UK pay rising in real terms, says coalition

Consumer goods inflation is rising at a slower rate than wages, ministers say
Most British workers have seen their take-home pay rise in real terms in the past year, the government says.

Ministers say new figures show everyone except the richest 10% saw their take-home wages rise by at least 2.5% once tax cuts were taken into account.

That is more than the Consumer Prices Index (CPI) inflation rate of 2.4% in the year to April 2013.

Labour said the figures were "highly selective" and did not take into account changes to benefits.

The government said the figures show only the top 10% of earners fell behind the CPI rate, with an average increase of 2%.

It said it made its claims by taking into account cuts to income tax and national insurance.

'Secure'

Conservative skills and enterprise minister Matthew Hancock said: "Of course, as a consequence of the great recession, people who work hard have been made poorer and times are tough for families as a result.

"That's why, as part of our long-term economic plan, we are cutting taxes for hardworking people so they have more money in their pockets and are more financially secure."

David Cameron: "It's going to take time and we need to be patient"
And speaking to BBC business editor Robert Peston on Thursday Prime Minister David Cameron said: "We are cutting people's taxes so we are seeing some positive signs on take-home pay but it's going to take time and we need to be patient and work through our long-term economic plan so it's a recovery that really lasts and that benefits everyone."

But Labour's shadow treasury minister Cathy Jamieson countered, saying: "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."

She said that under the current government, real annual wages had fallen by £1,600 since 2010 and figures from the Institute for Fiscal Studies showed that "families are on average £891 worse off as a result of tax and benefit changes since 2010".

BBC deputy political editor James Landale said the government was trying to counter criticism from Labour that people were not feeling there was an economic recovery under way.

"The question is whether this kind of battle over statistics that will now ensue matters more than how people actually feel in their pockets," our correspondent said.

Earlier this week, the International Monetary Fund upgraded its forecast for the UK economy.

It now expects the economy to grow 2.4% this year - faster than any other major European economy - against its previous forecast of 1.9%.

That was further evidence, the Treasury said, that the government's economic plan was working.
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