The transparent attempt by the government to selectively reinterpret the data so as to downplay the so-called 'cost of living crisis' is frankly rather alarming.
The coalition is being rather disingenuous, aren’t they?
Splashed across several of the newspapers this morning was the extraordinary claim, emanating from government, that living standards, employment and pay are all rising as economic recovery takes hold.
“Official analysis showed that wages rose faster than inflation for 90 per cent of people last year,” as the Daily Mail put it.
The economy has certainly returned to growth recently after three years of stagnation, but are living standards really on the rise?
No, is the short answer.
Firstly, the data the government has used for their claim is highly selective, as some commentators have pointed out. It excludes mortgage interest payments, which are a huge added cost for some families, especially in the south east of England, and fails to take changes to the benefits system into account, which include changes to in-work benefits, tax credits and child benefit.
According to the Institute for Fiscal Studies (IFS), it’s those on low incomes who are now feeling the squeeze because of changes to social security payments and who will continue to be the hardest hit as benefit reforms take effect in the next few years. There is a plethora of anecdotal evidence suggesting as much this already: half a million people received three days emergency food assistance from a Trussell Trust food bank between April and December 2013, for example.
The Annual Survey of Hours and Earnings (ASHE), which is what the government is basing its calculations on, also excludes those who are self-employed in its calculation, and they make up 14 per cent (and growing) of the workforce.
And finally, as the economist Jonathan Portes has pointed out, coalition calculations are also based on weekly rather than annual earnings – whereas tax liabilities are calculated annually. They aren’t comparing like with like.
In summary, the latest Office for National Statistics (ONS) figures showing that total pay growth is still just 0.9 per cent – half the level of inflation which is 2 per cent – are still the best figures to go by.
As Paul Johnson, director of the IFS, put it on the Today programme earlier this morning:
“If you’re looking at the whole of household income, a lot of this information is a little bit out of date. We’ve done our own work looking at where we think things will be going and it does look pretty clear that, as I said, by 2015 incomes won’t have recovered their 2010 or 2008 levels.”
The transparent attempt by the government to selectively reinterpret the data in order to downplay the so-called ‘cost of living crisis’ is frankly rather alarming.
To reach hundreds of thousands of new readers and to make the biggest impact we can in the next general election, we need to grow our donor base substantially.
That's why in 2024, we are seeking to generate 150 additional regular donors to support Left Foot Forward's work.
We still need another 124 people to donate to hit the target. You can help. Donate today.
10 Responses to “The coalition’s cost of living sleight of hand”
Selohesra
I think it would be truely astonishing if we were now better off that 2008 or 2010 – the depth and damage of Labour’s recession was enourmous and will take a lot of pain from everyone to repair. Fortunately it sdeems that we have just started on a recovery – but a long way to go
blarg1987
Just to correct your point it was not Labours recession but a recession of Conservative and New Labour policies over several decades. Both parties put in policies that contributed to the recession so both are culpable.
Rich
I’m your average run of the mill bloke, I work as a cover teacher in a very large school in the North of England. I’ve worked all my life and paid taxes for the last 30 years. I’ve been prudent throughout my life and up till now Ive never owed anyone anything EVER, no over draught, no credit cards, no loans!
I now have almost £2,000 of rent arrears and my landlord has served an order seeking posession of my home, I’ve never felt so desperate as I do now!
I’m classed as ‘Working Poor’, I do have to choose between heating and eating, I have a disabled daughter and the care I can give her has been squeezed so much I’m struggling, ATOS have hounded us relentlessly!
My older children have moved out of our family home of 22 years and I’m now subject to the insidious Bedroom Tax.
I do not see a way out of my situation, there’s no more money and none on the horizon.
How on earth have these Eton buffoons come to the conclusion that people like me are better off?
How dare they preach these blatant lies and what can people like me do about it!
Sparky
Prove it.
blarg1987
Well it was a Conservative Goverment that allowed de regulation of the city, encouraging large risk taking and relaxing or repealing many laws that were put in place following the crash in 29. This encouraged many building socities to become banks,
New Labour when it came to power did not reinstate any of the laws that were repealed and the Conservatives in opposition demanded even more deregulation of the banking system.
This all came to a crunch in 07 with the financial crisis with many of the building socities that turned into banks (following deregulation of the Conservative Goverment) going bust due to risk taking and not hiolding enough capital which neither party ensured there was a regulaton for when in power or push for a regulation when in opposition.
And your prove to the contrary is?