Financial expert Martin Lewis has brilliantly exposed George Osborne’s so-called ‘living wage’ on ITV’s The Agenda:
The founder of MoneySavingExpert.com said very firmly:
You stole the name ‘living wage’ from the Living Wage Foundation.
Osborne seethed as Lewis laid bare the gulf between the Chancellor’s rhetoric and his actual policies. In April 2016, wages rise to £7.20 per hour. Rhys Moore, the director of the Living Wage Foundation, said “this is effectively a higher national minimum wage and not a living wage”. Currently the real living wage is set at £9.40 per hour in London and £8.25 elsewhere. Osborne’s version not only pretends London doesn’t exist, but is also well subpar for the rest of the country.
Additionally, Osborne’s proposals are arbitrarily not applicable to under 25s. This is despite poorly paid jobs being typically low-skilled – a few extra years will hardly make you better at stacking shelves. There’s no reason being older would make you better at jobs that are likely to see a pay rise from Osborne. And young people need money too – it’s a stealth tax on parents.
As Lewis says, the Conservatives have hijacked the buzzword ‘living wage’ and appropriated it onto their own substandard version.
The problem with a national living wage
A one size fits all national living wage is itself problematic: it assumes all businesses have the means to pay it. You cannot equate small businesses with huge multinationals. John Allan, chair of the Federation of Small Businesses, said Osborne’s planned living wage:
will pose big challenges for many small firms, particularly those in the hospitality, retail and social care sectors where low pay is common and margins tight.
Neither Osborne’s, nor the real living wage should be implemented wholesale. Martin Green, the chief executive of Care England, has warned Osborne:
without adequate funding to pay for the national living wage, the care sector is at serious risk of catastrophic collapse.
There should be a threshold; the national living wage should apply after a certain turnover. The rate of corporation tax a company pays depends upon how much profit it makes. The same could be done for employee wages. On the other hand, companies who do not make enough profit should qualify for state help. Herein lies a common misconception: it is the company on benefits if it cannot afford to pay its staff properly. What is called ‘inwork benefits’ is actually corporate welfare. It is not the employee who is on benefits – they have a job.
On ITV, Lewis nailed Osborne’s “naughty” living wage to the wall. And ‘naughty’ is an understatement: the government is misleading the country by mislabelling and exaggerating its policies.
A real living wage would massively reduce the welfare bill by making sure the state is not unnecessarily topping up company pay, when companies like Monsoon can easily afford it. It is senseless to be paying people tax credits or universal credit when the corporation they work at is raking it in. For smaller businesses who want more employees – they can apply for state help.
Lewis is spot on to champion the idea.
Check out the Living Wage Foundation.
Featured image via Youtube screenshot.