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Osborne’s Living Wage: ‘not enough to live on’

17 July 2015


Making adjustments: George Osborne works on a Eurofighter Typhoon fighter jet during a visit to BAE Systems in Warton, Lancashire, on Thursday of last week 

Making adjustments: George Osborne works on a Eurofighter Typhoon fighter jet during a visit to BAE Systems in Warton, Lancashire, on Thursday o...

COLD water was poured over the Chancellor’s announcement of a “National Living Wage” last week (News, 10 July), as campaigners sought to deflate what they described as a cunning political move.

“The policy bears no resemblance to a Living Wage,” said Paul Morrison, a policy adviser to the Joint Public Issues Team (of the Baptist, Methodist and United Reformed Churches, and Church of Scotland), last week.

"It was a “naked attempt to steal the name ‘Living Wage’ and subvert it. The name Living Wage is worth stealing, mainly due to the brilliant work of churches, charities, and especially the Living Wage Foundation.”

Canon Angus Ritchie, the director of the Centre for Theology and Community, and one of the founding leaders of Citizens UK’s Living Wage Campaign, said that “loose language on this issue is dangerous.”

Writing in The Independent on Tuesday, he said: “Words do not mean whatever we want them to. Terms like ‘Living Wage’ and ‘affordable housing’ have a meaning independent of the will of politicians and spin doctors. The reality is that the ‘national living wage’, though very welcome, will not be enough to live on.”

The director of political programmes for the Theos think tank, Paul Bickley, suggested that it would become “harder to get firms to respond to obligations to workers that, in the end, are not legal but moral”.

Think tanks, including the Resolution Foundation, the Institute for Fiscal Studies, and the Social Market Foundation, stated that much higher wages would be needed to offset the changes to tax credits.

“A £4-billion boost to pay cannot match a £12 billion cut to benefits,” the director of the Resolution Foundation, Gavin Kelly, wrote on Sunday. While welcoming the policy as a “highly significant — and welcome — pay rise for a large chunk of Britain’s five million low-paid workers”, he warned: “Millions of working families will lose, and many on tax credits now face a punishing 80 per cent marginal tax rate.”

The Foundation drew attention to the impact of the Chancellor’s surprise announcement on the social-care sector, which is facing, it argues, a “cocktail of low and falling wages, tight budgets, rising demand for services, and little scope for productivity gains”.

Mr Osborne faced criticism from the Right, too. Writing in the Telegraph, the head of public policy at the Institute for Economic Affairs, Ryan Bourne, described the economics of the policy as “dire. . . Increasing the minimum wage is simply not a good poverty reduction tool.”

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