CASE and ISER report: ‘Were we really all in it together?’

Were we really all in it together? The distributional effects of the UK Coalition government’s tax-benefit policy changes by Paola De Agostini, John Hills, Holly Sutherland was published in November 2014.

The research by the Centre for Analysis of Social Exclusion, LSE and the Institute for Social and Economic Research found that:

  • The poorest income groups lost the biggest share of their incomes on average (and those in the bottom half of incomes lost overall).
  • In contrast, those in the top half of incomes gained from direct tax cuts, with the exception of most of the top 5 per cent – although within this 5 percent group those at the very top gained, because of the cut in the top rate of income tax.
  • In total the changes have not contributed to cutting the deficit. Rather, the savings from reducing benefits and tax credits have been spent on raising the tax-free income tax allowance.
  • The analysis challenges the idea that those with incomes in the top tenth have lost as great a share of their incomes as those with the lowest incomes.

Guardian report of the research, 15 November 2014