24 Jan 2014

Britons better off? Cameron says pay is rising

The Conservatives are taking on Labour in the “cost of living crisis” debate, saying that statistics show take-home pay has risen over the last year. But Labour disputes the figures.

The prime minister insisted there were “positive signs” that take-home pay was starting to rise, leaving Britons with more money to spare.

An analysis of take home pay figures circulated by the Treasury has suggested all but the top 10 per cent of earners saw a rise last year, once cuts to tax and national insurance were taken into account. The Treasury said that on average, people saw their take home pay rise by a third more than the rate of CPI inflation, which is currently 2 per cent.

However Labour disputes the figures. It says that once benefit cuts are taken into account, Britons are down more than £1,600 a year on average since 2010.

David Cameron and George Osborne have failed to deliver the stronger, balanced recovery we need to see – Chuka Umunna, Labour

The comments from the prime minister are an attempt to quell Labour’s attack on stagnant living standards, and the party’s promise to end what it calls the “cost of living” crisis.

The comments came ahead of a speech at the World Economic Forum (WEF) in Davos, in which Mr Cameron is due to say cheap shale gas energy and a pro-business regulatory climate could encourage firms to move posts back to the UK.

Read more from FactCheck: are you poorer than you were in 2010?

Cameron urges patience

“We are seeing some positive signs in terms of take home pay. But it’s going to take time,” he told the BBC. “We need to be patient and work through our economic plan so it’s a recovery that lasts and benefits everyone.”

Mr Cameron urged people to bear in mind that Britain was “recovering from the longest and deepest recession in living memory”.

“I think (the recovery) will be sustainable if we deal with the problems that we had before the recovery came, if we deal with excessive deficits, if we mend the broken banking system, if we make sure that in the case of Britain we rebalance our economy and make sure it’s a recovery for all, North and South, to make sure that the poorest people benefit from a recovery,” he added.

But Labour disputes the figures used, which are based on an annual earnings measure, dated from April last year.

Shadow Business Secretary Chuka Umunna said: “David Cameron and George Osborne have failed to deliver the stronger, balanced recovery we need to see.

“At a time when families are struggling with a cost-of-living crisis and have been hit by real wages falling by £1,600 per year, we desperately need more better-paid, highly-skilled jobs in areas like manufacturing,” he said.

“The Tory-led government came to office promising an export-led recovery but the UK’s trade deficit is growing.”

Video: Rachel Reeves, shadow work and pensions secretary, says a “cost of living crisis” remains and things are “incredibly tough” for families.