People worse off than three months ago as soaring inflation sees wages fall

Wages have fallen for the first time since 2020 sparking fears that more people will end up in poverty.

The latest Office for National Statistics (ONS) data, published today, shows that wages (not including bonuses) fell by around 0.8 per cent between October and December 2021 – the first time it has done so since May to July 2020.

When bonuses are taken into consideration, people were still 0.1% down on their wages, adjusted for inflation, compared to the previous three months.

The report explains that while pay levels on the surface have increased, the rising cost of food and other household costs has left people with less at the end of the month.

According to the ONS, the level of average total pay, including bonuses, rose by 4.3% in the three months to December, however people are still 0.1% worse off, due to consumer price inflation reaching 4.4% in December.

The prices of food, fuel and services have all risen in the past several months, with campaigners and experts warning the crunch will continue to hit those on the lowest wages as National Insurance contributions rise in April, alongside the surge in energy prices.

READ MORE: Boris Johnson and Rishi Sunak confirm hike in National Insurance contributions to go ahead

Rishi Sunak did not remark on the wage rates, but pointed to the number f people on payroll as an indication that his efforts to protect the economy during the pandemic had been successful.

The Chancellor explained: “Our £400bn economic plan has protected our jobs market through the pandemic and it is now healthier than most could have hoped for. 

“Payrolled employee numbers are at a record high and redundancies are at an all time low thanks to our Plan for Jobs.

“We’re continuing to help more people into work, and are providing support for the cost of living worth over £20 billion across this financial year and next.”

The SNP, Labour and the Liberal Democrats have all urged Mr Sunak to do more to help those already struggling, before taxes and energy prices rise.

David Linden, the SNP’s work and pensions spokesman said: “The Chancellor must get a grip of this Tory-made cost of living crisis before millions are plunged into, or further into, fuel poverty as real pay falls. 

“Under the Tories at Westminster, wage growth has been dismal, and we now know real wages are not expected to reach 2008 levels until at least 2026.

“This crisis has been a decade in the making and the Tories haven’t lifted a finger.

“Indeed, UK poverty is rising because of Tory cuts, regressive tax hikes and the huge cost of Brexit. Rising inflation, energy bills and prices are compounding this and pushing families into hardship and destitution.”

Labour’s Shadow Chief Secretary to the Treasury, Pat McFadden MP, criticsed the Chancellor’s plan to give people a £200 loan to cover their rising energy bills, to be repaid over five years.

He said: “ These figures confirm working people still face a fragile recovery in the face of a growing cost of living crisis and spiralling inflation. 

“12 years of the Conservatives’ record means working people today will not only be paying more in tax under the Conservatives but face heating bills rocketing, prices rising and falling real wages. 

“Our plan to deal with rising energy bills is funded by a one-off windfall tax on oil and gas producers, and would save most households around £200, with £600 off bills for those who need it most.

“The Tory proposals for a buy now pay later loan on energy just don’t measure up to the scale of the pressures being faced by households.”

Lib Dem Treasury Spokeswoman Christine Jardine MP said the squeeze on budgets are only set to get worse, and urged the Chancellor to scrap the planned rise to National Insurance rates.

She said: “People up and down the country are facing one of the biggest squeezes on their incomes in a generation. 

“This will only get worse as the Conservatives plough on with their unfair National Insurance tax hike that will clobber families. 

“If Boris Johnson had any compassion he’d scrap the tax hike and support those set to be hit hard as the cost of living crisis worsens.”

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