Did living standards reach an 'all-time low' under the Conservatives?

At Prime Minister’s Questions on 21 May the Prime Minister Sir Keir Starmer claimed that under the previous Conservative government “living standards were at an all-time low”.

We’ve contacted Number 10 to ask what he meant by this, and will update this article if we receive a reply. But we can’t find any data to support Mr Starmer’s claim and the Resolution Foundation told us it believes he “clearly misspoke”.

There are a number of ways in which living standards can be measured, but none of the most commonly used measures show an “all-time low” was reached at any point under the previous Conservative government (or under the Coalition government from 2010 to 2015).

It is true that at least one measure suggests growth in living standards over the last parliament was the weakest on record, and other measures of living standards saw decreases. But that is not the same as saying living standards actually fell to record lows.

Ministers should correct false or misleading claims made in Parliament as soon as possible in keeping with the Ministerial Code, which states that they should correct “any inadvertent error at the earliest opportunity”.

How are living standards measured?

Mr Starmer didn’t mention a specific measure of living standards when making his claim, but we do know that the Labour government has said it will track progress on living standards during its own time in office using two specific measures:

• Real Household Disposable Income (RHDI) per person. RHDI measures total household earnings (from wages and other sources, like benefits) after tax, accounting for inflation.
• Gross Domestic Product (GDP) per capita. This measures a country’s overall economic output, divided by its population.

Another commonly used measure of living standards is the Department for Work and Pensions’ Households Below Average Income (HBAI) data. HBAI statistics are based on data collected through the Family Resources Survey, which is used to provide estimates of average incomes, income inequality and the number of people living in low-income households.

The Institute for Fiscal Studies describes this as “the highest-quality data on disposable household incomes we have”—though it has recently noted that there have been lower response rates to the survey since the Covid-19 pandemic.

What happened to living standards under the Conservatives?

Ahead of the general election last year it was widely claimed that the 2019-24 parliament would be the first since records began to see a fall in living standards.

At the time this claim was made, full data covering the entire parliament wasn’t available. We now know that, measured quarterly, RHDI per person was slightly higher in Q2 2024 (the last quarter before the election) than in Q4 2019 (when the 2019 general election took place), while GDP per capita was slightly lower.

According to the Resolution Foundation, it is the case that annual average RHDI per person growth in the previous parliament was the weakest on record. This measure also saw the biggest single-year decrease on record in 2022/23, according to the Office for Budget Responsibility. Annual GDP per capita also decreased over the previous parliament—though not by a record amount.

HBAI data, meanwhile, shows that median disposable household income, both before and after housing costs, decreased between the 2019/2020 financial year and the 2023/24 financial year.

But at no point during this period, or indeed during the Conservatives’ overall time in government between 2010 and 2024, did any of these measures reach an “all-time low”.

When we asked the Resolution Foundation about Mr Starmer’s statement it told us that he “‘clearly misspoke”’ and that it assumes he was intending to refer to the growth in living standards over the previous parliament being at a record low.

Of course, the previous parliament saw the Covid-19 pandemic and the Russian invasion of Ukraine, both of which had an impact on the global economy, as well as the UK’s withdrawal from the EU. The extent to which these factors should be blamed for the UK’s economic performance in recent years has been a subject of significant debate. The Resolution Foundation told us it was “not a surprise” that living standards saw weak growth over this period given the pandemic and high inflation.