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Average Earnings

Volume 572: debated on Tuesday 10 December 2013

1. What comparative assessment he has made of trends in the annual rates of inflation and growth in average earnings since May 2010. (901513)

Real average weekly earnings have fallen since 2010, owing to the previous Government’s financial legacy left to us. However, last year real household disposable income grew at its fastest pace since 2009. In its latest forecast, the Office for Budget Responsibility expects the growth of real household disposable income to accelerate in every year of the forecast period, reaching 2.6% in 2018.

Will the Minister confirm that the UK has suffered the second biggest fall in wages of any G20 country since this Government took office? Is that not a damning indictment of this Chancellor’s record over three wasted years?

If the hon. Lady wants to talk about the largest anything, perhaps she would agree with Paul Johnson, who said that wages have increased much less quickly than inflation. As I say, that is not surprising. We have had a great big recession. We had the biggest recession in 100 years. It would be astonishing if household incomes and earnings had not fallen.

Her Majesty’s Revenue and Customs liabilities table published in May shows that the number of people earning more than £1 million jumped from 13,000 in January to 18,000 after the Budget. Their combined income rose from £27 billion to more than £47 billion. Is that why April was the only month in which earnings rose above inflation?

That is a very interesting question. The hon. Gentleman will know that the OBR last week said that the only thing that would raise wages was increased productivity in the economy. That means more people creating more jobs and more growth in our economy. I would have thought the hon. Gentleman welcomed the fact that 2.7 million people have been taken out of income tax completely as a result of our changes and 25 million people are paying less income tax.

Does my hon. Friend agree that Opposition Members seem to misunderstand the fact that rises in the personal tax-free allowance are putting money back into the hands of the lowest earners? Does she agree further that the best way to raise people’s living standards is by creating new jobs and new growth in our economy?

My hon. Friend is, of course, right. The fall in living standards is a consequence of the economic crisis left to us, and the best way to deal with living standards is to deal with that economic crisis so that families can find work in a growing economy.

Does my hon. Friend agree that the reason we have had a big drop in living standards is that we had the largest drop in output since the second world war? As my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) says, we need to rebuild that output, as we are now doing, if we want to rebuild living standards.

My hon. Friend is right. As I said, Paul Johnson of the Institute for Fiscal Studies said:

“We’ve have had the biggest recession we’ve had in 100 years”.

It is hardly surprising that household incomes and wages have fallen. We recognise that times have been very tough for households and for businesses, but as my right hon. Friend the Chancellor’s autumn statement showed last week, we are on the right path to a responsible recovery now.

Does the Minister expect that after the autumn statement average earnings will keep pace with rising energy bills this winter?

What we have done in the autumn statement is to give £50 off energy bills. We are putting money in people’s pockets with the personal allowance, through capping rail fares, through the council tax freeze and with the fuel duty freeze. The hon. Gentleman has a cheek to talk about putting money in people’s pockets when the Government whom he supported left behind the economic crisis from which we are having to pick up the pieces.

I guess we have to take that as confirmation that the Minister does not expect average earnings to keep pace with rising energy bills this year. Is it not true that, despite the autumn statement, all we have seen is a policy that tinkers around the edges and means that energy companies will still see their profits rising as households continue to see their bills rising? When will she be on the side of households who are worried about heating their homes, and when will she support an energy price freeze and stop always defending the excessive profits of the big six energy companies?

The hon. Gentleman has clearly learned nothing. Does he realise that his energy policy is a complete con, that energy companies have already said that they would have to freeze investment, and that they would put prices up beforehand and afterwards? The Government are absolutely on the side of hard-working families and their household budgets, and we are putting £50 in their pockets now.

Under Labour. Therefore, it is a matter of catch-up before the Government can get the economy back on track.

My hon. Friend is right to say that wages and salaries suffered their fastest drop between 2007 and 2009, and that drop started in 2004, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) has already admitted. Interestingly, the shadow Chief Secretary to the Treasury could not answer the question about whether Labour’s calculation of wages and household disposable income includes the tax changes we have made, and therefore does not reflect the fact that we are putting more money into people’s pockets.