Is pay going up?


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.

Nick Robinson Article written by Nick Robinson Nick Robinson Political editor

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  • rate this

    Comment number 35.

    It’s that time again. Run up to elections.

    We have low immigration for EU elections, and for the general election the booming economy, mass new employment, low inflation and now we are suddenly richer.

    Say something loud enough and people will believe it? (With a little help from massaged statistics, also leave out the bits that don’t look good).

    What next let them eat cake?

  • rate this

    Comment number 34.

    You can play about with stats & manipulate figures with people into different categories. To suit your agenda & look good for a day, until the whole book is read in detail. Some believe it clever people dont. To me theres no recovery until the average pleb. Stops struggling to pay the increasing bills, & has some sort of decent life to show for it. Poor peeps dont listen well dc your find out,..

  • rate this

    Comment number 33.

    We seem to be en route to there never having been a sub-prime collapse or banking crisis, any real-world fall-out being due to a Labour panic leading the world into what only seemed financial rescue, what only seemed a 2010 recovery, & what only seemed a triple-skimming limbo. To prove the point, an assertion on 'wages' said to be 'after tax cuts': ever deeper 'our' MT-TB dependency culture

  • rate this

    Comment number 32.

    OK, put it round other way, refer to one as Gross if that helps. Median?Average? IIRC these are different.

    Whether median or avge, different groups are doing well, others less so. If you earned just over limit of the old Personal Allowance & managed to live within your means, then the incrPA has proportionately increased your GTHP(NTHP)substantially

    Inflation? Real+? Thats summat else!

  • rate this

    Comment number 31.

    Unless you have been in unemployment & had to sign on for the pittance per week your supposed to live on. The procedure is treat everyone like a naughty child, produce evidence on the lovely paid jobs you applied to. No help in stamps, no real compassion from job centre staff either. Until you been through this process properly. Please refrain from your ignorant arrogant comments.

  • rate this

    Comment number 30.

    So median wages up by less than inflation but with tax changes e.g hike in personal allowances take home may be up pay up. Housing benefit child benefit and working tax credits cuts may impact you as will increased travel costs.

    Call Me Dave is certain you are better off so how does it feel.

    From One of those "Peak" workers started in November and finished in January.

  • rate this

    Comment number 29.

    @27 Up2snuff "NetTakeHomePay is different to TakeHomePay"

    How's that? What you take home is net of deductions.

    Anyway, median annual earnings for full-time employees increased by 2.1% to £27,000 in the year to April 5th 2013. That's before tax reductions of £126 (0.47%), call it 2.6% for luck - slap bang in the middle of the CPI range of 2.8% (March) and 2.4% (April)... close enough to zero!

  • rate this

    Comment number 28.

    Well yes, in "real terms" pay has dramatically increased within Westminster, if one defines "real terms" as,

    "I'm alright Jack, pull the bloody ladder up".

  • rate this

    Comment number 27.

    NetTakeHomePay is different to TakeHomePay & Pay thanks to deductions

    As AndyC555 would remind us, NI has increased for higher incomes who have not taken to tax efficient vehicles to avoid IT. So for those in middle & at top who have not had big PAY increases, NTHP may have gone down, esp. at marginal levels at the edge of IT bands. Hope I've got that OK - Andy will no doubt complain

  • rate this

    Comment number 26.

    Household final consumption expenditure (=%60 of GDP), all purchases made by resident households to meet their everyday needs: food, clothing, housing services (rents), energy, transport, durable goods (cars), spending on leisure and on miscellaneous -services.
    Most families have been tightly squeezed by pay freeezes and inflation and with the RPI at % 2.8 will the pay increase beat that? Nope.

  • rate this

    Comment number 25.

    Newly employed people typically earn less than the average wage so rising employment under-records pay rises for those already in work. People may understand why take home pay rose more slowly than inflation in the recent recession but why did it rise more slowly in the boom period under Labour? Stealth taxes and excessive public expenditure!!!

  • rate this

    Comment number 24.

    It DOES depend what you mean by pay.

    Pls see pt 2 of post, 400 chars not enough and lengthy 10 min wait meant I could not explain fully in one go.

    Part 3 to follow.

  • rate this

    Comment number 23.

    Nick, your Blog suggests HMG is planning to muddy the waters today.

    Take Home Pay is different from 'Pay'. Its affected by tax. For many THP may have increased, just above the lowest income levels, for those who benefit from the incr in Pers Allowance. Top taxpayers do not get that but theyve had pay increases+a 50% cut in top rate band payts, so their THP is better, too

  • rate this

    Comment number 22.

    @18. Up2snuff "it all depends what you mean by pay"

    No, it depends on what you mean by "real take home pay"!

    "Take home pay" would have to be after-tax earnings from employment (perhaps allowing "after-tax" to include "after tax credits"). For an increase in this to be "real", it would have to exceed some measure of inflation over the same period (CPI 2.8% in March 2013 but 2.4% in April).

  • rate this

    Comment number 21.

    "The economy didn't collapse (as BALLS insisted it would) & as is now growing faster than any other developed country"

    But many countries have had a better rate of growth for some time. Additionally I have read a couple of reports that Britain's growth is based on debt rather than an equivalent increase in exports.

    As for Labour's abilities compare the May 2010 growth figure with any month since

  • rate this

    Comment number 20.

    Good news for the government. A fall in the numbers registered as unemployed doesn't map to a rise in gainful employment but it can be portrayed as such.

    And what about the plan to have years of stagnation followed by a brief and artificial pre-election boom, driven by the property market and fuelled by lax monetary policy from a complicit Central Bank?

    Well it's working perfectly, isn't it?

  • rate this

    Comment number 19.

    There's the Euro Election in May and the General Election in May 2015.
    This Coalition of the Right have started announcing the 'good news' in advance of these events to try and gull people into voting for them.
    The reality is most people's real incomes have stagnated, while living costs have risen relentlessly.

  • rate this

    Comment number 18.

    Well, I'm blowed! Nick Holiday Robinson turning up with a Blog.

    And allowing us pesky Web-Site Members to add our sweaty comments!

    Nick, it all depends what you mean by pay. Pay is what you are paid & the economists on the TOADY prog this a.m. were observing that for bulk of the workforce pay is flat or declining. For the top 1% its going up. Again, we know that from ONS average pay figures

  • rate this

    Comment number 17.

    If it's true that real take-home pay has risen for the majority, it makes even more reprehensible the Government's treatment of its own workers - who include many of the lowest paid.

  • rate this

    Comment number 16.

    I have just heard that the ONS said income tax and capital gains tax which were lumped together,have actually fallen by 1.5% over the year.National insurance has remained at 0 increase ,and all this while 465,000 jobs have supposedly been created in the last year.

    Dodgey jobs from the dodgey Tories?


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