The Tories are taking it in turns to use statistics in order to mislead voters.
One week it is Iain Duncan Smith, the acknowledged master of the dodgy statistical craft, and the next week it is his apprentice Owen Paterson telling us that the government is spending more money on flood defences than the last Labour Government. It is not.
Now it is the turn of David Cameron, the man who said there would be no top down reorganisation of the NHS.
Over the past week starting 22nd January the prime minister has been telling anyone prepared to listen that take-home pay is rising faster than inflation. He’s been telling parliament, the economic elite in Davos and every television channel that he could get in front of. He’s probably been telling his own reflection in a mirror.
No one should believe him and here’s why.
He says that in the last financial year April 2012 – April 2013 take-home pay (i.e. after income tax) rose 2.5% and the rate of inflation, measured by the Consumer price Inflation (CPI) index, was 2.4%. So wages are above inflation by 0.1%.
The Claim Examined
1. Why did he choose the last full financial year when more recent figures for November 2013 are available? Because these figures make things look better than they are. If he had chosen November 2013 then the rise in take-home pay would have been 0.9% not 2.5%.
2. Why did he choose to use the CPI? Why not choose the Retail Price Index (RPI)? The RPI, which is used as the basis for wage negotiations, includes items not found in the CPI: Council tax, mortgage interest payments, house depreciation, buildings insurance, ground rent, solar PV feed in tariffs and other house purchase costs such as estate agents’ and conveyancing fees. It was this government that changed from using the RPI to CPI to measure inflation and now we know why.
3. Why did he choose take-home pay rather than gross wages? He wanted to reflect changes to tax thresholds that have been favourable for the lowest band of taxpayers. However, if he wanted to include changes in income tax, he should have taken account of changes to tax credits – they were down – and of cuts to welfare benefit – benefits, remember, which are in large part paid to people in work. But if he had done that then he would not be able to make the claim he did.
Don’t Take Our Word For It?
The Institute for Fiscal Studies (IFS) said the Government’s figures on take-home pay do not reflect what has happened to household incomes overall. Paul Johnson, director of the highly respected IFS, told BBC Radio 4’s Today programme that there were two basic problems with Cameron’s figures. Johnson’s first criticism is over Cameron’s choice of data:
“First, we have other sets of data – the Office for National Statistics publishes an average weekly earnings index. That went up quite a lot less quickly than inflation in the most recent months.”
Johnson’s second point concerns Cameron’s manipulation of the data:
“And of course they are not taking account of reductions in things like benefits which were occurring over the time. So if you are looking at household incomes that will be different from what’s happened to take-home pay.”
So What Is Cameron Up To?
He is trying to save his career!!!
With seventeen months before the next general election, Cameron is scrambling desperately to regain some sort of credibility with the public. Ed Miliband and his front bench team have been very successful in grounding the discussion of the economy on to what matters for most people: the cost of living.
Commentators from across the political spectrum have acknowledged Miliband’s success.
For example, the BBC’s reporter Ian Watson wrote that ever since Ed Miliband launched his attack on the government’s indifference to the decline in cost of living the ‘government didn’t have a dog in this fight’.
Even the Daily Mail has conceded that workers are on average earning £1,350 a year less in real terms than when David Cameron came to office in May 2010, according to figures released by the Office for National Statistics.
The problem for Cameron is that people think he is out of touch with their concerns – and they are right. The public knows that their incomes have fallen.
Take child care costs for example. The Child Policy Action Group’s recent annual report, ‘The Cost of a Child in 2013: August 2013’, has some depressing findings for anyone bringing up a child.
The report’s key findings include:
– It costs a minimum of £148,000 in total – around £160 per week – to bring up a child to age 18 and meet its minimum needs. (Figures averaged for a child across all ages and including childcare costs and housing.)
– The minimum necessary cost for raising a child rose by 4 per cent in 2013, while the minimum wage rose by 1.8 per cent, average earnings by 1.5 per cent, benefits for families and children by just 1 per cent, and child benefit did not rise at all.
– The value of both child benefit and child tax credit relative to the costs of raising a child decreased from 2012 to 2013. Many low-income families also saw cuts in housing support with the introduction of changes such as the ‘bedroom tax’ and benefit cap. Remember – when we talk about ‘welfare benefits’ we are talking far more about payments to people IN work, than people out of it. Both have lost out.
– At the same time, working families had to contend with rapidly increasing childcare costs (which increased at a rate of 5.9% from 2012 to 2013) while many non-working families were required to pay council tax.
– Minimum wage families faced a growing shortfall between their income and the spending their children need. Families working full time on the national minimum wage had only 83 per cent (couples) and 87 per cent (lone parents) of the minimum income needed to support their families.
– Families receiving out of work benefits faced even greater shortfalls of income. Couple families received only 58 per cent of the income required to cover minimum costs, while lone parents got 61 per cent.
– The introduction of universal credit from October 2013 will have mixed results for families. However, for both couple and lone parents working full time on the minimum wage, the new system will still leave them some way short of an acceptable standard of living.
– Families with children tended to fall lower down the income distribution and be at higher risk of poverty than those without. This is partly explained by the costs set out in this report. These additional costs hit families at the same time as ‘time costs’ and childcare costs prevent parents from earning more.
We say to Cameron ‘look at these figures’, stop playing politics with dodgy statistics and stop patronising the public. Face what’s happening to earnings – for those in work and those out of it. Then go away and hang your head in shame.
Britain Deserves Better Than This
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