Call it a boom? It's just juggling with statistics, says Labour

Alistair Darling, Labour's Treasury secretary, yesterday dismissed suggestions that the long-awaited "feel-good factor" was finally returning and might boost the electoral fortunes of the Government, writes Nic Cicutti.

Mr Darling said that the average family was paying pounds 2,000 more in tax than four years ago, and dismissed as "nonsense" suggestions that better economic figures showed a new boom is on the way.

"We want to see our constituents feeling better," he said yesterday.

"Many of them deserve it, because they have had a raw deal for many, many years, but the fact is that most people don't actually feel better.

"They may feel they are not being clobbered, day in, day out, quite as much as they have been over the last year or two, but they don't feel good and they don't trust the Tories to get them out of the problems this country has been in."

Despite falling unemployment and the lowest interest rates for more than 30 years, stimulating a minor housing market recovery, Mr Darling said: "I think the idea that somehow, because of one or two economic statistics, everything has turned round for the Tories is nonsense.

"People ... are worried about what the Tories will do to the health service, they are worried about class sizes, the state of the schools; they are paying higher council taxes, water charges," he told BBC Radio 4's Today programme. He claimed that public borrowing was heading for a pounds 12bn shortfall this year, despite recent optimistic figures. The national debt had doubled since 1990, Mr Darling added.

He was responding to claims by Michael Howard, the Home Secretary, that Britain was starting to reap the rewards of the Tories' "tough economic decisions".

Mr Howard said: "We have the lowest basic rate of income tax for 50 years. We have had the longest period of low inflation for 50 years. We have the lowest unemployment of any major European country. We are number one in Europe for foreign investment."

Jonathan Loynes, UK economist at HSBC Greenwell, said: "Our own view is that we are returning to a position where consumers are in the forefront of recovery.

"But it could be argued that there are still a number of problems. The first point is the question of debt. People are now already in much more debt this time round than they were at the last stage of the recovery. In 1985, consumer debt was 80 per cent of average income. Today, that stands at 106 per cent. People aren't going to feel that good if they owe so much."

Mr Loynes also said changes in the labour market mean that while labour is much more flexible, that may not be so good for the man in the street. The job for life is no longer guaranteed, while wages are now scarcely rising above inflation.