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  1. Politics
26 March 2010

How Labour has redistributed from rich to poor

New data shows how tax changes have benefited the poorest 10 per cent.

By George Eaton

Robin Cook was always fond of hailing Tony Blair’s Labour government as the most redistributive since Lloyd George, and now here’s the data to prove it.

The graph below, from the Institute for Fiscal Studies, shows how New Labour’s tax and benefits changes have redistributed wealth from the poorest to the richest since 1997.

Distributional-impact-Labour-1024x723

Under Labour, the poorest 10 per cent of households have gained by 13 per cent, while the richest 10 per cent have lost by almost 9 per cent.

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With the Tories still committed to their grossly regressive plan to raise the inheritance-tax threshold to £1m and the Lib Dems’ tax plans likely to widen income inequality, it’s clear that only Labour can be trusted to combine redistribution with growth.

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The party’s deficit reduction plan, based on a ratio of 67 per cent spending cuts to 33 per cent tax rises, is also the most progressive.

The Tories plan to reduce the deficit through an 80:20 mix of cuts and taxes, while the Lib Dems, as Nick Clegg boasted to the Spectator, plan to do so through spending cuts alone.

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