Seven years after leaving government, David Cameron is back. Much has changed in the country while he has been away, but one thing at least remains stubbornly stuck in the past: household incomes. Average annualised income today is just £48 per person higher than it was when the former prime minister resigned in 2016, an increase of just 0.2%.

The current PM will not need his newly-restored colleague to tell him that living standards progress should look better than this. It is the second lowest rise recorded over any seven-year period since records began in the 1950s (Cameron avoided the very worst figure by just one calendar quarter).

But 2016 was far from a turning point. It was merely the (roughly) halfway mark in what now amounts to a 15-year period of economic stagnation that stretches back to the financial crisis of 2008. A combination of crises (financial, pandemic and cost of living) and sluggish recovery (think productivity puzzle) has meant that average annual GDP growth has ticked along at less than half its long-run average. As a result, the average person is around £6,500-a-year worse off today than they might have been had more normal times ensued.

It has been a period in which everyone has been affected, with incomes growing just as slowly at the top of the distribution as at the bottom. And the high inflation of the last two years has caused genuine hardship to spread across a wider share of the population. Nearly half of adults say they continue to use less fuel around the home due to cost of living pressures, while nearly a third are drawing down savings. Between January and October this year, Citizens Advice referred 84% more people to emergency charity support and food banks as they did over the same period in 2021.

Nevertheless, as the economy enters another new phase in which inflation is falling, but at the expense of higher interest rates, reduced demand and rising unemployment, some are more exposed than others to what comes next. The cumulative impact of a lost decade and a half is harder to take for those with fewer resources to fall back on. Back in January, prior to the full effects of rising borrowing costs taking hold, one in three (32%) unemployed people and one in four (24%) renters said they had fallen behind on, or missed, three or more bill payments within the previous six months.

And the economic malaise is increasingly being reinforced by a second challenge: namely the deterioration of the nation’s health. The pandemic was, of course, a very visible (and widely felt) shock but, in some areas at least (and again for some groups more than others), things were already on a downward trajectory before its arrival.

That structural shift only appears to have accelerated post-pandemic. On the eve of Covid’s arrival, three in four (74%)  of us reported having good or very good health; today it’s just two in three (66%). Long Covid is part of the story, but wider strains within the NHS are clearly at play too. In 2012, more than 90% of elective treatments were completed within 18 weeks; that figure now lies below 60%.

And these economic and health challenges are colliding. Consider, for instance, that an additional 600,000 adults sit entirely outside of the labour market today, relative to the pre-pandemic period, due to long-term ill health. Financial concerns are fuelling mental health problems, while a mental health crisis is pushing back against economic renewal.

One of David Cameron’s first and most enduring acts as prime minister was to introduce the collection of national wellbeing statistics – capturing the population’s sense of happiness, anxiety, satisfaction and self-worth. More than a decade later, his foresight has helped to produce a treasure trove of data which is helping us to understand more and more about what really matters to people’s lives and how we might build a more content nation.

Sadly for the former PM – and indeed for us all – the current set of figures do not make for very encouraging reading. A total of 3.1 million adults across the UK are suffering from ‘low’ levels of satisfaction today – an increase of 750,000 in just three years. We have data now to back up what might have always felt instinctive: that personal wellbeing is affected, above all else, by health, but also by having a job. Given the current outlook on both these fronts, we might expect the national mood to darken further still in the coming months (and that is before accounting for a projected £2,300 average increase in annual mortgage repayments from the end of 2024).

Against this difficult backdrop, the drama of this week’s reshuffle should be seen for what it is: of secondary importance to the lives of most people in the UK, relative to next week’s Autumn Statement. The detailed projections set out by the Office for Budget Responsibility (OBR), alongside the statement, will likely contain some good news. The cost of living crisis at least should be entering its end game. But too many of the metrics that matter will likely be stuck in neutral – or even reverse.

That being the case, it is vital that the Chancellor avoids the temptation to roll the pitch for the upcoming election battle. Instead, he must take the action that is required to get to grips with the twin economic and health challenges, while simultaneously providing support for those most exposed to continued difficult times. That means matching benefit increases with inflation, actively supporting the out of work back into employment, and investing in public services and public sector workers.

It is a difficult task, but he can leverage support from elsewhere should he choose. When presenting his Budget back in March, he made ready reference to the potential provided by the UK’s civil society. Faced with a challenge that has only got harder, he should match warm words in this area with real action. After all, charities, community groups and social enterprises are past masters in both dealing with the fallout from crisis and recognising the tough and long-term actions that need to be taken today to build a better future.

The UK’s charities have already played a vital role supporting those most impacted by the last 15 years of paused progress. Properly engaged with, they can be a key partner for the government in navigating what comes next. From working alongside the UK’s more than 3,000 mental health charities to tackle declining mental health outcomes, to drawing on the expertise of the 4,500 charities that specialise in employability training, Jeremy Hunt and his colleagues have much to gain from recognising the potential of civil society.

That does not mean tapping up the new Foreign Secretary for his Big Society playbook. Civil society cannot fill any void the state chooses to leave in the name of fiscal prudence, not least because running hot for such a sustained period of time has left the UK’s charity sector at risk of burning out. But resetting the government’s relationship with the sector, drawing it into genuine partnership alongside the private sector too, has to be part of Jeremy Hunt’s vision for recovery and renewal.

Read the briefing here

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