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Government's tax and welfare policies have shifted money from the poorest to the rich

By David Hughes

The Government's tax and welfare policies have shifted money from the poorest to the better off, an academic study has found.

The research shows reductions in benefits financed cuts in taxes, with an income transfer from the poorer half of households to "most of the richer half", although the wealthiest were also hit.

The study, by academics at the London School of Economics and Essex University, found that "clear losers" include lone-parent families, large families, children and the middle-aged.

The report's authors wrote: "Whether we have all been 'in it together', making equivalent sacrifices through the period of austerity, is a central question in understanding the record of the coalition Government.

"It is clear the changes did not lead to uniform changes in people's incomes.

"The reforms had the effect of making an income transfer from the poorer half of households (and some of the very richest) to most of the richer half, with no net effect on the public finances.

"In effect, the reductions in benefits and tax credits financed the cuts in taxes. Some groups were clear losers on average -including lone-parent families, large families, children and middle-aged people. Others were gainers, including two-earner couples and those in their 50s and early 60s."

According to the research, the poorest 5% in terms of income lost nearly 3% of what they would have earned if the UK's tax and welfare system of May 2010 had been retained.

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