North East workers '£23 a week poorer' under this Government

Working people in the North East are £23 a week worse off under this Government, Labour has claimed

Prime Minister David Cameron
Prime Minister David Cameron

Working people in the North East are £23 a week worse off under this Government, Labour has claimed.

Shadow ministers launched a campaign to highlight wage cuts and increases in the cost of living which they plan to focus on right up until the next general election in 2015.

Wages have fallen by 5.8% by 2010 in real terms, Labour said.

That means that they have fallen by £23.10 a week or £1,201 a year after the effects of inflation are taken into account.

The figures come from wage data published by the Department for National Statistics and official inflation statistics.

A combination of businesses keeping wages down and relatively high inflation has hit living standards for ordinary working families, according to Labour.

The rate of inflation is currently 2.9%, above the Bank of England’s target of 2% – although it was also above this target under the last Labour government.

But Labour accused ministers of making the problem worse by increasing VAT 17.5% to 20% from January 2011, which led to higher prices.

Chris Leslie MP, Labour’s Shadow Financial Secretary to the Treasury, said: “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.”

By contrast, Mr Leslie said the Government had cut income tax on salaries over £150,000 from 50p to 45p – which he described as “a tax cut for millionaires”.

Labour set out a range of measures which it said would limit increases in the cost of living, including capping increases in rail fares and preventing letting agents from imposing hidden fees on tenants.

Mr Leslie said Labour would manage the economy better, creating more growth which would lead to higher wages.

Catherine McKinnell, Labour MP for Newcastle North, also a shadow Treasury Minister, said: “Working people know they are worse off under the Tories as prices continue to rise faster than wages.

“Families have also seen their tax credits and childcare support stripped back while David Cameron has prioritised a tax cut for millionaires.

“We’ve had three years of economic failure and these figures show families on middle and low incomes are still seeing their living standards falling. And the overwhelming majority of people rightly think that Ministers like George Osborne, who claim that families are better off, are totally out of touch.

“While those on middle and low incomes continue to feel the squeeze, the highest earners are doing well. Bonuses soared to almost £4bn in April as bankers delayed their payouts to take advantage of George Osborne’s top rate tax cut. And millions of pounds of tax revenues will have been lost as a result.”

The summer campaign comes after some Labour MPs criticised Mr Miliband for failing to run an effective campaign against the Government.

Backbencher Graham Stringer claimed the Labour leader was making “a huge mistake” by “slumbering” during Westminster’s summer recess, rather than using the opportunity to attack the Conservatives while fellow-backbencher George Mudie warned that the party appeared “hesitant” and “confused” because of Mr Miliband’s failure to spell out a clear agenda to voters.

Conservatives and Liberal Democrats argue that the Government has actually put more money in the pockets of working people by increasing the income tax threshold.

North East Lib Dem Sir Alan Beith defended the Government's record, saying: "Families are facing difficult times and the Government has to take difficult decisions but this Government has cut tax on low pay, set out to reduce the cost of welfare which falls on hard working tax payers, and go after tax dodgers in big business.

"Labour did none of these things, opposes welfare reform, took away the low rate of tax for people on low pay and had lower taxes on millionaires than the present Government is collecting."

Workers no longer pay income tax on the first £9,440 they earn, up from the £6,475 threshold under the last government, leaving them £593 a year better off in cash terms.

From next April the threshold will be £10,000, giving many workers a tax cut of £705.

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