People are struggling,
costs are going through the roof
and I'm not sure there's anyway of stopping it.
There's lots of people currently working just to pay the bills,
not having any sort of life.
We struggle just so we can have a roof over our head.
Millions of Britons have effectively had a pay cut.
Wages aren't keeping up with costs,
public services are struggling too.
It's tough right now
and I can't be the only one who's asking what's going on?
The Government offers this explanation.
It's the legacy of Covid and it's, of course, what Putin is doing.
But are Ukraine and Covid the full story?
I think the UK is probably poorer than most people think.
The system isn't producing like it should.
That is the result of choices we've made.
This is definitely not what normal looks like.
This is what failure looks like.
The Government rejects talk of failure or decline,
and it's true, Britain's one of the richest countries in the world,
but if that's the case, why do so many people feel so poor?
Cornwall is home to more than 500,000 people.
It's where I grew up and where my parents still live.
These days, Cornwall relies on fishing,
farming and, most of all, tourism.
It's one of the most popular destinations in the country
but it's also one of the poorest parts of the UK.
Cornish workers are among the UK's lowest paid.
With rising food, housing and energy prices,
life has got harder in the last few years for many people.
Andy Collins is one of them.
So, where are we off to?
We're off to Luxulyan,
which is a small village outside of Par,
to follow up on a patient that we saw last week.
Andy used to be a health care assistant,
then, after four years of training, he became a nurse.
And you enjoy it? Love it.
Wouldn't trade it for the world.
I absolutely adore my job.
He qualified a year ago.
Right. Got my mask, got my gloves, got my apron. Happy clays.
How you doing? Oh, it's you. It's me.
Hello. Were you expecting somebody else?
Andy works full-time and earns just short of £24,000 a year.
How do you feel now you're back on the bed? I'm fine. You're fine?
OK. All clone.
I can hear in how you talk about your job, the passion that you
have for it, the commitment you have to the job, to the patients,
to all of it, really,
but does the level of pay you receive for it
have an impact on how you feel about this?
It does.
It's starting to get close to being that I can't afford to do this.
It's becoming a problem in that,
does the level of pay that we receive match our outgoings?
But are the concerns so pronounced that you would consider quitting?
It's getting close.
Right now, inflation is close to a 40-year high
and, even with his promotion, for Andy the sums just don't add up.
As soon as I qualified, it was October
and up went the rate of gas,
up went the electric, up went fuel,
so whatever I've earned in extra has just disappeared into bills.
I'm seeing colleagues that are struggling.
I'm seeing gaps in the workforce that mean we are really, really
busy and we can't always spend as much time as we want with patients.
CARS HONK
Nurses' pay has failed to keep up with the cost of living.
When you factor in inflation,
they're now 10% worse off than they were in 2010.
People are still being forced to,
you know, rely on food banks
and things and then come to work to look after people.
That's a situation that is just completely untenable.
Nurses are now considering a new pay offer from the Government
but, across the country,
many public and private sector workers are taking action.
What do we want? PROTESTERS SHOUT
When do we want it? Now!
The Government doesn't deny it's difficult right now,
but says big wage rises risk fuelling inflation further.
What do we want? Decent pay! When do we want it? Now!
Arguments over pay are happening now
but the experience of so many workers
is part of a story that reaches back years.
Here's how.
The UK is in one of the longest periods of slow wage growth
in living memory.
This graph shows the average wage in the UK.
It's more than doubled since 2000.
But look what happens when this is
adjusted to factor in rising prices
to show how much a wage can actually buy.
In the 15 years since the financial crash of 2008,
it's hardly grown at all.
Panorama asked the think tank the Resolution Foundation
to look at the data on wages.
It estimated that
if wage growth had continued as it was doing before 2008,
workers would have, on average, around £11,000 more a year
than they do today.
But that's not what's happened.
The wage stagnation of the last 15 years
is almost completely unprecedented.
Nobody who's alive and working in the British economy today
has ever seen anything like this.
Nobody thought it could happen
and I think that it is a danger that we treat that as normal.
We've got used to it over the last 15 years and we've forgotten
this is definitely not what normal looks like -
this is what failure looks like.
And this is being felt.
In 2008, the typical German household
earned over £500 a year more
than the average UK household.
By 2020 the gap was over £4,000 -
an eightfold increase.
Or, as the Institute for Fiscal Studies puts it,
the slow-down in wage growth in the UK...
Something that had lasted decades.
The idea that each generation
does at least as well as the one before
has, for the moment, ended.
So, how do we explain why wages in real terms have stopped growing?
Many economists say it's the UK's low level of productivity.
In other words, the work we do needs to produce more.
There's a quote about this from the Nobel prize-winning economist
Paul Krugman, who says...
The argument being that if you want to increase
people's living standards in the long run,
well, by far the best way of doing that
is to increase the output of each worker.
So productivity is how much you produce with a unit of lab our
over the machine.
The more you can produce,
the more you get rewarded for it.
Most of us, if we think about productivity,
would probably think about how well we work as individuals,
how efficient we are, how much we produce or achieve.
Here in Harlyn Bay,
I want to talk to this group of local businesspeople...
...once they get out of the sea.
I mean, I'm pretty keen on going in the water in Cornwall
when I come back home, but this is next level.
I'm not sure I'd be doing this in February.
But these swimmers are braver than me.
We should point out it's absolutely freezing when you're on the beach
and you're dry, so goodness knows what they're experiencing out there.
Amazing actually. Very alive. Good. Very alive, very tingly, very blue.
It definitely takes the cobwebs out, shall we say, for a morning.
For some of the group, this is part of improving their own productivity.
If you allow yourself time
to get outside, go for a walk, go for a swim,
I think perhaps you get your brain going in a different way
and you can then be more productive in a shorter space of time.
Would you be surprised if I said the UK had a productivity issue?
To be honest, not really,
because I think we've been barking up some of the wrong trees, I think.
Do you think the British are kind of going at it the whole time
but maybe not always so efficiently? Perhaps. Perhaps.
Maybe we've been too long slaves to our desks,
feeling like you're working hard but not necessarily working smart.
Personal productivity is one thing.
You can also measure the productivity of a company,
or indeed of a country,
and the UK's productivity is lagging behind.
Here's how.
Productivity has long been a concern for the UK's economy.
UK productivity has grown
0.4% per year since 2008.
To put that in context,
the average across other
developed countries is 0.9%.
For example, in Germany,
the value of a worker's output
is more than £47 per hour.
In France, it's more than £51.
But in the UK, it's around £43.50.
And all of this affects how much people get paid.
So it is true that we, as a nation, cannot afford wage increases
that are higher than inflation,
unless we have a productivity miracle
and we're not on the verge of a productivity miracle unfortunately.
An increase in productivity is particularly hard
because of the nature of the UK's economy.
Our manufacturing industry has been shrinking for decades.
These days, nearly 80% of the economy
comes from services like financial services, hospitality and retail.
Services are lower productivity than manufacturing
so that, again, has slowly been putting downward pressure
on productivity,
and that, again, feeds through to real wages.
All of which means, until the UK solves its productivity puzzle,
its low wage growth will be hard to resolve.
One way to try to boost productivity is to increase investment.
This is Callestick Farm. It's been making ice cream since the 1980s.
Did you buy this farm to make ice cream
or does it go further back? No, it goes a lot further back than that.
My grandmother bought this farm in 1935.
Much more recently, they signed a big, new contract with M&S.
Father and son Sebastian and Ben Parker
needed to triple the farm's output
and that costs money.
Investment is obviously key to be able to produce
the volume that we're doing.
You know, if you don't have the infrastructure
and the equipment in place to be able to do that,
you know, you can't do it - it's as simple as that.
Callestick spent more than £1 million,
including on this spiral freezer.
Now they can produce three times the amount of ice cream
with only a small increase in staffing.
The result is a big rise in their productivity.
It very much represents a step change
in the way that we've clone things.
With smaller equipment with a low output, clearly, you know, you can't
produce the output you need to do to be able to fulfil a larger contract.
Greater efficiency means they may, in time,
be able to pay their staff more.
We've been through a round of massive investment into the business
in terms of equipment and infrastructure.
Ancl in the longer term, that will mean that we can,
the business can sustain higher rates of pay for all.
The extra dimension here is the UK's very low levels of unemployment.
Businesses are competing for staff,
so the ability to pay more helps.
Callestick's experience shows how business investment can
increase productivity and that can help deliver higher pay.
But across the UK, it's not happening enough.
Low investment is a challenge for the UK's economy now
but this isn't new.
Britain's big problem is just very low levels of investment.
Low levels of investment by our firms,
low levels of investment not only in kit,
like, it's actually hard to get something built in Britain
if you're a company, but low levels of investment in their staff.
Between 1997 and 2017,
investment from both private companies and the Government
was equivalent to
16% of the UK's GDP.
That's 16% of the total value
of the economy.
But look at how that compares
with other developed countries.
We're last on this list,
behind Canada, France,
the US, Germany and many others.
The UK's level of investment has been low since the '90s
but, in the years after the financial crash of 2008,
the coalition government put the brakes on spending
and investment went even lower.
Professor Diane Coyle at Cambridge University told us...
This is Engineered Arts in Falmouth.
And this is a humanoid robot called Ameca.
Studies suggest that the country is lagging behind
other advanced economies in terms of output per hour worked.
Ameca interacts with humans using artificial intelligence
to sift information from the internet.
She's sold to businesses and universities around the world.
The Government is introducing several initiatives
to try and increase productivity rates, but more needs to be clone.
The company's received £45 million from investors in North America.
None from within the UK.
Do you think the UK takes engineering and mechanisation
as seriously as other countries do?
No. The UK operates...
...er, with a kind of banking mind-set. You know,
the cost of everything, the value of nothing.
I think there's lip service paid to this idea
that we're investing in technology for our future prosperity,
but the reality is that, on the ground, it just doesn't happen.
Will's creation, though, is more positive.
Ameca, could you tell me about business investment in the UK?
The UK Government is taking an active role
in encouraging investment
and providing incentives for businesses to grow and develop.
The man she shares an office with begs to differ.
He says more Government investment is needed
in education, technology and infrastructure.
It's very hard for us to recruit people
with the necessary engineering skills from UK institutions.
If you want business, you have to provide space for business,
and I think there's a definite lack,
and there's also a lack of planning for space.
I think there has not been that much support in terms of
capital investment from the Government.
And Willjackson's experience fits with the national picture.
The UK invests less in things like skills and innovation
and infrastructure than other countries.
This is especially the case since 2010,
but actually it's also a longer-term problem.
That was seen over the years.
The Government doesn't deny there's a problem here.
Since 2020, it's increased its own spending on investments,
and last year Rishi Sunak asked this...
Why is investment in capital so low?
My analysis is clear.
The problem is no longer the Government.
Businesses simply aren't investing enough.
But why might that be?
Because businesses don't take investment decisions in a vacuum,
and one factor in their decision-making
is political turbulence.
Most economists would tell you,
what is the number one thing you can do to make sure...
...to incentivise business investment,
private sector investment and therefore drive growth,
is to have stability and certainty and strong institutions,
and we seem to have gone out of our way over the last few years, anyway,
to undermine some of those things.
Since 2016, there have been five prime ministers.
Thank you, and goodbye. Thank you.
As well as Covid and the war on Ukraine,
there was also the financial turmoil of Liz Truss's leadership...
...and years of uncertainty over Brexit.
All of this has come at a price.
For example, the Government's official watchdog,
the Office for Budget Responsibility,
projects that Brexit will shrink the UK economy by 4%.
It also says that...
The Government would say Brexit is a long-term plan.
Rishi Sunak has talked of...
And while there are debates about investment strategy for the future,
it's beyond dispute that the UK's investment
is low compared to other developed countries.
It's been low for years,
and this, in the short term, is being exacerbated by Brexit.
And none of that helps increase productivity or wages.
Across the UK, families are feeling the squeeze.
Polling shared exclusively with Panorama
suggested one in four people are finding it difficult
on their current income,
and nearly half are worried about their financial situation.
Nicky Rogers works around 20 hours a week as a carer,
and gets £10.50 an hour.
She also receives Universal Credit,
has various loans,
and borrows from friends.
But it's not enough.
She lives with her daughter Leah and son Archie.
It's really sad that, you know, that we struggle
just so we can have a roof over our head.
With a light bulb gone,
they say they can't even afford to buy a new one until the next payday.
I pay for my own petrol to get to work
and Leah pays for her own petrol to get to work,
so that's over £100 a week.
Ancl I don't get no extras, no mileage or anything,
which...is a pig.
So I get paid weekly with work so that's what holds us over
for the week. I got paid on Friday and it was gone Saturday morning.
In the nicest way possible, if I moved out,
Mum wouldn't be able to survive, even worse than she already does.
Because it's my money that we live off.
Archie goes to school to be fed, basically.
He doesn't care about school like he should.
It's the norm now.
I think it's reasonable for all of us to have
a better standard of living, because at the moment, we're not.
We're just muddling through. We're not... This isn't...
You know, this isn't normal, is it?
This ISN'T normal.
And in a cost of living crisis,
it's the lowest paid who are hit hardest.
The current shock is particularly bad
in that it's driven by inflation in energy prices and also food prices.
These are things that low-income households
spend more of their income on,
so the inflation that they face is actually higher than
the inflation rates faced by higher income households.
This is made worse by inequality.
The UK's highest earners are among the richest in Europe...
...but our lowest-income families
are more than 20% poorer
than those in France and Germany.
That's nearly £4,000 a year lower
than their French equivalents.
Just before Christmas, Nicky turned to a food bank for the first time.
My wages weren't covering anything that I needed.
I can't remember my mum saying,
"We've got to sit in the dark for the night,"
or, "You can't have that because I can't afford it this week."
You know, that we couldn't put our heating on
because we've only got £1 left in our meter.
My mum never said none of that to me,
and I find that I'm saying that to my children, and that's shocking.
Everything seems to be falling apart.
None of this is going to let up soon.
The polling shared with Panorama
suggests 44% of people think their standard of living
is going to get worse in the next year.
And the data suggest they're right.
The Government's independent watchdog says
in the next two years,
we'll see the largest two-year fall in living standards
since their records began - in the '50s.
Let's go. Come on, let's go!
In Penzance, this group of dancers is meeting for their latest class.
Sennen is 17 and doing A-levels.
Definitely feel... a sense of unfairness.
Well clone.
Swinging the back leg round to the front.
It has angered me a lot and it has made me quite upset.
These concerns are shared by Abigail,
who's also 17, and a photography student.
I feel like things that were more achievable
back in the clay for the past generation
aren't going to be as achievable for my generation.
If I was to have a family in the future, it would be quite difficult
and a lot of stress, maybe, put on me.
Had all these dreams since I was younger
and all these expectations,
and now it's all kind of just crashed down.
The Government says there are still many reasons to be hopeful.
And when our leaders have addressed the pressures of recent years,
they've focused on recent events.
...the legacy of Covid...
...caused by the lingering effects of Covid.
There is a global energy crisis...
Global pressures on prices.
...a global inflation crisis and a global economic crisis.
It's, of course, what Putin is doing.
There's no denying these global factors,
but some of our problems are specific to the UK.
We're now, like, thousands of pounds,
the typical Brit is thousands of pounds poorer
than the typical German, the typical French person,
the typical Australian, the typical Canadian.
I mean, the typical American is now 60% richer
than the typical Brit. It's not 6, it's 60.
This is an uneasy message to hear,
and we're not hearing it from the politicians.
I think there is a lack of diagnosis or understanding
of actually what the real structural issues facing the economy are.
I think that's particularly true at a political level.
If politicians do understand the problem,
they're not keen to say it out loud.
I wanted to ask the Government about this,
but no minister was willing to speak to us.
In a statement, the Government said...
JOURNALISTS SHOUT
And in last week's Budget, the Chancellor Jeremy Hunt
announced measures to try to boost productivity,
including investment zones and tax incentives.
Today we build for the future.
With inflation down, debt falling, and growth up,
the declinists are wrong and the optimists are right.
CHEERING
We stick to the plan, because the plan is working,
and I commend this statement to the House.
CHEERING
The current state of the UK economy
is not everyone's definition of a plan that's working.
And some economists argue Mr Hunt's budget
doesn't address the scale of the challenge.
What was missing, though, was a clear long-term plan
to boost business investment,
which will boost productivity in this country,
and instead what we saw was more tinkering around the edges,
more temporary policies that might have, you know,
some short-term effect on growth,
but we're still set to see the biggest drop in living standards
for two consecutive years, so, despite the Budget
and the perhaps most optimistic outlook,
people are still going to feel much poorer than they were before.
That isn't to say this is a lost cause.
All the economists Panorama spoke to
agree it should be possible to get living standards rising again.
There's every reason to be optimistic.
We have the best universities in the world.
We have many pockets of excellence.
We have a legitimate democratic system in place.
It's as if you are a football team and you have all the players
but somehow, those players haven't coalesced together.
Forwards and backwards as normal.
Normal match-day warm-up, yeah?
OK, ladies. Brilliant.
Helston women's football team
are training for their next match at the weekend.
Nice little light steps, just loosening up the upper body as well.
But there are other things on their mind too.
What are the difficulties that you didn't quite anticipate?
Being in Cornwall, we've got some of the most expensive houses down here.
Most of us are going to have to go through either shared ownership
or a different kind of route just to get on the housing ladder.
The money side of things and things like that, you know.
There's lots of people currently working just to pay the bills,
not having any sort of life.
Many moons ago, I went to primary school here in Helston
and, a few years later, when I was around the same age
as some of the players here...
Little bit of Strictly Come Dancing.
...| guess there was an assumption about life in the UK
that the next generation would be a little better off
than the one before, that the state would do what it could
to look after you if you were poorly,
and, to put it more broadly, that things get better.
But right now, those assumptions are being eroded
by the state of the UK economy.
What we're seeing is, in effect,
a national pay cut that's been years in the making.
It's changing what people can expect from their jobs,
from public services,
and from their country.
It might not be comfortable to admit it
but, by several measures, we're poorer than we think.