‘Labour must raise living standards faster to stop voters turning to populism’

Ofgem has confirmed that millions of households will soon open their energy bills to find the price cap has jumped by 13 per cent, driven by the Iran war. It’s a stark reminder that, even as wages rise, the cost-of-living crisis has not loosened its grip on families in my constituency or across the country. Across class, age, region and background, people are still feeling the same pressure and pain – life is harder, less secure and less affordable.

As has become blindingly obvious but still bears repeating, this is not some temporary squeeze, but a crisis that has been decades in the making. Before Iran, there was Ukraine. Before Ukraine, Covid. Before Covid, Brexit. Before Brexit, the global financial crash. The UK economy has been in a state of permacrisis from the moment subprime mortgages popped up with their very own dedicated bulletins on the evening news.

That’s what made Andy Burnham’s commitment last week to a ten-year mission to raise living standards so important. Recalling what he’d heard on the doorstep in Makerfield about the need for help right now, he also recognises that people need more help in the short term too. He rightly pledged to do what he could to give people breathing space, without gambling with the public finances.

READ MORE: ‘Labour must offer the politics of opportunity and aspiration’

We have a strong record to build on. Since taking office two years ago the government has rolled out a series of redistributive measures to ease the cost-of-living crisis: cutting energy bills; expanding 30 hours of free childcare; freezing rail fares and prescription charges; and delivering two increases in the minimum wage. Prior to the Iran war, this year was set to be the best for overall living standards for some time with a ‘bumper rise’ for families on lower incomes.

This was in addition to making progress on the key structural cause of the living standards crunch – Britain’s productivity crisis. Taking the US, France, and Germany for comparison, the UK saw the worst decline in productivity following the subprime crisis. Yet, since the third quarter of 2024, output per worker has risen around 2.4 per cent – a remarkable improvement on the less than 0.3 per cent per year we saw over the previous decade. Reversing austerity, stabilising the economy, and delivering structural reforms, such as in the planning system, have all played their part.

But much more remains to be done. Hard work too often feels disconnected from the promise of a decent life, particularly with rising energy costs and wider economic pressures. This prolonged erosion of living standards is not just an economic failure, but one of the central political challenges of our generation. It is driving the public’s distrust in politics, fuelling disillusionment, and creating the conditions for populism to thrive. 

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Following the local elections, polls showed that the economically insecure voted in their droves for populists on the left and the right; with those who are socially liberal voting Green and socially conservative voting Reform. If living standards can’t be raised by a mainstream Labour government, then people are increasingly willing to roll the dice and vote for the extremes.

So, to rebuild public confidence, we must show that we have a credible plan to raise living standards over the short and long term. We must go further in addressing our productivity crisis. We must tackle the regional inequality that drags down growth. That is why Andy Burnham’s proposals for devolution matter so much: we must redistribute power and resources if we want stronger growth in living standards in every corner of the country.

Andy’s mission for Number 10 North – to strive for equivalent living conditions in every part of Britain, borrowing from the German Basic Law – also demands action on the cost of living across a whole host of policy areas. In that vein members of the Living Standards Coalition were pleased to publish a new edited collection on raising living standards in partnership with the Fabian Society.

Drawing on ideas from across our movement, the collection includes proposals from Polly Billington MP for “free energy for renters and low-income households”, “secure affordable, healthy food” from Yuan Yang MP, plans for “greater skills training in response to the development of AI” from Dr Jeevun Sandher MP, as well as schemes on childcare, transport and student finance from other colleagues and expert contributors. This is not a Parliamentary Labour Party or movement that is short on ideas.

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The collection also highlights an important lesson from the past two years. Labour’s challenge is not only taking the right action but ensuring that progress is felt quickly and is visible enough to reassure voters that change is happening right now and that we’re on their side. Without that urgency, as we saw with the outcome of May’s local elections in England and elections to the devolved parliaments, anxieties will be channelled into votes for populists who offer radical, but disingenuous, answers.

For Labour to rebuild trust and its electoral coalition, we must accelerate the pace at which our agenda delivers clear, tangible improvements to the living standards of people in every corner of the country.

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