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
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?