Alfie Stirling

"More wage growth in first 10 months of Labour than in first 10 years of Conservatives" is true only on a technicality, due to Covid.

The reality is wages have been terrible for 15 years and the present government are reproducing the average almost perfectly.

That's also what people are feeling.

A must-read this morning - JRF's @alfie-stirling.bsky.social on the crisis in UK living standards, and how politicians can (and must) respond

There has been essentially no growth in real wages for 10 months.

Before the Boil: Addressing the UK's Living Standards Crisis The UK faces a crisis in living standards. The current outlook for real disposable incomes is unprecedented, including rising inequality and the risk of a first parliament on record where the average...

The latest OBR forecasts suggest the average family may end the current parliament financially worse off than they were at the start.

That's unlikely to be a survivable record to defend at the ballot box, but there may be a way to turn it around.

New piece from me for Political Quarterly.

New report: Taxing landlords more is good, actually.

Since 2016, tax reforms helped slash the growth of the private rented sector and boosted first-time buyers—without hurting existing tenants.

A big housing story hiding in plain sight? ⬇️

Two fab economist roles currently going at @jrf-uk.bsky.social, do get in touch if you have any questions!

How can you tell when a country is over adjusting for financial markets reaction/fiscal rules?

When you see that had Trump announced tariffs just a few weeks earlier, it could have avoided billions in permanent cuts to low income disabled people.

🗣️ "This is particularly painful for the lowest income families."

Our Director of Insight and Policy, @alfie-stirling.bsky.social
spoke to @news.sky.com this morning about the impacts the range of bill increases coming into effect today will have on people's living standards.

When you adjust for these things, it more than wipes out rising incomes under the government's measure.

The danger is that the Chancellor's numbers won't reflect the lived experience of families.

You can't buy food with imputed rent, and you can't just stop paying your rent or mortgage.

Key differences are the Chancellor's figure:

1. Is gross of housing costs, even though these are rising fast in OBR forecast.

2. Treats 'imputed rent' - what homeowners would get *if* they rented out their home - as income.

3. Adjusts for people not families, when child population is falling

But why did the Treasury say households will be £500/yr better off?

They are using a 'national accounts' measure for income that is not designed to capture living standards.

We are using the data government produces specifically to look at disposable incomes, after housing costs.

Not everyone is affected equally.

The poorest third could see their incomes fall around twice as fast compared with the middle and the top, 2025-30.

They are disproportionately effected by job losses, rising housing costs and falling real benefit income, including cuts to disability benefits.

The main drivers are threefold.

1. Interest rates are high (up on Oct forecast), increasing unemployment and feeding through to higher housing costs.

2. Inflation (also forecast to be higher in the near-term) reducing real earnings growth.

3. Frozen tax thresholds sees % tax in earnings rise.

NEW from @jrf-uk.bsky.social.

Much was made of the pressures from a “changing world” on public finances.

Those pressures are also impacting families, and government choices are making it worse.

We find the avg. family will now be £750/yr worse off by 2029, vs today.

Thread.

#SpringStatement

OBR's measure of living standards, RHDI, is up by £500 - largely due to stronger wage growth, including planning reforms which boost incomes.

BUT when you dig into it, 3/4 of the extra income from housing services is 'imputed rents' (what families would receive if they rented out their home).

1/3

This from the OBR on Real Household Disposable Income is key.

Living standards, by their measure, are flattered by non-tangible 'imputed rent' -- that's very much *not* the stuff of "pounds in people's pockets".

And even with this included, overall government policy has lowered living standards.

For more:

bsky.app/profile/alfi...

The past year could prove the high point of the parliament for living standards.

Starmer's missed milestone? The outlook for living standards at the Spring Statement While on average all families are forecast to see a fall in living standards this Government, families on the lowest incomes are set to bear the brunt of the pain.

@jrf-uk.bsky.social full writeup here.

www.jrf.org.uk/cost-of-livi...

In case anyone was wondering, this is what it looks like visually.

For more, see the Observer online now/print tomorrow for an exclusive writeup.

@jrf-uk.bsky.social full report coming shortly.

And look out for the update of this analysis on Wednesday, with the latest forecasts. www.theguardian.com/uk-news/2025...

It would take a brave government to stand on that record in 2029.

But if it doesn't, it will put this parliament at risk of being the first on modern record (since 1955) to see falling living standards from start to finish, by the OBR's main measure.

(this chart is from @resfoundation.bsky.social)

The OBR's main measure is also pushed up through scoring additional income for owner occupiers ('imputed rents') and for the way it adjusts for populatiuon growth.

Their measure may still come through as positive next week, depending on a number of factors. We will see.

The OBR measure of 'real household disposable incomes' (RHDI) per head is an inferior proxy for lived experience, compared to our measure using DWP data.

Unlike our preferred measure, their RHDI is gross of housing costs. But even with these wished away the picture is bleak.

Keir Starmer says new ‘milestones’ on living standards, NHS and more are ‘almighty challenge’ – as it happened Prime minister makes speech intended to to show Labour government is ‘delivering change’

This is catastrophic for millions of families, and it also matters politically.

Just four months ago the Prime Minister announced a milestone for rising living standards, "so working people have more money in their pocket".

www.theguardian.com/politics/liv...

Not everyone is affected equally.

The poorest third could see their incomes fall twice as fast compared with the middle and the top, 2025-30.

They are disproportionately effected by job losses, rising housing costs and falling real benefit income (even before disability cuts).

At the average, this sees:

1. Housing costs rising faster than inflation; mortgages up £1300/yr, rents £300/yr by 2030 (green).

2. Inflation rising faster than earnings; real earnings down £700/yr (dark blue).

3. Real tax constant despite lower earnings, (light blue).

The main drivers are threefold.

1. Interest rates are high (up from October), reducing employment, constraining earnings, and feeding through to higher housing costs.

2. Inflation (also up) outstripping earnings growth.

3. Frozen tax thresholds sees % tax in earnings rise.

NEW from @jrf-uk.bsky.social

Much has been made of the pressure on public finances.

Household finances remain the elephant in the room.

If OBR adjust their Mar forecast in line with the BoE in Feb, it will see the average family £1,400/yr worse off by 2030, compared with today.

Thread.