George Osborne during a visit to the Royal Mint on March 25, 2014 in Llantrisant, Wales. Photograph: Getty Images.
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Why the Tories can't declare that the living standards crisis is over

Average pay excluding bonuses remains below inflation. For most, there is still no recovery at all. 

Today is the day that George Osborne and his Treasury team have been waiting for. After falling for five consecutive years*, average wage growth (1.7 per cent) has finally crept above inflation (1.6 per cent). Expect the Tories to cite the figures as proof that the recovery in the macroeconomy is feeding through into people's pockets and that the "cost-of-living crisis" is abating. (Although it's worth noting that the wage figure is from February, while the inflation figure is from March. Inflation in February stood at 1.7 per cent. In other words, pay was merely flat that month.)

But there's a catch: while average pay is up by 1.7 per cent, pay excluding bonuses is up by just 1.4 per cent, a real-terms cut. That will allow Labour to warn that this remains a recovery for the City of London, not the country at large. As Ed Balls noted in his Guardian article on Monday: "Average earnings figures, which can be driven by large pay rises at the top, often mask what is happening in the middle and at the bottom. We know that bankers' pay in London, where most of the top earners are based, grew nearly five times faster than the pay of the average worker last year."

Even after average pay (excluding bonuses) finally outstrips inflation, there will be no rise in real incomes for the millions of public sector workers who have had their salary increases capped at 1 per cent and for those most reliant on benefits. 

For the rest, after five years of falling living standards, it will take more than a few months of growth to make up the ground lost since the crisis. In 2015, as the IFS has repeatedly pointed out, real incomes will still be far below their 2010 level, with voters currently an average of £1,600 a year worse off. Many in the private sector remain stranded in low-paid, part-time jobs (1.42 million people are working part-time because they can't find full-time jobs) that do not provide enough for them to maintain their family's living standards.

As Balls noted at his post-Budget briefing last month, this will be the first time on record that real incomes have ever been lower at the end of a parliament than at the start (paving the way for Miliband's "Reagan moment"). Indeed, based on the RPI measure of inflation (which includes housing costs), the OBR forecasts that wages will be flat until 2019; there will be plenty of people who feel no better off in the next decade, let alone in the next year. The price of many essentials, such as housing, food, energy and transport, continues to rise faster than the general rate of inflation. 

Rather than suggesting that the crisis is over, the Tories would be wiser to offer solutions to it. As the Conservative group Renewal has argued, the party should look to significantly increase the minimum wage in real-terms, build a million homes over five years, and strengthen consumer protection. The Tories' greatest weakness remains that they are viewed as "out of touch" by most voters; they would be foolish to confirm this perception by declaring the war won while millions are still struggling. 

* The exception being April 2013, when high-earners collected their deferred bonuses to benefit from the abolition of the 50p tax rate.

George Eaton is political editor of the New Statesman.

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Theresa May "indifferent" towards Northern Ireland, says Alliance leader Naomi Long

The non-sectarian leader questioned whether the prime minister and James Brokenshire have the “sensitivity and neutrality” required to resolve the impasse at Stormont.

Theresa May’s decision to call an early election reflects her “indifference” towards the Northern Ireland peace process, according to Alliance Party leader Naomi Long, who has accused both the prime minister and her Northern Ireland secretary James Brokenshire of lacking the “sensitivity and neutrality” required to resolve the political impasse at Stormont.

In a wide-ranging interview with the New Statesman, Long – who is running to regain her former Belfast East seat from the DUP for her non-sectarian party in June – accused the Conservatives of “double messaging” over its commitment to Northern Ireland’s fragile devolution settlement. The future of power-sharing province remains in doubt as parties gear up for the province’s fourth election campaign in twelve months.

Asked whether she believed the prime minister – who has been roundly criticised at Stormont for her decision to go to the country early – truly cared about Northern Ireland, Long’s assessment was blunt. “We have had no sense at any time, even when she was home secretary, that she has any sensitivity towards the Northern Ireland process or any interest in engaging with it at all... It speaks volumes that, when she did her initial tour when she was prime minister, Northern Ireland was fairly low down on her list.”

The timing of the snap election has forced Brokenshire to extend the deadline for talks for a fourth time – until the end of June – which Long said was proof “Northern Ireland and its problems were not even considered” in the prime minister’s calculations. “I think that’s increasingly a trend we’ve seen with this government,” she said, arguing May’s narrow focus on Brexit and pursuing electoral gains in England had made progress “essentially almost impossible”.

“They really lack sensitivity – and appear to be tone deaf to the needs of Scotland and Northern Ireland,” she said. “They are increasingly driven by an English agenda in terms of what they want to do. That makes it very challenging for those of us who are trying to restore devolution, which is arguably in the worst position it’s been in [since the Assembly was suspended for four years] in 2003.”

The decisive three weeks of post-election talks will now take place in the weeks running up to Northern Ireland’s loyalist parade season in July, which Long said was “indicative of [May’s] indifference” and would make compromise “almost too big an ask for anyone”. “The gaps between parties are relatively small but the depth of mistrust is significant. If we have a very fractious election, then obviously that timing’s a major concern,” she said. “Those three weeks will be very intense for us all. But I never say never.”

But in a further sign that trust in Brokenshire’s ability to mediate a settlement among the Northern Irish parties is deteriorating, she added: “Unless we get devolution over the line by that deadline, I don’t think it can be credibly further extended without hitting James Brokenshire’s credibility. If you continue to draw lines in the sand and let people just walk over them then that credibility doesn’t really exist.”

The secretary of state, she said, “needs to think very carefully about what his next steps are going to be”, and suggested appointing an independent mediator could provide a solution to the current impasse given the criticism of Brokenshire’s handling of Troubles legacy issues and perceived partisan closeness to the DUP. “We’re in the bizarre situation where we meet a secretary of state who says he and his party are completely committed to devolution when they ran a campaign, in which he participated, with the slogan ‘Peace Process? Fleece Process!’ We’re getting double messages from the Conservatives on just how committed to devolution they actually are.”

Long, who this week refused to enter into an anti-Brexit electoral pact with Sinn Fein and the SDLP, also criticised the government’s push for a hard Brexit – a decision which she said had been taken with little heed for the potentially disastrous impact on Northern Ireland - and said the collapse of power-sharing at Stormont was ultimately a direct consequence of the destabilisation brought about by Brexit.

 Arguing that anything other than retaining current border arrangements and a special status for the province within the EU would “rewind the clock” to the days before the Good Friday agreement, she said: “Without a soft Brexit, our future becomes increasingly precarious and divided. You need as Prime Minister, if you’re going to be truly concerned about the whole of the UK, to acknowledge and reflect that both in terms of tone and policy. I don’t think we’ve seen that yet from Theresa May.”

She added that the government had no answers to the “really tough questions” on Ireland’s post-Brexit border. “This imaginary vision of a seamless, frictionless border where nobody is aware that it exists...for now that seems to me pie in the sky.”

However, despite Long attacking the government of lacking the “sensitivity and neutrality” to handle the situation in Northern Ireland effectively, she added that Labour under Jeremy Corbyn had similarly failed to inspire confidence.

“Corbyn has no more sensitivity to what’s going on in Northern Ireland at the moment than Theresa May,” she said, adding that his links to Sinn Fein and alleged support for IRA violence had made him “unpalatable” to much of the Northern Irish public. “He is trying to repackage that as him being in some sort of advance guard for the peace process, but I don’t think that’s the position from which he and John McDonnell were coming – and Northern Irish people know that was the case.” 

Patrick Maguire writes about politics and is the 2016 winner of the Anthony Howard Award.

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