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Families Hit Hardest By Austerity - Report

Changes to tax and benefits brought in by the Coalition have cost the average household £1,127 a year, according to a thinktank.

The Institute for Fiscal Studies says the poorest families with children have lost the most, as a proportion of their income, since the Government came to power in 2010.

The independent economic thinktank found that while the richest tenth of society have lost the most in cash terms, the lowest-income 10% of families with children are hardest hit when you look at percentage of household income.

Middle and higher-income households of working age have been mostly unaffected by the changes, according to the IFS, which says they have escaped "remarkably unscathed".

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Those who do not have children have gained financially from the Government's austerity measures, mainly due to increases in the threshold for paying income tax, the thinktank said.

Meanwhile, pensioners have been "relatively unaffected" on average, as gains from the "triple lock" in the state pension have been largely offset by the rise in VAT.

Labour seized on the findings, saying they were evidence of a "clear betrayal" by Prime Minister David Cameron to lead the most family-friendly Government ever.

Cathy Jamieson, the party's Treasury spokeswoman, added: "It's clear working people can't afford five more years of this Government."

But a Treasury spokesman said fairness was "at the heart" of the Government's approach, and added its analysis shows the richest 10% of households have made the biggest contribution to lowering the deficit.

The spokesman said: "UK income inequality is now lower than when this Government came into office and the recovery is being felt across the country.

"But the only sustainable way to raise living standards for all is to keep working through the plan that is securing a better future across the country."

The IFS said it was unable to assign all of the tax rises and benefit cuts implemented since May 2010 to specific households.

Those which could showed an average loss of £489 per household a year.

This comprised an average gain of £321 a year from cuts to direct taxes, such as income tax, a loss of £333 a year from increases in indirect taxes, such as VAT, and a £477 a year loss from cuts in benefits.

The IFS found that the poorest households lost around 4% of their incomes, and the next poorest tenth lost around 3.5%.

Middle-income households lost between 2.5% and zero, with a loss of about 2.5% for the richest.

Families with four or more children have lost 6.9% of their income, an average of £2,941, compared with a 4.5% loss for families with three children, 3.5% for two-child families, 2.6% for those with one and 0.4% for households with no children.

The worst-hit household type were non-working lone parents, losing about £1,837 a year, although the IFS said this was skewed upwards by a small number of households affected by changes such as the cap on benefits and national caps on local housing allowance rates.