Indisposable income

New figures published last week by the Office for National Statistics (ONS) show that the UK’s living standards crisis is worse than previously thought. While the new ONS figures show better economic growth than previous estimates, they also revise down estimates of household disposable income.

For 2013, real household disposable income per capita – the most comprehensive measure of living standards – is now estimated at 2.7 per cent below its peak, compared to the previous estimate of 1.8 per cent.

The estimate of GDP is now 2.7 per cent higher than the pre-crisis peak in 2008, compared to the previous estimate of 0.2 per cent. However, the share going to labour in 2013 has been revised down from 53.7 per cent to 51.2 per cent.

Therefore, while the size of the economy has been revised up, household incomes have been revised down. It turns out the UK’s living standards crisis is even worse than we thought. This is set to be the first full Parliament since the Second World War when the government leaves office with people’s pay packets worth less than when they came into power.

Working people in the UK are seeing their living standards squeezed harder and harder.  The cost of energy, transport and housing is soaring but clearly wages aren’t keeping up.  Full-time North East workers are earning, on average, £1,321 less a year than they were in 2010. The real terms drop in wages of £1321 is the equivalent to:

·   23 average weekly household shops (food and non-alcoholic drinks) or

·   A year’s energy bills for the average household (gas and electric) or

·   18.5 tanks of fuel for the average car

There is something deeply wrong when the economy is growing, but the people who do all the work face ever shrinking pay and falling living standards. We need an economy where everyone gets a fair share of growing prosperity instead of just a few at the top, with growth driven by rising wages rather than growing household debts.

Unfortunately, the Prime Minister’s speech to Conservative Conference last Wednesday, coupled with the Chancellor’s perverse Robin Hood policy promises to take cash from the working poor to pay for tax breaks for the richest pensioners, will only make life tougher for hardworking families.

After years of falling real pay we need a range of policies that ensure fairer pay from board level to the shop floor. The TUC believes Britain needs a pay rise and a real recovery for people in work. That is why people in our region are joining thousands around the country in London on October the 18th for a national demonstration for fairer pay.

Beth Farhat

Regional Secretary – Northern TUC