out of. He dedicated more time to attacking the institution he was supposed to be defending, than he did to taking apart his ostensive opposition. And that’s because Leave weren’t his opposition, not really. He has long wanted out of the EU, and he got out.

It is neither good nor decent to lead a bad campaign for a cause you don’t believe in. I don’t think a more committed Corbyn could have swung it for Remain – Labour voters were firmly for Remain, despite his feeble efforts – but giving a serious, passionate account of what what the EU has done for us would at least have established some opposition to the Ukip/Tory carve-up of the nation. Now, there is nothing. No sound, no fury and no party to speak for the half the nation that didn’t want out, or the stragglers who are belatedly realising what out is going to mean.

At a vigil for Jo Cox last Saturday, a Corbyn supporter told me that she hoped the Labour party would now unify behind its leader. It was a noble sentiment, but an entirely misplaced one when the person we are supposed to get behind was busily undermining the cause his members were working for. Corbyn supporters should know this: he has failed you, and will continue to fail you as long as he is party leader.

The longer he stays in office, the further Labour drifts from ever being able to exercise power. The further Labour drifts from power, the more utterly hopeless the prospects for all the things you hoped he would accomplish. He will never end austerity. He will never speak to the nation’s disenfranchised. He will achieve nothing beyond grinding Labour ever further into smallness and irrelevance.

Corbyn does not care about winning, because he does not understand the consequences of losing. That was true of the referendum, and it’s true of his attitude to politics in general. Corbyn isn’t an alternative to right-wing hegemony, he’s a relic – happy to sit in a glass case like a saint’s dead and holy hand, transported from one rapturous crowd of true believers to another, but somehow never able to pull off the miracles he’s credited with.

If you believe the Labour party needs to be more than a rest home for embittered idealists – if you believe the working class must have a political party – if you believe that the job of opposing the government cannot be left to Ukip – if you believe that Britain is better than racism and insularity, and will vote against those vicious principles when given a reason to; if you believe any of those things, then Corbyn must go. Not just because he’s ineffectual, but because he’s untrustworthy too.

Some politicians can get away with being liars. There is a kind of anti-politics that is its own exemplum, whose representatives tell voters that all politicians are on the make, and then prove it by being on the make themselves and posing as the only honest apples in the whole bad barrel. That’s good enough for the right-wing populists who will take us out of Europe but it is not, it never has been, what the Labour Party is. Labour needs better than Corbyn, and the country that needs Labour must not be failed again.

Sarah Ditum is a journalist who writes regularly for the Guardian, New Statesman and others. Her website is here.