Cameron boasts he has “hit the richest households hardest”

I hadn’t had time to read the Institute for Fiscal Studies Green Budget before Prime Minister’s Questions, but it was brought up by Lorely Burt, the Liberal Democrat MP for Solihull, who asked David Cameron if he had noticed that the IFS had “confirmed” that raising the income tax threshold “is right”, and that the broadest shoulders were bearing the greatest burden.

I thought this odd, as (a) the IFS does not express political views, and (b) it has previously pointed out that raising the income tax threshold has tended to benefit the better-off. Turn to chapter 7 and we find that the IFS, avoiding politics, says this:

Households in the middle and upper-middle will have tended to lose less than other groups, in no small part because they are the biggest gainers from the substantial increases to the income tax personal allowance.

So I was puzzled when the Prime Minister agreed with Burt and quoted from the Green Budget, saying this Government has “hit the richest households hardest”. Nick Clegg nodded emphatically.

I am not sure Cameron’s words were a direct quotation, but they were a reasonable summary of this, on page 212:

Those on the very highest incomes have clearly been hit the hardest when looking at the fiscal consolidation [measures to cut the deficit] as a whole.

This is a point I have tried to make, but it has nothing to do with raising the income tax threshold. I have commented before on the paradox of the supposedly left-wing Lib Dems pushing a policy that benefits the better-off, while the supposedly grind-the-poor Tories have imposed other taxes that do just enough to ensure that tax and benefit changes overall hit the rich the hardest.

No doubt Nick Clegg will explain all in his speech on “tax and fairness” tomorrow.

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• Kernow Castellan

  I am always very sceptical of these comparative statements, as they compare what is being done with a status quo ante that was not sustainable.

  One could argue (and the IFS itself has) that if no fiscal consolidation were done, then yields would have risen, hitting mortgages, possible IMF involvement and externally imposed austerity. So the comparator itself is not a viable model. It represents a world we could never have got to.

• JohnJustice

  “Hitting the richest households hardest” is hardly the right phrase given the minute impact that government measures will have on their wealth. A limp slap across the wrist is more like it.

• Cyclops

  They’re paying more tax than they did under Labour.