Stagnation: years ago, the Living Wage Commission said the fall in take-home pay had left millions of workers struggling to make ends meet
You’re a lot worse-off than you thought you were.
Official data from the Office for National Statistics (ONS) shows that Conservative governments since 2010 have presided over the longest period of wage stagnation since the Napoleonic Wars:
Real average earnings are at the same level as they were in 2005. Then weekly pay stood at £497 — the same figure as it was in April.
Economists described the figures as “completely unprecedented”, saying that there was no comparable period since the Napoleonic war when wages had been so stagnant. They attributed the slump to the series of crises that have hit the economy over the past 15 years including the financial crash, Brexit and the consequences of the war in Ukraine. They warned that with inflation still running at nearly 10 per cent, it was likely to be about 18 months before real-terms wages began to rise again.
The figures show that, between the turn of the century and 2005, seasonally adjusted average weekly earnings rose by about 15 per cent amid a buoyant economy. They then increased more slowly, by 5 per cent, in the run-up to the 2008 financial crisis. The impact of that crash on public and private sector wages effectively wiped out all the gains in the previous eight years, before recovering slightly in the three years leading up to the Brexit referendum.
Since then, excluding the effects of Covid which distorted the figures because lower paid workers in sectors such as hospitality were furloughed, wage growth has never recovered.
Apparently, if wages had continued rising as they had been before the financial crisis, your pay packet would have been £200 per week thicker.
Who benefits from this?
Who profits by depriving you of the fair wages that help make life worth living?
Here’s a hint:
UK’s top bosses paid millions despite cost of living crisis, annual reports show | Executive pay and bonuses | The Guardian https://t.co/bWMNiWHvLX
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I did a bit of digging (not very much!) and it turns out that Mr Burgon isn’t wrong:
Workers are £11,000 worse off per year due to 15 years of wage stagnation, according to the Resolution Foundation.
In new figures shared with BBC Panorama, the think tank calculated that, had wages continued to grow at the pace seen before the 2008 financial crash, the average worker would make £11,000 more per year than they do now, taking rising prices into account.
Torsten Bell, chief executive of the Resolution Foundation, told the BBC the wage stagnation of the past 15 years is “almost completely unprecedented”.
Unprecedented it may be, but you can bet it was entirely planned by the Tories who slithered into government in 2010.
“This is definitely not what normal looks like. This is what failure looks like.”
Not as far as those Tories were concerned. For them, it was success. They funnelled the cash away from the majority of UK citizens, away from the Treasury, and into the hands and offshore bank accounts of the tiniest minority of the super-rich.
The UK’s top ten richest people are wealthier than the group has ever been, according to The Sunday Times, who recently released their annual Rich List. Their data finds that the cumulative wealth of the top ten billionaires in the UK has grown from £47.77 billion in 2009 to £182 billion in 2022 – an increase of 281 percent.
As this chart shows, following the 2008 crash, the UK’s billionaires have seen a steady, and fairly steep, incline in their wealth. The upward trend continued despite the pandemic, which saw the UK’s economy shrink by 20.4 percent in the second quarter of 2020, as most industries suffered, and 30.5 million people in Europe were expected to be pushed into poverty. This is a stark contrast to the UK’s 250 ultra wealthy, who saw their collective wealth surge to a record high of £653 billion in 2022.
And Jeremy Hunt’s Budget predicted slower growth than we expected after the disastrous Liz Truss was ousted from Downing Street last year.
And the Tories are starting to bounce back in the opinion polls.
Who are the people going back to them? Are they masochists?
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Need a miracle: this is YOU, the day after tomorrow.
Here’s a terrifying article by Brett Christophers (who?) originally in The Guardian.
The author examines the reasons rent, food and energy prices aren’t coming down, if household incomes are.
His answers can be summed up in two words: globalisation and privatisation.
He tells us:
Profits have reached record levels… [but] the cost of living crisis reflects the combination of higher prices for essentials with household incomes that are at best standing still.
Part of the reason that UK companies are generating record profits is precisely because they are successfully keeping wage costs down.
It has long been understood that across an economy at large, companies cannot simply drive down wages and expect profits to hold up in the medium or long term. After all, workers are also consumers. Lower wages mean a lower capacity to consume.
Then he hits us with the reason the big UK firms have managed to avoid this threat to their profits:
Much more than is the case in other countries, such firms tend to be distinguished by one of two key features, both of which insulate the companies in question from the potentially negative impact of UK wage stagnation.
The first is their geography. Companies in the FTSE 100 index derive less than a quarter of their revenues from the UK – a remarkably small share. In other words, domestic demand conditions are largely irrelevant to their fortunes.
That this is true of the UK’s big oil and gas companies, BP and Shell, whose profits are at all-time highs, is well known. But it is no less true of profit heavyweights in other sectors such as AstraZeneca, BAE Systems, British American Tobacco (BAT) and Unilever.
That’s globalisation – these firms operate in other countries where wages are higher and can therefore charge what they like. If UK households default on their energy bills, their lights will go out and the energy firms’ bosses won’t think twice about it.
The second key feature of many leading UK firms is less often discussed. This is the non-discretionary nature of the expenditure that households incur in consuming their services: expenditure such as loan payments, housing rent and utility bills.
Many of these companies have been in the news for their profits, too – companies such as HSBC, Centrica, Thames Water and Annington Homes. Their household customers, many (and, in some cases, all) of whom are located in the UK, are essentially captive: they must make payments, whether wages are rising or not.
In the case of the disproportionate prominence of firms earning revenue in the form of non-discretionary household expenditure, the explanation is … : privatisation. In the 1980s and 1990s, both Conservative and New Labour administrations went about privatising publicly owned assets that occasioned regular household payments – principally housing and utilities – with a gusto and comprehensiveness unparalleled elsewhere in the global north.
So successive Tory and New Labour governments have created a situation in which working households are now being held hostage by the corporations that have effective monopolies on the goods and services we need, simply to be able to live.
I lived through the period when Margaret Thatcher was privatising everything in sight, and when globalisation was the buzzword for the economy. I knew it would end badly for people like myself – and that’s exactly what is happening.
But far too many of my fellow citizens were taken in by the weasel words of Thatcher, Major, Blair and all their fellow-travellers; people who subsequently became extremely rich by forcing us to struggle.
And now, future generations will pay. And pay. And pay…
But if you ask young people today what they think, most of them will say they aren’t interested in politics and it has nothing to do with them.
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Over a cliff: The Brexit bus, with all its claims of a new Golden Age for the UK, teeters on the edge. Boris Johnson, in the driver’s seat, says: “Boys? I’ve got an idea.” Then Philip Hammond walks up and pushes bus, Boris and Britain over the precipice.
Probably because there are very few people around with the economic expertise to know that outrage is the proper way to respond.
Philip Hammond’s Autumn Statement – his first real contribution to UK politics as Chancellor of the Exchequer – was a long admission that the Conservative Party has ruined the country, hidden behind an attempt to blame it all on Brexit.
No, Philip; your party’s policies are responsible.
So it seems the UK is going to have to borrow an extra £59 billion – just to cover the cost to the country of Brexit.
This means the claim on the side of the famous red Brexit bus, that we could put £350 million a week into NHS services was definitely a lie. Let’s not beat around the bush any more – it was a lie and the people who made that statement are liars who cannot be trusted with anything.
Oh – but Boris Johnson, one of the arch-liars, is now Foreign Secretary and has a huge responsibility to deliver the best possible exit from the European Union for the population of the UK. Honestly, how do you think that’s going to work out?
We now know there will be less money available for the NHS and other public services than before, due to lower productivity growth (because foreign countries aren’t buying from us) and – yes – lower immigration.
Your wages and prosperity will suffer like never before, because of this. But I bet your right-wing neighbour still thinks immigrant-bashing is a worthwhile activity.
And all as a result of the vote for a Conservative Government last year.
It is worth emphasizing, as many commentators have, the almost-complete failure to mention the National Health Service or provide any more money for it, even though it is in a funding crisis of horrifying proportions. Mr Hammond says announcements about extra funding for the service have already been made, ignoring the fact that his government has not provided enough.
Perhaps one reason for this is the pitiful increase in public investment announced by Mr Hammond, at a time when interest rates are at an all-time low. There will never be a better time to borrow money and invest it in the UK’s infrastructure, but instead we’re getting 0.3 or 0.4 per cent of GDP, in each financial year leading up to 2020 – slightly more than from New Labour in the years before the financial crisis.
This tells us – although Mr Hammond will never say it aloud – that the Conservatives are continuing their squeeze on public services, started back in the dark days of the Coalition Parliament. One might say it is all part of the plan to take everything away from public hands, as started by Margaret Thatcher and her cronies back in 1979 – if only one had the experience and understanding to see that far.
There’s more – we could discuss the hidden policy not to increase fuel duty, that throws out all the economic predictions but gives the Tories a favourable headline in their poodle press; or we could mention the new fiscal rules which set the scene for panic cuts in public investment as we approach the now-fixed (rather than rolling) date for the deficit to be cut back to a new level set by Mr Hammond.
But it is all too depressing, really.
Someone recently said that, with a May as prime minister and a Hammond as chancellor, all we need is a Clarkson for the UK’s government to emulate the former Top Gear presenting team, now relegated to internet TV on their Grand Tour. It is true that Clarkson once considered standing in the 2015 election.
Some might consider that a good idea – a brand behind which to market the UK’s flailing government.
But let’s be honest: Clarkson, Hammond and May were successful because they presented themselves as three petrol-headed idiots.
With May, Hammond and Boris Johnson in the UK’s driving seat, we don’t need any marketing.
We already know they are idiots. Sadly, we also know that their calamities won’t just be television entertainment – we’ll have to live with the consequences.
But the response to the Autumn Statement has been muted. Some have even claimed that John McDonnell was wrong to challenge it by demanding more investment.
This is because we do not – as a nation – know enough about economics. Otherwise we would be on the streets in front of Parliament, right now, demanding a change of direction – or a change of government.
What an embarrassment: George Osborne should be ashamed of the rubbish he spouted in his speech yesterday (Friday).
George Osborne is flailing.
He’s a desperate man, trying vainly to convince us that the current state of the British economy was his plan all along when anybody with half a brain can see it wasn’t.
Yesterday he was in Washington, trying to convince Americans that he knows what he is doing, but US economists are far too canny to accept anything he says at face value.
His principal claim was that critics of what he and the ConDem inner circle still laughably call “the government’s long-term economic plan” have been proved “comprehensively wrong”. Some of us would like to see his proof of that.
Back in 2010, when Osborne took over at the Treasury, trashed a perfectly good Labour-stimulated recovery and sent the economy into freefall, those of us with any sense said the situation would worsen until it hit the point at which the economy would stabilise of its own accord, without any interference from politicians. Then it would start to improve because demand would start to rise again.
We reached the lowest point possible in the British economic cycle; from there, the only way was up. That is why there is a recovery – and a mean, meagre little thing it is, too. We should be 20-25 percentage points above where we are. Instead, we’re 1.4 per cent behind our pre-recession peak and the money is going to the wrong people.
The only question you should be asking is why this Tory illiterate has held us back.
Osborne told America that the British economy was growing faster than any other in the G7 – which means nothing. When an economy has shrunk more than any other, it is easier for it to grow. It doesn’t mean that our economy will be bigger than the others, although that is certainly the impression that Osborne wants to convey.
He said the growth was “despite warnings from some that our determined pursuit of our economic plan made that [economic growth] impossible”. This was a lie.
Osborne knows perfectly well that nobody said growth was impossible. They said Osborne’s policy would delay any recovery, causing misery for millions of medium- and low-waged people and providing a spurious justification for his colleague Iain Duncan Smith’s purges of benefit claimants – actions that have caused many thousands of unnecessary deaths.
Apparently, to quote members of a previous Tory government, that is “a price worth paying”. For what?
He said: “Fiscal consolidation [austerity] and economic recovery go together, and [the economic turnaround in the UK] undermines the pessimistic prognosis that only further fiscal stimulus can drive sustainable growth.” This is not what the data shows. It shows, as already stated, that the British economy hit rock-bottom under Osborne’s guidance and has now started the long climb upward of its own accord. That is not an endorsement of his policy; fiscal stimulus along Keynesian lines would have arrested the decline and boosted the economy back into growth – as evidenced four years ago, when Osborne inherited an economy that had been growing for five consecutive quarters and sent it right back into decline.
Osborne claimed, yet again, that a Keynesian scheme would create more debt – denying the simple economic fact that the boost it would have provided would have put more money into the Treasury and cancelled the debt far more quickly than his cuts.
It’s obvious, really. Any growth is despite austerity, not because of it. If you take money out of a system, it’s harder for anybody to make a profit on which tax can be paid. Economics 101, George. But you studied history, didn’t you? And towel-folding.
We should also remember that in Osborne’s first Budget he promised – promised – a “steady and sustained” economic recovery. Instead, we had three years in which the economy flatlined. Then he brought in ‘Help to Buy’ – a very crude fiscal stimulus scheme that has created a housing price bubble that is hugely damaging for low earners while putting money into the pockets of people who don’t need it. The economy picked up, because housing relies on other industries, but the crash that is to come might create a worse situation than before.
Osborne wants us to believe that wages will start to rise above inflation, even though the experience of the Americans to whom he delivered his speech is that 95 per cent of post-recession growth went to the richest one per cent of the population. He wants us to believe living standards will improve, but there is no evidence for this at all.
It’s all just another big lie.
Just take a look around you and you’ll see the facts. Osborne was charged with keeping the economy on its knees because that is what the Tories needed, in order to suck the cash from the middle-class, working-class and unemployed people of the UK.
Tories need mass unemployment to maintain the UK as a low-wage economy, creating more profit for bosses while keeping the workers under the cosh.
They need stagnation in much of the economy in order to ensure that the deficit does not go away and the national debt rises, thereby making it possible from them to continue selling off the National Health Service and dismantling the welfare state.
They need a housing bubble in places like London, to ensure that it is too expensive for undesirable poor and middle-income people, ship them out to other towns that have suffered the planned decimation of their economic bases (in order to ensure that they could not make a better living there), and make the capital city a playground for the rich.
And they have done it all by manipulating the media into telling you the worst lies about your own well-being – lies like those in George Osborne’s speech yesterday.
The last 40 years of British history represent the worst decline in living standards for the British people in the entire history of our nation. Never before did we have as much as when the Conservatives came to office in 1979; never before did we have so much to lose.
And we gave it away to liars like George Osborne, just because they had honey on their forked tongues.
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A moment of crisis for David Cameron as he realises it is unlikely that George Osborne has the faintest idea what the Autumn Statement means.
If anybody else had prattled on for 50 minutes while hardly uttering a single sensible word, they would have been consigned to a mental hospital forthwith.
But this is Coalition Britain, and the speaker was George Osborne, the man who likes to tell us all that he is in charge of the nation’s finances. Thanks to his government’s Department for Work and Pensions, nobody is allowed to have mental illnesses anymore; after this speech, it seems likely we all have an idea about the reason for that.
A 50-minute speech is a lot of verbiage, and it is certain that worthier journalists across Britain – if not the world – have already analysed it to exhaustion. Allow me to let you into a secret:
They’re probably trying too hard.
Most of the speech was about putting Labour down. The Opposition has made all the headway over the past few weeks, and we all knew Osborne was under orders to change the mood music of the nation in time for Christmas.
Did he manage it? Not really. His speeches always come across as strained events, where he’s making an effort to be clever without ever achieving it. As a result, the message gets lost. We can therefore discount the Labour-bashing.
That leaves us with what he actually said. Even here, his meaning was at times opaque. What follows is an attempt to provide a handy guide to George-speak, for anyone unfortunate enough to have heard him yesterday.
Osborne: “We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.”/Meaning:“I am lying. Austerity failed miserably and the economy flatlined. A few months ago I realised that we would have nothing to show at election time so I turned the spending taps back on, with Help To Buy and Funding For Lending. I know that these are exactly the sort of Keynesian economic levers that I preached against for three years but I’m hoping that nobody noticed.”
The hard work of the British people is paying off, and we will not squander their efforts./Osborne appears to be celebrating his three years of stagnation. He inherited growth and decided to trash it. (MagsNews on Twitter)
There was no double-dip recession./“Phew! Lucky escape there!”
At the time of the Budget in March, the Office of Budget Responsibility forecast that growth this year would be 0.6 per cent. Today, it more than doubles that forecast and the estimate for growth will be 1.4 per cent./“Please God don’t let anybody remember that three years ago, the forecast for this year was 2.9 per cent.”
Today in Britain, employment is at an all-time high… We have the lowest proportion of workless households for 17 years./These jobs have increased the numbers of the working poor. Too few are full-time; too many are part-time, zero-hours or self-employed, serving up no National Insurance contributions from employers, no holiday or sick pay, or making contractors work long hours for less than the minimum wage.
The number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years./“And we have imposed sanctions on more people on Jobseekers’ Allowance than ever before, in order to produce that figure.”
By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early./Although of course the books were initially supposed to be balanced by 2015. (Huffington Post live blog)
This year, we will borrow £111 billion, which is £9 billion less than was feared in March./…and £41 billion more than forecast in 2010.
We will cap overall welfare spending./But this will not include the state pension (half the social security budget) or the most cyclical jobseeker benefits./”A living wage would mean less dosh on in-work benefits; letting councils build would mean less subsidies for private landlords.” (Owen Jones on Twitter)
Pensioners will be more than £800 better off every year./But as usual he’s ignoring the VAT elephant in the room. (Mark Ferguson on Twitter)
We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s./But life expectancy depends on where you live and how much money you have, meaning the poor continue to pay more towards the pensions of the rich./”Current pensioners better off – future pensioners paying for it. What was that about “making our kids pay for current spending” George?” (Mark Ferguson of LabourList on Twitter)
Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30 per cent of all income tax is paid by just one per cent of taxpayers./Estimates of the amount of tax that is not collected range between £25-£120 billion per year and it is not the poor who aren’t paying up.
This year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government./Because they now have more income. Simple really. (Tom Clark of The Guardian, on Twitter)
Today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years./Including capital gains tax for foreign investors on sales of UK property, which has nothing to do with tax avoidance/evasion, fraud or error.
We must confront this simple truth: if we want more people to own a home, we have to build more homes… The latest survey data showed residential construction growing at its fastest rate for a decade./The rate of house building is at its lowest peacetime level since the 1920s
This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me./On Wednesday, the Lib Dems and Michael Gove’s education department argued over who had to pay for it.
Extra funding will be provided to science, technology, and engineering courses [in universities]. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential./And pushing thousands into the hands of debt collectors.
The best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world./KPMG would know – it writes the tax system and also runs some of the larger tax avoidance schemes.
From April 2015 we will introduce a new transferable tax allowance for married couples… Four million families will benefit, many of them among the poorest working families in our country./Osborne says the Tories are backing British Families – but only ones who are married it seems. (Mark Ferguson on Twitter)/While the new tax arrangements bribe families to marry, the benefit cap will bribe big families to split up. (Tom Clark on Twitter)
We are all in this together./The biggest lie of this Parliament.
We are also helping families with their energy bills./Commence the cutting of the “green crap”. This from the “Greenest government ever”. (Mark Ferguson on Twitter)
Next year’s fuel duty rise will be cancelled./This is a cut in a tax that was never imposed in the first place.
We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people./Young people will therefore have less chance to get contribution-based benefit. National Insurance assures people their pension contributions – except when it isn’t paid. So they will have no contributions to show for any years they worked before 21 and will have to work until their late 60s.
The cost for a business of employing a young person on a salary of £12,000 will fall by over £500./This is a bonus for businesses, not employees.
“Jobs tax” – it’s ludicrous, isn’t it? National Insurance has been a respected part of British life for more than 100 years but Osborne, living as he does in a mythical Victorian-era golden age that never actually existed, thinks it is a “jobs tax”. Either that or he’s still bruised by the fact that Labour’s labelling of the under-occupation charge as a Bedroom Tax caught on with the public.
Shadow Chancellor Ed Balls got on his feet and immediately attacked Osborne’s “breathtaking complacency” for denying the drop in living standards faced by everyone in the country, with families already £1,600 per year worse off. Osborne laughed. He thought that was funny.
The Shadow Chancellor pointed out that we are enduring the slowest recovery in a century, and that average real wages will have dropped by 5.8 per cent by the end of the Parliament (except for fatcat business bosses).
He was having a hard time getting his points across, however, because Tory MPs were heckling him very loudly. Owen Jones tweeted, appositely, “Do the Tories think that a bunch of braying MPs dripping with privilege, while ordinary people’s living standards crash, is good TV?”
Maybe they did. Maybe they thought they had the public on their side.
Let’s have a look at a few comments from the public – courtesy of the Huffington Post:
“Planning to kill more people, George?” (Robin Stacey)
“Spend more you wet lipped monkey.” (Will Moriarty)
“No one has an ounce of faith in anything you say, you parasitic pool of curdled warthog’s puke.” (Anthony Nicholas)
And finally: “Hope you end the speech with your resignation x” (Joanne Wood – and yes, she did mean to end with a kiss).
What a shame Osborne did not follow her advice.
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