Austerity has clearly failed. So why don’t they ditch it? | Seumas Milne

Falling incomes are fuelling the deficit and costing votes. But Cameron is looking after other interests

Now we know for sure George Osborne’s economic plan has failed, even on its own account. For all the self-congratulation about credit-fuelled growth, the recession in wages goes on. Four years into the coalition, most people’s living standards are still falling. Last week it seemed as though pay might have finally overtaken prices. But yesterday’s figures showed that real earnings fell by 1.6% over the past year. That continues the longest drop, of seven consecutive years, since records began in Victorian times.

The fall in living standards is greater still for the poorest, who effectively suffer higher inflation. Add in the fact that business investment as a share of national income and productivity are still declining, and no wonder David Cameron’s red lights are flashing. Of course the Tories like to boast about employment growth. But since only one in 40 of the new jobs are permanent, the number of people in enforced part-time work has doubled to 1.3 million, and there has been an explosion in artificial self-employment, the experience on the ground is something else entirely.

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