Waving goodbye to two decades

Nice or nasty, either way the economic future doesn't look great.

Another week, another terrible set of GDP figures, an IMF downgrade of the UK's growth prospects, and a new report showing the squeeze on living standards is set to run and run. The public, along with our politicians, is probably starting to grow immune to some of the shocking headlines about how long it will be before their incomes recover. All attempts at peering into our economic future do, of course, need to be taken with a handful of salt. And if long range economic forecasting is a mug's game, then seeking false precision about the resulting political consequences is truly the pursuit of fools.

Yet for all the uncertainty we can discern the broad contours of different possible paths for living standards over the rest of the decade. None are attractive -- though some are uglier than others. All are likely to challenge the standard assumptions upon which recent politics have been based.

Let's start by tracing the immediate prospects for low to middle income households (broadly those in work in the bottom half of the income distribution). To do this we can adjust the OBR projections for average earnings (reflecting the historic relationship between average and lower earnings), and take account of the coalition's planned cuts to tax credits. The depressing result is that typical disposable household income for this large swathe of Britain is set to fall 8 per cent by 2015 (from just under £22,000 in 2007-08 to just over £20,000).

To get any sense of the range of possibilities for the next parliament the best we can do is draw on different periods from our recent past as alternative guides to the future. So let's consider a "nice growth" and "nasty growth" scenario from 2016 up until 2020. The nice scenario replicates the growth in household income experienced during the first half of Labour's period in office (until 2003) when wages were climbing and the creation of tax credits further boosted low to middle income households. Given the miserable times we are currently living through, referring to this as merely "nice" is something of an understatement. Yet even under this cheery scenario low to middle income households would only regain the position they reached in 2007-08 by 2020. They would have lost more than a decade, but at least they'll be headed in the right direction.

Nice and nasty scenarios for low household income of low to middle income Britain


So much for the supposed good news. Under the "nasty growth" scenario low to middle income households don't share in rising prosperity; their living standards stagnate as they did between 2003 and 2008 -- a period of steady economic growth. Household income limps along at around £20,000 to 2020, around the same as it was in 2001. We've waved goodbye to two decades. And just to repeat: both these scenarios are premised upon the OBR's assumptions for GDP growth until 2016 being realised (and many think that will be a stretch). We haven't dared contemplate a nightmare scenario in which the Eurozone implodes and there is no or very low growth for an extended period.

What might all this mean for how politics shapes up as we approach the next election? The conventional wisdom would hold that the defining question for a living standards election, which 2015 should surely be, is Ronald Reagan's "are you better off" than you were five years ago?

I'm not so sure. As things stand it's not clear in whose interests it will be to make this the issue hovering over the ballot paper. Unless Labour somehow manages to secure a seismic shift in the public's assessment of where blame lies for the crisis and its aftermath it may not like the answer it gets if this becomes the election question. As for the Conservatives, "things could have been even worse" is not exactly a rousing campaign tune for David Cameron to be humming. All of which raises the unlikely possibility that the largest decline in household incomes in living memory might be the dog that no one -- or at least no party leader -- wants to bark come 2015.

Nor is it clear what the electorate's frame of reference will be: their living standards when David Cameron first entered Downing Street or the change in the months immediately prior to the election? A lot could hang on this. For every economic commentator who thinks the scale of our personal debt overhang will mean growth staying miserably low all the way to 2015, there are others who believe that at some point in this parliament, probably late on, things will -- finally -- tick upwards. Eventually, so this argument runs, forecasts that have been too rosy will give way to those that are too gloomy, with strong pre-election growth and sharp falls in unemployment. Veterans of election campaigns will tell you that changes in economic sentiment in the months running in to a campaign are absolutely vital: it's all about finding your mojo for the final sprint. Even the faintest glimmers of economic hope provide the basis for a traditional incumbent campaign theme along the lines of "don't let Labour ruin the hard won recovery".

Yet there is another, counter-intuitive, and altogether more troubling scenario for the coalition: it's just possible that the emergence of a year or so of strong growth prior to the election could even become a source of vulnerability. A stoical public, after years of swallowing the harsh medicine of austerity, may finally refuse to take another spoonful if the long promised return to strong growth fails to lift their own economic prospects.

Only a fool would claim to know which of these scenarios will come good. What's more clear is that for all the endless talk about the new times we are living through, today's politicians are still operating under the old assumption that nice growth is bound to prevail. They still haven't reckoned with the possibility that the world really may have turned nasty.

Gavin Kelly is the chief executive of the Resolution Foundation.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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If the SNP truly want another referendum, the clock is ticking

At party conference in Glasgow, I heard Scotland’s governing party demand a future distinctly different from the one being sketched out in Westminster. 

Nicola Sturgeon described Glasgow as the “dear green city” in her opening address to the SNP party conference, which may surprise anyone raised on a diet of Ken Loach films. In fact, if you’re a fan of faded grandeur and nostalgic parks, there are few places to beat it. My morning walk to conference took me past chipped sandstone tenements, over a bridge across the mysterious, twisting River Kelvin, and through a long avenue of autumnal trees in Kelvingrove Park. In the evenings, the skyline bristled with Victorian Gothic university buildings and church spires, and the hipster bars turned on their lights.

In between these two walks, I heard Scotland’s governing party demand a future distinctly different from the one being sketched out in Westminster. Glasgow’s claim to being the UK’s second city expired long ago but I wonder if, post-Brexit, there might be a case for reviving it.



Scottish politics may never have looked more interesting, but at least one Glasgow taxi driver is already over it. All he hears in the back of his cab is “politics, fitba and religion”, he complained when he picked me up from the station. The message didn’t seem to have reached SNP delegates at the conference centre on the Clyde, who cheered any mention of another referendum.

The First Minister, though, seems to have sensed the nation’s weariness. Support for independence has fallen from 47 per cent in June (Survation) to 39 per cent in October (BMG Research). Sturgeon made headlines with the announcement of a draft referendum bill, but read her speeches carefully and nothing is off the table. SNP politicians made the same demands again and again – devolved control of immigration and access to the single market. None ruled out these happening while remaining in the UK.

If Sturgeon does want a soft Brexit deal, though, she must secure it fast. Most experts agree that it would be far easier for an independent Scotland to inherit Britain’s EU membership than for it to reapply. Once Article 50 is triggered, the SNP will be in a race against the clock.


The hare and the tortoise

If anyone is still in doubt about the SNP’s position, look who won the deputy leadership race. Angus Robertson, the gradualist leader of the party in the Commons, saw off a referendum-minded challenger, Tommy Sheppard, with 52.5 per cent of the vote.

Conference would be nothing without an independence rally, and on the final day supporters gathered for one outside. A stall sold “Indyref 2” T-shirts but the grass-roots members I spoke to were patient, at least for now. William Prowse, resplendent in a kilt and a waistcoat covered in pro-indy
badges, remains supportive of Sturgeon. “The reason she has not called an Indy 2 vote
is we need to have the right numbers,” he told me. “She’s playing the right game.”

Jordi McArthur, a member for 30 years, stood nearby waving a flagpole with the Scottish, Welsh and Catalan flags side by side. “We’re happy to wait until we know what is happening with Brexit,” he said. “But at the same time, we want a referendum. It won’t be Nicola’s choice. It will be the grass roots’ choice.”


No Gerrymandering

Party leaders may come and go, but SNP members can rely on one thing at conference – the stage invasions of the pensioner Gerry Fisher. A legendary dissenter, Fisher refused this year to play along with the party’s embrace of the EU. Clutching the
lectern stubbornly, he told members: “Don’t tell me that you can be independent and a member of the EU. It’s factually rubbish.” In the press room, where conference proceedings were shown unrelentingly on a big screen, hacks stopped what they were doing to cheer him on.


Back to black

No SNP conference would be complete without a glimpse of Mhairi Black, the straight-talking slayer of Douglas Alexander and Westminster’s Baby of the House. She is a celebrity among my millennial friends – a video of her maiden Commons speech has been watched more than 700,000 times – and her relative silence in recent months is making them anxious.

I was determined to track her down, so I set my alarm for an unearthly hour and joined a queue of middle-aged women at an early-morning fringe event. The SNP has taken up the cause of the Waspi (Women Against State Pension Inequality) campaign, run by a group of women born in the 1950s whose retirement age has been delayed and are demanding compensation. Black, who is 22, has become their most ­articulate spokeswoman.

The event started but her chair remained unfilled. When she did arrive, halfway through the session, it was straight from the airport. She gave a rip-roaring speech that momentarily convinced even Waspi sceptics like me, and then dashed off to her next appointment.


Family stories

Woven through the SNP conference was an argument about the benefits of immigration (currently controlled by Westminster). This culminated in an appearance by the Brain family, whose attempt to resist deportation back to Australia has made them a national cause célèbre. (Their young son has learned to speak Gaelic.) Yet for me, the most emotional moment of the conference was when another family, the Chhokars, stepped on stage. Surjit Singh Chhokar was murdered in 1998, but it took 17 years of campaigning and a change in double jeopardy laws before his killer could be brought to justice.

As Aamer Anwar, the family’s solicitor, told the story of “Scotland’s Stephen Lawrence”, Chhokar’s mother and sister stood listening silently, still stricken with grief. After he finished, the delegates gave the family a standing ovation.

Julia Rampen is the editor of The Staggers, the New Statesman’s politics blog

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood