The Tories would cut the minimum wage – we’ll raise it

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In the flurry of benefit-bashing and blows to the welfare state unleashed by the Tory-led Government over the past few days, Cameron and Osborne may have hoped that their threats to lower the minimum wage might slip under the radar. However, the outcry and opposition among Labour members and the public just might signal a turning-point ahead of the next election.

The minimum wage is totemic for Labour. It encapsulates all of our most cherished beliefs as a party; that people should work, that everyone should expect to be rewarded fairly for their labour, and that nobody in society should fall below a basic standard of living. For people like me who joined the Labour Party in the middle of the last decade, concerned about the war in Iraq or top-up fees, Labour’s commitment to the minimum wage acted as a welcome reminder that we were in the right place. It’s an issue that unites the party and one that’s simple to discuss on the doorstep.

Cutting the minimum wage makes little economic sense. Workers on lower wages have a higher marginal propensity to spend each pound of income, and particularly a higher marginal propensity to spend locally. Taking money out of people’s pockets will take money out of local high streets up and down the country. Lowering the minimum wage would place further strain on the benefits system, as welfare budgets have to pick up more of the slack caused by employers failing to pay adequate wages.  When Labour first introduced the minimum wage in 1999, it had no significant negative impact on employment levels; similarly, there’s little evidence that lowering the minimum wage would have any positive effect on getting people into work.

George Osborne’s big speech yesterday promised that his Government would “make work pay”. Clearly, his speechwriters accidentally knocked “less” off the end of the sentence. Cutting the minimum wage runs totally counter to the Tories’ stated rhetoric on welfare, by making people on low incomes more, not less, dependent on state benefit, and by letting employers off the hook rather than making them responsible for their employees’ standards of living.

No dividing line between Labour and the Tory-Lib Dem Coalition is clearer. While Labour introduced and continues to support the minimum wage, the Conservatives, aided and abetted by their Lib-Dem enablers, want to drop it. But we can – and should – go further. Labour must back up recent rhetoric on the Living Wage with concrete policy pledges. A minimum wage is one thing, but aspirational socialism should require wages that genuinely support families, no matter the size of employers. Labour councils up and down the country are demonstrating that a Living Wage works for their employees and for them as employers, while public, private and voluntary-sector organisations alike are applying for accreditation as Living Wage employers.

The online response to the Government’s threat to the minimum wage shows that Labour Party activists are riled up and ready to campaign. Throughout his leadership campaign, Ed Miliband spoke passionately about his commitment to a Living Wage – a vote-swinger for many party members.  Let’s demonstrate on the doorstep that there’s a real difference between Labour and the Tories –they’ll cut the minimum wage; we’ll raise it. Let’s have a pledge to introduce the Living Wage for all employees by the end of the next Parliament. It’s something to fight for, and it’s a fight we can win.

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