Britain divided over whether future growth will improve living standards

The electorate is broadly split over whether, come the next general election, it will still be possible for the government of the day to ensure steadily rising living standards, according to a new polling report for the Resolution Foundation. The analysis, “2015- the living standards election?”, gives a unique insight into what voters think that politicians can – and can’t – promise to achieve at the next election.

The research carried out for the Resolution Foundation by YouGov shows that exactly half the public think that, with the right policies, overall economic growth should still result in rising family living standards. However a large minority (35 per cent) think this is now beyond the ability of governments to achieve and the most they can be expected to secure is a stable economy and sound public finances.

Conservative supporters are the most pessimistic on this issue – more than six in ten (64 per cent) think it is very hard for government with the right policies to secure higher living standards, compared to four in ten Liberal Democrats (43 per cent) and only two in ten (20 per cent) Labour supporters. Conversely, seven in ten Labour supporters (69 per cent) think that the right policies can ensure that overall economic growth leads to rising living standards, compared to half of Liberal Democrats (48 per cent) and just over a quarter (27 per cent) of Conservatives.

The report considers the specific measures that the public think would make a difference to their living standards. It highlights the priority given to a reduction in the cost of essentials like food and fuel which the electorate say is the single measure which would most improve their circumstances. Of a list of options, this is named as a priority by almost seven in ten people (65 per cent), followed by a reduction in petrol duty (47 per cent) and then by a tax cut for those on low and middle pay and by a cut in VAT (both 35 per cent). Next comes a general increase in wages across the board (24 per cent), a reduction in housing costs (17 per cent), the creation of more jobs and more available hours of work (13 per cent), an increase in the national minimum wage (8 per cent) and a reduction in the cost to parents of childcare (6 per cent).

The poll also examines how much confidence the public has that the government of the day would have the power to bring about these changes. Around nine out of ten people think governments have the ability to cut direct taxes, reduce VAT, increase the national minimum wage and cut fuel duty. But a majority also think that government is able to bring about far harder to achieve changes such as an across the board increase in wages.

It finds there are also finds stark differences in attitudes according to people’s age, income and region:

• Older people put more emphasis on reducing taxes on consumption. Among those aged 60 and over, six in ten (62 per cent) say a reduction in fuel duty would help and more than half (53 per cent) favoured a cut in VAT. The corresponding figures for those aged 18-24 are 21 per cent and 24 per cent.
• Middle and upper-middle income families are most pessimistic over whether it’s possible for a government to secure rising living standards. More than four in ten (44 per cent) in households with incomes from £40,000 to £70,000 said this would be very hard for a government – compared to three in ten (29 per cent) of households with the lowest incomes – below £20,000
• Low-income families are the least likely to believe their living standards will benefit from economic recovery. One in three (33 per cent) with household income below £20,000 do not think it will improve their standard of living, compared to one in five (21 per cent) of those with household incomes above £70,000
• Scots are most pessimistic about their living standards in the short-term. Six in ten (59 per cent) expect to be worse off in 2015 than now, compared with four in ten (40 per cent) Londoners

The Resolution Foundation polling also sheds light on public attitudes towards the crucial interlocking issues of prudent management of the public finances and the promotion of economic growth – and possible trade-offs between them – issues that will dominate the political agenda all the way to the next election and beyond.

Prudent management of public finances is vitally important to potential voters. Eight out of ten people (78 per cent), including a clear majority of supporters of all three parties, agree they cannot trust a political party on the economy or have confidence that their efforts on living standards will succeed, unless prudent management of public finances is the top priority.  Only one in ten (11 per cent) disagree. Against this, however, eight out of ten people also sign up to the proposition that ‘promoting growth’ should be the top priority for government. Just one in ten (9 per cent) disagree with the statement.

Forced to make a choice over which of these two economic objectives should ‘come first’ the public is divided but a larger proportion opt for ‘promoting growth’ (49 per cent) than ‘prudent public finances’ (38 per cent). Again, these findings are highly polarised by party support – Conservative supporters prioritise prudence financial management over the promotion of growth (62 per cent versus 30 per cent), Labour supporters think growth promotion should come first (21 per cent versus 69 per cent) while Liberal Democrats are evenly split (45 per cent versus 49 per cent).

Gavin Kelly, chief executive of the Resolution Foundation, said: ‘Despite the stagnation of recent years, including in the period prior to the recession, the majority of people still think that with the right policies growth will translate into steadily rising living standards. They want their share of the future gains from growth. However, a large minority appear to have lost faith in this belief which is concerning given that the legitimacy of our economy rests on it.

‘There’s no question that 2015 will be the “living standards election” but to date we haven’t known much about how the electorate’s expectations may have changed in the post-crisis era.  It’s striking to see the extent to which the public still believe that government has the power to control or influence the key factors that affect their economic plight. Whether on prices, wages or the availability of work, the public thinks that our leaders should be able to make a big difference.’

Peter Kellner, president of YouGov, said: ‘Politicians who look for a clear lead from the public will look in vain. Voters know that over time Britain needs to cut the deficit and create more jobs; but they are divided on which should come first. The larger truth is that pessimism abounds. The dominant mood is that things will continue to get worse. The challenge of political leadership is not just to decide the best policies but to frame a plausible narrative that can dispel the gloom. I cannot recall a time when so many voters had so little faith in the ability of politicians to secure prosperity.’

For fuller findings of the polling see the notes below

Ends

Notes

1. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 1,761 adults. Fieldwork was undertaken between 27 -28 February 2013.  The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
2. The Resolution Foundation is an independent policy and research organisation working to improve the lives of people on low to middle incomes.

Fuller findings of the polling include:

On the prospects for rising living standards

• 50 per cent of the public believe growth and the right policies can steadily improve family living standards. 35 per cent think this is almost impossible for governments
• Conservative supporters are most pessimistic on this score – more than six in ten (64 per cent) think it is beyond government to channel growth into higher living standards, compared to four in ten Liberal Democrats (43 per cent) and only two in ten (20 per cent) of Labour supporters. Conversely, seven in ten Labour supporters (69 per cent) think a government can harness growth to drive up living standards, compared to half of Liberal Democrats (48 per cent) and just over a quarter (27 per cent of Conservatives)
• Current supporters of both coalition parties are more pessimistic than those who voted for them in 2010. The proportion of Conservatives who think governments can improve living standards has fallen from four in ten (38 per cent) to less than three in ten (27 per cent). Among Liberal Democrats, it has fallen from more than half (54 per cent) to less than half (48 per cent)

On the measures that would improve living standards

• The public believe a reduction in the cost of essentials such as food and fuel would do most to help their living standards. Almost seven in ten people (65 per cent) picked this when asked to choose two or three from a list of nine possible measures. This was followed in popularity by a reduction in petrol duty (47 per cent), a cut in VAT (35 per cent), a reduction in direct taxes for those on low and middle pay (35 per cent), a general increase in wages (24 per cent), reduced housing costs (17 per cent), the creation of more jobs and more hours of available work (13 per cent), an increase in the national minimum wage (8 per cent) and a reduction in the cost childcare to parents (6 per cent)
• Older generations put more emphasis on reducing taxes on consumption while younger people prioritise pay and housing costs. Among those aged 60 and over, six in ten (62 per cent) said reduced fuel duty would help and more than half (53 per cent) a cut in VAT. Among 18 to 24-year-olds the top choices were a general wage increase (38 per cent) and reduced housing costs (34 per cent)
• Asked what would help Britain more generally (rather them and their families in particular) people put a little more emphasis on wages, housing and jobs and a little less on living costs. Viewed this way, reduced cost of essentials such as food and fuel is still the top choice, but down from 65 per cent to 56 per cent. Meanwhile the proportion of people who picked a rise in the minimum wage, increases from 8 per cent to 18 per cent
• Younger people are more likely than older generations to name a rise in the minimum wage and lower-cost childcare as things that would help the country generally. Among those aged 18 to 24, 39 per cent picked the minimum wage as a priority and 8 per cent the cost of childcare. This compares to 13 per cent and 5 per cent respectively among the over 60s.
• Electors overwhelmingly feel the government can control or influence the key drivers of living standards. Nine out of ten say it has the power to cut direct taxes, reduce VAT, increase the national minimum wage and cut fuel duty. Around seven in ten believe the government can deliver on reducing the cost of essentials, creating more jobs, reducing childcare costs and reducing housing costs. More than half think a general increase in wages is within the power of government.
• This confidence in the power of government is strong across supporters of all main parties, but especially Labour. For example, almost seven in ten Labour supporters (66 per cent) think the government can push up wages generally – compared to four in ten Conservatives (42 per cent) and Liberal Democrats (39 per cent)

On the balance between prudence and growth

• Eight out of ten people (78 per cent) agree both with the proposition that prudent financial management should be a government’s priority and that achieving growth should be its priority. One in ten (11 per cent and 9 per cent respectively) disagree
• This view that prudence financial management should be a priority is broadly held by supporters of all parties, by nine in ten Conservatives (92 per cent), by eight in ten Liberal Democrats (84 per cent) and by seven in ten Labour supporters (74 per cent)
• The view that promoting growth should be a priority is held almost equally by supporters of all three main parties – 84 per cent of Liberal Democrat and Labour supporters and 82 per cent of Conservatives
• Almost half of the public (49 per cent) agree with the proposition that promotion of growth should come first and will lead in time to improved public finances. However four in ten (38 per cent) would put prudent financial management first, arguing that this will in time allow the economy to grow
• Conservative supporters prioritise prudence financial management over the promotion of growth (62 per cent versus 30 per cent), Labour supporters prioritise growth promotion (21 per cent versus 69 per cent) while Liberal Democrats are almost tied (45 per cent versus 49 per cent)
• Current supporters of coalition parties are more likely to prioritise prudence than those who voted for them in 2010. Among Conservatives this has risen from just over half (55 per cent) of 2010 voters to six in ten (62 per cent) current supporters. Among Liberal Democrats this has risen to almost half (45 per cent) from three in ten (31 per cent) of 2010 voters.
• Older people are more likely to prioritise economic growth over prudence. More than half (52 per cent) of those aged 60+ prefer growth compared to fewer than four in ten (36 per cent) who rank prudence as more important. This is even more pronounced among those aged between 40 and 59, where the corresponding figures are 56 per cent and 33 per cent. Electors aged 18 to 24 show a small preference for growth (41 per cent against 37 per cent for growth). Only those aged 25 to 39 prioritise prudence (with 40 per cent choosing growth and 46 per cent prudence).
• By region, London is the only place where prudence is seen as more important than growth however (with 40 per cent choosing growth and 45 per cent prudence). In all other regions, people take the opposite view. Opinion is strongest in Scotland (where 54 per cent prioritise growth and 33 per cent prudence)

On how long economic recovery will take

• A large majority think there is no prospect of full economic recovery in the short-term. More than three in ten people (36 per cent) think recovery will take 4 or 5 years, almost three in ten (29 per cent) think 6 to 10 years and almost one in six (15 per cent) think it will happen in more than a decade or never. Fewer than one in ten (7 per cent) expect full recovery in the next 2 or 3 years

On whether people feel worse off than in 2010 and expect to be worse off by 2015

• More than half of people (53 per cent) say they are worse off now than they were in 2010.Just over one in seven (14 per cent) say they are better off and three in ten (30 per cent) about the same
• Almost half (46 per cent) expect to be worse off still by 2015. One in five (19 per cent) think they will be better off and one in three (28 per cent) about the same