Low income women to lose up to £2000 from tax and benefit changes

New modelling by the Women’s Budget Group examining the impact of tax and benefit changes since 2010 on men and women’s incomes finds that cumulatively by 2020:

• Lower income groups stand to lose much more, and women more than men in each income decile group except the 10% poorest where both lose out almost equally. Women in the lowest 20% of households stand to lose up to 15% of their individual income by 2020.
• Even at the top of the income distribution women will lose out more than men, with men in the highest decile group actually gaining in cash terms.
• In cash terms, women in the second poorest 10% of households will lose on average £2000 a year by 2020 (15% of their individual income and 12% of their household income). This compares to men in the top 10% of households, who are set to find their net income increase by £329 compared to if the tax and benefit policies in place in March 2010 had continued to 2020.
• The main factor driving the changes are the successive cuts and freezes in benefits and the failure of measures such as the introduction of the National Living Wage and raising of personal tax allowance to compensate those in the lower income groups. In particular, the roll-out of Universal Credit will make people worse off than if the tax credits system (and the reversed cuts conceded last Autumn) had been continued.

Commenting on the findings, Dr Neitzert said:

“The evidence is clear: women, especially those on low incomes, have shouldered the largest burden of austerity measures. Overall, women stand to lose twice as much as men by 2020 and for those on the lowest incomes this means a cut in living standard of between 18 and 20 percent.

“These results come just days after the Women and Equalities Select Committee described HM Treasury’s Equalities Analysis as ‘insubstantial and lacking in detail’ and documented the repeated refusal of Ministers to engage with the Committee. This begs an obvious question: are the HM Treasury and its Ministers deliberately seeking to hide these inconvenient truths?

“The Treasury has a legal obligation under the Public Sector Equality Duty to have due regard to the impact of its policies on equality but it doesn’t seem keen to do this in any meaningful way. Women’s Budget Group has repeatedly shown that such an analysis is technically possible. There are no excuses: if the HM Treasury wants to understand the impact of its decision-making on different groups in society, the tools and methodologies are there.

“It may be that under a new Chancellor the Treasury will be more forthcoming about the equality impact of this year’s Autumn Financial Statement. We certainly hope that Phillip Hammond will heed the Women and Equalities Committee’s call for greater transparency from the Treasury.

“Given the reluctance by the previous Chancellor, however, the Women’s Budget Group will again be analysing the impact of the AFS announcements on different groups. For the first time, we will be partnering with race equality thinktank, the Runnymede Trust, to provide a breakdown of the winners and losers by income, ethnicity and race, gender and disability”

Appendix: Data table and graphs

Data table (for both graphs): Impact of tax/benefit changes on men’s and women’s incomes in cash and percentage terms, 2020 (compared to a baseline of policies in place March 2010)

Graph 1: Cumulative real-term change in individual taxes and cash benefits by gender and household income decile group (£, 2010-20)

Graph 2: Cumulative real term change in individual taxes and cash benefits as a proportion of individual disposable income by gender and household income decile group (2010-20)

View a PDF of the press release here.