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UK PM calls for a pay rise for everyone – as his party auctions luxury chalet stay

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U.K. Prime Minister David Cameron may be calling for higher wages for all of the country's workers Tuesday – but to many voters, his party is still stuck with an elitist image.

A pheasant shoot, a stay in a Verbier ski chalet, tea with Mayor of London Boris Johnson and shoe shopping with Home Secretary Theresa May were among the auction lots at the Conservative Party's annual "Black and White" fundraising ball for donors Monday night, according to documents leaked to BuzzFeed.


The whole affair struck a distinctly elitist note, just as the party's leader makes a plea to business on behalf of British workers suffering from below-inflation wage growth.

Cameron will step into an arena usually covered by the left-wing opposition Labour Party when he says: "It's time Britain had a pay rise."

The U.K.'s politicians are drawing up battle lines ahead of May's general election, which at this stage appears to be the most difficult to call for decades.

The eagerness of politicians to capture the support of business can be seen by the attendance of six government ministers and two shadow ministers from the Labour Party at the British Chambers of Commerce (BCC) conference on Tuesday.


Does Britain really need a pay rise?

The coalition government's pro-business approach has kept the City in rude health at least – the U.K. has its highest ranking for capital-raisings since 2005 in the year to date, according to Dealogic figures.

Yet there are doubts over how much this has trickled through to the majority of voters. Average wage growth has outstripped inflation for three months now, but this has been preceded by stagnant to very low wage growth, according to official statistics. The opposition Labour Party has dubbed this a "cost of living crisis," which is why Cameron is now trying to address it.


The prevalence of this view has been challenged by U.K. statistician Simon Briscoe, who argues that official measures are using the wrong measure of inflation – it should be CPI rather than RPI – and also that the average is skewed because "many jobs have been created at the lower end of the pay scale and jobs lost at the top end." He argues that the median worker who has kept their job for more than a year is actually better off.

Party of the 0.1%

It's nothing new for politicians to raise money through lavish auctions, as the Conservative Party did Monday. And the donors present are exactly the people they need onside to deliver better economic growth. Still, the party was quickly seized on by Labour as an example of the party representing a "privileged few."

The "lounge suit" rather than "black tie" attire for the ball itself suggested that the party didn't want a flurry of pictures of cabinet ministers looking, frankly, posh ahead of the elections.

The house the government built

One thing the parties, and the construction business, are all in agreement on is that the U.K. needs more housing. The rise in house prices has fuelled personal wealth growth for homeowners in London and the South-East (a Conservative Party stronghold), but also made it difficult for first-time buyers to get on the property ladder. And a housebuilding boom could also help boost jobs (although the government might have to address a skills shortage first).

"Housebuilding targets, reform in the private rented sector and housing taxes are likely to be key bones of contention in the coming months," according to Grainne Gilmore, head of UK residential research at Knight Frank.

- By CNBC's Catherine Boyle.