£1,600 worse off: Two methods, one claim

Published: 26th Mar 2015

"On average working people are now over £1,600 a year worse off under this out-of-touch Government"—Rachel Reeves, 13th November 2013

"People are £1,600 a year worse off."—Ed Miliband, 18th March 2015

According to the Labour party, nothing has changed since 2013. People were £1,600 worse off then, and they're £1,600 worse off now: real wages haven't changed over the past year.

The problem is that these figures come from two different sets of calculations using two different sources that produce the same fall in wages.

The original claim used pre-tax Average Weekly Earnings compared to the Retail Price Index (RPI) measure of inflation. This gave a fall in real wages of about £1,640.

Performing the same calculation now using the latest figures gives a fall of about £1,585—close enough to the £1,600 figure.

But the party has changed both the measure of earnings they're using, and the measure of inflation they're using.

If you just change the measure of inflation, replacing the statistically flawed RPI with the preferred Consumer Price Index, the fall in real wages would be almost halved to £860.

But changing the measure of earnings as well, using the median wage from the Annual Survey of Hours and Earnings, results in a fall in real wages of £1,610.

That's the new figure, same as the old figure.

The problems with the RPI were known before Labour made its original claim. We've asked the Labour Press Office why the calculation has changed, and we will update this article when they respond.

Now read our factcheck on the problems with the £1,600 measure.


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