Low Pay – and How The Parties Plan to Deal with It

A look at the cost of living crisis, and the plans the political parties have drawn up to combat it.

The Problem

Supermarket receipt

The spectre of low pay hangs over the heads of the poorest and neediest British citizens. Since 2010 over a million people have been pushed onto poverty wage, meaning that most people in poverty in this country are in employment. The country has experienced the biggest drop in living standards since the Victorian era. While the billions spent on Working Tax Credits end up subsidizing corporations such as Tesco, and Sports Direct.

The living wage foundation says that £7.85 per hour is a wage that is high enough to maintain a normal standard of living. The minimum wage is  £6.50 p/h.  The six major parties (Including the SNP as they could be the third largest party in parliament after May 7) all have different visions on how to deal with the cost of living crisis.  

The Plans in Brief 

The Conservatives

George Osborne said in 2014 that the country can now afford to raise the minimum wage above inflation but I find no explicit number pledged.

The main thrust of their plans to improve the lot of the low waged is to increase the tax-free personal allowance to £12,500.

The Labour Party

The Labour have pledge to preside over a rise in the minimum wage to £8 p/h by 2020.

They also plan to reintroduce the 10p tax rate, which they claim will lower tax for 24 million people. They also have plans to introduce tax breaks for companies paying the living wage.

The Liberal Democrats

Liberal Democrat policy appears to focus on removing minimum wage workers from paying income tax; which they will do by raising the income tax personal allowance to £12,500, but not until 2020.

There is little mention of any action on the minimum wage.

The Scottish National Party

The SNP are fighting for the powers to set minimum age to be devolved to Holyrood, where they will increase the minimum wage at least in line with inflation. It is their stated aim to eventually pay a living wage.

UK Independence Party

UKIP’s policy rests entirely on increasing the lower income tax threshold. They are the most generous offering a rise to £13,500.

The Green Party

The Greens are promising the immediate implementation of a Living Wage after May the 7th with a promise that nobody will be paid less than £10 p/h by 2020. The differential in minimum wage based on age will also be abolished.

Income tax plans are in flux until the publication of their manifesto, as they have presumably been rewritten after the dropping of the Citizens Income policy.

The analysis

Increasing the tax threshold at which lower earners start paying income tax, offered by the Conservatives, the LibDems, and UKIP appears to be a sensible idea. No doubt it would have some effect on the finances of millions.

However large sections of people employed on minimum wage are part-time workers; meaning they pay little or no income tax, so for many this policy means nothing. Indeed income tax for the low waged is a relatively small burden when compared to Council Tax and VAT. Meaning their energies might be better spent in Council Tax reform.

Labour’s commitment to an £8 p/h minimum wage by 2020 is questionable. The minimum wage has not yet recovered, in real terms, to pre-crash levels. To beat the pre-crash levels the minimum wage would have need to be around £8.50 p/h by 2020.

The SNP have a slightly fairer offering, at least the minimum wage would keep pace with inflation. However without a commitment to a Living Wage people are still going to struggling to make ends meet.

The Green Party are the only party advocating an immediate change to a living wage, which is a noble and achievable aim. Obviously the vested interests of big businesses and the CBI are lobbying hard against the policy in Westminster, using scare tactics of job losses, but they did the same when the minimum wage was introduced in 1998. There were no job losses then, nor will there be any now.   

min wage

The establishment parties’ policies are at best timid, and at worst harmful. A revolution is needed to crush the cost of living crisis, but it will not come from Westminster.

Originally posted on Quazen.com