In the run-up to the general election in May, you can expect a lot of guff. Each week, we’ll give you the facts.
In last week’s Budget, George Osborne claimed that living standards had risen under the coalition government. “Households on average will be around £900 better off in 2015 than they were in 2010.” Yet Labour leader Ed Miliband argued that Osborne “has failed the working families of Britain”, since “people are clearly worse off under him”. So who’s right?
As you might expect, it depends on how you measure living standards. Osborne quoted two measures: inflation-adjusted GDP per person and real household disposable income per person (which looks at average household incomes after taxes and benefits).
Miliband instead focused on inflation-adjusted weekly earnings. To complicate things further, theLabour leader used figures that stopped in April 2014. The chancellor’s figures include estimated growth to the end of December 2015 – a difference of over 18 months.
On balance, Paul Johnson of the Institute for Fiscal Studies, one of the most respected non-partisan think tanks, thinks the bigger picture tends to favour Miliband – it is nearly impossible to deny that “real earnings have fallen” and “we are for sure much worse off on average than we could reasonably have expected to be back in 2007, or indeed back in 2010”.
While “average incomes among pensioners have risen, among those of working age they have fallen, with especially big falls for those in their 20s”.