In his budget speech, George Osborne said average earnings have risen by 11%, but most benefits have risen by 21%.
According to the Office for National Statistics, wages have risen by more like 12% between April 2008, when they were £440 a week, and April 2015, when they were £493 a week.
And a quick look at historical rates of benefits collected by the Institute for Fiscal Studies shows a mixed picture on which welfare payments have risen in value over that time.
For example, both jobseeker’s allowance and housing benefit for a single person over the age of 25 has gone up from £60.50 a week in 2008 to £73.10 this year – a rise of 21%. Incapacity benefit has risen by about 25%, from £63.75 a week in 2008 to £79.45 a week this year.
However, other benefits have not gone up by anywhere near that amount. The basic element of working tax credit for a single person has risen just 9%, from £1,800 a year in 2008 to £1,960 this year. Child benefit has also only risen by 10%, from £18.80 a week in 2008 to £20.70 this year. And maternity pay is not quite there, having gone up from £117.18 a week in 2008 to £139.58 this year – a rise of 19%.
Osborne has a little bit of wriggle room, given that he was careful to say “most” benefits have gone up by 21% but looking at individual types of payment tells a more complex story.
Asked which benefits the chancellor had included in his claim, the Treasury said the chancellor was looking very specifically at working-age welfare payments, including housing benefit, income support, jobseeker’s allowance and employment support allowance (which was only introduced in 2009).
A wider point to make is that inflation has gone up by closer to 24% on the retail prices index (RPI) measure that takes housing costs into account. So neither wages nor benefits have kept pace with inflation, leading to the squeeze on the cost of living that people have experienced since the banking crash of 2008 and subsequent recession.
In that light, Osborne’s suggestion that benefit rises should be kept down to the level of wage increases looks very much like a policy of levelling down.
• This article was amended on 9 July 2015. An earlier version had the figure £177.18 where £117.18 was meant.
