Andrew Tyrie challenges chancellor over budget 'impact' assessments

The chancellor, Philip Hammond, has been challenged by an influential politician to reveal how changes in his tax and spending policies will affect the poorest and richest people in Britain.

Seizing on the pledge by the prime minister, Theresa May, to create a fairer society, Andrew Tyrie MP, the Conservative chair of the Commons Treasury select committee, said the government must bring back its practice of publishing a detailed distributional analysis in future budgets and autumn statements.

The coalition government started releasing such an analysis in 2010, showing the impact of changes to tax, welfare and public spending on households in different parts of the income distribution. At the time, former chancellor George Osborne described it as cutting-edge work and later highlighted the analysis as the most comprehensive and robust assessment (pdf) on how policies had affected families.

But after the Conservatives won the 2015 general election, the analysis was dropped and replaced with what Tyrie describes as a “deficient substitute”.

Ahead of an autumn statement from Hammond, expected in November or December, Tyrie has written to the chancellor calling for the former “excellent” analysis to be reinstated.

In a swipe at Osborne, Tyrie wrote: “I would be grateful for an assurance that you will reinstate the distributional analysis of the effects of the budget and autumn statement measures on household incomes, recently and mistakenly discontinued by your predecessor.”

Tyrie commented on his letter: “The new prime minister is committing her government to making Britain a country that works ‘not for a privileged few, but for every one of us’. A high level of transparency about the effects of tax and welfare policy on households across the income distribution would seem to be a logical, perhaps essential starting point.”

In the letter, Tyrie criticises the Treasury’s newer analysis for showing changes in the share of public spending received and taxes paid by households, rather than the amounts they receive.

The newer analysis also sheds little light on how households are affected at any given moment, rather it projects a future outcome. It also looks at five income groups rather than 10 and so does not give much insight into the very poorest and very richest households.

Tyrie’s call is likely to be welcomed by anti-poverty campaigners who before the March budget this year had called upon Osborne to produce the more detailed distributional impact assessment.