Coalition hails real terms 'wage rise' despite Labour denials

The government says wages for most people rose faster than the cost of living over the past year

Nick Clegg and David Cameron
(Image credit: Getty Images)

WAGES are rising in real terms, the Government said today as it announced new figures. Taking tax cuts into account, all but the top ten per cent richest workers saw their wages rise 2.5 per cent in the past year, the coalition claimed.

With the consumer price index of inflation, which tracks the cost of a representative basket of shopping, standing at 2.4 per cent, ministers said this represented a wage rise in real terms - and a sign that their long term economic strategy is working.

With most people still considerably worse off than they were in 2007, David Cameron was careful not to oversell the data, telling the BBC: "We are cutting people's taxes so we are seeing some positive signs on take-home pay - but it's going to take time."

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Tory skills and enterprise minister Matthew Hancock was more bullish, telling BBC Radio 4's Today programme: "Things are starting to turn round.

"We can see that the economic plan is starting to work and helping to make people's personal finance more secure. The figures show... that it's starting to make an improvement."

Not everyone was convinced. Labour's shadow Treasury minister, Cathy Jamieson, said the figures were "highly selective" while The Guardian saw a party political motive, saying the announcement was a "fresh effort to blunt Labour's attack over stagnant living standards".

Jamieson told the BBC: "Ordinary people know, working people know, that their wages are simply not going as far as they could do. The truth is that under this government, real wages have fallen by over £1,600 a year."

She added: "These highly selective figures from the Tories do not even include the impact of things like cuts to tax credits and child benefit which have hit working families hard."

And Jamieson cited figures from the Institute for Fiscal Studies (IFS) which she said showed that "families are on average £891 worse off as a result of tax and benefit changes since 2010".

Speaking for the IFS, Paul Johnson told Today that, while the Government had used a "perfectly sensible set of numbers" to calculate take-home pay, its own analysis suggested "people will start to see their incomes rising by 2015... but they will be well below where they were six or seven years ago".

He pointed out that recent data from the Office for National Statistics, its average weekly earning index, showed inflation far outstripping wages in recent months - the opposite effect to that hailed by the Coalition.

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