Austerity grim reaper George Osborne claims living standards are rising, all whilst the nation is in poverty
George Osborne thinks living standards are rising. Millions of working families know he is wrong
The Chancellor’s desperate attempt to claim that living standards are rising jars with the reality of most people’s lives, writes Chris Leslie.
By Chris Leslie MP3:07PM BST 26 Jul 2013CommentsComments
Living standards are “the new battleground” in British politics, as the Telegraph Politics Evening Briefing noted yesterday and as the BBC’s political editor concluded on last night’s News at Ten.
This is familiar territory for Labour, which has been talking about the “squeezed middle” for the last three years.
It’s no wonder that the political debate is shifting again to the cost of living when, despite yesterday’s welcome and long overdue signs of growth in the economy, average earnings continue to lag way behind price rises month after month, as this powerful chart from Markit Economics shows. In fact, this is now the longest squeeze on family incomes since the 1870s.
Labour will relish continuing to fight on this battleground over the coming months – because while millionaires got a huge tax cut a few months ago, most families are finding they are worse off under the Tories. Pay is now down by £1,350 a year in real terms since David Cameron and George Osborne came into office. And that’s before the impact of tax and benefit changes since 2010, which the Institute for Fiscal Studies says has cost families an average of £891 this year alone.
As Ed Miliband and Ed Balls have said over the last year, we need a strong and sustained recovery made by the many, not just a few at the top. That is what we mean by a One Nation economic plan.
And that’s why this week the shadow chancellor joined forces with the former US Treasury Secretary Larry Summers to launch a transatlantic commission on inclusive prosperity. It will examine the long-term reforms we need to ensure that economic growth leads to rising living standards for people on middle and low incomes.
Revealing his vulnerability on this area, George Osborne has made a desperate attempt to claim that living standards are rising not falling. This has backfired because not only does it jar with the reality of most people’s lives, it’s also deeply misleading. On George Osborne’s chosen measure of “real household disposable income”, figures from the ONS show it actually fell by 1.7 per cent in the latest quarter – the biggest fall since 1987.
The Chancellor also repeats his argument that we are all in together, citing figures that show inequality falling. But he forgets to mention that this happened in the year after Labour raised the top rate of tax and the year before he cut it again while squeezing people on middle and low incomes ever tighter.
And the idea that a record squeeze in people’s living standards, long-term unemployment at a 17-year high, three years of flatlining, two credit rating downgrades, a deficit reduction plan that has ground to a halt and a promise to balance the books by 2015 that’s now in tatters show that George Osborne’s strategy has worked is possibly the most out-of-touch claim of all.
We need action now, not out-of-touch claims that everything is going to plan and things are getting better for ordinary families.
First, we need action to secure a strong and sustained recovery and catch up the lost ground of three years of flatlining, with policies that will create jobs now and strengthen our economy for the long-term. That should include bringing forward infrastructure investment, as the IMF has demanded, to take advantage of current record low interest rates. If the £10 billion boost recommended by the IMF was invested in housing, we could build 400,000 affordable homes, support 600,000 jobs and create thousands of new apprenticeships too.
Second, we need real welfare reform, with a compulsory jobs guarantee for young people and the long-term unemployed – paid jobs that people would have to take up or lose their benefits – funded by a tax on bank bonuses and restricting pension tax relief for those on over £150,000 a year to the same rate as basic rate taxpayers.
Third, we need fairer choices on tax. Instead of a top-rate tax cut for the very highest earners this year, the Government should have protected tax credits for working families that ensure work pays. And we should give a tax cut now to working people on middle and low incomes by bringing back a 10p starting rate of tax, paid for by a mansion tax on the very wealthiest.
Fourth, we need to act where working people are paying more than they should, for example by breaking the stranglehold of the big six energy suppliers, stopping the train company price rip-offs on the most popular routes and capping interest on payday loans.
David Cameron and George Osborne refuse to contemplate any of these measures. They continue to stand up for the wrong people and rely the on the discredited notion that tax cuts at the very top will trickle down to benefit everybody else. That’s the opposite of One Nation, it isn’t working and millions of working families know it.
If the Tories are finally willing to fight on the issue of living standards and fairness, then bring it on.