photo credit: HM Treasury via photopin cc

New research published by the Trade Union Congress (TUC) shows that the poorest working households will lose on average £460 a year by 2020, due to tax and benefits changes.

Meanwhile, the richest working households will see their income increase by £670 a year over the same period.

The research analysis the combined impact on household finances caused by Universal Credit, benefit cuts and changes to the minimum wage and tax allowances. It also looks at employment status.

Whilst middle-income families can expect to make a small gain from measures outlined in George Osborne’s summer budget, it is the very wealthiest who are set to see the largest gains.

According to the TUC, the average weekly gain for the wealthiest working households of £12.88 “is enough to buy a bottle of champagne each week, with plenty of change left over”.

However, low-income working households are set to lose around £8.85 each week, equivalent to a basket of groceries from a discount supermarket.

“The average annual amount lost by low paid working households (£460) is equivalent to a year’s worth of school dinners” for one child at £2.50 per day, says TUC.

The research also looked at the impact of Osborne’s budget on non-working households and shows a similar picture of “large gains at the top, minor gains in the middle, and losses for the bottom”.

But if the full roll-out Universal Credit is delayed beyond 2020, the very poorest households could lose hundreds of pounds a year because of tax credits cuts.

The TUC has accused the Government of deliberately redistributing wealth from the poorest to the very richest.

TUC General Secretary Frances O’Grady said: “Even after the extra help from a larger tax allowance and a higher minimum wage, low paid families will still be made more than £8 a week worse off on average by 2020.

“And if Universal Credit is delayed, leaving families still on tax credits, their losses will be hundreds of pounds a year more.

“David Cameron needs to explain to low paid families why he is cutting their income by the same amount as a whole year of school dinners, but he’s giving the richest a cash boost worth a bottle of champagne every week.

“We need a recovery that works for everyone, not just those at the top. But by cutting support for low paid families, despite a growing economy, the government is shutting them out of the recovery.

“And worse than that, it’s also giving rich households a tax break by taking support away from the low paid.

“Not only is this unfair, but it’s bad economics. We need more money in the pockets of low paid families so that they can get out and spend it in their local businesses.”

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