The coalition’s attacks on the poorest are even worse than first thought

By Richard Watts / @richardwatts01

The coalition had a difficult week over the summer after the Institute for Fiscal Studies research found the emergency budget’s changes to tax and benefits hit the poorest hardest.

George Osborne and Nick Clegg’s claim that this was a “progressive” budget was always going to unravel. Who do people expect to lose out when public spending aimed at helping poorer people is cut?

Monday’s analysis that the cuts to the Building Schools for the Future programme will – surprise, surprise – disproportionately affect the poorest is further confirmation that this government is going the hammer those least able to defend themselves.

Missing from this analysis so far is the impact on the poorest of government spending cuts on councils.

I wrote some time ago that the Tory-Liberal decision to cut Local Government within this financial year came after estimates made in opposition – about how much wasteful spending could be easily cancelled – turned out to be wrong by a massive margin.

The government primarily chose to carry out these cuts by reducing Area Based Grants (ABGs). These are grants paid to councils to fund a whole range of services including Connexions, reducing teenage pregnancy and supporting community use of school buildings.

Crucially ABGs are paid on a formula linked to deprivation, simply meaning they when they were reduced the poorest areas got the biggest cut.

Research by London Councils shows that deprived boroughs like Hackney and Islington received massive cuts of over £8 million while affluent boroughs like Sutton and Richmond were cut by £2 million or less.

The Tory-Liberal’s would respond that at the same time they removed the ‘ring-fence’ on some of these grants so that council’s had greater discretion over how they were spent. David Cameron himself made a great play of this in Sunday’s Observer.

Up to a point Dave. The one tiny problem with the PM’s argument is that the freedom to spend a grant that has been cut (so much that it can only be spent propping up vital services) isn’t exactly a gift.

The cut to ABGs will clearly hit the poorest hardest and the effects need to be taken into account alongside cuts to benefits, increases in regressive taxes like VAT and cuts to spending programmes such as BSF when the true cost of the coalition to the country’s poorest is totted up.

This analysis will continue to be published over the next weeks and months and each individual report will continue to pull at the fig leaf of ‘fairness’ which the coalition clings to in order to keep the Lib Dems on board.

Sunder Katwala writes at Next Left that the government would probably be better off abandoning its rhetoric about fairness as it becomes clear that their actions work against their stated goals. A full analysis of the Tory-Liberal Coalition’s work, including cuts to councils, would support this argument.