Belfast Telegraph

Sunday 30 August 2015

Tories may back minimum wage boost

Published 07/01/2014

A 50p an hour increase in the minimum wage could save the Government £1 billion, as people pay more tax and claim less benefits.
A 50p an hour increase in the minimum wage could save the Government £1 billion, as people pay more tax and claim less benefits.

Speculation is mounting that the Tories could back a substantial rise in the minimum wage to combat criticism over stagnant living standards.

Analysis for Downing Street is said to suggest a 50p an hour increase could save the Government £1 billion, as people pay more tax and claim less benefits.

But there are likely to be concerns about putting more burden on businesses as the economy shows signs of revival.

Last year Liberal Democrat Business Secretary Vince Cable asked the Low Pay Commission to consider whether the current £6.31 hourly rate for adults can be pushed up, after falling 10% in real terms since the 2008 credit crunch.

According to The Times, David Cameron is being urged by allies to back a significant increase with "shock value".

The Conservatives have been struggling to find a riposte to Labour's argument that ordinary workers are not feeling the effects of wider economic recovery.

Cabinet Office minister Oliver Letwin is said to believe a strong move on the minimum wage would prove the party is not just "posh boys who don't know the price of milk".

Chancellor George Osborne, Work and Pensions Secretary Iain Duncan Smith and skills minister Michael Hancock are also reportedly in favour of a hike.

The cost for employers could be offset by cuts in national insurance.

The Commission - which has recommended the minimum wage level since it was introduced in 1998 despite Conservative opposition - is due to report by the end of next month.

Ministers can overrule its findings, but they have only done so twice - including last year when they opted for a higher rate for apprentices.

Mr Cable said: "The National Minimum Wage strikes a key balance between protecting the low paid and making sure they can find work. But as the economy starts to recover, the benefits of growth must be shared fairly and equally by everyone.

"This is why last September I asked the independent Low Pay Commission what economic conditions would be needed to allow for significant rises in the National Minimum Wage without damage to employment.

"And strengthening the National Minimum Wage needs to happen hand in hand with tough enforcement.

"Those who do not pay it can expect to feel the full force of the law. From this spring we are hiking up penalties on rogue employers who do not play by the rules, as well as making it easier to name and shame employers who fail to pay their workers what they are due."

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