Lower income households paid the most on alcohol and tobacco duties as a proportion of their disposable income

Figures out this morning from the Office of National Statistics give some interesting insights into the amounts we spend on alcohol and tobacco.

The research looks at the amounts we spend between 1995 and 2010.

It found that the richest fifth of households paid the most in alcohol duties in real terms across the 15 years though, lower income households paid the most as a proportion of their household disposable income for all periods from 1997/98 onwards.

In real terms, the average amount of alcohol duty paid per household remained relatively constant throughout this period.

Since 1995 the average amount of alcohol duty paid per household increased from £284 to £309 in 2010, expressed in 2010 prices. The average amount of alcohol duty paid by all households peaked in 2005 at £321, again, expressed in 2010 prices.

Duty on wine accounted for 30 per cent of average household expenditure on alcohol duties in 2009/10, compared with just 15 per cent in 1995/96.

Average real expenditure on tobacco duties declined for all households between 1995 and 2010, from £395 to £311 per year.

Average expenditure on tobacco duty as a proportion of household disposable income is highest for lower income households, though this proportion fell from 4.8 per cent to 3.0 per cent between 1995 and 2010

Growth at 0.5 per cent-should we be worried?

So the growth figures are just out.

The UK economy has grown by 0.5 per cent over the three months to September according to the office of National Statistics

The figure is up on the 0.1 per cent growth in the second quarter of 2011 which the ONS said had been affected by one-off factors such as the Japanese tsunami and the extra bank holiday..

The headlines are that output of the production industries increased by 0.5 per cent compared with a fall of 1.2 per cent in the previous quarter with construction sector output decreased by 0.6 per cent in 2011 Q3, compared with an increase of 1.1 per cent and services increased by 0.7 per cent compared with a rise of 0.2 per cent in the previous quarter.

Meanwhile stock markets are falling after digesting the news from late yesterday that Greece will put the debt package to a referendum.

The FTSE 100 Index opened more than 2 per cent lower whilst Germany's Dax was 4.3 per cent down and the Cac-40 in France lost more than 3 per cent.

Responding to the figures,Labour's shadow chancellor Ed Balls said that today's figures confirm that the British economy has been bumping along the bottom for the past twelve months - flatlining when we need strong growth to get unemployment and the deficit down.

He added that

“Already, the stagnant growth and higher unemployment that George Osborne's failing policies have delivered mean the government is set to borrow £46 billion more than they planned. After today's figures, the Chancellor will now have to downgrade his growth forecasts for a fourth time later this month - and revise up again his borrowing forecasts.

Meanwhile the Institute of Directors Chief Economist James Leach said


“You can’t see the road ahead from the rear-view mirror: today’s GDP figures are welcome news, but they fail to capture the dramatic events of recent weeks in the eurozone. GDP growth is almost certain to flatten off, or even fall, in the fourth quarter of this year due to postponed business investment and consumer caution, even if the eurozone crisis stabilises. Unfortunately we don’t think the crisis is over, it will continue to haunt recovery prospects in the UK.”

New research proves VAT hits the poorest hard

The poorest fifth of households in the UK spent a higher proportion of their expenditure on goods and services that attracted Value Added Tax (VAT) in 2009/10 than in 1986.

That's the conclusion of research out today from the Office for National Statistics (ONS).Overall, the data shows the poorest fifth of households in the UK pay more in VAT as a percentage of their disposable income than the richest fifth.

However, the analysis highlights changing spending patterns. Poorer households in 1986 spent a smaller proportion of their expenditure, than poorer households in 2009/10, on discretionary items which attracted VAT.

For example, after taking into account changes in prices, the poorest fifth of households spent, on average, around 250 per cent more on new cars, holidays abroad, meals out, audio/visual goods (including TVs) and photographic equipment combined in 2009/10 than in 1986. This is compared with an increase of 20 per cent for the richest households.

The analysis reveals that in 1986, the poorest fifth of households spent 55 per cent of their weekly expenditure on non-VATable items, compared with 45 per cent on VATable items. However, in 2001/02, this pattern had reversed. The poorest fifth of households spent, on average, 42 per cent on items which did not have any VAT levy compared with 58 per cent on items which did.

In 2009/10 this reversal was still evident, although to a lesser extent, as the poorest households spent, on average, 45 per cent of their total weekly expenditure on items which did not attract VAT, compared with 55 per cent on those which did. The research extends to 2010, but does not include the current 20 per cent rate of VAT introduced in 2011.

For the richest fifth of households there was no marked change in the proportion of their expenditure on VATable compared with non-VATable items over the period.

Retail sales rises all thanks to computer games

Some good news on the economy this morning as retail sales are up in September.

According to the latest figures from the Office for National Statistics (ONS),sales rose 0.6 per cent reversing a 0.4 per cent fall in August.

The rise,says the ONS,is down to back-to-school sales of laptops and a number of big video game launches.

However clothing sales fell 2.1 per cent on the year, their biggest annual fall since April 2008.That fall may well be down to the unseasonably warm September that we had