Parliamentary sketch – A wager on wage hike

Posted on: 31st January 2014

This week we’ve had one of Westminster’s favourite competitions – i.e. “who can be toughest on immigrants”? – whilst, at the same time, showing sympathy for Syrian refugees.

Locally, I’m pleased to see that a suggestion I made that the former Penwith Council offices at St Clare should be used as a health park, including a rebuilt Poltair Hospital, is gaining some support; and that pressure for public subsidy to support air links to Scilly is gathering pace.

But back at Westminster we’ve had more political games. One, which was more the product of political calculation than principle, was the recent suggestion by the Chancellor of the Exchequer that the minimum wage should rise (by 11%) to £7 per hour. In itself, something I have been pressing for myself.

Coming from a Tory who opposed the introduction of the minimum wage in the first place, it could be seen as a brazen attempt to wrong foot Labour Leader, Ed Miliband, hours before he was about to make “a big economic speech”.

Not only was it a contradiction of where many of his Conservative colleagues want to be (many are still opposed to the national minimum wage) but it contradicts their enthusiasm for “regional” pay – a policy to the detriment of places like Cornwall.

The Chancellor was clearly prepared to withstand inevitable criticism from business groups; some complaining that Osborne was trying to pass the costs of this “Government mandated wage hike” on to private companies. Certainly it is true that many of the smallest businesses and sole traders would most probably face greatest difficulties from such a wage increase, but at least they would all be on the same and even playing field.

Nevertheless, some Conservatives have twigged what the rest of us have known for some time: that low wages are heavily subsidised by the State through a benefit system which compensates those on the lowest wages with housing benefit, tax credits and other income supplements. A large rise in the national minimum wage could cut billions from the Government’s welfare budget.

For a Government which wishes to “make work pay” (more than benefits) an increase in wages would send the right signal.

But, in reality, politicians can make whatever gestures they like. It is the supposedly independent Low Pay Commission (LPC) which effectively determines the level. Indeed, the LPC has often made clear the dangers of any dramatic change to the minimum wage; it was set up to avoid Governments distorting the labour market for short term political gain.

So perhaps this is just an example of yet another clever political ploy? If (as seems very unlikely) the LPC accepts the Chancellor’s suggestion, he will be seen to have “set the agenda”. But if it doesn’t, he can still claim that he is on the right side of the argument supporting hard working people, whilst respecting the independence of the LPC! It’s like a ‘win-win’ wager on a wage rise, whatever the outcome!

You can contact Andrew George by email: His constituency office can be contacted at Trewella, 18 Mennaye Road, Penzance, Cornwall, TR18 4NG. Telephone: 01736 360020.

Andrew George MP
Kernow a’n West ha Syllan
West Cornwall and the Scillies
Kwartron Porthia
Constituency of St Ives
Tel: 01736 360020
Fax: 01736 332866

28th January 2014