National and Devolved Politics

24.11.17

Living standards set to fall for longest period yet , think tank says

Britain is heading for the longest period of falling living standards since records began, the Resolution Foundation has warned this week.

In its analysis of the Autumn Budget, the Foundation found that real household disposable income is set to fall for an “unprecedented 19 successive quarters between 2015 and 2020.”

With changes to Universal Credit, tax and benefit policies announced since since summer 2015, the poorest third of households will be worse off by an average of £715 a year by the end of parliament, yet the richest third will benefit from an extra £185, according to the report, ‘Fresh Squeezed.’

The report predicts that, on a 10 year rolling basis, productivity is set to fall by 0.1% by the end of 2017, making this the worse decade for productivity since 1812.

Consequently, the foundation predicts that the economy will be £42bn smaller in 2022, compared to the March 2017 forecast.

The foundation claims that these projections, combined with Hammond’s decision to “accept that public finance deterioration and increase it by a further £15bn”, means that he has abandoned the Conservative manifesto aim of reaching an absolute surplus by the middle of the decade.

It notes that budgets are set to be 16% lower in 2022-23 than in 2010-11, whilst capital spending per person is set to exceed pre-crisis levels by the start of the next decade, and if the chancellor did choose to meet the manifesto aim, it would require the pace of deficit reduction to double in the three years running up to 2025-26.

However, the foundation has welcomed the Budget’s focus on housing, with spending levels set to drive progress towards building 300,000 homes a year.

Although it also claims that the abolition of stamp duty for many first time buyers will have a cumulative cost of £3bn, which it says could be better spent on building more homes.

Resolution Foundation director, Torsten Bell, said: “Following years of incremental changes, yesterday the OBR handed down the mother of all economic downgrades pushing up borrowing for the Treasury.”

He called the outlook for families “deeply troubling,” with their disposable income dropping for the longest period in over 60 years.

Bell said: “On the substance of the Budget the chancellor has made the right call in boosting housing investment and focusing on this key issue of intergenerational concern.

“However, yesterday’s stamp duty rabbit is in reality a very poor way to boost home ownership.

“Its £3bn cost could have been better spent building 140,000 new homes through the government’s own Housing Investment Fund.

“Faced with a grim economic backdrop the chancellor will see this Budget as a political success.

“But that would be cold comfort for Britain’s families given the bleak outlook it paints for their living standards.”

Hoping that the foundation’s predictions do not come to fruition, Bell concluded: “While the first sentence of the Budget document reads ‘the United Kingdom has a bright future’, the brutal truth is: not on these forecasts it doesn’t.”

Top Image: Gregory Lee

Have you got a story to tell? Would you like to become a PSE columnist? If so, click here.

Comments

There are no comments. Why not be the first?

Add your comment

 

related

public sector executive tv

more videos >

latest public sector news

Protesters gather as councillors meet to discuss mass children’s centre closures

15/10/2018Protesters gather as councillors meet to discuss mass children’s centre closures

Demonstrators and parents have gathered outside County Hall in Norwich to protest against planned mass children’s centre closures as Norfol... more >
'Pioneer' Wigan Council CEO announces retirement

15/10/2018'Pioneer' Wigan Council CEO announces retirement

The chief executive of Wigan Council Donna Hall CBE has announced her retirement, after winning national acclaim for forging a new model of local... more >
Study shows English councils suffering ‘territorial injustice’ from government spending cuts

15/10/2018Study shows English councils suffering ‘territorial injustice’ from government spending cuts

 Research from Cambridge University has revealed that English councils have been hit twice as hard as councils in Scotland and Wales by spen... more >

editor's comment

25/10/2017Take a moment to celebrate

Devolution, restructuring and widespread service reform: from a journalist’s perspective, it’s never been a more exciting time to report on the public sector. That’s why I could not be more thrilled to be taking over the reins at PSE at this key juncture. There could not be a feature that more perfectly encapsulates this... read more >

last word

The importance of openness after Grenfell

The importance of openness after Grenfell

Following the recent Grenfell Tower tragedy, Lord Porter, chairman of the LGA, argues that if the public are going to have faith in the safety testing process then everything must be out in the o... more > more last word articles >
500 jobs could go as city council eyes 5% tax hike to tackle £28m deficit

11/10/2018500 jobs could go as city council eyes 5% tax hike to tackle £28m deficit

Up to 500 jobs are at risk at Wolverhampton and residents face a council tax rise of 4.99% in what has been described as “the most significant financial challenge the council has ever faced... more >
Government removes intervention in Tower Hamlets LBC

05/10/2018Government removes intervention in Tower Hamlets LBC

James Brokenshire has formally ended the government’s intervention in Tower Hamlets London Borough Council following “significant improvements” in a recent review. The Mini... more >

the raven's daily blog

What cities should become

15/10/2018What cities should become

Tom Leaver, project manager at Future Cities Catapult, examines the rationale behind the creation of the City Data Sharing Toolkit, and explores how this is driving a seismic shift in how cities evolve into our data-rich future. We’re used to big-screen sci-fi future cities being dystopian monoliths to everything wrong with the worl... more >
read more blog posts from 'the raven' >

comment

Inspiring leadership in social value

15/10/2018Inspiring leadership in social value

We have learned a lot since the last National Social Value Conference, with many organisations both in the public and private sectors now embeddi... more >
Is fair funding possible, or pie in the sky?

15/10/2018Is fair funding possible, or pie in the sky?

David Phillips, associate director at the Institute for Fiscal Studies, discusses the current health of local government finance, and how a bette... more >
Keeping the momentum of the Northern Powerhouse

15/10/2018Keeping the momentum of the Northern Powerhouse

On 6 September, the biggest decision-makers of the north joined forces to celebrate and debate how to drive innovation and improvement through th... more >
The Convention of the North

15/10/2018The Convention of the North

Steve Rotheram, mayor of the Liverpool City Region, discusses the findings of the very first Convention of the North, which was held in Newcastle... more >

interviews

Keeping the momentum of the Northern Powerhouse

15/10/2018Keeping the momentum of the Northern Powerhouse

On 6 September, the biggest decision-makers of the north joined forces to celebrate and debate how to drive innovation and improvement through th... more >
Michael King: Time for Ombudsman reform

06/08/2018Michael King: Time for Ombudsman reform

Michael King first joined the Local Government Ombudsman service back in 2004 as deputy ombudsman. At the start of 2017, he was appointed as the ... more >
Helping a city understand itself

06/08/2018Helping a city understand itself

SPONSORED INTERVIEW The urban landscape is changing. How can local authorities keep up with citizen behaviour? Stephen Leece, managing directo... more >
Modern policing: the future is bright

06/08/2018Modern policing: the future is bright

SPONSORED INTERVIEW The public sector, and policing in particular, has often been criticised as being slow to adapt to change. But now, says L... more >

public sector focus

View all News