“Great news this morning!” beamed Rishi Sunak on Wednesday. Not every release from the Office for National Statistics gets its own prime ministerial post on Instagram, but inflation falling to 2% was, the Tory leader claimed, a personal victory. When he moved into No 10, it was 11%, he reminded voters. “But we took bold action, we stuck to a clear plan and that’s why the economy has turned a corner.”
Not so fast, Mr Sunak. The prices of food and petrol remain about 25% higher than two years ago. More than one in five households say that they are struggling to pay their bills or to make ends meet. The cost of living crisis was always much bigger than a number on the consumer price index: it was a catch-all term, taking in everything from a punitive welfare system and poorly paid and insecure work to rising expenses. Millions of households were in a cost of living crisis long before it made the front pages; long after the term falls out of fashion, they will still be in one.
Much of modern politics runs like this: taking a big and complex issue and squeezing it down to fit into a single number that serves as a target. Perhaps the most glaring example is the fixation on GDP growth. Last month, just hours after the ONS announced that the UK’s national income had grown 0.6% in the first quarter of the year, Mr Sunak proclaimed that “things are starting to feel better”. Over this election campaign, Labour’s Sir Keir Starmer and Rachel Reeves have made much of how they will boost GDP growth.
This is an odd strategy, politically and economically. For one thing, surveys show that GDP means very little to most of the British public. In one study from 2020, respondents confused GDP with “the exchange rate (due to the similarity to GBP) and even general data protection regulation (due to the similarity to GDPR)”. Rather than GDP, previous generations of politicians measured economic success by living standards or even industrial production. As the economic historian Jim Tomlinson observed in a recent essay, Liz Truss stands out for her focus on GDP growth. However great the disaster of Trussonomics, he writes, “both Conservatives and Labour accepted her view that growth should now be central to the political agenda”.
Second, most of the benefits from economic growth have not been shared out. In their book When Nothing Works, the Foundational Economy collective of researchers show that of all the growth in take-home pay between 1999 and 2020, the 10% highest earners scooped 25%, while the bottom 10% got only 3%. This kind of disparity led to the Brexit heckle of “that’s your bloody GDP, not ours”. Finally, history shows that over the past 50 years, almost every government has overseen lower economic growth than its predecessor.
So GDP growth is something that the public doesn’t understand, and enjoys little of. Far better would be for politicians and the media to look at a range of measures of economic health and social benefit. The UN publishes a human development index that looks at life expectancy and schooling as well as income. In Britain, such an index could take in healthy life expectancy and security of housing, as well as decent jobs. Living standards are more than one measure and more than one number. Our discussion should reflect that breadth.
