06/08/2013 04:44 BST | Updated 05/10/2013 06:12 BST

Workers '£6,600 Worse Off' Under Coalition, Says Labour

Chancellor George Osborne is congratulated by Prime Minister David Cameron after he delivered his Budget in the House of Commons, London.
Chancellor George Osborne is congratulated by Prime Minister David Cameron after he delivered his Budget in the House of Commons, London.

The amount of money working people will have lost in real terms under coalition rule would be enough to pay for the average family weekly shop for a year-and-a-half, shadow Treasury minister Chris Leslie said.

Taking into account inflation, workers will have lost £6,660 by the time of the next election and incomes will be £1,520 lower in real terms in 2015 than in 2010, Labour's analysis of Office for Budget Responsibility forecasts showed.

David Cameron's record of 35 consecutive months of falling real wages is worse than any other Prime Minister on record and spending power has dropped in every month but one under coalition rule as price rises outstrip wage increases.

Apart from Mr Cameron, James Callaghan is the only PM on record to have overseen more than a year of constantly falling real wages, Labour's analysis of Office for National Statistics figures showed.

Real wages fell for 17 consecutive months under Mr Callaghan - less than half the total period of consecutive real wage decreases under the current Government.

By the next election, working people will have seen their spending power cut further than in any other G7 country since the second half of 2010, the Opposition's analysis of House of Commons library figures showed.

Labour's study also revealed a regional disparity, with workers in Yorkshire and the Humber, Wales, the North West and the South West of England seeing the biggest real wage drops.

Real wages are now 8.1% lower in Yorkshire and the Humber, compared to a 5.5% decrease in the South East, the figures showed.

Mr Leslie, shadow financial secretary to the Treasury, said: "I thought it (living standards) would be worth looking at if we're starting to focus on that 2015 election period and people are starting to evaluate 'well what will David Cameron's legacy be for me?'

"It is a reduction in real wages over that period of £6,660 which for a lot of people will resonate. It is a significant, serious amount of money."

He added: "That's enough to pay for the average family weekly shop for almost a year-and-a-half, it's enough to get a new car, albeit quite a small one at a stretch, but it's quite a significant sum of money.

"So we have a Prime Minister who is out of touch, doesn't realise the effect that this is having on people's pockets and they (the Government) regard this as a different issue from the economy, we regard this as absolutely central to what is happening with the economy.

"You can't separate out growth in that macro sense from how it's affecting people in their daily lives and of course the upward pressure on prices as well have combined to make this a very serious situation indeed."

He went on: "David Cameron will go down in history as a disastrous Prime Minister for people's living standards. He is totally out of touch, his economic policies have failed and the result is working families are massively out of pocket."

"Far from never having it so good, many working people have never had it so bad. Prices have risen faster than wages in 36 out of the 37 months since David Cameron has been in Downing Street. This is the worst performance of any Prime Minister on record.

"Labour would help middle and low income families right now, including a lower 10p starting rate of tax, action to tackle soaring energy bills and protecting tax credits for working families by reversing the tax cut for millionaires."

But Government whip Mark Hunter blamed Labour for "crashing the economy".

The Liberal Democrat MP said: "The reason the cost of living is high is because Labour crashed the economy. For them to criticise the coalition for cleaning up their mess is utterly hypocritical.

"Liberal Democrats have done everything we can to help people with the cost of living while cleaning up Labour's mess. We have given 24 million ordinary workers a £700 tax cut, increased the state pension by £650 and kept mortgage payments and interest rates low."

Conservative Business Minister Matthew Hancock said: "Today's squeeze on living standards is a direct result of Labour's disastrous economic policy that got us into this mess.

"And if they were in government now, Labour would make hardworking people worse off. Their plan for more borrowing and more debt - exactly the same old Labour policy that got us into this mess in the first place - would mean soaring mortgage rates and higher bills.

"As the economy continues to recover we must ensure that - unlike under Labour - everyone who works hard has the chance to take part in that recovery and reach their potential. That's why we're taking 2.7 million out of income tax altogether, cutting income tax for millions more and fixing the welfare system so that it rewards hard work."