The ‘National Well-Being’: The recovery is coming too late for most and not at all for the elderly

Joe Wright, 19 March 2014

The Chancellor is about to announce the budget for the next fiscal year and it is safe to say it will be littered with the words ‘recovery’, ‘job not done’ and ‘tough decisions’. As to what else, we have been told there will be one or two surprise ‘crowd-pleasers’ (another penny off beer?) and a fleshing out of the promised cap on the Welfare budget, but no major announcements, especially nothing on a shakeup of the 40p tax rate or deeper spending cuts many on the Tory backbench pleaded for.

Annoyingly for commentators, this budget has been far less leaky than previous ones. So instead of speculating on what will be known in an hour, I thought time would be better spent testing the Government’s diagnosis of the UK recovery with a wider a look at the UK’s ‘National Well-Being’, a series of now annual reports compiled by the ONS. These statistics are people’s self-reported feelings about various aspects of their life, not a departmental report about what people should be feeling – in essence, whether they are recovering.

Looking back over the earlier years of the parliament, the picture is a mixed bag. There are fewer people in financial difficulty with 10.9 per cent reporting struggles with their household budget, down from 11.6 per cent in 2010/11 and 12.3 per cent in 2009/10. However, the overall number of people completely satisfied with their household income has fallen from 57 per cent to 53 per cent over the same period, reflecting the stresses on middle and low-income people created by the gap between inflation and wages.

For the over-60s, a reliable pool of votes for the Tory, the jobs is most certainly not done – or even started. 26 per cent reported they expected to be worse off financially in the years ahead. The ONS says this was likely caused by a rise in the cost of living. While inflation remained well above the Bank of England’s 2 per cent aim for more than half of this parliament, interest rates are expected to remain flat until next year. Though the survey is a little old, the Chancellor has given the elderly little reason to feel any different since aside from some small relief in inflation. It is unlikely there will be any respite for them before the election.

Real net national income per head, a far better measure of people’s financial situation than overall GDP, remains below what is was in 2007/8. Numbers are not available for 2013, but a bump would be a very welcome sign that people might, might, just be beginning to feel rather than hear that there is an economic recovery.

Comparatively, however, the struggle to return to pre-crisis levels of growth has been particularly drawn-out. Naturally, Labour will protest that this is the Chancellor’s own fault having stymied the recovery by cutting government spending so fast when first coming into office. The danger for the Chancellor still remains that such a long and drawn out recovery will only start to reach people before it’s too late (especially for him that is).