If the government makes ‘savings’ of £1million, what does it actually save? Well, by savings we mean job cuts, and almost all of the job cuts are from lowly paid workers.
A person on (say) £12000 a year will pay £673 in tax and NI contribution. They now do not have a job and so will receive (at least) jobseekers allowance of £73.1 a week, or the equivalent of £3801 a year. So the immediate saving is not £12000 but £7525 a year.
But someone on a low income will not be saving, but spending their money to live. The government will therefore lose VAT on their spending, let’s say on average 15%. Applied to £7525 a year this reduces the saving to £6397.
On top of that, anything that they buy will add to the profits of the business who sell them the product – and the business will be paying tax on the profit. The business will employ someone to get the product to them and serve them – and that person is paying tax too.
So for every £1million that the government claims to cut the saving is probably only half at best.
In terms of human suffering this seems to me to be a very cruel and inefficient way of balancing the books. Surely it is better to increase the contributions from the wealthy who will not suffer any hardship, but simply see a reduction in the amount of money that they squirrel away?