Labour claims about savings under their policies are not credible

The Conservatives' failure to curb rising bills has cost families almost £6,000 a year since 2010… Labour’s plan for real change will save average families over £6,700.

Labour party, 4 December 2019

Labour today released figures that they said showed that costs to the average family had risen by almost £6,000 since 2010, while Labour policies would save the average family £6,700.

Very few of these figures represent what “average families” will save under Labour’s policies, or how much more those families have had to pay under the Conservatives.

More than three quarters of the supposed “savings” come from just two large costs, rail season tickets and childcare, neither of which comes close to reflecting what an average family actually pays. In England, two fifths of families don’t pay anything for childcare; only 5% of people use a train more than three times a week.

Some of the smaller figures seem fair estimates of savings that might come about if Labour’s policies were implemented, but they overstate the extra costs families have faced since 2010.

Labour are also inconsistent in whether they adjust for inflation (the rise in prices over time). They show the change in prices over the Conservative government unadjusted for inflation, but then present the change in wages during that time adjusted for inflation, by which measure wages have slightly fallen since 2010. This inconsistency exaggerates the total increase in costs families have faced since 2010.

Overall, as we’ve said before about some Conservative claims in this election, these figures are not credible.

We’ve looked in detail below at some of Labour’s figures.

Childcare

Labour says that under the Conservatives the “average cost of child care rose £1,916 between 2010 and 2019”.

This doesn’t represent the increased costs families have faced.

Labour’s figure is based on comparing childcare prices in England compiled by Coram Family and Childcare in 2010 and 2019. But these don’t take account of government support for childcare costs.

To give an example, in 2018 average nursery costs in England for children aged two were about £121 a week. But according to an official survey of parents in 2018, 43% of families don’t pay for childcare and of those that do, the median family paid £25 a week (if you placed all families with costs in a line from highest to lowest spenders, the median family is the one in the middle of that line). Some families do pay higher costs than this, but they don’t represent the “average” family.  

We’ve discussed some of these issues in more depth before.

Labour goes on to say that its own policies will save an average household £2,941. It says this applies to a family currently accessing the maximum available for a two year-old child.

We haven’t seen the workings behind this figure, which Labour says is from a House of Commons Library analysis.

Rail fares

Labour says an average family would save £2,194 on a pair of season rail tickets under its policy to cut rail fares by a third from 2020. This is almost certainly not an average for all families—it’s highly unusual for a family to contain two rail season ticket holders. 

The majority of people in England (61%) use a train twice a year or less. Only 5% of people use the train three or more times a week. 

We haven’t been able to verify how Labour reaches its specific cost saving or its figure for the average cost of a season ticket, and we’ve asked for more details.

The party also says that the average commuter will be paying 40% more for their season ticket from January 2020 than in 2010. This is based on its own analysis of prices on over 180 train routes in 2010 and comparing their projected cost in 2020. 

Using figures from the Office for Rail Regulation and assuming fares rise 2.7% in 2020 (as they’re due to), season ticket fares will have increased by 39% between 2010 and 2020. 

Energy bills

Labour claims that “domestic dual fuel bills were £1,116 on average in 2010 and £1,184 on average in 2019” and that “11 per cent of UK households are in fuel poverty – approximately 2.53 million households.”

Labour’s figures on energy costs are correct for a dual-fuel bill, according to figures from energy regulator Ofgem, though the 2019 number is actually for 2018. Those figures are not adjusted for inflation.

However, it's misleading to present this increase as a “failure”, as Labour does in its press release. Wages in non-inflation adjusted terms have increased faster than energy bills during that time meaning that, relatively speaking, energy bills have become easier to pay for people on average since 2010.

Labour’s figure for fuel poverty actually understates the level of fuel poverty in the UK because it only looks at  England statistics. Across the UK there are around 3.4 million households in fuel poverty. 

Labour also says it will “nationalise the big six energy companies saving at least £142 per household. It  would make homes more energy efficient saving £417.”

The claim on nationalisation comes from a paper from Greenwich University. 

It is difficult to estimate exactly how much nationalisation will save or cost, as the outcome of nationalisation will depend on a wide range of factors.

The Institute for Fiscal Studies recently wrote about Labour’s nationalisation policy. It said “reorganising the ownership and structure of these industries, while simultaneously achieving the ambitious targets that have been set (for instance the rapid decarbonisation of the electricity and gas grids), risks years of disruption” given “the enormous cost, complexity and risk involved in bringing them into public ownership”. 

Labour also plans to make homes more energy efficient by retrofitting the entire housing stock of the UK by 2030. We haven’t been able to reproduce the evidence to say whether retrofitting homes will save £417; we are going to ask Labour for clarification. 

Free school meals

Free school meals are currently available to all reception, year 1, and year 2 pupils, as well as pupils in low-income families. Labour says its policy of extending free school meals to all primary school children will save families £437 per child per school year.

Again, this is not an average family. This depends on having a child of primary school age and who doesn’t already receive free school meals. In England, in January 2019 around 16% of pupils attending state-funded primary schools were eligible for and claiming free school meals.

The Department for Education (DfE) calculates the cost of providing free school meals as £437 per academic year per pupil as: “Each meal taken by an eligible pupil attracts £2.30. An allocation assumes that pupils will take 190 school meals over an academic year, providing £437 per eligible pupil”.

Broadband

Labour says it will save an average family £364 a year by making broadband free, and that broadband bills have gone up by £204 since 2010.

Labour’s figure on future savings seems credible when taken at face value. It comes from a study published by broadband deal comparison website Cable.co.uk, conducted by market research firm BVA BDRC which estimated that in 2018, broadband cost around £30.30 per month on average (or £364 per year).

Labour is also right that broadband has got more expensive since 2010, but not nearly by as much as they claim. 

It’s difficult to make a like for like comparison here because consumers purchase broadband alongside other services and so it’s hard to disentangle the change in the cost of broadband specifically.

But Labour is definitely not comparing like-for-like when looking at the price increase since 2010 because, while its 2018 figure from Cable.co.uk includes line rental and VAT, the 2010 figure it uses from an Ofcom study, does not.

Ofcom has not published comparable figures as far back as 2010, but between 2012 and 2017 - adjusted for inflation - the average price of a landline and broadband joint package increased by 23% in the case of standard broadband to approximately £34 per month, and by 7% to approximately £36 for super-fast broadband.

Based on these figures, someone buying a broadband package with line rental would pay roughly £75 more per year in 2017 than in 2012. 

Prescriptions

Labour says it wants to abolish prescription charges in England, saving an average family £108 a year.

This saving won’t apply to you if you’re in Scotland, Wales or Northern Ireland, where prescriptions are already free. For England, Labour’s figure is based on a family currently paying £9 for a monthly prescription.

But a lot of people in England are exempt from prescription charges. These exemptions mean that almost 90% of items prescribed in England were free in 2017, the latest data.

People are entitled to free prescriptions depending on their age, income (including whether they are eligible for state benefits), health status/medical condition and whether they have served in the armed forces. 

Women who are pregnant or who have had a baby in the last 12 months are entitled to free prescriptions. Contraceptives are free as are medicines prescribed to hospital inpatients.