Millions will benefit from Living Wage

My long campaign for the living wage has come to fruition.

Thursday, 14th April 2016, 4:30 pm
Model villages like Saltaire may be in the past, but principles still apply.

More money in your pocket. Less tax for the low paid. A far cry from Labour and the 10p tax, taxing all people on earnings from £6,500-£11,000.

Twelve days ago, this Government introduced the National Living Wage. This was One Nation Conservatism in action — a Government that at its core believes workers need a fair day’s wage.

As a Conservative MP, I know that lower taxes stimulate growth and jobs. That smaller, more local government is invariably better government; and that hard work and personal responsibility form the cornerstones of a prosperous and fair society.

Yet, this Conservative Government holds that it is not enough to just believe in hard work, when for too many a hard day’s work has not always meant a fair day’s pay. Work should always pay, and that is exactly what the National Living Wage is all about.

Since the beginning of this month, 1.3 million of the lowest paid are earning more for every hour they work. British workers aged 25 and over on the minimum wage are getting a bigger increase in their annual pay than any of their counterparts across the world. It is the biggest such rise in any advanced economy since the financial crisis seven years ago.

Those in the North East are set to get a bigger increase than in London and the South East. In Northumberland, one in four are set to receive a pay rise this year, rising to one in three by 2020.

Torsten Bell, Director of the Resolution Foundation, put it very simply: “The National Living wage will transform the low pay landscape in the North East.”

This is just the start. The National Living Wage will increase every year, and is forecast to reach £9 an hour by 2020. For women this means significant progress in closing the gender pay gap.

The minimum wage increase is predicted to create a ripple effect up the income scale, meaning that as many as six million people will benefit.

There are those who hold serious reservations about the living wage, worried that it could penalise business and hold back growth. These were the same concerns many held in 1998 at the time of the introduction of the minimum wage. However, as the past 18 years have shown, the evidence for this simply is not there.

In fact, many businesses have jumped the gun on paying a living wage, including corporate behemoths such as Deloitte and Barclays. They know that, in the long-term, it is more profitable to reward their workforce, and by doing so minimise employee turnover and maximise productivity, commitment and loyalty.

The days of William Armstrong and Joseph Rowntree building houses for their workers and ensuring a decent standard of living may be in a bygone age, but many of those principles still apply today. It is not a hindrance, but a duty, and a mutually beneficial one at that, for a business to look after its employees.

We are not just putting up wages for the lowest paid, we are also ensuring that they keep more of what they earn. In the last Parliament, we took almost four million of the lowest paid workers out of tax altogether. We dramatically increased the amount of money a person can earn before paying any income tax.

All but the highest earners are having their tax bill cut, benefiting over 30 million people. We are increasing the personal allowance to £11,000: next year rising to £11,500. For a basic rate taxpayer this will mean over £1,000 more in your pocket than Labour offered in 2010.

April 1 marked a watershed moment for the low-paid in this country. David Cameron was right when he said that the living wage “is an idea whose time has come”. The living wage started as a belief and became a campaign. Now, thanks to this One Nation Conservative Government, it has become a reality.

This Government has achieved a great deal to be proud of. We have the fastest growing major economy in the world, more people in work than ever, and a deficit that is declining. But there is much more to do, and the creation of a living wage is something to be very proud of.