A ‘regressive’ budget?

The IFS has given the coalition’s opponents powder for their muskets, only it’s a little damp. The IFS’ analysis is drawn exclusively from straight tax and spend figures; it does not account for the future financial benefits brought by structural public service reform – so Gove’s and IDS’ reforms, both of which aim to alleviate poverty, have not been evaluated.  Matthew Sinclair explains why this means the IFS has exaggerated the severity of Osborne’s Budget:

‘Suppose you invented a policy, some kind of economic miracle, which doubled the incomes of the poorest ten per cent of families without the Government spending a pound.  That would reduce benefit spending.  It would also increase tax revenues from the poorest.  The same method that the IFS are using in their reports would show the effects of that policy as horribly regressive, cutting spending on the poor and shifting the fiscal scales against them.