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Friday, October 22, 2010

Is the Institute of Fiscal Studies being fair?

Nick Clegg has hit back at the Institute of Fiscal Studies this morning, questioning their view that the Government's economic policies are unfair.

He said that he "fundamentally" disagreed with the IFS analysis that the cuts are "regressive", meaning they would hurt the less well off more than wealthier people, with families with children faring worst of all:

He insisted that "the richest are paying the most", adding: "Those who say otherwise are not being very straight with people and frankly they are frightening people."

In an interview with The Guardian, the Deputy Prime Minister said: "We just fundamentally disagree with the IFS.

"It goes back to a culture of how you measure fairness that took root under Gordon Brown's time, where fairness was seen through one prism and one prism only which was the tax and benefits system.

"It is a complete nonsense to apply that measure, which is a slightly desiccated Treasury measure. People do not live only on the basis of the benefits they receive.

"They also depend on public services, such as childcare and social care. All of those things have been airbrushed out of the picture by the IFS."

Personally, I believe that it is inevitable that any cuts in public services will mean that poorer families suffer, because they are the biggest users of those services. That would have been true of Labour's plans to cut slightly more than the Coalition Government as well.

However, it seems to me that every effort has been made here to spread the pain around and that the biggest losers are the richest 2%. Even the IFS seem to acknoledge that.

I do not believe that the IFS have a political agenda but I do agree with Nick that the basis on which they are making value judgements is skewed. If we based our economy on such a premise then we would value welfare dependency above employment and work. That is not the way to run a successful economy, nor is it the view of the vast majority of people.
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