The 'real world' economy

By Bernadette Meaden
September 13, 2013

With his boast of a recovering economy and rising disposable income, George Osborne seems to many people to be living in a different world to the one they inhabit. The feel good factor apparently being detected in Westminster is completely absent for the vast majority of the population, particularly outside of South East England. Perhaps it’s not surprising, as many official statistics seem increasingly removed from the real experience of the majority of the population

Last year, however, the Office for National Statistics (ONS) reported a figure which did ring true for many people. In real terms, the average earnings of UK employees in 2012 were at roughly the same level as in 2003. This felt accurate; many people who managed to keep their jobs during the recession have had a wage freeze, or even a wage cut.

But given these reduced wages, there is a worrying lack of awareness from government ministers about what this means in terms of survival. Michael Gove says foodbank users are there due to their own bad financial management, not appreciating the harsh fact that for some people their weekly income does not meet even their basic weekly outgoings. No amount of financial management will make their income cover their basic costs. The fact is that people on lower incomes spend a higher proportion of their income on commodity-based essentials, ie food and fuel, which have risen sharply in recent years.

Yet as far as the prices of such essentials are concerned, the official inflation measures of CPI and RPI seem to bear no relation to people’s real experience. Their energy bills and food prices have gone up far more than these official statistics would suggest.

In 2003 the average household energy bill was around £500. It is now well over £1000 and rising rapidly

In July the ONS reported that food prices rose significantly, but the official Consumer Prices Index actually fell. Again, the official inflation figures bear little relation to the experience of going to the supermarket and seeing prices riseweek by week.

Another important official figure which is used to judge the success or failure of government economic policy is the unemployment figures, and again, since the Coalition took power these figures have seemed to be more and more detached from reality.

Latest figures say that there are 2.49 million people unemployed and it is remarkable that following the biggest financial crash the world has ever seen, this figure is not much higher. But perhaps, in reality, it is?

Many now believe that official unemployment figures are misleading, hiding a large number of hidden unemployed people, and an increasing number of people who do not have what one would consider a satisfactory job, but are counted as employed. These may be the million people on zero hours contracts, or the numbers on Workfare placements, who are only receiving Jobseekers Allowance in exchange for work, but are counted as employed.

Last year, Sheffield Hallam University published a report in which they suggested that the true figure for unemployment was almost 3.5 million and recently the TUC suggested that the true figure could even be double the official figure. Without a hint of irony, Employment Minister Mark Hoban said that this showed that the TUC was ‘out of touch.’

Given the highly privileged and wealthy background of most members of the Government, perhaps it is not surprising that they have little idea of the harsh realities of life for much of the population. But their ability to deny these realities is increased by sets of statistics which may or may not be accurate, but certainly have little relevance to most people’s lives.

Perhaps what we need is a new, ‘real world’ set of figures. An inflation index that truly reflects the basic price of heating and eating, and unemployment figures that truly reflect the insecure and precarious nature of employment, may deter ministers from pretending that poverty is due to fecklessness. It is strange how every time we have a recession, some politicians would have us believe that the poor are stupid, lazy, and irresponsible.


© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden

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