British economy policy is not helping those at the bottom

WHAT should the new chancellor, Philip Hammond, do? Some sort of fiscal boost seems likely in light of Britain’s slowing economy. Much of the talk has been about infrastructure: Stephen Crabb, who challenged Thereas May for the prime-ministership, proposed a £100 billion to fund it. A focus on infrastructure is welcome; but the government also needs to do more for those at the bottom. This would make sense both economically and politically.

Current government policy is extremely regressive. The plan is to save £12 billion in working-age welfare between now and 2020. The Institute for Fiscal Studies has forecast that over that period tax-and-benefit changes will hit those at the bottom much harder than those at the top (see chart). Someone in the second-poorest income decile is expected to see their income fall by about 12% as a result of welfare changes, whereas those towards the top will see little if any change. It is surprising quite how few people realise Britain’s direction of travel in this regard. 

<img src="http://cdn.static-economist.com/sites/default/files/imagecache/original-size/images/2016/07/blogs/free-exchange/regressive.png&quot; alt="" title="" width="580" height="670"…Continue reading

This post was originally published in the Economist.

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British economy policy is not helping those at the bottom

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