The House of Commons Library estimates that, looking at all changes to taxes and benefits from 2010-2017, 86% of the reduction in government spending is in spending on women. This is based on which person in a household receives a benefit or is taxed, so doesn’t factor in the “indirect” impact on partners and household budgets.
The House of Commons Library estimates that, up to the 2017 autumn budget, 86% of the reduction in public spending which the government has made through changes to taxes and benefits is from spending which previously went to women.
The reason women are most affected is that they are most often the recipients of the main benefits which have seen reductions in spending, such as child tax credit. There is also some evidence that the impact on women is most disproportionate, in comparison to men, among higher earners.
These calculations don’t tell the whole story though. Even if a woman is the nominated recipient of child tax credit, if she lives with a male partner, that partner will also be affected by the loss to household income. So these figures don’t reflect the “indirect” impact on other household members. It also doesn’t include spending changes that can’t be linked to individuals (e.g. departmental spending and business tax rates).
This isn’t the first time Labour has made such a claim
Back in 2010, the coalition government committed to operating without a structural deficit on day-to-day spending by 2014/15 (a target that wasn’t met, and still hasn’t been), which required reductions in public spending.
Since 2010, Labour has asked the House of Commons Library (a research service for MPs)—using Treasury data—to look at every single specific change to direct taxes, benefits and tax credits under the coalition (and now also Conservative) governments, starting with the coalition's first budget of June 2010. Labour asked them to work out the financial impact of these changes on women and men respectively. The methodology was created by the Labour MP Yvette Cooper. We first covered Labour’s reporting of the findings five years ago.
The latest estimate, produced following the autumn budget in 2017, is that since 2010, 86% of the £94 billion net reduction in public spending (which the government has made through tax and benefit changes) comes from money that previously went to women.
Women are the main recipients of the benefits which have been affected
The main reason for this is that that women are the main recipients of the benefits which have seen the biggest reductions in government spending.
For instance, the Treasury picked out the child element of tax credits as a major area for savings, by limiting how many children can be claimed for—in 2016 it estimated this would be worth £1.6 billion in savings by 2020/21. Among in-work families, 86% of recipients of child tax credits were women in April 2018—meaning more women will be affected by a loss of child tax credits than men.
On the flipside, some of the government’s tax changes have seen individuals gain, rather than lose, income. The increase in the personal tax allowance is one of these. As roughly 60% of income taxpayers are men, more men will get a financial benefit from this policy than women.
These calculations aren’t perfect
As the House of Commons Library puts it, its calculations generally assume “that policies primarily impact on the gender of the person to whom the benefit is paid or tax imposed.”
This is a limitation on the calculation, because it doesn’t reflect how reductions in benefits might be felt across the whole household. For instance, child tax credit (in areas where Universal Credit has not replaced it) is paid to a nominated person within the household—most often a woman. But many of these women live with a male partner, who would likely also be affected by that loss of income.
We don’t know to what extent the women and men included in the House of Commons Library’s calculations are pooling their incomes into a wider household budget.
Another issue is that, even if we know what proportion of recipients of a certain benefit are women, we don’t always know what the average award is. If the male recipients of a certain benefit get, on average, a higher payment than female recipients, then this needs to be factored in, alongside the number of recipients of each gender.
The House of Commons Library says “where possible, information on differences in the average awards paid to men and women is taken into account”—but it’s not always possible for them to do so.
The government has questioned the selection of government policies included in Yvette Cooper’s methodology. The calculations don’t include spending changes that can’t be linked to individuals (e.g. departmental spending and business tax rates). The government has also argued that it should not include reductions in benefit which affect higher-earning individuals, such as the removal of child tax credits for parents earning £50,000-£60,000.
This links to a broader government argument that the analysis does not recognise the benefits of spending reductions in creating “sound public finances” and economic security (as made by then-Chancellor George Osborne back in 2015). But assessing the wider systemic impact of spending reductions is beyond the scope of this piece.
Further evidence supports the House of Commons Library’s findings
Focusing just on the direct financial impact of spending reductions, there is more evidence to suggest that women have been more negatively affected than men in terms of income.
In November last year, the Equality and Human Rights Commission (EHRC) released a report on the “impact of tax and welfare reforms between 2010-17”. It looks at the financial impact of government policies since 2010 on a specific set of areas, including income tax, benefits, tax credits, and Universal Credit. It doesn’t exactly match with the House of Commons Library’s method, but takes a broadly similar approach.
The EHRC report found that “Women lose more than men from reforms at every income level. Overall, women lose around £940 per year on average, more than double the losses of around £460 for men”.
The EHRC also shows that the relative impact on men and women varies according to income level. By dividing the country into ten income “deciles” (with 1 being the lowest 10% of earners, and 10 being the highest-earning 10%), the smallest difference in impact is among the lowest 10% of earners (an average loss of just over £800 per year for men and around £1,000 for women).
The biggest gap is in decile 7 (a loss of around £220 for men, and around £740 for women). Men toward the top end in deciles 8 and 9 are typically no worse off, and men in decile 10 have gained an average of just under £200 a year. Women in deciles 8 and 9 are an average of £400 worse off, and typically £500 worse off in decile 10.
The report argues that “the result that women experience larger losses than men is mainly driven by the fact that women receive a much larger proportion of benefits and tax credits than men” and that since 2010 “the largest negative impact on incomes is as a result of cuts to benefits”.
This is also why disparities between men and women are highest in younger age groups. Among families receiving benefits relating to children, it is most often the mother who receives them. This means the findings are subject to the caveats we highlighted earlier, about how we don’t know the “indirect” effect upon any male partners of women receiving child tax credits.
The report also picks out a number of other groups, beyond women, who are particularly affected by tax and benefit changes. Ethnic minority households, households containing someone with a disability, lone-parent families, and families with three or more children are all picked out as “significantly adversely impacted”.
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