Threat to living wage rise as UK firms face slump
PLANNED increases in the national living wage could be shelved despite warnings the issue is vital to cementing Tory support in Labour’s former ‘Red Wall’ seats.
The minimum pay rate had been expected to rise by 5.6 per cent, from £8.72 per hour to £9.21, next April as part of plans to raise it to two-thirds of average pay by 2024.
But the Low Pay Commission, which advises the Government on the wage, is considering recommending a smaller increase because of concerns it could prove ‘unaffordable’ for employers at a time of recession – and even spark job losses.
Officials are now discussing with ministers whether to apply an ‘emergency brake’ to the increase at this autumn’s Budget. The move comes amid fresh warnings about the need for the Government to consolidate its support in Red Wall seats in the North and Midlands which it took in last year’s General Election.
A new report by the Tory think-tank Onward today urges ministers to focus on boosting wages and cutting unemployment in these areas.
The study, backed by 40 Conservative MPs who have formed a new ‘levelling up taskforce’, reveals the election has radically altered the composition of the Tory Party at Westminster, with average wages in newlywon Conservative seats around 5 per cent lower than in Labour constituencies. The study urges ministers to publish an annual progress report on Boris Johnson’s ‘levelling up agenda’, focusing on whether disparities in wages and employment levels are falling.
It also calls on the Treasury to do a ‘geographical analysis’ of all Budget policies to measure their impact in the regions, warning that the UK has become one of ‘the most geographically unbalanced developed economies’ in the world.
Bryan Sanderson, of the Low Pay Commission, yesterday said it is concerned about the ‘profound impact’ of a 5.6 per cent rise at a time when many firms are reeling. The commission will report at the end of next month but the decision on whether to apply the brake will be Chancellor Rishi Sunak’s.