Economical with the truth

CHANCELLOR George Osborne was beaming all over the morning news bulletins on Wednesday, claiming that “average incomes are now back to pre-crisis levels”, according to a new report from the Institute for Fiscal Studies (IFS). He did admit there were some exceptions, for example young working families, but claimed pensioners were now, on average, a whole 1.8 per cent better off than “before the recession”. And he claimed that a fall in unemployment had helped to bring about this happy situation and that wealthier households had borne the brunt of the hard times.

But in January there was another report from the IFS which showed that household incomes have been reduced by £1,127 a year on average as a result of tax and benefit changes made by this Government, with low income households losing the most as a proportion of their income.

That report said: “Tax and benefit changes introduced by the coalition have reduced household incomes by £1,127 a year or 3.3 per cent on average. Low-income households with children lose the most as a percentage of their income from changes implemented by the coalition.

“For middle and higher income families with children... loss of tax credits and child benefit has more than offset the effect of income tax cuts.”

Last Wednesday’s IFS analysis is based on figures from both the Labour Force Survey, the huge continuous survey that the Office for National Statistics uses to measure unemployment, and from the Government’s independent forecaster, the Office for Budget Responsibility. It has then projected the data forward to be able to make more up-to-date forecasts. So there’s some guesswork in there and it did not include all tax and benefit changes.

These sources will give no indication regarding the incomes of people who have been made homeless by the recession. And they take no account of people on lower incomes being forced to pay proportionately more for housing, domestic heating and travel. All these things have soared in price since 2010.

The huge rise in the number of people, including working people, now dependent on food banks shows the real picture.

And as for those “lucky pensioners” who, according to Osborne, have been protected from cuts to their pensions, they have also suffered. They too have been hit by the austerity cuts in housing benefit and council tax benefit and by the withdrawal of a lot of social and health services due to cuts. The rise in what they have to pay for rents and domestic fuel has more than wiped out any small advantage they may otherwise have had.

One small blessing has come the way of people on low incomes. The sanctions war against Russia has left European farmers with mountains of vegetables they can no longer export to Russia. So prices for fresh vegetables, fruit and dairy products in street markets and supermarkets have fallen.

As for employment, most new employment has been parttime and/or on zero-hours contracts, which leaves workers forced to be ever ready to go in at the beck and call of the boss but not knowing from one week to the next what hours work or what pay they will get — and of course without sick pay or holiday pay.

Labour shadow treasury minister Cathy Jamieson MP called the figures a “clear betrayal of Cameron’s promise to lead the most family-friendly government ever”.

“For all the Government’s claims, this report shows that they have raised tax by over £13.5 billion a year. And for millions of working people the rise in VAT and cuts to things like tax credits have more than offset changes to the personal allowance,” she said.

And there are some bits of Wednesday’s IFS report that Osborne glossed over: median household income in 2014-15 is now back to the same level as it was in 2007-08, but is still more than two per cent below its 2009-10 peak. Median household income grew by just 1.8 per cent between 2011-12 and 2014-15. Median income for those aged between 22 to 30 is 7.6 per cent lower in 2014-15 than in 2007-08, while for those aged 31 to 59 it is 2.5 per cent lower.