5 October 2015

Faced with low pay and employers unwilling or unable to pay a real living wage, the Labour government introduced tax credits, a means of topping up unlivable low pay with taxpayers’ money. A civilised and sensible approach, it seriously helps very many people, who also receive other financial benefits such as help with rent.

The Tory government now wishes to move away from state subsidy for low pay and dependency on benefits. It considers employers should pay their workers decent wages, hence Osborne’s compulsory “national living wage” of £7.20 an hour from next April for workers aged twenty five and over, and this, with other measures, the Tories say enables a reduction in tax credits to the low paid. The current real living wage is £7.85 an hour outside London and that rate applies to workers aged twenty one and over.

I heartily agree that all workers should be paid at least a real living wage: workers should have the proper recognition of their labour and the simple dignity of earning enough to live decently, even well, and provide good security and stability for their families. A proportionate reduction in state subsidy to low pay should then follow. The question is: have the Tories got the arithmetic right, does their simultaneous give-this-take-away-that of their July 29015 budget add up? The independent expert Institute for fiscal studies (IFS) says it doesn’t and that around 3 million low paid families will overall lose as much as £1300 a year from the Tory changes. I gather individuals will learn of their quantified losses in December, the month of Christmas. The IFS damagingly describes the budget as “regressive”.

Sensible proposals have been suggested, by Frank Field among others, to mitigate the presumably unintended losses but David Cameron has insisted there will be no loss of income for the poor and his government will not change anything in their plans.

Well, that confirms the Conservatives as the stupid party – and the nasty party. I think the stupidity will tell against them most.

The risks for the government are so big that I believe there will be mitigating changes. It will be interesting to see how Cameron explains that.


On 6 October in a platform speech at the Tory party conference Boris Johnson, mayor of London, and known to fret genuinely about those 3 million losing families, said of the government welfare changes: “we must ensure…we protect the hardest working and lowest paid: the retail staff, the cleaners…”