View more on these topics

Osborne wants above-inflation rise for minimum wage

Chancellor George Osborne wants an above-inflation rise to the minimum wage and is targeting a huge increase to £7 an hour.

In an interview with the BBC today, Osborne says the minimum wage would need to rise to £7 an hour to equal where it once stood in real terms, instead of today’s rate of £6.31.

The minimum wage is set by the Low Pay Commission to balance the interests of business with low paid workers. Osborne has written to the body to ask how far it could raise the hourly rate.

The move will be seen as a Conservative pitch for votes of the working poor at the next election and a response to Labour’s criticism there is a cost of living crisis in Britain today.

The Trades Union Congress has said a higher minimum wage would wipe billions off the cost of in-work benefits such as tax credits.

But Osborne says any resulting cut to the welfare bill would be wiped out by lower business profits and smaller corporate tax receipts. It would also create higher Treasury spending on pensions tax relief.

He said: “The working poor are the people who suffer most when the public finances get out of control, when the economy collapses. When the banking system isn’t properly regulated. Our Government, the Government I am part of, has got on top of these problems.

“And the whole country benefits and I want to make sure the working poor benefit as part of it. I want to make sure we are all in this together as part of the recovery. Which is why I want to see those above inflation increases in the minimum wage, precisely because the British economy can now afford that.”

Inflation fell to 2 per cent in December, the first time it has hit the Bank of England target since November 2009.

Labour leader Ed Miliband has called for tax breaks for firms to offer a living wage of £7.65. He has floated the idea of imposing a higher minimum wage in different sectors such as financial services.

Confederation of British Industry director general John Cridland says:An unaffordable rise would end up costing jobs and hit smaller businesses in particular. Any increase in wages must reflect improved productivity.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. If this goes ahead it could back fire on the Tories.. Small business i.e hair dressers in the sticks maynot be able to pay the minimum without job losses

Leave a comment

Close

Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm

Email: customerservices@moneymarketing.com