Is pay going up?

  • 22 January 2014
  • From the section UK Politics
  • comments

The government is promising to publish figures within days to show that the vast majority of workers have seen an increase in their real take home pay in the past year.

The data will, officials claim, show that the wages of 80% of workers - not the richest 20% - have increased faster than inflation after tax cuts are taken into account in the year to April 2013.

This follows a claim made by David Cameron at Prime Minister Questions today that "this year people are better off because we have controlled spending and cut taxes".

It seemed to contradict the widespread assertion that most of us are getting poorer even as the country is starting to get richer again, as wage rises are still lagging price increases.

It would also challenge Ed Miliband's claim today that for most people "life is getting harder" and Labour's oft repeated insistence that there is a cost of living crisis.

The government was today unable to provide the statistical basis for the Prime Minister's claim, although I understand that it will include the impact of recent tax cuts (due to the increase in the personal allowance - the amount you can earn before paying income tax) - but, critically, not cuts in benefits eg the freezing of child benefit , real terms cuts in tax credits and council tax benefit cuts.

The statistics are sure to be closely scrutinised, given that ministers have in the past used data to claim an increase in living standards which official forecasters and independent statisticians said was unhelpful or misleading.

Labour will continue to point to data produced by the independent Institute of Fiscal Studies which shows that after taking into account inflation, tax and benefit changes the average family is hundreds of pounds a year worse off than they were at the time of the last election.

This latest attempt by ministers to change the political terms of trade comes on a day when they were able to hail unequivocally good news about a fall in all types of unemployment and a record rise in the number of people in jobs. Next week sees the publication of the latest figures for economic growth which are likely to be another sign of the strength of the economic recovery. The Prime Minister is tonight at the Davos summit of international political and business leaders. He will be speaking there about the economy on Friday.

Notes for nerds

The government is basing its analysis on the last Annual Survey of Household Expenditure produced by the Office for National Statistics just before Christmas. It is based on data for the year up to April 2013.