Monday, March 24, 2025
Broken Promises
The Guardian reports that living standards for all UK families are set to fall by 2030, with those on the lowest incomes declining twice as fast as middle and high earners, according to data that raises serious questions about Keir Starmer’s pledge to make working people better off.
The paper says that the grim economic analysis, produced by the respected Joseph Rowntree Foundation (JRF), comes before the chancellor, Rachel Reeves, makes her spring statement on Wednesday in which she will announce new cuts to public spending rather than increase borrowing or raise taxes, so as to keep within the government’s “iron clad” fiscal rules:
In December, the prime minister announced a series of “milestones” that he said would be passed before the next general election, which is likely to be held in 2029. The first of these was “putting more money in the pockets of working people”.
But with many Labour MPs already deeply concerned about Reeves’s plan to raise about £5bn by cutting benefits, including for disabled people, evidence that living standards are on course to fall markedly under a Labour government – and to decline most for the least well off – will add to the mood of growing disquiet in party’s ranks.
The JRF analysis rests on a realistic assumption that the Office for Budget Responsibility (OBR) will adjust its forecasts in line with the Bank of England and other main forecasters when it makes them public on Wednesday. The OBR is expected to halve the expected growth rate for this year from 2% to about 1%.
In what it describes as a “dismal reality”, the JRF said its detailed analysis shows that the past year could mark a high point for living standards in this parliament. It concludes that the average family will be £1,400 worse off by 2030, representing a 3% fall in their disposable incomes. The lowest income families will be £900 a year worse off, amounting to a 6% fall in the amount they have to spend.
The JRF also said that if living standards have not recovered by 2030, Starmer will not only have failed to pass his No 1 milestone but will also have presided over the first government since 1955 to have seen a fall in living standards across a full parliament.
Comparing 2030 with 2025, it said the average mortgage holder is set to pay about £1,400 more in mortgage interest annually and the average renter about £300 more in rent a year, while average earnings are set to fall by £700 a year. The JRF said the poorest third are being disproportionately affected by rising housing costs, falling real earnings and frozen tax thresholds.
Cuts in public spending will only exacebate the misery, what is needed is investment funded from taxes on wealth. As it stands, Labour can expect to have their promises thrown back in their face at the next election.
