Benefits push up household income

Britons were better off between April and June, official figures showed today, although this was largely down to a rise in social benefits.

Real household actual income, which consists of wages, pensions, benefits, share dividends and net interest, rose by £69 to £4,510 per head in the second quarter, the Office for National Statistics (ONS) said, its highest level in a year-and-a-half.

The main contribution came from growth in social benefits, which includes services provided by the Government such as health and education, the ONS said, although wages and salaries also made a "substantial" positive contribution.

Howard Archer, chief UK and European economist at IHS Global Insight, said the figures support hopes that "households will step up their spending over the coming months" but warned household income per head is still 2.9% below peak levels seen in mid-2009.

The survey is part of the broader Measuring National Wellbeing programme, which was launched in November 2010 by Prime Minister David Cameron.

Mr Cameron ordered the research after deciding that the Government needed to be informed not only on Britain's economic progress but also on the public's quality of life.

National Wellbeing will be measured alongside gross domestic product (GDP) as a means of determining whether Government policies are making Britain a better place to live.

Without taking account of inflation, growth in household actual income was 2.8% in the second quarter when compared with the previous quarter.

As income increased, real household actual expenditure dipped by £7 per person in the same period and the household saving ratio increased by 0.7 percentage points to 6.7%.

Household payments of taxes and social contributions reduced household actual income by 0.4%, while an improving picture in the labour market boosted wages and salaries.

The department said this was supported by an increase of 128,000 in the number of employees in the second quarter.

Mr Archer continued: "While households are in a better position than they were late in 2011, they are still significantly worse off than they were back in 2009, so the upside for consumer spending is likely to be limited for some time to come.

"Consumer spending caution is likely to be reinforced by still appreciable concerns over the economic outlook."

PA