Voters blame politicians for cost of living crisis

Most political issues only enter people’s lives at specific points in time, when scrolling social media feeds or discussing with friends and family. Living standards and household economic security, however, permeate through all aspects of daily life: the cost of the weekly shop, budgeting for Christmas, or worrying about keeping your job. It is no surprise, therefore, that living standards continue to be voters’ top concern. And that, as new research published by the Nuffield Politics Research Centre (Nuffield College, University of Oxford) makes clear, households feeling economically insecure is the clearest driver of Labour’s dramatic loss of support since the election.

By way of comparison, we can compare the impact of economic security on voter behaviour to the impact of immigration attitudes, the oft-cited reason for Labour’s electoral woes: Nuffield find that becoming economically insecure increases that chance of defecting from Labour 3 times more than becoming more opposed to immigration.¹

It is understandable that voters are concerned about living standards. Household disposable incomes in 2024 were lower than 2019; it’s the first-time incomes have fallen over a full-term parliament since records began in 1961. Feelings of economic insecurity contributed to the Conservative party losing the 2024 election; people voted for change, a change of government and a change in the fortunes of their own economic security. But this has not yet materialised.

Household incomes have flatlined since the election and are expected to be, on average, over £500 a year lower at the end of this parliament than today. This will be an even bigger drop than the Conservatives presided over. Without intervention, households are facing a decade of declining incomes.

Self-identified levels of economic insecurity haven’t increased over the past year — they remain similar to the 18.5 million economically insecure adults reported in February — but this group are increasingly blaming Labour for their experience. People who are economically insecure are more likely to disapprove of Labour’s handling of the national economy, and more likely to switch to other parties as a result. They are also more likely to switch to a party reflecting their views on immigration, on the right or left. Through a variety of channels, it is clear that living standards and economic security are central to voter’s preferences, and should be central to any political party hoping to gain public support.

Rising costs and static incomes squeeze living standards

People in the UK across the political spectrum talk about the cost of living crisis in remarkably consistent ways. A series of focus groups undertaken by JRF with More in Common, showed that people understand the cost of living as the squeeze between static incomes and rising costs - as wages fail to keep pace with price increases – but also as intuitively inter-related with other issues such as the strain on public services, crime and the state of the high street.

It is the lowest-income households who have seen, and are expected to continue seeing, the largest falls in income. But we also found just how pervasive the cost of living issue is, with impacts on quality of life being felt across the electorate, ranging from general scrimping on the joys and treats that make life worth living - buying cheaper food, going out less - through to the basics themselves being out of reach. Even people once financially comfortable are finding themselves squeezed, including by the financial burdens of adult children unable to move out, or the costs of caring for older relatives.

Feelings of economic insecurity peak in mid-life, corresponding with a combination of higher likelihoods of having childcare duties, mortgage repayments, low savings, unsecured debts and a lack of disposable income in case of emergencies. For low-income households this all too often becomes a choice about which essential goods to go without – whether to heat their home or skip a meal. Living in a society where not all households can afford the basics in life affects everyone living in it. It is knowing that there is not a suitable safety net should circumstances arise where it might be needed. This is what we mean by a lack of economic security.

And it is this lack of security that is driving Labour’s vote losses across the political spectrum; it helps explain why Labour is losing voters to Reform UK, the Liberal Democrats and the Greens. The public lay the blame for the cost of living crisis firmly at the feet of political elites and big business, however, it is striking that they don’t have a clear sense of the solutions needed.

No party is currently inspiring huge confidence in tackling the issue and certainly no party leads on it in the way that Labour leads on the NHS or Reform on immigration. As such, there is a key opportunity for one party to lead the way through setting out a convincing policy offer. This needs to feel like common sense and be couched within a compelling narrative on why we are in this situation, how things can be turned around, and who should pay.

Those companies are obnoxious the profits they make. Why are they allowed to just keep raising the bar?

Jackie, HR Manager, Sherwood Forest, Dissenting Disruptor²

After COVID as well, it seemed like it was a good excuse to put prices up and people jumped on the bandwagon.

Matt, Construction Manager, Witney, Traditional Conservative

There's enough cash around to solve those kind of things. Just needs to be the political will to do it.

Tom, Lecturer, Hackney, Progressive Activist

… it is probably government driven … it's not too much of a problem until things aren't right or things are then cut and stopped that you see the problems come out.

Andy, Construction Manager, Winchester, Established Liberal

Improving living standards is possible, popular and pro-growth

Improving people’s living standards is not just good electoral politics. Done well, it supports the overall health of the economy through enabling people to engage in the economy more productively. Economic insecurity and low-income is not predominantly a worklessness problem. Over 70% of children living in poverty have at least 1 parent who is in work.

The social security system could be improved to better support living standards and support people into finding jobs that are a better match, that provide better pay and progression opportunities. And the safety net for people in work, which helps people stay in work if they have caring responsibilities or are sick, should be improved so more people can access it. Sustainably increasing incomes also reduces the cost of reliance on public services, and supports demand and business confidence.

Declining incomes are not an inevitability. Every single parliament between 1964 and 2015 oversaw increasing living standards, and this can be a reality again. At JRF we are currently working to develop a set of transformative proposals that would help drive the type and level of change needed.

We need to work towards a social security system that provides the basic essentials in life when people need it. This would require:

• removing the two child limit — which reduces support for larger families and traps hundreds of thousands of children in poverty — at the Autumn Budget.
• introducing a protected minimum floor in Universal Credit, which would embed for the first time in our social security system the principle of a safety net below which no one should fall.

Introducing a protected minimum floor in Universal Credit would limit the total amount that can be taken from a household’s Universal Credit, whether as the result of debt deductions or the benefit cap. The Government’s fair repayment rate policy has already limited debt deductions, a minimum floor in Universal Credit would extend that principle to the benefit cap too. It would boost the removal of the two child limit, taking the number of children with a lifeline out of poverty from 340,000 to 530,000 in 2029/30. The combined cost of these 2 policies is £3.6 billion in 2029/30.

Over the coming months, JRF will be developing and launching a series of further proposals aimed at reducing the cost of essentials and improving economic security. We are looking at:

• proposals for how to reduce energy costs for the majority of households, including through a Rising Block Tariff
• interventions to reduce the cost of renting — a necessity alongside uprating the Local Housing Allowance to restore the link with local rents
• supporting work by NEF which proposes how the childcare funding system can be made simpler and more progressive
• options for making social care systems fair and sustainable
• developing a policy agenda to support communities and places to be resilient and thrive, focusing on people who live in neighbourhoods facing the double disadvantage of high levels of economic deprivation and low levels of community spaces, active groups and local community services
• policy solutions to the ‘two-tier labour market’ that leaves low-paid, self-employed individuals without the protections and benefits of much of employment regulation
• a set of tax proposals that will help support growth and raise funds for those measures that require investment.

Notes

1. Defined as moving from supporting further immigration to opposing further immigration.