Green Paper Discussion (from 24th March, 2025)

EHRC In 2017, the Equality and Human Rights Commission commissioned Aubergine Analysis and Landman Economics to work with the National Institute of Economic and Social Research (NIESR) to carry out a cumulative impact assessment (CIA) of the distributional impacts of tax and spending decisions on people sharing different protected characteristics.

We also examine the impact on the right to an adequate standard of living, as measured by relative poverty and the Minimum Income Standard measure published by the Joseph Rowntree Foundation (JRF) (2017).

Our 2015 report, ‘Future fair financial decision-making’, made a number of recommendations for the UK Government’s approach to future Spending Reviews (and tax and spending decisions more broadly) in the context of the Public Sector Equality Duty (PSED).

A key focus of those recommendations was that HM Treasury (HMT) should extend its analysis of the aggregate distributional impacts of tax and spending decisions to analyse the aggregate impact of decisions on people sharing different protected characteristics – that is, carry out a CIA (EHRC, 2015).

At the time of writing (February 2018), HMT had not acted on this recommendation.

The project forms part of our detailed programme of work on welfare reform, including a comprehensive literature review by NIESR on recent welfare reforms and welfare-to-work programmes (Hudson-Sharp et al., 2018)

The cumulative impact of tax and welfare reforms

Our analysis shows that, overall, changes to taxes, benefits, tax credits and UC announced since 2010 are regressive, however measured – that is, the largest impacts are felt by those with lower incomes. Moreover, the analysis shows that

• Negative impacts are particularly large for households with more disabled members, and more severely disabled individuals, as well as for lone parents on low incomes.

• Around one and a half million more children are forecast to be living in households below the relative poverty line as a result of the reforms. These negative impacts are largely driven by changes to the benefit system, in particular the freeze in working-age benefit rates, changes to disability benefits and reductions in UC rates. The changes are also likely to lead to significant increases in the number of children (in particular) below a minimum acceptable standard of living.

Our review of progress since our 2015 report also suggests that considerable work still needs to be done to ensure that equality considerations are fully incorporated into decision making by HMT, and more broadly across the UK Government.

However, despite high-level commitments to ensuring that equality considerations are properly taken into account in financial decisions, and some indication that progress has been made internally on data quality and availability issues, there is little concrete evidence that the specific recommendations have been properly considered or acted upon. The published Impact on Equalities Analysis and the distributional analysis to accompany the 2015 Spending Review do not appear to represent any significant progress from comparable documents produced in 2010.

The continuing lack of evidence of an assessment of the cumulative impact on protected groups does not appear consistent with the PSED.

We therefore recommend that, as a matter of urgency, the UK Government reviews the level of welfare benefits to ensure that they provide an adequate standard of living for households who rely partially or wholly on transfer payments.

Specific reforms that have a particularly adverse impact on living standards for particular groups include

• The reassessment of the caseload of DLA payments for PIP (we note, however, that these impacts will be substantially mitigated as a result of the recent High Court judgment against the UK Government). This has a disproportionate impact on disabled people, especially the most severely disabled.