Presenter: "If you had to focus on one measure that was if you like impacting the poor more than the rich I think your analysis shows it is the rather subtle one that sounds very innocuous that we are going to update benefits by the CPI rather than the RPI.
IFS: "yes that's the largest welfare cut that's coming in over the next few years. That's forecast to save the government about 5.8 bn pounds by 2014 But it will keep That amount will keep on increasing every year in the future because the CPI tends to go up less quickly than the RPI and that is firstly because of a technical change in the way it is calculated that is quite justified because the RPI does not account for the fact that people can change what they buy when prices go up to keep their level of welfare the same and also because mortgage interest and council tax that have tended to go up faster than general inflation are excluded from the CPI. Now the government said that that might be justified because people who claim benefits are not exposed to these things because they generally rent or council tax benefit covers their council tax. However, we find that only 23% of benefit claimants are in fact unaffected by increases in these items
Presenter: it is one of these things that is quite technical but makes an enormous difference and bigger every year as it accumulates.
No minister can read this report and attempt to describe their measures as fair. They are anything but. Nor is it the case that these regressive measures are a one-off. Far from it: the biggest reason the chancellor's emergency budget is so unfair is because he has permanently pegged benefits to the lower consumer price index (CPI) rather than the old retail prices index (RPI). That may sound technical, but consider this: CPI is currently just above 3%, while RPI is nearly 5%. Now imagine your disability benefits inching up by 3% a year every year rather than 5%: within just a few years that leaves you with a big shortfall. This one fact puts in perspective the recent speculation about how Iain Duncan Smith is fighting for more generous welfare provision – a couple of billion extra does not offset the many billions being taken from society's support for the poorest. With full access to all the Treasury models, Mr Osborne will have known how much poorer he was about to make some of the most vulnerable members of society – yet he went ahead and did it anyway.
If you want me to respond to any comment please either comment only on the past few entries or put something in your comment to make it clear what you are commenting on (the URL would help). Otherwise I will not be able to find the comment quickly and will not respond.