Question to the HM Treasury:

To ask Her Majesty’s Government why they changed the basis of the distributional analysis of the most recent budget presented in <i>Impact on Households</i> from that in previous such documents, and whether they plan to publish (1) the analysis on the same basis as hitherto, and (2) estimates up to 2019–20.

The Government published analysis of the impact of government policy across the income distribution alongside the Summer Budget. This set out a new approach to distributional analysis, abstracting from the level of government borrowing. Under the previous framework, a pound of extra borrowing would appear as a gain to households. But higher spending or lower taxes today would increase the deficit and the debt burden, with consequences for households in the future. The new analysis considers how policy decisions affect the share of tax and public spending paid by and received by households.

The analysis showed that decisions made by this government mean the poorest continue to receive the same share of public spending as they did in 2010-11, while the share of tax paid by the richest has increased.

Publishing analysis for 2017-18 reflects a compromise between including as much of the Summer Budget package as possible, and making as few assumptions as possible about changes in the wider economy into the future. By 2017-18 the majority of announced welfare measures have come into effect, as have most of the significant changes to the tax system. Analysis for 2016-17 would capture very few of the measures announced in the Summer Budget; analysis from 2018-19 onwards, would need to make substantial assumptions about changes in household incomes and inflation.