Boris Johnson has been challenged over his optimistic claims on the state of the economy and the cost of living crisis facing Brits in a testy TV interview.The Prime Minister insisted the British economy was “bouncing back” after the pandemic in a BBC interview to mark the start of Conservative party conference in Manchester.
Presenter Andrew Marr repeatedly grilled him on the Government’s handling of the fuel crisis and the shortages of HGV drivers, as well as the challenges facing family finances going into winter.
Mr Johnson is already under pressure over rising energy bills and the £20-a-week cut in Universal Credit – which comes into force on the day of his conference speech on Wednesday.
But he claimed that wages were growing, the economy was on the up and the fuel shortages causing misery for drivers were finally abating.
Here we help to sort the facts from the fiction.
‘Wages are finally growing’ WHAT BORIS JOHNSON SAID: “What you’re seeing is finally growth in wages after more than 10 years of flatlining.What you’re seeing is people on low incomes being paid more.”
WHAT THE FACTS SAY: According to the Office for National Statistics, regular pay rose by 6.8% in the year to May-July 2021 – or 4.5% once inflation is taken into account.
Technically this is the highest real-terms wage growth in 20 years.But the ONS has warned it is “clearly misleading” to use these “distorted” figures to make claims about the health of Britain’s economy.
That’s because wages dipped dramatically due to Covid last Spring, so recovered this Spring – and that technically gets recorded as a bigger “rise” than it actually is.
There’s more, too.Inflation is soaring this Autumn, and is already sitting at a nine-year high of 3%.
That means any rises in wages could soon be outstripped once again by rising prices.
‘UK’s economy is fastest-growing in G7’ WHAT BORIS JOHNSON SAID: “What you’re certainly seeing is the stresses and strains caused in a UK economy that is now the fastest growing in the G7.”
WHAT THE FACTS SAY: Technically yes, the UK’s GDP grew by 4.8% in April-June 2021 – the highest in the G7.
But that’s only if you compare to the period January-March 2021, when the UK was stuck in lockdown.
If you look across the whole Covid pandemic it’s very different.According to the House of Commons Library, UK “real” GDP fell by 4.4% between October-December 2019 and April-June 2021 – the steepest drop of any G7 country.
The US grew 0.8%, while Japan fell 1.5%, Canada 2%, the Eurozone 2.5%, Germany 3.3%, France 3.3% and Italy 3.8%, the Commons Library said.
‘Record sums’ are being put into ‘all parts of government’ WHAT BORIS JOHNSON SAID: Asked about justice funding after Sarah Everard’s murder, he said: “We’re almost certainly putting record sums into all parts of government.”
WHAT THE FACTS SAY: There are three problems with this.First of all, it ignores previous sweeping cuts to budgets under austerity.
According to the House of Commons Library, the Ministry of Justice budget was around 25% lower in 2019-20 than in 2010-11.
Secondly, Mr Johnson’s boast appears likely to be in cash terms rather than real terms (factoring in inflation).
The MOJ budget did rise between 2020-21 and 2021-22 – but only from £10bn to £10.1bn.
Thirdly, the Spending Review is coming at the end of this month which could put a financial squeeze on “unprotected” departments like the MOJ.
The independent IFS think tank has warned unprotected services face a £4bn cut, and those areas – “including perennially squeezed budgets like justice and local government – are now facing real-terms cuts in 2022–23”.
‘Fuel crisis is abating’ WHAT BORIS JOHNSON SAID: On fuel shortages, Mr Johnson said: “It has been abating.What you’re hearing now from the Petrol Retailers’ Association is that supplies are getting on to the forecourts.”
WHAT THE FACTS SAY: On Saturday, the PRA said that while the fuel situation was easing in Scotland, the North of England and the Midlands, elsewhere it was deteriorating.
PRA chairman Brian Madders told BBC Radio 4’s Today programme on Saturday: “In London and the South East and possibly parts of eastern England, if anything it had got worse.”
Military drivers will begin driving fuel tankers to forecourts on Monday, but Mr Madders warned it would not be a cure-all solution.
‘We’ve spent £407bn protecting jobs and livelihoods’ WHAT BORIS JOHNSON SAID: “We’ve had to look after the British people with £407 billion of a protection for their jobs, for people’s livelihoods.And I’ll tell you something about that package, it was most beneficial to the poorest and the neediest in society.”
WHAT THE FACTS SAY: The £407bn is the government’s figure for ‘total support for the economy’ related to Covid between April 2020 and March 2022.
However, not all of this related directly to “jobs and livelihoods” – the £407bn also counts all the extra money spent on the health service, testing and Covid-related contracts.
The OBR estimates 46% of Covid spending has been on public services, while 32% has been for households – that vast majority of that the furlough scheme and self-employment grants.
Support for businesses directly made up 22%, and included government loans, some of which may be paid back.
‘I’m the fiercest opponent of tax rises’ WHAT BORIS JOHNSON SAID: “You have no fiercer and more zealous opponent of unnecessary tax rises than me, but we have had to deal with a pandemic on a scale which this country has not seen before in our lifetimes and long before.”
WHAT THE FACTS SAY: The IFS think tank has said the UK tax burden is set to reach “the highest-ever sustained level” due to the PM’s National Insurance hike in April – with various estimates putting it at the highest since the war, since 1950 or since 1969, depending how you count.
So Boris Johnson can claim all he likes that he hates tax rises, but this one seems a bit of a stretch.
‘Wealthiest in society are funding NHS’ WHAT BORIS JOHNSON SAID: “The people who are paying the most for the NHS, the people who are paying the most to fund the NHS bounce back, the £36 billion that we’re putting in, are the richest, the wealthiest people in society.
And that’s entirely right.That’s what’s happening.”
WHAT THE FACTS SAY: This appears to be a reference to health and social care funding, which is being raised through a National Insurance hike from 12% to 13.25%.
It’s true that people on higher incomes pay higher National Insurance, of course.But you start paying NICs if your salary hits just £9,568 per year – a much lower threshold than Income Tax.
It’s charged at a much lower rate once your earnings get beyond £50,270 per year.And it’s focused on workers – who are hardly all the richest people in society.
So while someone on a £50k salary pays more than someone on a £15k salary, critics say it is not nearly progressive enough.
The tax will charge nothing to the unearned wealth of landlords, for example, and will affect only a minority of pensioners when it starts to affect their bills from 2023.
The IFS said: “This continues a trend seen over many decades of the burden of tax being shifted towards earnings.”
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