Blog

Category: Commission on Living Standards

Taking a local look: Household disposable income

Giselle Cory

Today’s figures from the ONS show that household disposable income continued to fall in 2011. This is part of a longer term trend of stagnation and decline in incomes that began around 2003. As we showed in the Commission on Living Standards, disposable income per head fell in every English region outside London from 2003 to 2008, even while the economy continued to grow. For much of the UK, the squeeze started long before 2008.

Today’s new data show this trend is worsening. Disposable incomes across the UK fell in 2011 much more than in the previous year. Across the UK, the average fall from 2010 to 2011 was 2.4 per cent, compared to a fall of 1.2 per cent in 2010 and growth of 3.1 per cent in 2009.

But again it is the regional breakdown of income growth that is most striking. The chart below shows the change in disposable income per head from 2003 to 2011 in English regions, Scotland, Wales and Northern Ireland.

James Plunkett

This post originally appeared on James's Huffington Post blog

While low pay and in-work poverty have risen up the economic agenda in recent years, our policy debate has been stuck in a loop. Ask most Labour politicians about low pay and you can expect a well-intentioned but passive mixture of pride in the minimum wage and warm words on the living wage before the topic is changed to the importance of protecting support like working tax credits. Turn to a Conservative and the ingredients generally differ but are no less predictable, giving little more traction on low pay itself: a worrying silence on the minimum wage, a touching faith in general skills policy (and a falling skills budget) to help the lowest paid, before a swift change of topic to the importance of tax cuts.

Matthew Whittaker

Today’s fiscally neutral Autumn Statement was billed as one for strivers. We have already shown that around 60 per cent of the cut associated with the 1 per cent uprating of most working-age benefits and tax credits will actually fall on working households. But of course, the additional £235 increase in the personal tax allowance from April 2013 will benefit many of those in work. What’s the combined impact?

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

In the Autumn Statement there will be a blizzard of facts, figures, assertions and counter-assertions. There have been a few helpful pointers on what lto ook out for (try this and this), and I’ve already given my tuppence worth on what may happen to the faltering fiscal rules. But here are a few further insights to bear in mind.

First, be on striver alert. Expect plenty of warm words about "do-ers and grafters" who get up and work hard on modest means. In a different part of the Chancellor’s speech there will be tough messages and measures for those working age families who receive tax credits and benefits. Not for the first or last time the impression will be given that these are two distinct groups inhabiting different moral and economic worlds. They aren’t. Three quarters of tax credits go to working households. If reports about capping tax credit increases at 1 per cent are correct then so-called strivers are about to be squeezed too.

Gavin Kelly

This post originally appeared on Gavin's New Statesman blog

Next week George Osborne will hold forth on the size of the underlying deficit and reveal whether austerity will now extend until at least 2018. When he does, he won’t know what he’s talking about – and he’ll be in good company. Neither will Ed Balls when he responds, nor will the phalanx of city economists who rush to comment, nor indeed will establishment economic institutions such as the IMF and the OECD.

This isn’t because our current crop of politicians and economists are unusually uninformed. Rather it reflects the fact the debate on fiscal policy is being driven in no small part by an economic concept – the structural deficit - that is very close to being unmeasurable. It’s an example of how what sounds like a sensible idea in theory can go wrong in practice.

James Plunkett

This post originally appeared on the Huffington Post

Few political debates have made more progress in 2012 than that around childcare. In the past 12 months, all three major parties have come to see reform as an economic and political necessity.

Although hard policy proposals are yet to emerge, it's now clear that one yardstick for 2015 will be the strength of parties' plans for improving the availability and cost of childcare for low to middle income working parents. In the meantime, a search is on for fresh ideas that would gain early ground on this politically valuable new terrain.

Matthew Whittaker

Today’s important JRF report on poverty and social exclusion highlights the changing nature of poverty in recent years, finding that more than half of those children and working‑age adults who are reported to be in poverty live in a working household. This trend pre-dates the recession and, as our work has shown, is particularly concentrated among families in which just one parent in a couple works.

James Plunkett

This post originally appeared on the Huffington Post

The coalition recognised long ago it has a major problem with women. This morning's speech from the deputy prime pinister was one of the first major attempts to address this challenge through policy. The speech, drawing heavily on the Resolution Foundation report The Missing Million, looked at how to raise female employment through smarter support for families. To Nick Clegg's credit, it's not an easy time to be making these arguments. But despite sensible moves to give parents more flexibility, the coalition still has a long way to go to prioritise women's work.

In the DPM's favour, the speech contained two promising moves on flexibility. First, the right to request flexible working will be extended to all employees, having previously been reserved for parents of dependent children and some carers. This follows through on a previous promise and is good news, encouraging flexible work to become the norm, rather than a flag that marks out people with caring responsibilities.

Matthew Whittaker

Look away from events in the US for a moment and you’ll find an interesting new release from the ONS highlighting trends in UK wage growth over the past 25 years. The headline points to average post-inflation hourly wage increases of 62 per cent since 1986, which looks fairly impressive and goes to the heart of our expectation that wages in the modern economy should be growing year after year.

The authors break the overall trend into a range of periods, centred around the recessions of the early-1990s and late-2000s. This enables them to show that wages behaved very differently during the most recent downturn: falling in real terms rather than merely slowing down as they did between 1989 and 1993. It’s a phenomenon we’ve looked at before and appears to owe much to a shift in the relationship between unemployment and real wage growth that took place over the last decade.