Yesterday’s announcement re the minimum wage shows the Conservatives are the party that believes in rewarding hard work
Last night, the Chancellor said that he supports an above-inflation increase in the minimum wage. By law, the exact figure has to be set by the Low Pay Commission, but by way of example he gave the figure of £7, which would restore the minimum wage to what it was worth before the great recession that took place at the end of the last Government.
I’m thrilled by this news - it’s something I have been campaigning for, both publicly before I became a Minister and privately since.
When this Government came to power, it faced two inter-related challenges - first, rescuing our economy; and second, making work pay. Under the last Government, many people found themselves trapped on benefits - they discovered they were little better off, or in some cases worse off, in work than out of work - and others were allowed to remain on out-of-work benefits for years. This was both unfair to those who were working and paying taxes to fund the welfare system and to those stuck, or allowed to remain, on benefits - there is plenty of evidence that work is good for your health and wider wellbeing.
This Government has already done two important things to make work pay:
- it has raised the amount of money we can earn before we have to start paying income tax. This helps everyone in work, but particularly those on low pay. Someone working full-time for the minimum wage is paying half the income tax under this Government that they were paying under the last Government; and
- it has introduced a cap on the amount of benefits an out-of-work family can receive so that people who work hard don’t find themselves worse off than someone living next door to them who isn’t working. Under the last Government, some families were getting over £50,000 a year in benefits.
But I’ve always thought that alongside these two policies, we should also be looking to increase the minimum wage (whilst cutting the taxes that businesses pay when they employ someone so that any increase doesn’t lead to an increase in unemployment). I am lucky - I have a job that pays well and which I love doing. I get up at half past five every morning looking forward to going to work. Many of the people I represent aren’t so lucky. They do something they don’t enjoy to put a roof over their families’ heads. If we want people on benefits to take jobs which, if we are honest, we wouldn’t want to do ourselves then we have to ensure that they get a fair reward for their effort. As I said, I’m thrilled that the Chancellor has been persuaded by that argument.
Of course, it’s worth noting that we are only in a position where we can contemplate an above-inflation increase in the minimum wage because we have taken tough decisions to rescue our economy, because we have a long term plan. We’ve got the deficit down and that’s kept interest rates down, which has allowed the economy to recover. We’ve cut taxes and regulations on business and that’s helped them create over a million jobs. If we hadn’t taken these tough decisions, we wouldn’t be in a position to raise the minimum wage now (or at least not without paying a heavy price for doing so).
Finally, this decision illustrates two important things about today’s Conservative Party.
First, we’ve changed for the better. When Labour introduced the minimum wage, we opposed it. We were wrong to do so. Today’s Conservative Party believes in making work pay and ensuring that people get a fair reward for their work.
And second, we’re determined to ensure that everyone benefits from the recovery, just as everyone is sharing the pain of clearing up Labour’s mess. Most of my constituents understand that tough decisions have to be taken to deal with the deficit, that although we are making progress we are not out of the woods yet. What they ask is that those decisions are fair - that everyone contributes, but those with the broadest shoulders contribute the most and that as the economy recovers everyone who works hard shares in that recovery. Yesterday’s news shows that the Government understands and shares that sentiment.