In a blow to the Chancellor, a leading think-tank suggested by 2030 families will be on average £1,400 worse off than they are today – with a 3% drop in disposable income
Rachel Reeves has rejected a grim analysis showing a huge fall in living standards for all families by the end of the decade.
The Resolution Foundation think-tank suggested by 2030 families will be on average £1,400 worse off than they are today – with a 3% drop in disposable income. The poorest households will be £900-per-year worse off – a 6% fall in disposable income.
The think-tank also warned that if the living standards haven’t recovered by the end of the decade then Keir Starmer will miss a key target. Last year the PM pledged – in a series of “milestones” – to put “more money in the pockets of working people” and boost living standards.
The bleak forecast from the Resolution Foundation comes as the Chancellor prepares to deliver the Spring Statement on Wednesday. But speaking on Sky News she dismissed the living standards analysis, saying: “I reject that and the Office for Budget Responsibility will set out their forecast this week.
“Living standards in the last Parliament were the worst ever on record. I’m confident that we will see living standards increase during the course of this Parliament, what we’ve already seen in these last few months of the Labour Government is a sustained increase in living standards.”
Director of Insight and Policy and the Resolution Foundation, Alfie Stirling, said: “This Labour Government risks presiding over the first parliament on modern record to see a fall in average living standards from start to finish, missing the Prime Minister’s new milestone alongside a rapid rise in inequality.
“It would take a brave government to test that record at the ballot box. There is no doubt the government is facing an unenviable list of economic pressures and uncertainties, ranging from the domestic to the international.
“But how you manage these risks is a matter of political choice. It is wrong, and ultimately counterproductive, to try and rebuild the public finances through cuts to disability benefits. Instead, the government should be addressing hardship and raising living standards directly, as part of their strategy for growth.”
Speaking on Sunday Ms Reeves also admitted the economy is “not growing fast enough” as she prepares to deliver the Spring Statement. She added: “I’m not satisfied with the numbers that we see at the moment.”
It is expected the Office for Budget Responsibility (OBR) watchdog will slash growth forecasts – cutting the Chancellor’s wriggle room for spending on Wednesday. Ms Reeves also defended a £5billion cut to sickness and disability benefits unveiled by the Work and Pensions Secretary Liz Kendall last week.
She told BBC’s Sunday with Laura Kuenssberg programme: “First of all, we must protect those who need our support and we must give all the support possible to help people back to work.”
The Chancellor added: “I want more people to have the support to get back into work. We have got a benefits bill that is going through the roof, where people are locked out of work. I want to change that and give more people the dignity and pride that comes from work through proper support to get there.”
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