Archive for September 2012

Spending more on less

Date: 27. September 2012
Giselle Cory

There has been a lot of discussion of inflation lately, as prices continue their upward march. The consumer trends data out today from ONS gives us an alternative way of looking at inflation. It shows that we are spending more and getting less on essentials like food, housing and transport. This is shown in the chart below, where solid lines show the amount we are buying and dashed lines the amount we are paying for it (effectively real terms versus cash terms consumption).

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Does the Treasury want to link benefits to earnings?

Date: 21. September 2012
Giselle Cory

Benefits used to be uprated using RPI, a measure of price inflation. This changed to CPI last year. This is also a measure of prices, but crucially it runs lower than RPI. This move generated savings for the Treasury. It has also had an impact on living standards.

For the last few years the UK has been experiencing earnings growth far lower than price inflation (see chart). This has caused a squeeze on living standards. If the rumours are to be believed, it has also prompted the Treasury to ask if more savings can be found by uprating benefits against earnings growth instead of CPI.

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Dragging us all down

Date: 21. September 2012
Matthew Whittaker

With so little to cheer in the British economy in recent years, the steady fall in unemployment since the turn of the year has been seized on as a sign that broader recovery may be around the corner. Yet in truth, the prospects for living standards in the country remain gloomy. And even if growth does return, new research from the Resolution Foundation predicts that unemployment will need to fall by over one million before Britain’s workers can look forward to any meaningful increase in pay.

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Why it's unlikely benefits increases will be linked to earnings

Date: 19. September 2012
Gavin Kelly

Gloomy projections all round. 

Following another Newsnight scoop, there must be debate in Westminster about whether the coalition are going to change their approach to uprating benefits - increasing them annually in line with inflation - for people of a working age. Coalition splits have already been predicted and then resolved before the pre-Autumn statement debate has even got underway.

This issue arises because the Coalition are on the hunt for welfare savings and playing around with benefit upratings is always one of the first places HM Treasury will turn to save money.  To start with it’s worth recalling that the Coalition has already changed its uprating policy from RPI (or the derived ROSSI index) to CPI for most working age benefits – generating significant savings, arising from lower living standards for recipients - than would otherwise be the case. So any further change in upratings policy comes on top of this.

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Looking under the lid of employment figures

Date: 12. September 2012
Giselle Cory

Employment has gone up and unemployment has gone down. This is good news. But it should not be taken at face value. A closer look at today’s data shows an increase in the number of people involuntarily working in part-time or temporary jobs. As the chart below shows, there has been a sustained rise in the number of people who are in temporary work because they could not find a permanent job. Around 650,000 people are in this position, up from around 400,000 in the mid-2000s.

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America’s working women

Date: 11. September 2012
Giselle Cory

This post originally appeared on Coffee House, The Spectator Blog

We know that the growth of women in work has been a significant driver of household income growth in the UK over the last 50 years. In fact, children are now most likely to grow up in poverty in male breadwinner households.

Today’s publication of the annual snapshot of America’s middle class - The State of Working America – reveals a similar trend on the other side of the Atlantic. As Figure 1 shows, American families with women in work saw their family incomes rise from the early 1970s until the early 2000s. Conversely, families without a woman in work (both couples and single parents) did not.

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Casting ahead to the 2015 election, no party leader likes what he sees

Date: 9. September 2012
Gavin Kelly

As the Westminster tempo cranks up, just as the marvel of the Olympic and Paralympic summer winds down, the main party leaders will be looking for ways of securing immediate momentum. Following his bumpy reshuffle David Cameron needs to demonstrate to an increasingly sceptical public that he hasn't become the prisoner of a divided party and a fractious coalition. Meanwhile, Ed Miliband has to show that he has what it takes to make a popular pitch that resonates with the public on how to secure shared prosperity in straightened times, as President Obama did at the Democratic convention last week.

This post originally appeared on the Guardian, Comment is free

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