Miliband launches plan for “Make Work Pay” contracts

In an interview with the Independent on Sunday, Ed Miliband has announced plans to give a tax break incentive to businesses for every employee who has their salary raised to the minimum wage. This is how the party are explaining the scheme:

Firms which sign up to paying the Living Wage at the start of the Parliament will benefit from a 12-month tax rebate of up to £1,000 – and an average of £445 – for every low paid worker who get a pay rise.

The measure will be entirely funded from the increased tax and National Insurance revenue received by the Treasury when employees receive higher wages. Additional savings in lower tax credits and benefit payments, as well as increased tax revenues in future years, will cut social security bills and help pay down the deficit.

According to the party, such a scheme would save the government money in lower social security payments and higher taxes – as well as seeing businesses get cash for every worker they pay a decent wage.

Looking ahead to implementation, Miliband has approached Alan Buckle – deputy chairman of KPMG – to work with businesses “on the detailed implementation of this scheme as part of his Review on Low Pay”. The “Buckle Review” will also examine other measures to strengthen the Minimum Wage and encourage greater use of the Living Wage.