Food bank Britain

It may not be all down to government policy, but it is the poorer half of society who have suffered most in recent years

“Are you better off now than you were four years ago?” That was the simple question Ronald Reagan asked voters to consider in his successful campaign for the White House in 1980. It remains a potent one, and there is a simple and a complicated answer to the Great Communicator’s question in Britain today.

The complicated answer is the one the politicians offer. Various figures suggest that wages are pulling ahead of price rises – if only because inflation is so subdued. Coalition ministers hail such numbers as the dawn of a new era of prosperity, vindication for the cuts, and proof that the “long-term economic plan” is working. (Conservatives are usually more excitable than their Liberal Democrat counterparts.)

At other times, the data points to the opposite – such as in the ONS’s report today that workers have seen the spending power of their earnings fall 1.6 per cent over the past year. Labour and its allies seize on every new piece of evidence as proof that their theme about the cost-of-living crisis has not, in fact, been overtaken by events and 3 per cent growth.

The truth is that monthly movements in inflation or unemployment do not tell us all that much. Living standards, as opposed to, say, Libor trends or the trade figures, are not some statistical abstraction. The voters do not need the help of politicians or experts to tell them about that; they know only too well that these past few years have been tough on household budgets, and the outlook looks better now than it did when banks and stock markets were collapsing all around us.

In other words, the debate on the economy, important as it is, is likely to be rather a stagnant one, with most voters already clear about what they think and whom they blame. What the mainstream, “Middle” Britain may be less well aware of is quite how badly things have gone for those at the bottom of the pile, incidentally the groups least likely to vote, and with the least-often-heard voices. There seems little doubt that the poor have been hurt badly by both the recession itself and the Government’s response to it.

As we report today, many families are forced to turn to food banks to survive because of delays in their benefits payments. And new research points to Britain taking a regressive turn over the past four years. The LSE’s Centre for Analysis of Social Exclusion shows that  the poorer half of society have all had their disposable income decline as a result of policy changes since 2010. The richer half, meanwhile, except for the top 5 per cent, have seen their income increase.

So the wealthy have not suffered so much in these years of austerity. Coalition policies would seem by this measure to have increased inequality – but the owners and managers of capital are likely to have done well in any case. One does not need to be a hardened Marxist to understand that when wages are depressed, then profits tend to be buoyant.

It is also only fair to add that wage restraint prevented a much bigger jump in unemployment during the slump, and it has made it easier for employers to hire in the recovery, hence the recent jobs boom. And the biggest contributor to poverty has always been unemployment. So Labour’s cost-of-living crisis has also helped more people to stay in work and out of hardship – which is what forms the Tories’ “jobs boom”. A complicated truth, that one.