George Osborne's recent response to claims of a "cost-of-living crisis" by Labour has been to deny that there is one. In his Autumn Statement last week, the Chancellor boasted that, on his preferred measure, living standards were rising. He was duly rebuked by the IFS, which said that Osborne's metric "should certainly not be used in isolation" and confirmed that real incomes had fallen by around £1,600 since May 2010.
When Ed Miliband made this point to David Cameron at today's PMQs, Cameron's response was striking. Rather than quibbling with the figures, he conceded that "household incomes" had fallen but argued that this was not surprising after "the biggest recession in 100 years". In other words: blame Labour. He declared of Miliband: "His entire approach seems to be 'we made this almighty mess, why are they taking so long to clear it up'– well, we are clearing it up!" But while this line might have been effective in 2010, it is likely to be less so after three and a half years of the coalition (as Miliband noted). Conversely, blaming the living standards crisis on the last government, rather than denying it altogether, is undoubtedly a better approach for Cameron (whose biggest weakness is being seen as "out-of-touch" by voters) to take.
Miliband went on to press Cameron on his hint, in an interview with the Spectator, that the top rate of tax could be reduced from 45p to 40p under a Conservative majority government. The PM sharply replied that the top rate was still higher than in any year of the last Labour government but notably refused to deny that he hopes to cut it. The possibility of Labour going into the next election proposing to reintroduce the 50p rate, while the Tories plan to reduce it to 40p, shows how much ideological ground is opening up between the two parites.
In response to Miliband's earlier questions on MPs' pay, ahead of IPSA's expected recommendation of an 11% rise tomorrow, Cameron went significantly further than before and said that unless ISPSA "thinks again", he "wouldn't rule anything out". When asked after the session whether this meant he would be prepared to scrap the body and hand control of MPs' pay back to parliament, the PM's spokesman said: "You've got his words. He's ruling nothing out." After being caught flat-footed by Miliband earlier this week (who called for cross-party talks on the issue), it now seems that Cameron will find some way to ensure the rise does not go through.