Saturday 17 January 2015 4:36 am

Cameron tells business to pass on falling oil price benefits to staff through higher wages

Businesses reaping the rewards of plummeting oil prices have been urged to pass on the savings to staff in the form of higher pay by David Cameron.

Asked about the matter on a visit to Washington, the Prime Minister told reporters: "Obviously I want to see companies’ success passed through in terms of wage increases. It has to be done in a way that’s affordable, and in a way that companies can continue to grow.

“Falling oil prices are going to benefit a lot of businesses and a lot of countries, and we want to see those benefits passed through in all the ways they can be," he said.

Profits at UK companies not in the oil or finance business recently surged to a 16-year high. Sectors most likely to benefit from the collapse in oil prices, which have fallen more than 50 per cent since last summer include agriculture, transport, mining, wholesale and retail, according to the ONS.

Consumers have already felt the benefit from falling oil prices at the petrol pumps, where the price of fuel could fall under £1 per litre.

In stark contrast, the rate of return for UK companies involved in North Sea oil and gas extraction fell to 13.9 per cent in the third quarter of last year, the lowest on record. BP is the latest to take a hit from falling oil prices in the oil industry, shedding 300 jobs at its North Sea oil operations

Cheaper petrol has pushed down inflation easing the burden on people in the face of sluggish wage growth, handing the Conservatives a “political windfall” ahead of the General Election as Labour campaigns on the cost of living crisis since the financial crisis.

Labour leader Ed Miliband slammed Cameron's plea, accusing the Prime Minister of years of “denial, complacency and failure” over the cost of living.

Meanwhile, business groups have said that long-term policies rather than short-term gains from low oil prices are needed to boost wage growth sustainably.