By a Newsnet reporter
A report published by the Institute of Fiscal Studies has shown that over the past year households across the UK experienced the greatest fall in living standards for 30 years. The report warned that the Treasury’s austerity cuts have barely begun to bite and will have the likely consequence of reducing the living standards of families by over 10% during the course of the next three years. Families on low incomes will suffer the most.
The report notes: “… the decline in average living standards looks set to continue until at least 2013-14. Taken together, this would mean that the UK had experienced one of the worst decades for changes in living standards since at least the Second World War.
The Institute’s report cautions that the UK government’s economic strategy will widen the gap between the richest and poorest, already one of the widest in Europe, and will cause greater child poverty. The number of children living in poverty increased during Labour’s term in office, and now looks set to rise even higher under the Conservative Lib Dem coalition.
Meanwhile, directors and executives of the FTSE 100 companies awarded themselves pay rises of between 2.5% and a whopping 7.5% in 2011 – and this before bonuses. For the same set of companies, bonus payouts to directors rose from 71% of the maximum in 2010 to 87% of the maximum in 2011.
Robert Joyce, a Research Economist at IFS and a contributor to the report, said: “The current economic downturn began more than 3 years ago, and may seem like old news. But, as in other developed countries, the most severe consequences of the recession on UK living standards have only just begun to be felt, and will continue to be felt for years to come.”
In repsonse to the report, Stewart Hosie MP, the SNP’s Westminster Treasury spokesperson, has called on Conservative Chancellor George Osborne to bring forward an “economic plan B” to encourage faster growth in the economy.
Mr Hosie said:
“The IFS analysis should set alarm bells ringing in the Treasury that we now urgently need an economic Plan B, or flexibility, to encourage faster economic growth.
“It is the very poorest households that are paying the price of the Tories’ austerity cuts, and as this report warns the UK Government’s > current strategy will result in greater inequality and rising child poverty.
“Measures are needed to boost consumer confidence, especially critical to recovery at a time of inflation, fuel and food price pressures. We need to see a new focus on additional infrastructure investment, such as new transport and housing projects, to create new jobs and new capital assets for the long-term. And we also need the UK government to take action to ensure the banks improve access to finance to help good businesses grow.
“The action taken by the Scottish Government has had a positive impact. We accelerated capital investment at the height of the > recession and over the year to March workforce construction jobs were up by 19,000, or 11.6 per cent, in Scotland – compared to a fall of 5,200, or 0.2 per cent, across the UK.
“Our no compulsory redundancy policy for staff under Scottish Government responsibility is helping to boost consumer confidence, and our commitment to the social wage – including the council tax freeze, no tuition fees, free prescriptions, and free concessionary travel – is giving Scots households maximum protection at a time when other bills and inflation are on a sharply rising curve.
“We now need the UK government to follow this lead and introduce an action plan to drive recovery.”