Osborne has fallen into Labour’s trap on living standards
Today’s earnings figures have set a trap for the Conservative Party. So far they appear determined to leap into it.
For George Osborne, the temptation is to pop the champagne corks and declare that the cost of living crisis is over. The problem is that for the vast majority of people in the country, today's technical rise in living standards will be barely felt, if at all.
For millions of public sector workers whose pay Osborne has capped at one per cent, living standards will continue to fall. And for the millions more, who receive little or no bonuses, getting by will remain an incredibly difficult feat.
Look deeper into the figures and it becomes clear that if you strip out bonuses from today’s figures, earnings are still rising at a lower rate than inflation.
The rise in earnings is also not a national phenomenon. In the past year, weekly gross earnings have actually fallen by 0.2 per cent in Yorkshire and the Humber, 2.1 per cent in the East Midlands and 6.1 per cent in London.
Today’s unemployment figures are also a mixed picture. While overall unemployment has fallen, many parts of the country have actually seen a rise, with joblessness up in Yorkshire, the Midlands, Scotland and Northern Ireland.
The problem for the Tories is that there are now two Britain’s. The first Britain is full of wealthy city workers who have seen their house prices rise and their bonus pots fill.
For this first Britain it makes perfect sense for Osborne to declare victory on living standards.The problem is that this first Britain is full of people who by and large would have voted for the Tories anyway.
The second Britain on the other hand is full of people whose wages have stagnated or fallen in real terms, ever since the start of the economic crisis. And it is exactly these people who the Tories failed to win back in 2010 and who they desperately need to win back now if they have any chance of victory in 2015.
The Tories' single biggest electoral problem is that they are seen as out of touch with people's concerns. Labour understands this, which is why almost every public statement from the party accuses the Tories of being "out of touch" or just "not getting it".
For Osborne to appear triumphant over a minor statistical recovery, on the day that food banks dominate the airwaves would play right into this perception and be a huge political error.
And for Osborne to simultaneously declare the cost of living crisis over, while telling millions of public sector workers that their wages must remain frozen, would be a singularly disastrous electoral strategy.
It is however, exactly this strategy that the Conservatives appear set on pursuing.
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