If there is one single indicator illustrating the political health as well as the economic health of a government, it is RPDI (real personal disposable income).   Year on year that tracks changes in the value of household income after taking account of inflation.   For 20 years till 2005 it rose continually until the rise seemed unstoppable.    Since 2005 however it has been very slightly falling each year.   In 2011 RPDI is about to fall very sharply, and even if recovery gets under way in 2013 ( a very big if) families on average in the UK will be no better off in real terms by 2015 than they were 10 years before.   For most families money-wise this is a wasted decade in which the nadir is about to hit them hard, far harder than most families yet realise.   No government has survived an income collapse on such a scale.

According to the Treasury documents made available at the Budget, the average family will be worse off by about £400 a year (£8 a week) once all this week’s Budget tax and benefit changes work their way through.   This excludes of course the impact of benefit cuts and spending cuts already announced .    If those are added in, as they should be to get the full picture, Labour claims that the combined loss for the average family will be as much as £1,400 a year(£27 a week).   It has been known for certain specialised (and therefore small) groups to take a hit of this size on occasion in the past, but there is no precedent for this applying to the whole of the ‘squeezed middle’ (roughly those with incomes between £12,000 and £30,000 a year who constitute nearly 70% of the population).

The figures are indeed stark.   Public spending is being cut by £81bn (nearly 6% of total national income) within 4 years, pushing up unemployment by half a million in the public sector plus adding nearly a further half million in the private sector whose jobs depend on public expenditure.   Taxes are going up from £86bn last year to over £100bn this year.   And according to the IFS, the most reliable analysis of the public finances, the poorest will be hit twice as hard as the richest.  The poorest tenth will be 6.5% worse off as a result of the squeeze, while the richest tenth will lose out by only 3%.

This will cause enormous pain and anguish to innocent working families while the perpetrators, the bankers, walk away scot-free.   But at least it will sink the Tories and annihilate the LibDems.

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