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The IFS had said that the drop partly reflected measures announced in what it called the Chancellor's tax-raising Budget of 2002. The Treasury dismissed the research as "complete rubbish".
In an interview with BBC Radio 4's Today Programme, Mr Milburn claimed that if self-employed people were disregarded, incomes had risen 1.8 per cent. He said that the apparent drop in average incomes was because self-employed people had been affected by a "world downturn" which hit their profits and claimed that since 1997, the reported average take-home income had "risen by 20 per cent in real terms" if you took out the self-employed.
Chancellor Gordon Brown also dismissed the figures insisting that the "typical family" has been much better off under Labour.
David Bishop, from the Federation of Small Business said: "What Mr Milburn said on the Today programme was utter rubbish. It's very disappointing for people who work hard and pay their dues to the Government to be spoken about in this way. No wonder our members feel like the forgotten army."
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Susie Hughes © Shout99.com 2005
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