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Is the Chancellor finally ready to tackle the living standards crisis?

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From the Bank of England to the IFS, more and more people have noticed that Britain is in the middle of a disastrous living standards crisis, and that Britain needs a pay rise.

In next week’s Budget we’ll find out whether the Chancellor has noticed too.

While it’s unlikely that he’ll stand up and say “It’s not right that working people’s wages in the UK are still over £30 a week below their pre-crisis level, and it’s my mission to do something about that” – that fact that should be animating most of his plans.  

But what should he do if he does want to tackle to living standards crisis?

We know that some of what lies behind the prolonged wage squeeze is Britain’s productivity crisis. Action to fix that needs to include boosting investment and a plan to get our workplaces fit for the future. This will mean that working people not only get the skills they need, but the chance to put them to use.

But realistically, these are long-term actions that are going to take a while to have an impact. The one in eight workers who are skipping meals to make ends meet need this plan more than most – but they also need some short-term fixes.

Boosting trade union membership could be one of those. Workers in unionised workplaces in the UK have higher wages. They could also be better protected from falling wages. Cross-country comparisons show that those with higher levels of unionisation have been protected to some extent from falling wages. Perhaps the Chancellor could announce that he’ll be allowing unions to have access to workplaces to help tell more workers about the benefits of joining a union.

He’ll also want to show that he recognises the importance of raising the national minimum wage for millions of low-paid workers. That would mean setting out a plan to get raise it to £10 as quickly as possible, and to make sure that younger workers are included too.

He should also have got the message that lifting the public sector pay cap is essential.

And he won’t forget that many families need additional support through the social security system so that they can make ends meet. So he’ll have found the funds to cancel the reductions in the work allowance for Universal Credit that are set to leave many families with children thousands of pounds worse off each year, and recognised that high inflation means that the benefits squeeze is hitting families even harder than George Osborne intended when he announced it in 2015.

Finally, he’d look to the long term again, and think about how low wages now will affect people’s pensions in the future. The government have been reviewing the auto-enrolment system. Now would be a good time to announce that they’ll be helping more low-income workers save for a pension by lowering the threshold at which employers must pay in.

The Chancellor doesn’t lack evidence that there’s a serious problem with Britain’s living standards. Nor is he short of suggestions of how to fix it. All he needs now is the determination to do something about it. Too much energy is expended giving reasons why we can’t do anything, when the reality is that we can’t afford not to.  

Image: WPA Pool/Getty Images

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