Politics

Will the Tories gain from the good news on incomes?

New stats from the IFS might undercut Labour's key line of attack

March 04, 2015
Parties are happy to throw money at voters—but do they even notice? © Dominic Lipinski/PA Wire/Press Association Images
Parties are happy to throw money at voters—but do they even notice? © Dominic Lipinski/PA Wire/Press Association Images

We did it! After what the IFS describes in a new briefing note today as a "historically slow recovery in living standards," the think tank's data suggests that our income is finally back to the level it was at pre-recession.

More specifically, that's median household income, which according to the IFS now sits at £461 per week, near where it was in 2007-8. That's not the highest it's been in recent years; income continued to grow during the recession to a 2009-10 peak. But it then plummeted by 4 per cent, and has been slowly clawing its way back ever since.

Today's stats are all over the news because this opens up a new front in one of the forthcoming election's most important battlegrounds. While the Conservative-led government has been able to claim victory in guiding us out of recession (albeit slowly) and boosting the number of jobs around (though many of them  self-employed and insecure), living standards have proved tricky. Labour has long been attacking the coalition with snappy phrases like "cost of living crisis" to underline the fact that not everybody feels the economic recovery is working for them.

That has been changing—according to YouGov, 43 per cent of Britons now feel better off than they did five years ago, vs 27 per cent who don't. But thus far the Tories have failed to capitalise on this. Today's news could give them the boost they need. On the other hand, there may be enough caveats in the stats (for example, the IFS notes that low income families have faced higher than average inflation during this period) to scupper their chances.

Read more on living standards:

Time to adopt the “living wage”?

The Big Question: cost of living

Why self-employment is the future of work

Youth left behind: The real story of the recession

Big ideas of 2014: Economic growth leaves wages behind