Families have lost pounds 3 a week since the election

Click to follow
The Independent Online
The average council-house family has lost more than pounds 3 a week in net income since the last election, according to the latest calculations from Whitehall.

The figures, in a Department of Social Security Abstract of Statistics, belie Treasury propaganda that the average family is pounds 700 a year better off than the last election. Claim and counter-claim about family prosperity is a key battleground for the election as the Tories try to persuade voters they are significantly better off and should not risk Labour ruining that new-found wealth.

Michael Jack, a Treasury minister, said in a written Commons reply: "Real take-home pay for a one-earner family on average earnings was pounds 292 per week in 1991-92, and is expected to rise to pounds 305 per week in 1996- 97.

"The 1996-97 income of a family on average earnings is up pounds 700 a year after the effects of tax and inflation when compared with that of 1991- 92."

That Treasury reply could contain a number of flaws: the year 1991-92 does not give an accurate definition of the timing of the last election, and average earnings for 1996-97 can only be "expected" because the year does not end until March.

However, the Abstract of Statistics provides actual figures for average earnings in April 1992, at the time of the last election, and last April. It shows a gross increase of pounds 50.10p per week to pounds 390.20 over the four years of John Major's government.

In real terms, after inflation has been taken into account, the increase is pounds 14.08, or pounds 732.16 a year before tax. After tax that increase is certain to be much less. For a one-earner family with two children living in council housing, with an average weekly pay slip of pounds 390.20, net income last April was pounds 253.28 a week - compared with the real-terms figure of pounds 256.49 in April 1992 - after housing costs had been deducted. That official DSS calculation includes average council-housing rent, council tax, income tax, national insurance contributions, and a full claim for any available benefits. That family was not better off last April than it was at the last election.

On the same basis, a single mother with one child, working on average women's earnings - of pounds 280.70 a week last April - is pounds 4.29 a week worse off, in real terms, after housing costs, than in April 1992. The Government's General Household Survey shows one-fifth of all households live in council or new-town rented housing.

Another 40 per cent of households have mortgages and there is no doubt that many will be considerably better off as a result of mortgage interest rate cuts, which have reduced annual payments on a pounds 33,000 mortgage by about pounds 1,340 a year since the last election. But that bonus has to be offset by the reduction in the rate at which the tax allowance, mortgage interest at source, is paid. Its reduction by the present government from 25 per cent to 15 per has cost the average mortgage payer about pounds 500 a year.

The Conservatives possibly prefer to use 1991-92 as their base line for "feel-good" calculations because there was a significant surge in net income between 1991-92 and 1992-93.

Labour however uses 1992-93 as its base year, possibly because that more than halves the net increase in living standards, from the Tories' pounds 700 to little more than pounds 300 a year for the average family, after pay rises, taxes and prices have been taken into account.

Labour pointed out yesterday that the average family - with one earner on average earnings and two children - was pounds 2.56 a week worse off last year, when compared with 1992-93, after inflation had been taken into account. A Labour spokesman pointed to the Treasury's own figures, showing that that family's net income, after all taxes and benefits, was pounds 296.78p a week in 1995-96 compared with an equivalent in real terms of pounds 299.34 a week in 1992-93.

On that basis, it would appear the average family was worse off whether they lived in rented council housing or whether they had a mortgage.

Comments