George Osborne may have – politically – sweetened the bitter pill of his Budget by ending it with a surprise announcement about the National Living Wage. But the Institute for Fiscal Studies still wasn’t that keen to swallow it today.
As well as revealing that 13 million families will lose £260 a year on average as a result of the freeze to most working age benefits (with 7.4 million of those in work, losing £280), the IFS’s analysts also pointed out that the increase in the minimum wage did not make up for the cuts to tax credits.
Paul Johnson said:
‘The key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients. That is just arithmetically impossible.
‘The gross increase in employment income from the higher minimum wage is about £4 billion.
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