Living standards crisis continues as pay falls by 2%

Average earnings rose by just 0.7% from June to August, while inflation was 2.7%.

The Tories are trumpeting today's jobs figures as further evidence that the economy is recovering. Unemployment fell by 18,000 to 2.49m from June to August (down by 0.1% to 7.7%), while employment rose by 155,000 to 29.9m (up by 0.3% to 71.7%).

But they're less keen to draw attention to the earnings figures. Total pay rose by just 0.7%, a real-terms cut of 2% and the lowest figure on record. In the public sector, pay fell in nominal terms by 0.5%, the first cash-terms cut since records began in 2001. 

Expect Labour to highlight these figures as evidence of a cost-of-living crisis and of a recovery "for the few, not the many". One reason why earnings growth remains so depressingly weak is the rise in underemployment. There are now a record 1.45m people working part-time because they can't find a full-time job. 

A woman looks out from a residential development in Tower Hamlets on February 21, 2013. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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