According to the Coalition, the majority of British workers have seen their take-home pay rise in real terms over the last year.
The Government says that, aside from the wealthiest 10%, everyone had seen their wages increase by at least 2.5% with tax cuts included.
With the Consumer Prices Index (CPI) inflation rate at 2.4%, this seems to contradict Labour claims of a cost of living crisis brought on by wages decreasing in real terms. The Opposition have claimed that the information used was “highly selective” and failed to take into account changes to benefits.
According to Cathy Jamieson, the figures “do not even include the impact of things like cuts to tax credits and child benefit which have hit working families hard.”
Jamieson went on to say that under the Coalition, real annual wages were down. She says since 2010 they have fallen by £1,600 and the Institute for Fiscal Studies’ figures showed that “families are on average £891 worse off as a result of tax and benefit changes since 2010”.
In an interview with BBC Radio 4’s Today programme, the director of the Institute for Fiscal Studies, Paul Johnson, said the Government had used “a perfectly sensible set of numbers” to work out take-home pay for the 2012-13 period.
He did also point out that by using more up-to-date data from the Office for National Statistics – the average weekly earnings index – shows that wages increased “quite a lot less quickly than inflation in the most recent months”.
The IFS’s own analysis, according to Johnson, said that “if the recovery takes off and continues as expected, people will start to see their incomes rising by 2015…but they will be well below where they were six or seven years ago.”