Personal Incomes

Oral Answers to Questions — Treasury – in the House of Commons at 12:00 am on 16th January 2018.

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Photo of Royston Smith Royston Smith Conservative, Southampton, Itchen 12:00 am, 16th January 2018

What assessment he has made of the effect on average personal incomes of recent increases in the national minimum wage and national living wage.

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

In April, the national living wage will rise to £7.83. That means an annual pay rise of over £2,000 for a full-time national living wage worker since the introduction in 2016 of the national living wage, which has helped reduce the proportion of full-time jobs that are low paid to the lowest level in at least 20 years.

Sustaining long-term pay growth relies on improving productivity. That is why we have increased the national productivity investment fund to over £31 billion, and it is why we are taking further action on skills, retraining and capital investment as we build a Britain fit for the future.

Photo of Royston Smith Royston Smith Conservative, Southampton, Itchen

Could the Chancellor tell the House whether income inequality has gone up or down since 2010? How does income inequality today compare with levels under the last Labour Government?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

Income inequality is lower than it was in 2010. In fact, it remains lower than at any point under the last Labour Government. The Gini coefficient, which is an internationally recognised measure of income inequality, is now 3% lower than in 2010. Since my autumn statement in 2016, we have increased the tax contributions of the highest earners while those on the lowest incomes have gained overall.

Photo of Derek Twigg Derek Twigg Chair, Statutory Instruments (Joint Committee), Chair, Statutory Instruments (Select Committee)

The problem is in constituencies like mine, which is one of the most deprived in the county, where more and more people are having to go to food banks. What is the Chancellor doing, in terms of the economic development of the country, to ensure that we get better-paid jobs, especially in places that are severely deprived such as Halton?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The hon. Gentleman makes an absolutely correct point. In the long run, higher wages can be delivered only through increased productivity. That means investment in infrastructure, investment in skills and training, and investment in research and development—with both public funding and tax incentives for private funding—and it means ensuring that capital is available for businesses to invest in the equipment that will raise the productivity of their workers. The Government’s ambition is for a high-wage, high-skilled economy, and we are investing to deliver that.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover

Will the Chancellor confirm that the lowest-paid have in fact seen a 7% real- terms wage increase since 2015, and that income inequality is now at its lowest level for 30 years?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

My hon. Friend is right. As I said, income inequality is lower than at any point during the Labour Government. People in full-time work on the national living wage have seen a £2,000 a year pay increase as a result of the national living wage and, of course, everybody in work has seen an improvement in their take-home pay as a result of the significant increases in the personal allowance that this Government committed to, and which this Government are delivering.

Photo of Alison Thewliss Alison Thewliss Shadow SNP Spokesperson (Cities), Shadow SNP Spokesperson (Treasury)

The Chancellor’s living wage is a pretendy living wage and is not actually available to those under the age of 25. Can he explain why the age gap in the minimum wage between 25-year-olds and 16 and 17-year olds actually increased in his Budget from £3.45 to £3.63? How can this be an economy that works for everybody if the youngest are not getting paid equally?

Photo of Philip Hammond Philip Hammond The Chancellor of the Exchequer

The rates for people under 25 were increased in the Budget by the biggest amount ever—[Interruption.] Look, of course we would all like to see high rates of employment and high rates of pay across all age groups in the economy, but for young people, the most important thing—the Low Pay Commission highlights this fact—is that they get into work, because if they are in work when they are young, they are more likely to remain in sustainable work throughout their lifetime, and that must be the priority.