Trea­sury’s data on winners and losers raises tough ques­tions

Re­search pro­vides pat on the back, but fails to of­fer clar­ity on post-fur­lough life, writes Rus­sell Lynch

The Daily Telegraph - Business - - Summer Statement: Focus On Business & Economics -

CHANCELLOR­S have not al­ways been keen on the de­tailed scru­tiny of who wins and loses as a re­sult of the de­ci­sions they take.

The most notable ex­am­ple was Ge­orge Os­borne, who scrapped the Trea­sury’s dis­tri­bu­tional anal­y­sis tra­di­tion­ally ac­com­pa­ny­ing Bud­gets due to the in­con­ve­nient fact that his planned tax credit re­forms would hit the poor­est hard­est.

Un­der pres­sure from the Trea­sury select com­mit­tee, the dis­tri­bu­tional anal­y­sis was re­stored in 2016 when Philip Ham­mond took the reins.

For Rishi Su­nak, the cur­rent Chan­cel­lor, the Trea­sury’s break­down of the im­pact of Covid-19 on house­holds ranked by in­come shows that the poor­est have been the big­gest ben­e­fi­cia­ries of the mas­sive eco­nomic sup­port un­leashed since March.

While work­ing house­holds over­all are £67 a week worse off since Fe­bru­ary due to lost earn­ings, the poor­est tenth are £12 bet­ter off thanks to the in­crease in uni­ver­sal credit by £20 a week and a rise in work­ing tax cred­its, along­side the fur­lough scheme and self-em­ployed sup­port.

This is less gen­er­ous than the US, which shunned a fur­lough scheme but has opted to top up ben­e­fits by a flat $600 a week. That largesse means that a fifth are ac­tu­ally re­ceiv­ing ben­e­fits twice the size of their lost earn­ings.

But for the UK’s poor­est, the mea­sures have more than mit­i­gated ac­tual and prospec­tive job losses.

At the top of the tree, the rich­est 10pc have taken the big­gest knock to their weekly in­comes in both per­cent­age and cash terms, at 14pc and £255 re­spec­tively. Over­all, the Trea­sury sug­gests that its sup­port schemes have been worth around a fifth of av­er­age weekly in­comes.

Nev­er­the­less, it is an in­com­plete pic­ture. While the poor­est work­ing house­holds have been rel­a­tive “winners” in terms of money, the same can­not be said for health. In England’s most de­prived ar­eas there were 128.3 deaths per 100,000 re­lated to Covid-19 in the three months to May 31. This was more than dou­ble the rate in the least de­prived ar­eas of 58.8 deaths per 100,000. Poorer house­holds are more likely to have un­der­ly­ing health is­sues, and work in lower-paid sec­tors with par­tic­u­lar ex­po­sure to the virus.

The Trea­sury’s anal­y­sis also takes no ac­count of the po­ten­tial longert­erm ef­fects of the pan­demic.

It’s a self-ad­min­is­tered pat on the back but on a day where Su­nak ruled out any ex­ten­sion of the fur­lough, it also raises the un­com­fort­able ques­tion: what hap­pens next?

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