Incomes ‘milestone’: a Champagne or Cava moment?

George Osborne this morning greeted the news about average UK living standards returning to pre-2008 levels as further proof that the sensible thing to do on 7 May is to vote Conservative.

"We have reached a major milestone today in the British recovery,” he told Radio 4’s Today programme. "But it is not the end of the journey. We've got to secure a truly national recovery and we mustn't put the progress we have made at risk by abandoning the plan that has got us this far."

For “abandoning the plan” read “voting Labour”.

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Interviewing the Chancellor, John Humphrys opened by saying “Happy days are here again!” – apparently bringing a broad grin from the Osborne - before adding: “Or, you can read the small print…”

Was it, Humphrys wondered, a moment for breaking out the Champagne – or would “a cheaper Cava” be a wiser option?

The most damning projection released by the Institute for Fiscal Studies (IFS), an independent think-tank, is that most working age adults - especially younger ones – remain worse off.

Incomes for the age group 22 to 30 are projected to be 7.6 per cent lower than they were in 2007-08, while for the 31 to 59 age group incomes are still 2.5 per cent lower. The winners are the over-60s, who are 1.8 per cent better off.

Also, the recovery has been incredibly slow. IFS director Paul Johnson told Today: "It is astonishing that seven years later incomes are still no higher than they were pre-recession and, indeed, in working-age households they are still a bit below where they were pre-recession."

Osborne admitted that “the poorest in society and the young in society suffer most when the economy fails”, but he was more interested in the three myths laid to rest by the IFS.

One, average incomes are up on 2007-08 which means the country is richer than it was, not poorer.

Two, the richest are paying the most towards dealing with Britain’s economic problems – not the least, “as you often hear”.

Three, inequality in society has fallen not risen.

In short, Osborne claimed, Britain is “fundamentally in a better position than it was five years ago”.