Ed Miliband’s Living Wage gamble: It’s a stop-gap solution while a Labour government works on re-balancing the economy, but will small businesses go for it? [Picture: BBC]
Just one day after the TUC leader said the Coalition has broken the historic link between economic growth and rising household incomes, Labour has proposed a way to restore it.
Since the recovery began, earlier this year, Vox Political has been pointing out its lack of impact on the poorest households in the UK – readily evidenced by the rise and rise of food banks across the country. This is because any profits are being funnelled up to those individuals who are already earning the most and – thanks to our bizarrely-slanted tax (avoidance) system – into tax havens.
According to the BBC, Frances O’Grady told a conference yesterday that “households are being excluded from the benefits of growth. Unless this changes, the recovery will be meaningless to the vast majority of people across Britain.
She said the government was “desperately short of solutions”.
A Treasury spokesperson said the government’s economic plan (wait a minute! The government has an economic plan? When did they come up with that?) was “the only sustainable way to raise living standards” despite all the evidence to the contrary.
This person also said the government’s plan was “slowly but surely working”, even though the economic recovery has nothing to do with any government action.
But today Ed Miliband, the Labour leader, unveiled a plan that made nonsense of the Tory mantra that the government is making work pay because, instead of cutting benefits to make it seem more desirable to have a wage (even though the amount earned is still a pittance), it will actually add cash to working people’s pay packets.
There is a drawback, in that it means a Labour government will offer businesses a 12-month tax break if they agree to pay employees the Living Wage. A tax break is legalised tax avoidance, and we really have enough of that going on already, thanks to the efforts of the Big Four tax avoidance accountancy firms – KPMG, Deloitte, PricewaterhouseCoopers and Ernst & Young – who happen also to write UK tax law for George Osborne (because he doesn’t know how).
But it’s only for a year while the Living Wage gets bedded in. It’s a stop-gap solution to lift workers out of poverty while Labour introduces long-term plans to re-balance an economy that has already been seriously damaged by three and a half years of crazy Conservative ideological pummelling. Who can predict the harm after a full Parliamentary term?
And the Living Wage is becoming even more desperately-needed in the UK than ever, after a study showed the number of workers earning less than its £8.55 per hour (in London) and £7.45 per hour (elsewhere) increased by eight per cent in the last year (from 4.8 million to 5.2 million).
Mr Miliband’s proposal means private firms would be able to claim back about one-third of the cost of raising their staff members’ wages to the Living Wage. This would be good for the government as it would save money on benefit bills and tax revenues would rise.
But costs to businesses would increase. While these could be absorbed by larger companies, smaller firms might struggle to stay afloat.
It is possible, though, that the wage rise would reinvigorate previously-downtrodden workers (as Vox Political has suggested in the past), giving them a sense that they are valued and a reason to invest their energy in the company’s success.
It’s not what you know – it’s who: This is the only ticket to upward social mobility in David Cameron’s Britain – an Eton tie.
Congratulations to Alan Milburn for completely destroying the Coalition government’s ‘Making work Pay’ policy.
It was always critically flawed, of course – how could it not be? It was based on the idea of reducing the money available to people on benefits, in order to make the amount taken home by working people seem like more.
Meanwhile, the real winners were company bosses and shareholders for whom the line ‘Making Work Pay’ is a complete misnomer. A shareholder takes home dividends after investing in a company. Such a person doesn’t do any work for that money at all!
Mr Milburn’s study focuses on working parents, according to the BBC’s report. This makes sense because social mobility is historically based on a child managing to achieve more than a parent.
For decades, Britons have been able to say, proudly, that each generation has been better-off than the last; now, the Conservative-led Coalition has reversed that trend. Working parents simply don’t earn enough to escape poverty and two-thirds of poor children are now from families in which at least one adult has a job.
Falling earnings and rising prices mean the situation is likely to worsen – and what the report doesn’t say (but we can infer), is that this is an intended consequence of government policy. David Cameron will not be thanking Mr Milburn for pointing this out.
Mr Milburn has recommended diverting money currently used to provide universal benefits to pensioners, so that the richest senior citizens would lose their free TV licences and winter fuel allowances, in order to relieve the burden on the poorest families.
But Mr Cameron, who knows that pensioners are more likely to vote than younger people (including working parents), won’t accept that. A spokesman told the BBC those benefits will be safeguarded until after the 2015 general election – in order, we can infer, to ensure that pensioners will vote Conservative.
At least this admission makes Cameron’s reasoning clear!
Some have chosen to lay the blame on Education. That’s right – with a capital ‘E’. Apparently, although Tony Blair was right to put the emphasis on education back in 1997, people just haven’t been interested in taking it up, along with the massive opportunities it offers to attain a comfortable life.
That just doesn’t ring true. Look at Yr Obdt Srvt. I left school with nine GCE ‘O’ Levels and three ‘A’ levels, went on to get a degree and then went beyond that to get a post-graduate qualification in Journalism (making me one of the few news reporters, these days, to have one).
I have never received more than poverty wages – even when I was editing a newspaper. But the effect I have on my surroundings is completely disproportionate to the money I have received – I recently wrote that when I left my last full-time newspaper job, that paper lost £300,000 per year as a result (according to my sources). This very site is currently rated 16th most influential political blog in the UK.
Yet I am as poor as a church mouse!
So Education is not the culprit – and putting teachers on performance-related pay is to chase Education up a blind alley. How would Special Needs teachers benefit from such a system? All pupils have a range of abilities and no two are the same, so how can performance-related pay ever be judged fairly? Suppose a teacher correctly realises that some pupils will never achieve academic excellence but that their talents lie in practical pursuits – should that teacher lose pay for trying to get the best result possible for those pupils? Of course not.
Once again we see government policy following the ‘divide and conquer’ pattern. ‘Take from the needy and give to the greedy’, as the slogan states.
And the flag of the conquering elite is the ‘Old School Tie’.
You’re on very shaky ground in Cameron’s Britain – if you weren’t at Eton.
Hour of the Vampire: Iain Batwing Smith is forcing jobseekers into non-jobs for no pay in order to cut off their benefits. He’ll bleed you dry. Image: Christopher Sharrock http://sharrock.wordpress.com/
Even after Rachel Reeves’ recent lurch to the Right, Labour’s behaviour remains beyond saintly in comparison with the gutter-vermin who describes himself as the Secretary of State for Work and Pensions.
I read the following altercation, copied verbatim from today’s Hansard (the record of Parliamentary events) on Facebook and almost despaired. The following took place during Work and Pensions Questions.
Andy Sawford (Corby) (Lab/Co-op): “Will the Secretary of State confirm whether benefits officers been have told not to sanction people when the only job offered is on a zero-hours contract? Do Ministers recognise that the new claimant commitments mean that people will not actually be able to sign zero-hours contracts without risking losing their in-work benefits?
Mr Duncan Smith: “The claimant commitment is about people’s obligations under the existing terms. They will have to seek work, attend interviews and try to get a job, and once they are offered a job they must take it. Those are the sanctions coming up under universal credit. People will lose benefits for three months for a first offence, six months for a second offence and three years for a third offence. Right now, zero-hours contracts are legal. If Labour wants to change the law, we want to hear that from the honourable Gentleman.”
In a nutshell, Iain Duncan Smith was saying that anyone offered a zero-hours contract must take it or lose their benefits for a minimum of 13 weeks.
Zero-hours contracts are treacherous – as we all know. Often an employee could be left waiting for days or weeks without receiving a call to come to work, but – as they are, technically, employed – they cannot claim unemployment benefits for the periods of downtime.
So Iain Duncan Smith is saying that many jobseekers will have a Hobson’s Choice between taking a job that guarantees no pay, no benefits and no security of tenure, or the complete loss of benefits for at least three months.
How, exactly, does that tally with his policy objective, which describes as “Making Work Pay”?
This might deserve a complaint under the Trade Descriptions Act.
It aims to publicise the results of a survey by Ipsos-MORI, examining public attitudes to the cap. The survey was carried out among more than 2,000 people who were selected to be representative of the UK as a whole.
“The vast majority (70 per cent) of the public think people affected by the benefit cap should be prepared to find jobs or work more hours,” the piece begins. This is accurate, according to the survey being quoted – but it is based on the premise that the benefit cap should be set at £26,000 per year for a workless family, which is significantly lower than what was originally advertised by the DWP – the income of an average working family.
The DWP, imposing the cap, drummed up support by saying it would limit the amount workless families could receive to the same as the average income of a family in work, claiming that this was £26,000. In fact, a working family claiming all the benefits to which it is entitled can get £31,000 – so the cap means workless families are at least £5,000 per year worse-off, a huge gap of 16-17 per cent.
“Two-thirds (65 per cent) say they should be willing to move to a cheaper property,” the release claims – but the Ipsos-MORI report’s summary makes it clear that support for the policy drops to 44 per cent – a minority – and opposition rises to 26 per cent if it means those benefit claimants affected by the cap have to move to other areas to find more affordable accommodation.
The press release, which came out to support the government policy ‘Simplifying the welfare system and making sure work pays’, continues: “Independent research published today (10 October 2013) shows that 60 per cent support the cap even if it means that those affected have to take a job, regardless of the pay.” So now it seems that making work pay is not the objective; cutting wages is the real plan.
“The Ipsos MORI report finds around three-quarters of the public support the benefit cap in principle.” This, at least, is accurate and is no bad thing. Benefits should be lower than wages – they are a safety net that should enable people to carry on living while they find paying work. But in return, employers need to pay a living wage, ensuring that nobody in work has to claim any benefit at all. That, at the moment, is sorely lacking in the UK.
“58 per cent think that politicians needed to do more to reduce the welfare bill.” But they weren’t asked how they thought this should be done, or whether politicians were doing the right things.
“50 per cent think that benefits are too generous.” Among those who’ve received benefits this drops, but surprisingly only to 45 per cent. Among those who haven’t received benefits, 62 per cent thought them too generous.
“11 per cent think the benefits system is working effectively.” But they weren’t asked whether the Conservative-led Coalition was to blame for the poor performance.
At this point, the press release stops quoting statistics – but there is one further piece of evidence that people need to know. It relates to what the people who were surveyed knew about the benefit cap before they answered the questions.
Only 29 per cent knew even a fair amount about the cap before answering the survey’s questions. Of the rest, 42 per cent said they knew “just a little” about it, 18 per cent said they’d heard of it but knew nothing at all about it, and eight per cent had never even heard of it.
So this survey – put out by the DWP as a measure of public support for the Benefit Cap – is in fact a measure of public ignorance.
Why should anybody accept these findings as authoritative? How can we accept the 70 per cent view that people affected by the cap should be prepared to find jobs or work – that’s fewer than those who admitted they don’t know much about it!
In fact, none of these statistics can claim to be authoritative because only a tiny minority of those surveyed knew enough about the subject.
Now look at Iain Duncan Smith’s comment: “Today’s report makes it clear that the public support setting a limit on benefits and the successful delivery of the benefit cap shows we are committed to returning fairness to the welfare state.”
Lie. It shows that most of the public are ignorant about the limit. The successful delivery of a benefit cap set at 17 per cent less than average income shows that he is committed to returning unfairness to the benefit system.
“Claimants affected by the cap need to make decisions about work and housing and what they can afford, just as hardworking families do. We have made sure the support is there to help people back into work and the Benefit Cap and Universal Credit will ensure that work pays.”
Lie. The press release itself states that people are being pressurised into any work they can get – whether it pays or not. Support is not available to get people back into jobs because the jobs aren’t there. And Universal Credit does not work.
The release goes on to state: “Since claimants were first notified of the benefit cap in April 2012, Jobcentre Plus have helped around 16,500 potentially capped claimants into work.” The wording is very careful; notice no mention is made that they moved into work specifically to avoid the cap – Smith and others have been reprimanded over such claims in the past. But the context suggests that the benefit cap is what motivated these people to get jobs, and that is unsupportable as well.
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