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Immigration and the cost of living

31 July 2012

8:51 PM

31 July 2012

8:51 PM

The average disposable income is at its lowest point since 2003, according to figures released this afternoon by the Office for National Statistics. The statistics for the first quarter of this year show that take home income was an average of £273 a week, while real incomes per head fell by 0.6 per cent to £4,444 in Q1, which is the lowest since 2005.

The ONS points to rising prices as the primary cause of these falls, and there are obvious points to be made here about the cost of living. It’s currently one of the major reasons voters are giving for turning away from the Conservative party, and Labour’s Chris Leslie has already used the ONS’ stats to attack the government’s tax and benefits policies. He said this afternoon: ‘These figures show the harsh squeeze facing families and pensioners, which the government’s unfair policies are making worse. While millionaires will soon get a tax cut, millions of people on middle and low incomes are paying more because of the rise in VAT and cuts in tax credits.’

But there’s also an interesting paragraph in today’s ONS report about one of the causes of this drop in disposable income. It says:

‘Finally, sustained population growth led to incomes being spread across a greater number of people, and therefore further reduced the growth of actual income per head over the period.’

The Home Office has been quick to point out that population growth is largely fuelled by immigration, and is arguing that today’s figures therefore undermine the arguments that the pro-immigration lobby make that high immigration leads to a stronger economy. Damian Green put out a statement saying this:

‘ONS have today confirmed that the population growth caused by Labour’s uncontrolled immigration has reduced incomes. This Government is reforming all routes of entry so we can bring net migration back down to sustainable levels in the tens of thousands. Labour have opposed all our reforms and Ed Miliband still refuses to admit that immigration was too high when he was in government.’

Note, though, that ministers are not explicitly linking the Conservatives’ drive to cut net migration with the cost of living. Though the two issues are vote-winners, combining them would be too fraught with political difficulty: ministers will rightly want to steer clear of any statements that suggest they are pointing fingers at immigrants for ‘stealing our disposable incomes’.

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