The state of living standards in the UK has been a hotly contested issue in the build-up to the country’s general election. The coalition government has argued that living standards have increased since it came to power in 2010. The Labour Party and other opposition parties claim that living standards have fallen.
In March 2015 the chancellor, George Osborne, presented evidence in his final budget that living standards have increased. But this evidence is misleading. Research from a range of reputable academic studies has shown that average income has fallen over the past five years and poverty has increased.
The latest available data also clearly shows that the living standards of the UK population have fallen, particularly since the April 2013 cuts in social security and other austerity measures took effect. It is a shame that the coalition government was not prepared to release the latest statistical information on living standards to the public before the May 2015 election – but fortunately, it has recently become available via the European Union.
Early release data provided by the UK government to the European Statistical Office (EUROSTAT) shows that more people in the UK are now in financial difficulties and increasing numbers are unable to afford both the necessities of life (such as two pairs of shoes) and minor luxuries, such as a one-week holiday away from home. Both fuel poverty and utility bill arrears have also increased.
These are the stark conclusions of research colleagues and I at the Poverty and Social Exclusion in the UK research project have just completed, comparing the change in UK living standards between 2009 and 2013.
In 2009, 45% of people lived in households which did not have sufficient money to pay an unexpected expense. By 2013 this had increased to almost half (49%) of the UK population. The figures also show that, for every single indicator of financial difficulty, more people were having problems in 2013 than in 2009.
It is clear that both serious and more minor financial difficulties are increasing in the UK population, with more than a third of people in 2013 having difficulties in making ends meet and more than one in five people finding their housing costs a heavy burden.
Only the wealthiest unaffected
The data also compares how the richest two-thirds of the UK populations’ standard of living changed between 2009 and 2013, as shown in the table below. The percentage of people who could make ends meet without any difficulties fell from 69% of the UK population to under two-thirds (65%). Only the very richest (those who could make ends meet very easily) saw no perceived fall in their living standards.
The chancellor’s claim that living standards have risen is fallacious – as the National Accounts household sector data that he used are primarily a measure of the movement of money, not the living standards of households. Real Household Disposable Income (RHDI) measures the total income of households compared with the rest of the economy. There is no information about how the total expenditure or income is distributed at the individual or household level.
Thus, if only the richest 1% have a rise in their incomes, this will also increase the average income in the household sector by exactly the same amount as if the increase had been shared equally by everybody. RHDI cannot provide a good or adequate measure of living standards. By shifting attention to this RHDI measure in the latest budget, the coalition government has obscured the real impact on peoples’ lives of fallen living standards.
There is only one conclusion that can be drawn from the available evidence – the majority of the UK population has suffered from a fall in their living standards during the current government’s term of office. Both the poor and the majority have indeed “all been in it together” – only the richest appear to have escaped.