According to the IFS, people really are worse off under the Tories

Despite the sort of spin that we saw last Friday, people really are worse off under the Tories.

George Osborne Autumn Statement-JPEG

This time last week members of the government were telling journalists that, after a long period of malaise, living standards were once again on the rise.

The economy had been growing for some time and, so Tory HQ presumed, it would be credible to claim that living standards had now caught up with inflation (never mind that the Office for National Statistics had recently said the opposite).

Well today we’ve seen a categorical refutation of such claims from no less than the respected (and independent) Institute for Fiscal Studies (IFS).

In its 2014 Green Budget, the IFS says that as things stand there is “little reason to expect a strong recovery in living standards over the next few years”. It adds that “real earnings are not expected to return to their 2009–10 levels until 2018–19” (Chapter 6, page 1).

While the respected indepenent think tank says that the fall in median income has probably now halted, they add that real median household income is still more than 6 per cent lower than before the economic crisis hit in 2007-08.

Incomes at the top have fallen faster than incomes at the bottom since the crash, but it is the poor who have experienced higher levels of inflation, as food and energy prices have risen much faster than the average between 2008 and 2013. The IFS estimates that, since 2008, average annual inflation has been 1 percentage point per year higher for the lowest-income fifth of households than for the highest-income fifth.

The key point, though, is that real earnings remain much lower than their 2009/10 levels, and are unlikely to return to those levels for four to five years.

Despite the sort of spin that we saw last Friday, people really are worse off under the Tories.

4 Responses to “According to the IFS, people really are worse off under the Tories”

  1. Me

    So when as the Labour Party going to start getting involved and saying so??

  2. JC

    And the worst off are the rich, who have seen their earnings drop by 9%.

  3. Mark Myword

    I am sorry but this does not tally with the IFS website. The excerpt below was copied from that website and was published yesterday. Crucially, it does not say it will be four or five years before earnings returns to 09/10 levels. Since the heading on this piece bears no resemblance to the content perhaps two items got mixed up.

    ‘New IFS projections suggest median (middle) household
    income in 2014–15 is at around the same level as it was in 2007–08
    before the recession, though still more than 2% below its 2009–10 peak.
    But the recovery in living standards that began in 2011–12 has been much
    slower than after the three previous recessions, with median income
    growing by less than 2% between 2011–12 and 2014–15.

    These are among the main findings of a new IFS Election Briefing Note on living standards published today, funded by the Nuffield Foundation.

    Real household incomes continued to grow slowly during the recession
    of 2008 and 2009, in part due to temporary fiscal stimulus measures.
    Median income then fell by 4.0% from peak in 2009–10 to trough in
    2011–12. It is almost certain that incomes would have fallen
    significantly under any government. It would therefore be misleading to
    attribute all trends in living standards before May 2010 to Labour, and
    all trends since then to the coalition.

    Key findings on changes in average living standards include:

    There are signs that the recovery in household income is finally strengthening.
    Thanks to an improving labour market and falling inflation, we project
    real median household income grew by 1.1% in 2014–15, returning it to
    around its pre-recession (2007–08) level.’

  4. Mark Myword

    Sorry – I’ve just realised this article is over a year old. My comment is still pertinent.

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