Published: 12th February 2015
One of the biggest consequences of Labour ’s destruction of the economy was that wages froze whilst inflation grew, effectively causing a pay cut.
However, unlike other recessions, this did allow many people to maintain their jobs during one of the worst financial crisis’ this country has ever seen.
Now with inflation at just half a percent, it is time to grow people’s wages to start closing the gap between the pay packet and consumer prices. It is worth pointing out that demand for wage growth has only been possible due to a set of positive policies towards business, as part of the Government’s long term economic plan.
Cuts in small business tax, reductions in corporation tax, an abolition of employer National Insurance contributions for anyone aged under 21 – going up to the age of 25 for apprentices – and business rate rebates have all put businesses in a stronger financial position than when we came to power.
The policy of the government has been to say to business, “We will take less of your money, but we expect it to go to your employees”.
A strong economy is built on strong private industry. The Labour Party constantly forget that Government does not have their ‘own’ money, it has your money through taxation. Any plan that appears to be giving money away has always come from you to start with and will end up being paid for by you if more is “given away”.
This Government increased the minimum wage above inflation with its biggest rise since the 2000s and the Prime Minister and Chancellor have made it clear that they want to get to £8.21 by 2020.
But this can only be gained by insuring that business has the money to give people pay rises without increasing the costs of its product.
Labour’s policy of direct intervention without a reduction in the tax burden makes any pay rise irrelevant. For instance, if a pay rise allows you to purchase products you could not afford before, it will only last if products stay at today’s prices. If the product price goes up because business has to charge more for it to cover wage costs, your pay rise is worthless.
That is why the Prime Minister this week told business that pay rises are due , because of the tax cuts that this government has given to business.
Our long term economic plan is to deliver a strong economy and as it grows, the government can also ensure that businesses have the money to increase wages without raising product prices.
For all Labour’s promises it is worth remembering the old adage that there is “no such thing as a free lunch”. Whether it be through large tax increases or through inflationary pressures; demanding wage rises without helping businesses reduce costs could do more harm than good to your personal budget.
A strong economy, a low tax base and long term economic plan for private business growth have been delivered by this Government. It’s now time Britain had a sustainable pay rise.