Poorer households hit hardest by austerity over the last five years, according to new report

Poorer households have been borne the brunt of austerity measures over the last five years, with families with young children harder hit than any other group, according to a major academic report published today.

Its findings undermine Coalition claims that the best-off would shoulder the burden of the continuing squeeze on spending aimed at reducing the national deficit.

The joint research by the London School of Economics and the Universities of Manchester and York concluded that poverty levels had been increasing for the last two years – and would continue worsening for another five.

And it warned that it would be impossible for any government to achieve the statutory target – backed by all major parties – of eradicating child poverty by 2020.

The researchers calculated that spending on “unprotected” services, including those for pre-school children and social care for elderly and vulnerable adults, had been slashed by one-third, affecting some of the neediest groups in society.

The poorest twentieth of the population lost an average of nearly three per cent of their incomes over the period, while the next five-twentieths lost nearly two per cent. By contrast income groups in the top half gained overall, with the exception of the richest twentieth.

The report said the pain of austerity had been most acutely felt by young families, as average spending per youngster fell in real terms on early education, childcare and Sure Start services, while changes to tax and benefits had affected families with children under five more than any other group.

It said changes to direct taxes, benefits and tax credits were mainly regressive, as people on below-average incomes lost more than they gained through increases in tax thresholds.

Nor did the savings from the cuts help reduce the national deficit as they were cancelled out by tax reductions for wealthier households.

“The effects of the coalition’s reforms were, in the main, the opposite of what they claimed - on average the poorer groups paid more than the richer ones as a percentage of their income,” the report said.

Prof Ruth Lupton, of the University of Manchester, who led the research, said: “There is more to the Coalition than cuts. Its major legacy may turn out to be its rapid reforms of the schools system, the NHS, and welfare benefits. But its decisions on where to cut and where to spend have limited its scope either to reduce the debt or protect the poor.”

In other findings, the research concluded, that despite the protection of pension levels, poorer people in older age groups had also suffered from austerity measures.

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Despite a ten per cent rise in the population aged 65 or more since 2010, the number of adult social care users has fallen seven per cent per year. It concluded that care at home and other community-based services had been particularly affected by the economy drive.

It found numbers of adult learners fell by 17 per cent between 2009/10 and 2013/14 as funding for the sector was cut.

Despite the controversial rise in tuition fees to up to £9,000 a year, increasing numbers of disadvantaged young people are going to university, but numbers of part-time and mature students dropped by 40 per cent.

Although health spending was ring-fenced, the growth in NHS budgets was extremely low by historical standards, the research concluded, and health inequalities remained entrenched.

Cathy Jamieson, the shadow Treasury minister, said: “This report makes a mockery of David Cameron’s claim that we are all in this together. The Tories have prioritised the privileged few by giving millionaires a huge tax cut while working families have been left worse off. And the Tories want to go even further if they win the election and once again cut the tax credits of millions of working people.”

Sure Start

The number of Sure Start centres fell from 3,631 in April 2010 to 3,019 last June, although the Government said the actual cut was smaller because of mergers. Services provided by remaining centres were reduced in many areas.

Support for families with young children

The Coalition abolished the Health in Pregnancy Grant and Baby Tax Credit, while the Sure Start Maternity Grant was restricted to first children only. Child Trust Funds – paid at birth but not accessible until a child reached 18 – were also abolished.

Social care

Since the mid-2000s, public spending on social care has failed to keep pace with the growing numbers of older people in Britain. Funding cuts imposed by the Coalition have intensified the pressure on social services since 2010. During this Government’s five years in office, overall spending is projected to have fallen by 13.4 per cent.

Wealth redistribution

In 2009-10, spending on cash transfers – the redistribution of wealth through taxes and benefits – was the equivalent of 12.7 per cent of Britain’s gross domestic product. Five years later, the figure has fallen to 12.1 per cent.