Living standards are stalling - and the signals are flashing red for the prime minister

Labour swept into government with a promise of economic growth.

That promise contained another, more important, promise: this growth would unlock prosperity for ordinary people.

The government made it a mission to raise living standards in every part of the country.

Politicians know all too well that most people want to feel like they're getting on in life. They want to get on the housing ladder. They want to be able to start a family, have a comfortable retirement or pass something on to their loved ones.

When this doesn't happen, politicians often take the blame.

So, the promise to raise living standards is an important one in politics but it is not an ambitious one. Outside of the last parliament, which was plagued by COVID and an inflationary crisis, every post-war government has managed it. Will Sir Keir Starmer?

New analysis by the Sky News Data x Forensics team is sobering. Disposable incomes - that's average income after tax - are barely higher than they were in 2019.

We are only £1 a month better off now than we were before the pandemic.

Labour got off to a good start. The Tories, in their final year, oversaw a £126 increase in disposable incomes (adjusted for inflation), determined as they were to get a grip on inflation.

The new government built on that by boosting earnings for public sector workers - including rail workers and doctors - who received chunky pay rises. However, the country is now going backwards. In the first six months of the year, disposable incomes have fallen by £43.

So, after a year in government, the signals are flashing red for the prime minister.

Not only are incomes stalling, but it comes after a long period of growing wealth inequality. The share of assets, such as property, owned by the richest in society is growing. No wonder people feel they can't catch up.

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The problems are clear, but the solutions are more difficult.

The government also came into office with a promise to fix public services, without going on a borrowing spree. That means taxes have to play a part.

Labour promised it wouldn't raise taxes on working people (income tax, national insurance or VAT) but it hasn't cut them either.

Taxes are still at a generational high. This is eating into our pay packets and, in turn, living standards. This is before rents, utility bills and food take their share.

Meanwhile, Labour's decision to raise money through business taxes is putting further pressure on inflation, as prices in the shops go up.

That means our money isn't going as far as it could be. The prospect of further tax rises in the budget won't help matters. But what alternatives does the government have?

More borrowing is risky. Cuts to public services are unpalatable. Economic growth - which could unlock pay rises - has been promised but may take time to bear fruit.

Better productivity is an eternal puzzle. The government could always tax differently, by targeting the wealthy, but the government seems to be worried that money could leave the country.

It's a difficult bind and, if the government fails to turn things around, incomes risk slipping this parliament. That would be a disaster for Sir Keir Starmer.

(c) Sky News 2025: Living standards are stalling - and the signals are flashing red for the prime minister