Don't believe the coalition hype. The so-called 'cost of living crisis' is far from over, writes James Bloodworth.
Don’t believe the coalition hype. The so-called ‘cost of living crisis’ is far from over, writes James Bloodworth
No doubt there will be a great deal of carping in the conservative press today about how we’re all feeling much better off now that the rate of inflation is finally set to fall below the rate at which wages are increasing.
Consumer Price Inflation was 1.6 per cent in March – down from 1.7 per cent in February, according to the Office for National Statistics, meaning that inflation is now at its lowest level since 2009. Who would argue that this isn’t welcome news?
Not us at Left Foot Forward, that’s for sure. But is it cause for celebration? Well no actually, for there are a number of powerful reasons to think that for most people the so-called ‘cost of living crisis’ is far from over.
1) Wages have been falling in real terms for four years
During that period people have been dipping into their savings, racking up debt and cutting back on many of the basics. Average wages should soon be rising faster than inflation; the mistake, however, is to assume that the preceding years do not have a cost. Real wages have fallen by £1,600 a year since 2010, and as we reported yesterday, a third of families in Britain believe now they are just one paycheque away from losing their home. Tax and benefit changes will also mean that the average household is £1,000 a year worse off by next year.
2) Food bank use continues to grow
Food banks do not cater to feckless people who blow all of their money on tatoos and plasma televisions, as some on the right like to suggest. Rather they demonstrate that many people are so up against it that they can no longer even afford enough to eat. According to the Trussell Trust, 614,000 adults and children received a food parcel from a food banks in the first nine months of 2013-14, compared to 350,000 for the whole of 2012-13.
As the below graph – which tracks the increase in the cost of basic food items from 2012 to 2013 – demonstrates, the cost of food has skyrocketed in recent years.
3) Rough sleeping is on the increase
Under the coalition homelessness has increased for three years running, with 185,000 people in England affected according to the Joseph Rowntree Foundation. Visible forms of homelessness are also up, with rough sleeping increasing by 6 per cent in England and 13 per cent in London last year. The spike is largely due to cuts to benefits and services as well as a lack of affordable housing, according to the report from December 2013. Overall, homelessness has risen by a whopping 34 per cent since the coalition came to power, with a 60 per cent jump in London.
4) It costs more to get to work
Rail fares are rising three times faster than incomes, according to campaigners, while Labour says that season tickets have gone up by 20 per cent under this government. The government wants more funding for the railways to come from tickets instead of the government, so it’s unlikely prices are going to stop going up any time soon. Since privatisation, some rail fares have increased by as much as 250 per cent. Research on fair increases since privatisation 20 years ago found rises of between 141 and 245 per cent – despite the fact that overall price rises, as shown by the RPI , increased by 78 per cent over the same period.
5) We are becoming a nation of low paid, temporary workers
Even one of the apparent success stories of the coalition is a cause for concern. The strong levels of employment, so often cited by the government as proof that their economic plan is working, are in part based on a rise in self-employment and a jump in the number of people on insecure zero-hours contracts. Around 1 million people – 4 per cent of the workforce – are now on precarious zero-hour contracts; and almost half the 1.2m jobs created since the coalition came to power are also accounted for by self-employment, according to the TUC.
Certainly we should welcome self-employment over unemployment, but there is a downside; as TUC general secretary Frances O’Grady puts it, “These newly self-employed workers are not the budding entrepreneurs ministers like to talk about…the vast majority work for themselves or another employer – often with fewer rights, less pay and no job security.”
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