Falling living standards are a problem of Labour's making

Making use of the slowest news month of the year, the Labour party has released details of a report which (shock horror) has shown that living standards have fallen as a result of the financial crisis and subsequent recession.

Of course, they don't put it quite like that, choosing to blame the coalition rather than the bust they promised would never come. Here's Chris Leslie, Labour's shadow financial secretary to the Treasury (presumably Balls is on holiday…):

David Cameron will go down in history as a disastrous Prime Minister for people's living standards. He is totally out of touch, his economic policies have failed and the result is working families are massively out of pocket.

By 2015, official forecasts show working people will have lost an average of £6,660 under five years of the Tories. Yet millionaires have got a huge tax cut from this Government.

Of course, this is a serious issue. Times have been incredibly tough for a very large number of people over the past few years. But falling living standards are a symptom of economic problems, which of course preceded the coalition. The fall in living standards since 2008 serves primarily to highlight just how disastrous Labour's economic record is, not only having failed to "abolish boom and bust" but doing the very reverse by engineering one of the biggest booms and consequently biggest busts in the developed world.

And how much worse would things would have been had it not been for the stabilising effect of the coalition's balanced programme of deficit reduction combined with monetary activism, both of which have kept interest rates at record lows? It's easy to forget that even small increases in interest rates bump up mortgage payments significantly.

And thanks to the Lib Dems, those on the lowest incomes are keeping significantly more of the money they earn. Combined with other measures such as freezes to council tax and fuel duty, the coalition has actually done a lot to help those trying to make ends meet.

Whoever was in power now would have been faced with falling living standards - recall former Governor of the Bank of England Sir Mervyn King's warning before the 2010 election - but the problem is one largely of Labour's making thanks to their reckless economic policy. The coalition might not (yet) have been able to reverse the trend, but they have done a number of things to help. However, only a sustained and sustainable economic recovery will deliver a turnaround in living standards - so today's further good news on that front has to be welcomed.

by Nick Thornsby (Liberal Democrat Voice)