IFS view vs Treasury view

Much has been said about the IFS report that suggests the Emergency Budget was not progressive, disputed by the treasury.  I was curious so I got a copy of the report.  As always there are a number of ways of looking at it, this is my way.  
Firstly the idea that you can look at the emergency budget in isolation is nonsense.  The emergency budget was made with the measures already announced in the March budget in mind.  It is only fair to look at the two together and see the overall impact.
Secondly the IFS looks at the impact of the budget by 2014, this assumes that for the next 3 years budgets the chancellor is going to lock himself away with his advisors for days, then pose outside number 11 with that red briefcase, jump in his ministerial car, arrive in a packed house of commons, stand up and say "I think will just leave things as they are" - it's not going to happen.
Thirdly, unlike the treasury, the IFS include employer national insurance contributions which they assume will lead to lower wages.  It is possible employers take that view, however they are constrained by the minimum wage.  The lowest paid can't have their pay reduced, the IFS assumption is flawed.
So basically have 2 big changes to look at.  
Firstly VAT.  It is often debated whether this is a progressive tax or not.  If you consider that VAT is only paid on luxury good and that those on low incomes will buy far less luxury goods, then it could be seen as progressive.  However VAT is only paid if you spend money, low income families spend all there money, higher income families may not.  Professionals seem divided, on balance, it is neither very progressive or regressive.
Secondly the increase in income tax thresholds (A Lib Dem manifesto promise).  This will take 880,000 low paid families out of income tax.  It will result in a £170 cut in tax for all those on low and medium incomes.  This change will more than cover the increase in VAT those of low and medium wages will pay.  In addition, those on high incomes will not gain as the threshold for higher rate of tax has been reduced.  So this is very much a progressive tax change.
These combined changes do look progressive, however there is one snag.  The VAT increase impacts on anyone who buys non essential goods (as defined by the treasury - I may blog more on this as there are some strange rules).  The reduction in income tax thresholds reduces tax for all those who are on medium and low earned income.  It does not help those who are dependant on state benefits.
The problem the coalition would have in trying to correct this is simple.
Private sector workers (those in work, not paid by the government) have had their wages frozen or cut
Public sector workers (those in work, paid by the government) have had their wages frozen.
Had the government even considered increasing benefits, it would have failed the critical test of fairness the Lib Dem involvement in the coalition secures.
I totally support the existence of the welfare system to protect those who are unable to work due to health or are between jobs through no fault of their own.  But even many of those on benefits will agree it is wrong to put benefits up when wages are frozen.
I have met people on benefits who have told me that they would end up worse off by coming off benefits and going to work.  This budget may have changed that a bit.  I think that is a progressive step.