David Cameron will tell company bosses to give their staff a pay rise in the coming months because “costs are falling and it’s cheaper to do business”.
The Prime Minister will use a speech to the British Chambers of Commerce annual conference in London to praise businesses for the economic recovery and urge them to ensure voters feel the benefit in their “pay packets and bank accounts and lifestyles”.
His call is designed to open up further dividing lines between the Conservatives and Labour before the general election, with Ed Miliband’s party facing criticism for being anti-business.
Mr Cameron will also warn business leaders of the possible consequences to the economy of a government led by Mr Miliband.
In a further blow to Labour, John Longworth, the chairman of the
British Chambers of Commerce, said that Labour’s flagship policies, including bringing back the 50p rate of tax and an energy price freeze, will “detract” from the growth of the economy.
Mr Cameron will hail the continued economic recovery, but will insist that it is time for workers to feel as if they have more money in their pockets. He has suggested previously that people should be paid more. However, this is the first time he has appealed directly to the country’s major employers to raise their employees’ wages.
Britain’s workers have experienced the strongest year of real wage increases since 2012, with economists expecting pay growth to accelerate in the months to come.
Excluding bonuses, earnings rose by 1.8 per cent between September and November compared with the same months a year earlier. Pay in the private sector rose by 2.2 per cent in the period.
After inflation, employees on average received take-home pay that was 0.8 per cent higher than a year earlier.
Mr Cameron will tell business leaders: “Now that our long-term economic plan is truly working, together we’ve got to make sure it works for everyone in our country.
“Economic success can’t just be shown in the GDP figures or on the balance sheets of British businesses, but in people’s pay packets and bank accounts and lifestyles.
“The most recent figures show that wages are already growing faster than inflation and as the economy continues to grow it’s important this continues and that everyone benefits. Put simply, it’s time Britain had a pay rise.” Mr Cameron will tell business leaders that plunging oil prices and strong growth means that it is time for companies to “pass on that good economic news to their workers”.
“We’ve got the strongest growth for seven years,” he will say. “We are seeing falling oil prices, meaning businesses up and down the country have lower prices on their inputs.
“Inflation is at half a per cent. Now that your costs are falling and it’s cheaper to do business, I’m confident that more businesses will pass on that good economic news to their workers, in rising pay cheques and higher earnings.
“That’s good for your employees, it’s good for you to have happier and more productive staff, and frankly it’s good for anyone who wants to make the argument for business.”
Mr Cameron will say that the Government is on a “trajectory” to take the minimum wage over £8 an hour by 2020. In an attempt to paint Labour as a party with an anti-business agenda, Mr Cameron will add: “Because for us, business is not a conspiracy of runaway profits, depressed wages, inequality and unfairness, it is the best generator of growth, wealth, work and opportunity there is and there would be no better way to demonstrate that right now than to give Britain a pay rise.”
Ed Balls, the shadow chancellor, and Chuka Umunna, the shadow business secretary, will also speak at the conference, with Labour having faced criticism from bosses in recent weeks.
Mr Balls will warn that Mr Cameron’s pledge to hold an in-out referendum on Britain’s EU membership would be a “disaster” for the economy, and in an apparent attempt to counter the criticism from business leaders, Mr Umunna will say that Labour will “strain every sinew” to make it easier for companies to work.
Mr Balls will say: “Britain has always succeeded and can only succeed in the future as an open trading nation, backing wealth creation and winning investment and attracting companies and talent from around the world. To walk away from Europe, our biggest trading market, would be a disaster for Britain.”
Mr Umunna will say: “We will work every day, strain every sinew, to make your lives that bit easier: easier to do business, easier to export, easier to create jobs, easier to succeed. Our exporters are national heroes, and you deserve the very best of support.”
Mr Longworth warned that several of Labour’s flagship policies would “detract” from the growth of the economy. He said: “The re-introduction of the 50p rate is a tax on aspiration, it doesn’t encourage entrepreneurs to put in their blood and guts and life and soul if they think they are going to be taxed at 50p.” He added that the party’s intention to double paternity leave to a month was a social policy “for which business will pay”.
“They are not pro-growth and enterprise. If these policies are thought to be pro-business then they are misguided.”