New research suggests that the middle classes have not gained at all from the increase in their benefits over the last decade. The independent think tank Reform says that middle and high earners receive an extra £41 billion from government compared to ten years ago but pay a similar amount in extra taxes. This welfare money-go-round means that George Osborne can and should make deeper cuts to the benefits received by middle class people in his Spending Review.
The first comprehensive analysis of the growth of middle class welfare has found that middle and high earners received an extra £15 billion in welfare benefits in 2008-09 compared to 1998-99, and an extra £27 billion in benefits in kind. But this apparent gain was just an illusion since they paid an extra £35 billion in direct taxes such as income tax and £6 billion in indirect taxes such as VAT.
The study argues that the Government should prioritise cuts to middle class welfare since its other welfare reforms need more work.
Andrew Haldenby of Reform says, "Commentators have called on the government to cut the taxes of the middle classes before cutting their benefits. In fact it is the other way round - cutting their benefits will allow a reduction in their taxes once the deficit is under control. The middle classes gain nothing from the current situation."
If you are unable to work due to illness or accident, forget expecting the government to bail you out of mortgage or credit card debts; income protection and critical illness policies are vital.