How Women and Those on Low Incomes Have Borne the Brunt of Austerity

14/03/2016 11:18 | Updated 14 March 2016

all women everywhere

On Wednesday George Osborne will deliver his Budget speech in the Commons for the seventh year running. Over that time, the rhetoric that 'we are all in this together' has faded and evidence has mounted that women and those on low incomes have borne the brunt of austerity policies.

Under the Lib-Dem/Conservative government from 2010-15, more than 80% of the revenue raised by Treasury from tax and benefit changes came from women's pockets.

Worryingly, research published last weekend by the Women's Budget Group shows that the policies announced so far by the Conservative government that took office in May 2015 are going to hit women and those on low incomes even harder.

The findings of the research could not be starker: the ten percent lowest income households will experience a drop in annual living standards of 23% by 2020, while the richest 10% see their living standards fall by only 5%.

Figure 1 Cumulative impact of tax/benefit and spending cuts as % of living standards by household income decile groups (2010-20)


Source: Author's calculations using Landman Economics tax/benefit and public spending microsimulation models

Note: 'Coal.' stands for measures announced by the Lib-Dem Conservative coalition government of 2010-15 and 'Cons.' for those made by the 2015-20 Conservative government. Decile 1 represents the 10% lowest income group and Decile 10 the t10% highest. Living standards stand for the household's disposable income plus the value of in-kind public services they use (such as healthcare, free education).

With women making up the majority of those on low incomes, it is not surprising that female-headed households are the worst affected. By 2020, female lone parents and single female pensioners will experience the greatest drop in annual living standards, on average around 20%.

There are legitimate questions to be asked about the fairness of austerity politics that place the greatest burden on those who are least able to pay.

Yet, even setting aside these questions, the policies of the last five years do not make good economic sense. The recipe for a recovery based on a combination of 'quantitative easing' - that is expanding the money supply available to investors - while cutting back on public expenditure, has failed to stimulate sustainable growth and employment of high quality. The large economies are again vulnerable to crisis.

Even the large international institutions are now calling for rich countries to ease up on austerity. In late February, the Chief Economist of the OECD, Christine Mann, argued for 'a greater use of fiscal (that is public expenditure) and pro-growth structural policies' when launching their 2016 Economic Outlook.

So what should George Osborne do tomorrow?

Investment, as the OECD has noted, is key. But crucially not just in building more roads and railways or power stations. Real dividends will come from investing in Britain's "social infrastructure" - in the health, education and care sectors that are necessary for an economy to sustain itself.

Investment in these industries, which are so often framed as a drain on the economy, has the potential to deliver greater economic returns than comparable investments in infrastructure, quite apart from the social benefits of a healthy and well educated population.

We modelled the employment effects of investing 2% of GDP in caring industries in seven OECD countries. Across all seven countries, more jobs were created by investing in care than in construction. In the UK, this would create some 1.5million new jobs as compared to 750,000 if the same amount was invested in construction.

Such an investment would also begin to close the gender gap in employment, raising women's employment rate in the UK by five percentage points, while still raising men's employment almost to the same extent as investing in construction.

So, George, the message coming from all quarters now - the activists on the street and the elites in international institutions - is clear: abandon austerity and embrace public investment in vital services to build a healthy and caring society and economy.

HuffPost UK is running a month-long project in March called All Women Everywhere, providing a platform to reflect the diverse mix of female experience and voices in Britain today. Through blogs, features and video, we'll be exploring the issues facing women specific to their age, ethnicity, social status, sexuality and gender identity. If you'd like to blog on our platform around these topics, email with a summary of who you are and what you'd like to blog about