It is a simple question – and it will be at the heart of the general election campaign. After 14 years of Conservative government, people are asking: am I any better off?
Incomes
The answer for most people is – no, you are not better off. Pay has fallen in real terms – that is when inflation, including housing costs, has been taken into account. From 2010-2019, pay across the UK fell by 0.1% a year. Things have improved since the start of the pandemic, but workers are earning thousands of pounds less than they would have been if earnings had risen with inflation.
The living wage – previously the minimum wage – has gone from £5.93 an hour for over-21s to £11.44. However, the Resolution Foundation said cuts to working-age benefits have offset the gains for many. It said, over the past 10 years, low-paid families with children in receipt of benefits had experienced next to no, or even negative, income growth.
The personal tax allowance – the bit that you can earn tax free each year – increased rapidly in the years of the Coalition, letting 3.4 million people on low incomes keep all of their earnings. But since 2021 the threshold has been frozen. That means people receiving pay rises have not felt as much benefit as they would have otherwise.
Despite cuts to national insurance this year, some people will still be worse off than if the thresholds had risen with inflation. When the chancellor announced the latest cut, the Resolution Foundation said anyone earning up to £19,000 would still be worse off. The biggest gainers, it said, were those earning £50,000.
Housing
Though some homeowners have seen huge gains in the value of their properties, it is harder than ever to get on the housing ladder.
In May 2010, the average price of a UK home was £169,162, according to the Nationwide Building Society. In April this year, it was £261,962.
Although the market was sluggish in many parts of the country for several years after the 2008 banking crisis, in London, low interest rates pushed up values. Prices had started rising everywhere before the pandemic and, after a brief period where the housing market was closed, the race for space and a stamp duty holiday added fuel to the fire.
Low interest rates helped many pay off their mortgages and, in the last English Housing Survey, covering 2022-23, 35% of households were outright owners while 29% had mortgages. In 2010, more people had mortgages than owned outright.
However, the cost of a mortgage has gone from record lows – some borrowers were able to lock in for two years at below 1% – to rates not seen since before 2008.
Those not already on the housing ladder face a huge struggle to buy a home. According to Nationwide’s chief economist, Robert Gardner, a typical first-time buyer home now costs 5.2 times a buyer’s earnings, up from 4.6 in 2010. Monthly repayments are now 39% of homeowners’ take-home pay – “that’s quite a bit above the long-run average”, he says. For most of the past 14 years, it was running at 29.30%, but rising interest rates have changed that.
The target of building 300,000 homes a year has not been met.
Children and young people
The past 14 years have been bleak. Within weeks of getting into power, the Conservatives scrapped child trust funds – Gordon Brown’s scheme to help families build up savings for their children. Children had been given payments of at least £250 to be saved until they turned 18. The Institute for Fiscal Studies has found that the accounts made a big difference to the wealth of 18-year-olds, though with average savings of £650, it said this was unlikely to have affected whether they could afford higher education or a deposit for a home.
In January 2013, the government changed the child benefit system so higher income families no longer got the payments.
In England, tuition fees were capped at £3,290. In December 2010, the coalition government tripled the cap to £9,000, which students started paying in September 2012. Since 2017, it has been £9,250.
Childcare costs have gone up faster than inflation: according to the charity Coram, across Great Britain, the average price of 50 hours of childcare for a child under two was £285 a week in 2023, more than 30% higher than a decade ago.
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Childcare vouchers were replaced by tax-free childcare in 2017, but many parents are missing out, said Laura Suter, director of personal finance at advice firm AJ Bell. Government spending has been less than half expected. She says many people are put off by the name of the scheme.
Older people
Older people, particularly women, have seen their incomes increase thanks to the new state pension and the “triple lock”, which was introduced by the coalition government to ensure state pensions keep up with inflation and earnings.
However, Helen Morrissey, head of retirement analysis at the financial firm Hargreaves Lansdown, said data shows that after housing costs, and with inflation taken into account, pensioners received £387 a week in 2022/23, compared with £371 a week in 2010. “This is not an enormous increase over the time period,” she said.
Older people are the most likely to have accrued savings, and for many years they did not earn much interest on them. According to Moneyfacts, in 2010, the average easy access savings rate on £10,000 was 0.78%. Interest rate rises mean that’s now at 3.11%. Those saving will feel better off because of recent rate rises, but borrowers will not.
Bills
Council tax bills have gone up, but central government funding cuts mean many bill payers are getting less for their money. In 2010-11, the average bill for a band D property in England was £1,439. This year, it is £2,171.
However, between 2010-11 and 2019-20, the amount local authorities spent on all services fell by 10.4%. The miles covered by bus routes fell by 14% and a third of England’s libraries closed.
Food prices went down for several years as discounters opened more shops in the UK and forced existing supermarkets to embark on cost-cutting. Official figures show prices dropped in 2014, 2015 and 2016. There were also drops during the pandemic. That trend has reversed – in spring last year, prices peaked at more than 19%.
Electricity bills had been fairly stable until the last couple of years. The average spend on electricity was £451 a year in 2010, and £1,274 last year, while gas went up from £520 to £1,304.
Rapid increases in prices in 2021 led to many suppliers collapsing and the disappearance of most of the cheapest tariffs.
Research by the Centre for Economic Performance at LSE suggests that Brexit has contributed to other cost pressures. In a report published last May, it said the cost of Brexit to each household was £250 when only considering the impact on food since December 2019.
A House of Commons Library report shows that, over the past three years, headline inflation has been higher in the UK than in France.
