At Conservative Party Conference today, Jeremy Hunt is set to announce a rise in the national living wage which will increase to ยฃ11 per hour at the start of the next financial year.
A wage rise
The national living wage, currently ยฃ10.42, sets out the lowest amount workers aged 23 and over can be paid per hour by law. In a speech to the Conservative Party conference, Jeremy Hunt is expected to say the move to increase the national living wage will benefit two million of the lowest-paid workers.
The pay rates are decided each year by the Government, based on the advice of an independent advisory group, the Low Pay Commission. Ministers generally accept the commission’s recommendations. The Government had already set a target for the national living wage to reach two-thirds of median hourly pay by October next year.
The Low Pay Commission has not yet confirmed its recommendations for next year but it estimates the rate needed to meet the Government’s target should be between ยฃ10.90 and ยฃ11.43. Jeremy Hunt is expected to announce that regardless of the recommendation, the rate will increase to at least ยฃ11 an hour. The Conservatives said this meant the annual earnings of a full-time worker on the national living wage would increase by ยฃ1,000 next year.
“Since we introduced [the national living wage], nearly two million people have been lifted from absolute poverty” the Chancellor is expected to say.
Party conference: internal pressure
This announcement will follow increasing pressure that some members of the party are placing on the Government to reduce taxes. An IFS report found last week that this Government will oversee the biggest tax rise since 1948 as taxes will amount to about 37% of national income by the next general election, due in 2024.
Both Jeremy Hunt and Rishi Sunak have said that despite cutting taxes being consistent with Conservative ideology, tackling rising prices and curbing inflation is the priority. Jeremy Hunt said it is โnot the right timeโ for tax cuts and he is unsure if he will be able to reduce levies before the next general election as at the moment if we had big tax cuts they would be “inflationaryโ.
Michael Gove, the Levelling Up Secretary, said yesterday that he would like to see the tax burden reduced before the next election.
Former Prime Minister Liz Truss will use a speech today to urge the government to cut corporation tax for businesses to help grow the economy. Truss will also call for measures to encourage housebuilding, as well as to bring back fracking for shale gas to help cut energy bills.
Benefit sanctions
In his speech, Hunt will also say he intends to toughen sanctions for people on benefits who do not take steps to find work. “Since the pandemic, things have being going in the wrong direction. Whilst companies struggle to find workers, around 100,000 people are leaving the labour force every year for a life on benefits” the Chancellor is due to say as he announces that ministers will look again at the benefits sanctions regime to help get people back to work.
Calling the issue a “fundamental matter of fairness”, he will add: “Those who won’t even look for work do not deserve the same benefits as people trying hard to do the right thing.”
However, further details on the plans for benefits are unlikely to come until the Autumn Statement in November – when the chancellor sets out his economic plans.
At a fringe event on Sunday, Work and Pensions Secretary Mel Stride said the Government was already looking at the Work Capability Assessment “so it reflects the way the modern world works”, including increased opportunities for home-working. This fits in with the Government’s aim to get people back into employment.
Final thought
The issue of tax remains a divisive issue within the Conservative party. The rise in the living wage hopes to benefit workers, however, the minimum wage does not reflect living wage rates.
Moreover, Putting measures in place to enable those with health conditions to work from home through flexible arrangements symbolises progression towards a more inclusive society. However, this must be treated with caution. The post-pandemic drive to encourage more people with long-term conditions and disabilities into the workplace due to the rise of working-from-home, could force unwell people back into work and cause anxiety. It is vital that people with disabilities and illnesses maintain access to state welfare.