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.

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.

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.

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

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

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.

Today’s Green Paper contains a welcome acknowledgement that the basic rate of benefits is inadequate. Steps have been announced to increase it, but it’s not quite as good as it seems for 2 reasons….

Not sure about this from the IFS. In the real world, I'm not convinced that changing an incredibly miserly income of £4,732 per year to a still-miserly £5,096 per year is going to persuade people, who would otherwise have got a job, that they're now so financially comfortable, they're not going to.

The government has pledged to deliver "higher living standards", move from "treatment to prevention" and from "hospital to community". Cutting billions from health related social security drives a coach and horses through all three.

Yesterday, a Government press release claimed the number of people “considered too sick to work” had "quadrupled" since the pandemic (a "383% rise"). This is incorrect. In fact, it’s not even close. It's more like 40%. This thread explains why 🧵1/7

Turns out "one fiscal event a year" meant spending cuts twice a year, and tax rises once a year.

Looking ahead to the disability benefits green paper, this essay for @citizensadvice.bsky.social makes the case for a system focused on improving health outcomes. Co-authors @maddyirose.bsky.social, @victoria-anns.bsky.social & Simon Collerton We challenge the 5 big falsehoods underpinning cuts…🧵

The speed at which US-Russia relations have gone from Cold War-esque to Molotov-Ribbentrop-esque is dizzying www.bbc.co.uk/news/article...

NEW First of three papers in a major study from @nprcoxford.bsky.social and @jrf-uk.bsky.social. TLDR - The credibility of all political parties in tackling household economic insecurity looks set to be one of the crucial dividing lines of the parliament. www.theguardian.com/business/202... 1/

Labour's support in the opinion polls is rapidly declining as unhappy voters look for alternatives. But why is this happening? Our latest study by election experts at @nprcoxford.bsky.social reveals who are switching parties 🔽 1/6

Some thoughts from me on our new report for @jrf-uk.bsky.social today: www.lbc.co.uk/opinion/view...

Under the UK's current policy settings, 'growth' alone is unlikely to address poverty.

The UK's big problem isn't bond market toddler tantrums, it's the growing risk of medium-term 'stagflation' - low growth, high inflation. (Incidentally that's also what's making the toddlers irritable in the first place.) 1/

Just giving these two roles a boost again. Still plenty of time to apply. Make 2025 a brilliant year - come join us!

I’m hiring! You’ll be leading big policy projects to transform the labour market. Think tackling low pay & exploitation, collective bargaining, making work family friendly… We’re running a webinar next Wednesday at midday where you can find out more.

Not sure how many folk in Northern Ireland follow me on here but... 📢We are about to advertise for two further jobs in our new Northern Ireland Team. 1️⃣ - A Senior Policy Adviser 2️⃣ - A Senior Analyst Adverts will go out tomorrow but closing date not until mid Jan so plenty of time.

We're looking for a talented macro economist and UK fiscal policy expert to lead a new programme of work at @jrf-uk.bsky.social Please do share, and drop me a line if you'd like to chat! jrf.octo-firstclass.co.uk/candidates/c...

A welcome shift in emphasis from GDP to 'living standards' (disposable incomes) from government today. Two key things missing in their formal target though: 1. Housing costs - currently rising faster than real incomes. 2. The distributional - inequality currently set to rise.

Essential reading ahead of Keir Starmer's speech this morning: Our latest @jrf-uk.bsky.social analysis shows that living standards are set to continue to fall over this parliament for those on the lowest incomes, with the biggest % falls for those in the bottom 20%. Housing costs are a HUGE driver

@jrf-uk.bsky.social latest cost of living tracker out today shows why living standards must drive Starmer's reset. Hardship remains entirely unchanged, with a warning of worse to come - 7m families going without essentials, including 5.4 without enough food - 4.3m in arrears Thread on findings:

This is essential reading - poverty in the UK is racialised & we need to understand that to have any hope of ending it.

If Starmer announces a greater focus on household disposable incomes this Thu, that is a good thing and not a moment to soon. This is the scale of the challenge:

The benefits of Keir Starmer's plan for change must be felt by the worst off 📢 New research shows average disposable incomes for the bottom 40% will be £440 lower by 2029 than this year. Lowest-income households will be hit hardest. 1/6

Slightly dreading watching Fraser Nelson's #Dispatches episode on why he thinks the sickness benefits system has gone wrong, but here I am. Will share some thoughts throughout

Bad data also leads to bigger picture policy issues, like disproportionate focus on labour market participation vs productivity.

Inflation out today at 2.3% for October, slightly ahead of the Bank of England's recent projection. But look which month is used to increase social security payments next April to compensate families for rising prices...

We’re looking for smart numbers people! Come join the gang.

Not following the narrative: the economic inactivity rate among 35-49 year olds is at its lowest on record. Similar results for 25-34 year olds. (And this LFS data probably underestimates employment rates.) www.ons.gov.uk/employmentan...

There is a reasonable possibility that either monetary policy or fiscal policy -- or both -- are too tight.

Govt has committed to £3bn cuts to health/disability benefits. But targeting arbitrary savings (set by previous Govt) won't lead to effective reforms that unlock work, and risks deeper hardship for disabled people. New @jrf-uk.bsky.social / Scope report shows the changes we really need🧵1/12

A fresh approach to benefit reform is needed. Disabled people must not bear the bulk of the risk in reformed health and disability benefit system. Our latest report with Scope looks at what reform is needed 🔽 1/6

📣 We’re recruiting two Analysts! Do you have the skills to help deliver our programme of analytical work in ways that can shape policy and generate impact? Are you interested in social policy, UK poverty and the political environment? Apply here: jrf.octo-firstclass.co.uk/candidates/c...

ICYMI post-budget microsimulation modelling from @jrf-uk. Following #Budget2024 and the latest OBR forecasts, we found average disposable incomes are now set to fall across the parliament. By October 2029, the average family is set to be £770/yr worse off in real terms compared with today. 1/