"It goes back to a culture of how you measure fairness that took root under Gordon Brown's time, where fairness was seen through one prism and one prism only which was the tax and benefits system. It is a complete nonsense to apply that measure, which is a slightly desiccated Treasury measure. People do not live only on the basis of the benefits they receive. They also depend on public services, such as childcare and social care. All of those things have been airbrushed out of the picture by the IFS."
Mr Clegg is not always wise in picking fights with the Institute for Fiscal Studies.
But let any such airbrushing end at once.
Let us immediately take up the deputy Prime Minister's challenge.
What happens if you undertake the fullest possible survey of the distributional impact of public spending changes - on the services that "people live by", as Clegg rightly says?
Is what the deputy PM thinks true? Are the spending changes much more progressive than the government's tax and benefit changes? Unfortunately for those hoping the government would be able to act on its "progressive austerity" commitments, he could not be more wrong about that.
A full analysis of the spending changes shows these are very sharply regressive. (Indeed, the specific changes which the government has announced have proved more regressive than was anticipated by allocating the overall scale of cuts equally to non-ringfenced departments).
The new post-CSR data is published by the TUC today. (The data can be downloaded here).
It shows that the poorest ten per cent of households will be hit 15 times harder than the richest ten per cent as a result of service cuts announced in the comprehensive spending review. The research been undertaken by Howard Reed of Landman Economics, experts in economic modelling, and Tim Horton, research director of the Fabian Society, to offer a post-CSR supplementary analysis of their 'Where the money goes' (PDF) report published by the TUC last month.
Using official figures to calculate how different groups benefit from different public services, the Reed and Horton analysis shows that the poorest ten per cent of households, with incomes below £10,200, will suffer reductions in spending on services equivalent to 29.5 per cent of their annual income on average, or £1,913 a year.
The second poorest group of households, with incomes between £10,200 and £12,900, will be hit hardest in cash terms – losing services worth £2,164 a year – and the TUC analysis confirms that the higher up the income scale people are, the less they lose from the cuts. The richest ten per cent will lose services worth just two per cent of their net income, the equivalent of £1,506 a year.
The analysis examines the impact of the CSR on different types of family and finds that lone parents will be hit the hardest, losing services worth 18.4 per cent of their income on average (£3,121 a year). Single pensioners are next, losing services worth 11.1 per cent of their income on average (£1,305 a year).
The analysis uses the same spending model behind the TUC report Where The Money Goes published last month on the eve of TUC Congress. This found that on average households benefit from £21,000 worth of services a year, and that those on low or modest incomes gain more than the better-off.
Where The Money Goes predicted that cuts of 25 per cent by 2012-13 (while ringfencing health expenditure and partially protecting education) would mean that the poorest ten per cent of households would lose around 20 per cent of their income.
But today’s analysis, using data from the CSR, shows that overall cuts to public spending (excluding benefits and tax credits) of £48 billion (in today’s prices) by 2014-15 will be even more regressive, partly because of deep cuts to services which are disproportionately used by the poorest households – such as social housing and social care.
The analysis examines the impact of the cuts on four typical families:
* A family with two school age children on modest earnings will suffer service cuts equivalent to 13.2 per cent of their income, or £2,631 a year.
* An affluent family with children at university will suffer service cuts equivalent to 19.4 per cent of their income, or £3,889 a year.
* A working lone parent with two children will suffer service cuts equivalent to 15.7 per cent of their income, or £3,132 a year.
* A pensioner couple will suffer service cuts equivalent to 16.2 per cent of their income, or £2,226 a year.
The Treasury's own distributional analysis of the CSR also shows that the spending changes are regressive. However, the Treasury analysis has chosen to model only about half of public spending - omitting home affairs, policing and most areas which are public goods like defence or environmental protection - while the TUC analysis seeks to model all the impact of all of the spending cuts in the CSR. The TUC reports finds that the smaller Treasury sample considerably underestimates the regressivity of the CSR by comparison with the model which seeks to count all of the spending.
To coincide with these findings, the TUC is launching a new ‘cuts calculator’, which allows people to work out how much they are likely to lose from the spending review. (The online cuts calculator).