New indicator would be monitored by independent officials and would have equal status with GDP figures

Ed Miliband will set up a national Living Standards Index monitored by independent officials if he becomes prime minister. It will aim to gauge whether future governments are helping working people improve their lives.

The Labour leader will say on Sunday that the new LSI measure – which will be accorded equal status to gross domestic product (GDP) figures – will help to ensure that economic policy is geared to the everyday needs of families rather than to meeting growth targets on graphs.

Under the plan, the independent Office for Budget Responsibility would be expected to monitor standards of living and issue forecasts in the same way it does for GDP.

In a letter to Sir Andrew Dilnot, chairman of the UK Statistics Authority, Miliband has asked for preparations to be made for the new index ahead of the general election on 7 May. Miliband told Dilnot: “Policymakers too often fail to understand and respond to changes in living standards, and so we now need a better measure.”

He added: “A future Labour government would use this indicator as the key measure by which we would expect our success to be measured.”

Labour has chosen five key policy areas to focus on during its general election campaign: living standards, the deficit, immigration, the NHS and young people.

Although opinion polls show Miliband and Ed Balls lagging well behind David Cameron and George Osborne on key questions of economic credibility, Labour believes it can counter Tory boasts about economic recovery and strong growth with a message that living standards have fallen for the vast majority of families over the course of this parliament.

Labour maintains that despite a rise in employment, working people have on average seen their wages fall in real terms by more than £1,600 a year since 2010, while full-time workers have seen real pay fall by more than £2,000 a year. The coalition parties counter by saying wages have begun to rise faster than inflation, and that the jobless rate fell to 6% – its lowest in six years – in the third quarter of last year.

Miliband told the Observer that the way current statistics are compiled – often from out-of-date figures – means politicians can create the impression that all is well when the vast majority of workers are actually becoming worse off because of the nature of the jobs being created.

He added: “The experience of everyday families too often does not make its way into the minds of policymakers because current measures are flawed: the wage index ignores the growing number of self-employed; income data is a year out of date; and there is disagreement on which out of a myriad different indicators on price should be used.”

He will call for the new index to be based on data that is not more than six months old and for it to take into account the impact on people’s incomes of wages and prices, as well as taxes and benefits.

After becoming Conservative leader in 2005, Cameron said gauging people’s wellbeing was one of the “central political issues of our time”. And while in opposition he talked of wanting to measure people’s sense of “general wellbeing”, because there was “more to life than money”.

Once he became prime minister, Cameron asked the ONS to examine how happiness could be gauged but although some figures were produced, the project has since disappeared from the government’s priority list.