“100 days as Prime Minister—average family is £1200 poorer”
“As we mark Rishi Sunak’s 100 days as Prime Minister, the Lib Dems have claimed that he’s left families £1,200 worse off.”
The Liberal Democrats have claimed that an average or typical household became £1,200 poorer in Rishi Sunak’s first 100 days as Prime Minister.
Although it is true that many households have faced rising costs in the last 100 days, this figure is based on calculations that contain several significant flaws.
The true figure is hard to estimate, and varies according to the assumptions you make, but one recent estimate for the fall in living standards by the Office for Budget Responsibility suggests that the true figure for these 100 days is probably lower.
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What the Lib Dems did
In a Twitter thread on 2 February, the Liberal Democrats said that the average family had become £1,200 poorer in the 100 days since Mr Sunak became Prime Minister on 25 October.
The party made the same claim in a press statement, and on ITV’s Good Morning Britain programme that morning, during an interview with the party’s leader, Sir Ed Davey.
When Full Fact asked where this figure came from, the party sent us a statement including several notes showing how it had been calculated.
Essentially, the party calculated several different annual cost estimates—for a rise in mortgage rates, a rise in income tax and a rise in shopping bills—and combined these into a single 365-day figure (£4,268), which it then scaled down to represent 100 days’ worth of that cost (£1,169.32).
This figure was then rounded up to £1,200.
At different times, the party said the figure referred to an “average family”, a “typical family” and—in its press statement, but not on Twitter or on ITV—“a typical squeezed-middle household with a mortgage”.
Why it’s wrong
The most basic problem with this estimate is that it doesn’t consider everything that affects how much richer or poorer a household might become.
This could include mortgage costs, income tax and grocery prices, which the Liberal Democrats considered. But it could also include many other costs, such as fuel or other taxes—as well as things that might have increased a household’s income, such as changes in wages or benefits, which they did not.
But there are also some significant problems in the specific estimates the party made.
By far the largest element of the cost (making up about £822 of the £1,169) was a Bank of England annual estimate of about £3,000 for “a typical mortgage-holder moving out of their fixed-term deal between Q4 2022 and the end of 2023”. According to the Liberal Democrats, this “equates to around £821.92 over 100 days”.
It is true that the latest Bank of England Monetary Policy Report includes an estimate for this cost. But it is not true to say that an average family could have been expected to pay it in Mr Sunak’s first 100 days.
As the Bank says, this £3,000 annual cost would apply to “around a quarter of the outstanding stock of mortgages, which equates to just over two million mortgages”. It also represents the number whose fixed-rate deal would end at some point between October 2022 and December 2023.
In short, only about two million out of 28 million households in the UK would face this cost between October 2022 and December 2023—and only about a fifth of those would have actually faced it during Mr Sunak’s first 100 days (assuming that fixed-rate deals were equally likely to end at any time throughout this period).
In 2021, when he was chancellor, Mr Sunak announced that the threshold at which people pay income tax, both at the basic and the higher rate, would be frozen for four years, instead of rising with inflation as had been usual. This effectively means that people will pay more income tax each year.
The Liberal Democrats asked the House of Commons Library to calculate how much higher two different income tax bills would be in 2022/23, compared with a scenario in which the threshold had risen in line with prices.
The calculations found that someone earning an average salary of £33,280 a year would pay £80 more income tax because the threshold had been frozen, and someone earning £63,870 would pay £400 more.
The Liberal Democrats combined these figures (in effect estimating the tax changes for a household with a combined income of £97,150) and scaled them down again to reflect what it said were 100 out of 365 days’ worth of this cost.
It is debatable whether this is really an additional cost that households have faced in the first 100 days after Mr Sunak became Prime Minister. The threshold had already been frozen several months before, in April 2022, although it is a policy that Mr Sunak himself introduced.
More importantly, these tax rises do not represent the costs faced by an average household. In the latest figures, for 2021/22, the average household had an income of about £57,200 before taxes and benefits, plus additional cash benefits of about £6,200—much less than the combined £97,150 of taxable income that the Liberal Democrat calculations assumed.
An average non-retired household had an income of around £65,200 before taxes and benefits, and received £4,600 of cash benefits.
For the rise in the cost of groceries, the Liberal Democrats used figures published on 31 January by the market research firm Kantar, which shows that the price of groceries in the four-week period to 22 January 2023 had risen 16.7% compared with the same period the year before.
Kantar said this meant that “households will now face an extra £788 on their annual shopping bills”. The Liberal Democrats calculated what 100 days’ worth of this 365-day cost would be, producing a figure of £215.89.
However this does not describe how much more it cost to buy groceries in the 100 days since Mr Sunak became Prime Minister compared to the 100 days prior to that. Instead, it compares the cost of buying groceries in the 100 days since Mr Sunak became Prime Minister with buying groceries for 100 days a whole year ago.
What has happened to household incomes?
With very high inflation, people have effectively been getting poorer over the past year—unless they’ve experienced equally large rises in their wealth and income.
It would be very difficult to estimate reliably how much poorer the average household became during a precise period like Mr Sunak’s first 100 days, because costs and earnings may have changed at a different rate during that time, compared with the rest of the year.
We can get a very rough idea of the change, however, by looking at estimates published in November 2022 by the Office for Budget Responsibility. These show a predicted 4.3% fall in real household disposable income in 2022/23, which is the largest fall in a single year since Office for National Statistics records began in 1956/57.
Average UK household disposable income (income after taxes and benefits) in 2021/22 was £48,257, so a 4.3% fall would represent an effective loss of about £2,075 in this financial year, or about £568 over 100 days.
The Resolution Foundation forecast a slightly smaller fall of 3% this year for non-pensioner households specifically, and after housing costs.
Image courtesy of UK Parliament/Chris McAndrew