7 Jan 2014

Coalition hopes to get its kicks from minimum wage

Yesterday, coalition partners were distancing themselves from each other over future welfare cuts. Today they’re fighting over ownership of what they hope will be a substantial rise in the national minimum wage later this year.

I say “hope” because the the Low Pay Commission was set up as an independent body made up of business people, trade unionists, economists and officials. The government tweaked a recommendation on apprentice pay last year but there’s only been one other occasion the LPC’s recommendations have been interfered with and it’s regarded as a “no no” in Whitehall to wade in.

Though, it’s emerged thanks to Rachel Sylvester in the Times┬áthat the chancellor and his allies tried everything they could to squeeze an earlier announcement out of the LPC to brighten up the autumn statement in December.

I’m told that the LPC got pretty “prickly” over the pressure that was brought to bear on them back then and refused to share its homework.

The chancellor is going to have to wait a few more weeks to get their submission but there’s growing confidence in Whitehall that it’ll be to the coalition’s liking. One Whitehall source said it could be around a 50p hike.

And the coalition has unusually asked for forward guidance on moves in the minimum wage over the next two to four years. That could come in the form of Bank of England interest rate hike criteria.

But instead of saying what happens to interest rates if unemployment drops to certain level, the LPC advice might say what should happen to the minimum wage if growth goes above a certain level.

Though it’s likely to be more complicated than that, the government’s hoping to have something it’ll be able to point at that will allow it to say to voters that it is taking care of the less well paid.


Tonight, Vince Cable, the business secretary, has issued a statement gently reminding voters that this was all his idea. His supporters accuse George Osborne of trying to “nick” his idea, “just like he’s doing on the tax free threshold”, they say.

On the other side, one Tory said he couldn’t wait to see a rise unveiled and that it would be “a right kick in the goolies for Labour’s narrative that we don’t care about poor people”.

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