In January inflation fell to 2% – hitting the Bank of England’s target for the first time in four years. Wage growth is now set to outstrip inflation and it’s clear that the Government’s long term economic plan is working.
With wage growth returning it is vital that the Government now continues to focus on raising standards for the low-paid and Alec has called for the Low Pay Commission to look at raising the minimum wage.
Alec said: “A rise in the personal allowance on income tax in April halved income tax bills for those on minimum wage and I believe it’s time to ensure that hardworking but low-paid families share the rewards of this Government’s economic achievements. Yet among some politicians in Westminster there is talk of a ‘living wage’ policy. I’ve previously outlined why I don’t think this policy is good economic management but this does not mean I don’t think it’s morally right to pay people a fair liveable wage.”
“A living wage is a false pay rise that creates a falsely inflated economy. By linking wage rises to inflation with an official ‘living wage’ the economy never has chance to catch up with itself, restricting the power of the Government or the Bank of England to control inflation. However, a minimum wage rise set by law and controlled by Government alongside economic growth allows the economy to find equilibrium and ensure stability in the markets. The introduction of the minimum wage in 1999 proved economists wrong. The system coped with a Government controlled wage rise because it allowed the economy time to adjust and avoid uncontrolled inflation. A ‘living wage’ allows no such control.”
One element of the living wage policy that will cause concern for many residents in Elmet & Rothwell is the consequence to pensioners who can’t afford the risk of high inflation. When a ‘living wage’ triggers higher inflation and a high cost of living it won’t be those in work who will pay for it but those no longer in work whose pensions will not benefit from a living wage.
Championing a minimum wage rise, Alec said: “The case for a managed minimum wage rise is sound. By reducing business taxes and cutting employers’ national insurance contributions the Government is growing the economy and business in the UK. But the reward of such growth must not solely be enjoyed by big corporations but by the workforce driving those companies forward and I believe there is now an argument for the minimum wage to rise at a significant rate.”
The Low Pay Commission is due to report to Government in February.