5 July 2015

New research published today (Sunday), and commissioned by the TUC from Landman Economics, finds that middle-income families with children face the biggest cash-equivalent losses from services cuts.

The research provides a detailed analysis of services cuts made from 2010 to 2015; and it projects the same pattern of impacts on households up to 2018 for the scale of future service cuts that the government is planning.

The total impact of current and future cuts across all services is largest for middle-income families – especially couple families with children.

Cuts to health care and school-level education follow this pattern, being largest for those in the middle of the income distribution.

Social care and social housing cuts mean the largest cash-equivalent loss for the lower-to-middle reaches of the income distribution. For social care cuts, the largest impact is on single pensioners.

Although cash-equivalent losses tend to be slightly larger for households in the middle of the spectrum than at the bottom, the impact will be more severely felt by families with less disposable income to compensate. When adjusted for income to find the effective loss in living standards, the impact of service cuts is severely regressive all the way across the income spectrum.

For all service cuts from 2010-18 combined, middle-income families (deciles four, five and six) will face cash-equivalent losses per household of more than £3,000. The loss for the highest-income households (decile ten) is around £1,000 less at just over £2,000.

When adjusted for income to find the loss to living standards from all service cuts 2010-18 combined, the losses for middle-income families are three to four times as high as for the top decile. The losses for families at the bottom of the income distribution (decile one) are five times as high as for those at the top.

TUC General Secretary Frances O’Grady said: This analysis shows how middle-income families are being hit much harder than those at the top. After five years of severe public service cuts, the cracks are showing. And with long waits to see a GP, large cuts in social care provision and youth services closing, families are feeling it.

“Good quality services are not only vital to families going about their everyday lives, they’re also essential for delivering a strong economy with high productivity. We need the best quality education today if we are to compete with the world’s most advanced economies tomorrow. And if families are let down by health and social care provision, more people will have to give up work to become carers and fewer will be able to work the full hours they want.

“The Chancellor’s plans to fund tax giveaways for the wealthy from even deeper public services cuts would put families at greater risk and are a false economy. A much better plan would protect our services, which are essential not only for decent living standards, but also for the UK’s economic strength.”

NOTES TO EDITORS:

- The research was undertaken for the TUC by Landman Economics, who modeled the impacts of spending cuts on households using service use data from the Family Resources Survey along with data on actual and planned changes in government spending, broken down into different services using internationally agreed service definitions. The full note can be downloaded here: https://www.tuc.org.uk/sites/default/files/Note%20on%20distribution%20future%20spending%20cuts%20%28Landman%20Economics%20for%20the%20TUC%29.docx

- The spending model was first developed for Horton, T and Reed, H (2010) Where the Money Goes: How We Benefit From Public Services. https://www.tuc.org.uk/sites/default/files/extras/wherethemoneygoes.pdf More recent results from the model were presented in Chapter 7 of Reed, H and Portes, J (2015) Cumulative Impact Assessment, Equality and Human Rights Commission Research Report 94. http://www.equalityhumanrights.com/sites/default/files/publication_pdf/Cumulative%20Impact%20Assessment%20full%20report%2030-07-14.pdf

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