Danny Alexander opened his Lib Dem conference speech yesterday by terming Glasgow the "deep south" relative to his Highlands constituency. Naff jokes aside, and a year and a day before the Scottish independence referendum, his other main reference to regional differences was the lower interest rates, lower taxes and thousands of jobs which Scotland benefits from through membership of the UK. Beyond these broad strokes and a stated commitment to every corner of the UK sharing the benefits of a stronger economy, there was less of a sense of how the status quo could actually be made to work better for households. With a growing danger of regional disparities, and a recovery that accrues mainly to London and the South East, the geography of living standards is set to become all the more important. It may be not only the 2015 election that's dominated by living standards, but the 2014 poll as well.
The importance of living standards as an issue in the independence referendum was underlined this week by a poll for the Scotsman. While we shouldn't draw too much from one survey, nearly half of respondents said they would vote for independence if it would make them £500 better off. Nationalism and romanticism will matter in the 2014 vote of course, as will anxieties around the major, intangible issues of macroeconomic policy and stability. But what people really want to see is a shared recovery that ends the unprecedented squeeze on household incomes - and they want to see that so much that it could yet sway the outcome.
How has Scotland fared during the downturn and what are its prospects now GDP growth has returned? Scotland's employment rate has fallen by 2.6% since 2008, among the biggest falls of any country or region of the UK. That means 110,000 jobs are still needed just to restore the 2008 employment rate. Yesterday, the ONS announced that house prices in Scotland had fallen by 2% of the past year, while they grew by 3.7% in England and a staggering 9.7% in London. House prices are not an ideal metric from which to judge a recovery but given their seemingly central role in the uptick in consumer sentiment in London and the South East, such disparities say a lot about how it is proceeding.
Yet in one sense, the Scotsman poll tells us less about Scotland's particular experience of the downturn, and more about the commonalities between the Scottish electorate and the wider UK population. This week, new polling for the Resolution Foundation showed just how central living standards are to people's voting intentions. Half of those asked said that if a political party could convince them it could improve the living standards of people like them, they would be more likely to vote for them - an unsurprising result. Yet no party has yet come anywhere close to convincing the electorate that they can answer this question. When asked what good ideas parties had to improve living standards, 39% said Labour had none at all, while the equivalent figures for the Conservatives and Lib Dems were even worse, at 43% and 47% respectively. It's clear then that both the 2014 referendum and the 2015 election will be sensitive to the prospect of higher living standards.
Alexander wrapped up his speech by reminding us that the economy is about people, not abstract concepts. He also restated his pride in the Lib Dems' flagship policy to give direct support to living standards by raising the personal income tax allowance to £10,000. But once the allowance hits £10k, five million people - by definition the five million lowest paid people in the UK - will earn too little to pay any income tax, and so won't benefit a penny from any further increases in the allowance. His reference to this policy acts as a reminder then that all parties will need new, serious ideas on ending the squeeze to win over voters, whether they're in the South East or the 'deep south' of Glasgow.