Election blow for Sunak as IFS says Tories oversaw ‘worst income growth for generations’
Rishi Sunak has suffered another general election blow after a top economic think tank said income growth under the Conservatives has been the worst in generations.
The prime minister had enjoyed a period of respite this week following an uptick in the polls for his party after infighting engulfed the Labour Party over the future of Diane Abbott MP and the academic Faiza Shaheen, who has not been selected to stand as an election candidate over social media activity in 2014.
But a damning new report has laid bare 15 years of languishing living standards under successive Conservative governments.
The study, by the influential Institute for Fiscal Studies (IFS), found average incomes grew by just 6 per cent from 2009-10 to 2022-23. Before the financial collapse in 2008, the UK would have expected income growth of 30 per cent in the same period.
The study also found that absolute poverty has fallen by just 3.4 per cent in the last 15 years, a fifth of the speed it fell under the last Labour government.
It pointed to a global slowdown in the wake of the credit crunch in 2008-09, but said Britain has fallen from one of the fastest growers to one of the weakest performers since.
And while disposable incomes have returned to pre-pandemic levels, the report also found that pay growth since 2008-09 has been “very poor”. Average pay is currently just 3.5 per cent higher than at the same time in 2009-10, it said.
Despite the largely damning findings, the report gave a boost to the Tories tax-focused campaigning. The IFS said average earners are now paying £2,000 less in taxes than someone on the equivalent pay in 2010, which will pour fuel on Mr Sunak’s warnings that if Sir Keir Starmer enters Downing Street families will be hit with tax hikes.
The Abrdn Financial Fairness Trust, which funded the report, said living standards “have languished for more than a decade”.
Chief executive Mubin Haq said: “On a range of measures UK performance has been weak, especially in comparison to other wealthy countries. The danger is that stagnation becomes the new normal. This is in no one’s interests and stunts too many futures and too many lives.”
Mr Haq urged whoever wins the general election to oversee a “renewed drive to tackling hardship and improving living standards”.
IFS associate director Tom Waters, who authored the report, said poor income growth has been an unfortunate feature of life in Britain for the past 15 years.
He added: “It has been slow growth for essentially everyone; rich and poor, old and young. This means that even while income inequality has been stable, progress on reducing absolute poverty has been painfully slow.
“Although there has been a widespread slowdown in growth internationally since the financial crisis, the UK has fallen from being one of the fastest growers prior to the Great Recession, to one of the weakest performers.”
The report followed an almighty row between Labour and the Conservatives over tax and the economy.
Both parties accused each other of having made billions of pounds worth of unfunded spending commitments, while both also ruled out raising income tax, national insurance and VAT.
Jeremy Hunt said Labour would “hammer families” with a 1p increase to VAT, which shadow chancellor Rachel Reeves branded as “nonsense”.
Ms Reeves hit back, saying Mr Hunt’s “£71bn unfunded spending plans risk putting up interest rates and people’s mortgages”.
