How Osborne disguised the truth about living standards

The Chancellor boasts in his Times piece that disposable incomes have risen but in the first quarter of this year they fell at the fastest rate since 1987.

With the return of the economy to something close to normal levels of output, attention has quickly shifted to the nature of the recovery. Is it balanced or unbalanced growth? Is it a recovery for the few or one for the many?

In his response to the GDP figures yesterday, Ed Balls emphasised that while the economy is growing (albeit after three years of stagnation), most people's real incomes are still shrinking. He said: "Families on middle and low incomes are still not seeing any recovery in their living standards. While millionaires have been given a huge tax cut, for everyone else life is getting harder with prices still rising much faster than wages."

But in a column in today's Times, George Osborne declares that the government is ensuring that everyone, including low-earners, benefits from the recovery, noting that "inequality is at its lowest for 25 years and disposable incomes grew by 1.4 per cent above inflation last year despite the squeeze, the fastest for three years". 

So who's right? The figures cited by Osborne are correct but they offer a highly partial picture. First, based on the most common measure - inflation - most people's pay is still falling, as it has been since the crash. In the year to May 2013, total earnings rose by just 1.7%, more than two percentage points below CPI inflation (2.9%). Since the election, average pay has fallen by £1,350 a year in real terms, with most now earning no more than they were in 2003. And the situation is unlikely to improve anytime soon. Wages aren't expected to outstrip inflation until 2015 at the earliest and earnings for low and middle income families won't reach pre-recession levels until 2023

But even if we accept Osborne's metric of choice - real household disposable income - the picture isn't as rosy as the Chancellor implies. Household incomes did increase by 1.4% in 2012 but they went on to fall by 1.7% in the first quarter of 2013, the largest quarterly drop since 1987. 

As for inequality, Osborne won't be able to masquerade as an egalitarian for long. While inequality has fallen to its lowest level since 1986 (owing to a combination of lower wages for middle and high income earners, the automatic stabilisers and the rise in the personal tax allowance), it is expected to rise from now on as the welfare cuts bite. In particular, Osborne's decision to cap benefit increases at 1 per cent for at least three years (an unprecedented real-terms cut) means the poorest will see a steep fall in their incomes. The IFS expects inequality "to rise again from 2011–12, almost (but not quite) reaching its pre-recession level by 2015–16."

The Chancellor might want to have a good story to tell about living standards and inequality, but he'll need to change his policies first. 

George Osborne delivers his Mansion House speech on June 19, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Getty
Show Hide image

The allegations of abuse in sport are serious – but we must guard against hysteria

This week in the media, from Castro and the student rebels, hysteria over football coaches, and Ed Balls’s ballroom exit.

From the left’s point of view, the best that can be said of Fidel Castro, who has died at 90, is that – to echo Franklin D Roosevelt on the Nicaraguan dictator Anatasio Somoza – he may have been a son of a bitch but he was our son of a bitch. Denying Castro’s dreadful record on human rights is pointless. According to the highest estimates – which include those who perished while trying to flee the regime – the death toll during Castro’s 49 years in charge was roughly 70,000. His immediate predecessor, Fulgencio Batista, whom Castro overthrew, murdered, again according to the highest estimates, 20,000 but he ruled for a mere seven years. For both men, you can find considerably lower figures, sometimes in the hundreds. It depends on the politics of the estimator, which shows the absurdity of such reckoning.

 

Murder is murder

What is certain is that Batista ran a corrupt regime with close links to the American Mafia and presided over outrageous inequalities. Even President Kennedy, who ­approved a failed military invasion of Cuba in 1960, said that, on Batista’s record, “I am in agreement with the first Cuban revolutionaries”. Castro, on the other hand, created a far more equal society where illiteracy was almost wiped out, and free health care brought life expectancy up to levels comparable to those in the US and western Europe. You could say that the numbers saved from early deaths by Cuban medicine under Castro easily exceeded the numbers that faced firing squads.

But nothing excuses torture, murder and political imprisonment. There isn’t a celestial balance sheet that weighs atrocities against either the freedoms from ignorance and disease that the left favours or the freedoms to make money and hold private property that the right prefers. We should argue, as people always will, about which freedoms matter most. We should be united in condemning large-scale state brutality whatever its source.

 

Spirit of ʼ68

Though his regime became an ally (or, more precisely, a client) of the Soviet Union, Castro wasn’t a communist and he didn’t lead a communist uprising. This point is crucial to understanding his attraction to the mostly middle-class student rebels in Europe and America who became known as the ’68ers.

To them, communist rulers in eastern European were as uninspiring as the cautious centrists who hogged power in Western democracies. They were all grey men in suits. Castro had led a guerrilla army and wore battle fatigues. As the French writer Régis Debray explained in Revolution in the Revolution? – a book revered among the students – Castro’s band of revolutionaries didn’t start with a political programme; they developed one during “the struggle”. Their ideology grew organically in the mountains of Cuba’s Sierra Maestra.

This do-it-yourself approach seemed liberating to idealistic young people who didn’t want to bother with the tedious mechanics of bourgeois democracy or the dreary texts of Marxism-Leninism. They had permission for “direct action” whenever they felt like it without needing to ­formulate aims and objectives. They couldn’t, unfortunately, see their way to forming a guerrilla army in the Scottish Highlands or the Brecon Beacons but they could occupy a university refectory or two in Colchester or Coventry.

 

Caution over coaches

Commenting on Radio 5 Live on the case of Barry Bennell, the Crewe Alexandra coach convicted in 1998 of sexual offences against boys aged nine to 15 (the case came to fresh attention because several former professional football players went public about the abuse), an academic said that 5 per cent of boys reported being sexually abused in sport. “That’s one boy on every football pitch, every cricket pitch, every rugby pitch in the country,” he added.

This is precisely the kind of statement that turns perfectly reasonable concerns about inadequate vigilance into public hysteria. The figure comes from an online survey carried out in 2011 by the University of Edinburgh for the NSPCC. The sample of 6,000 was self-selected from emails to 250,000 students aged 18 to 22, who were asked about their experiences of physical, emotional and sexual harm in sport while aged 16 or under. “We do not make claims for the representativeness of our sample,” the researchers state.

Even if 5 per cent is accurate, the suggestion that abusers stalk every playing field in the land is preposterous. After the Jimmy Savile revelations, just about every DJ from the 1960s and 1970s fell under suspicion – along with other prominent figures, including ex-PMs – and some were wrongly arrested. Let’s hope something similar doesn’t happen to football coaches.

 

Shut up, Tony

Brexit “can be stopped”, Tony Blair told this magazine last week. No doubt it can, but I do wish Blair and other prominent Remain supporters would shut up about it. The Brexiteers have spent 20 years presenting themselves as victims of an elite conspiracy to silence them. Committed to this image, they cannot now behave with the grace usually expected of winners. Rather, they must behave as though convinced that the prize will shortly be snatched from them, and treat any statement from Remainers, no matter how innocuous, with suspicion and resentment. Given enough rope, they will, one can reasonably hope, eventually hang themselves.

 

Strictly Balls

Perhaps, however, Nigel Farage et al are justified in their paranoia. As I observed here last week, the viewers of Strictly Come Dancing, in the spirit of voters who backed Brexit and Donald Trump, struck more blows against elite experts by keeping Ed Balls in the competition even after judges gave him abysmal ratings. Now it is all over. The BBC contrived a “dance-off” in which only the judges’ votes counted. 

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 01 December 2016 issue of the New Statesman, Age of outrage