Osborne has not solved the cost of living crisis

Britain needs convincing ideas about how to ensure that real wages rise.

Stand back from the detail of today's Budget and what we observe is Britain's political class trying – and failing – to respond to the crisis in living standards facing Britain.

They are doing this at the same time as they, of course, seek to outmanoeuvre their political opponents and build support among their friends. One manifestation of this will be the growing tussle over tax cuts, which will increasingly dominate party politics in the years ahead (see tomorrow's NS).

Until there are convincing ideas that resonate with the public on how to ensure that real wages will rise, party leaders will remain in the familiar territory of fighting over tax and benefit changes.

The political need to support living standards and kick-start growth, which greatly outstrips the practical ideas on how these goals can be achieved, resulted in a number of contradictions that ran through today's Budget.

Changes to personal tax – billed as reducing the burden on low-to-middle-income Britain – actually result in by far the biggest gains going to those in the top half of the income distribution. A statement of vaunting ambition about the need to reform and simplify the whole of our tax and National Insurance system immediately gets submerged in a sea of tax wheezes. And the heralding of a new model of growth is fleshed out with a set of micro-measures that will be wearily familiar to anyone who has spent time in Whitehall over the past decade.

There are, naturally, things to welcome. Steady growth in apprenticeships, extra support for science, a helping hand for first-time housebuyers and taxing private jets are all to the good. The extension of mortgage interest support will prove important in a year that is going to see more and more households pushed closer to repossession due to the impending hike in interest rates. And there may be some begrudging acknowledgement from an angry public for the cut in fuel duty.

But the real measure of today's political class will be whether they can develop a compelling account of what really underpins shared growth, in which the gains are more fairly spread across the working population. Without this, all of today's tax tweaks and the associated reform rhetoric will be neither here nor there.

Gavin Kelly is the chief executive of the Resolution Foundation.

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

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How tribunal fees silenced low-paid workers: “it was more than I earned in a month”

The government was forced to scrap them after losing a Supreme Court case.

How much of a barrier were employment tribunal fees to low-paid workers? Ask Elaine Janes. “Bringing up six children, I didn’t have £20 spare. Every penny was spent on my children – £250 to me would have been a lot of money. My priorities would have been keeping a roof over my head.”

That fee – £250 – is what the government has been charging a woman who wants to challenge their employer, as Janes did, to pay them the same as men of a similar skills category. As for the £950 to pay for the actual hearing? “That’s probably more than I earned a month.”

Janes did go to a tribunal, but only because she was supported by Unison, her trade union. She has won her claim, although the final compensation is still being worked out. But it’s not just about the money. “It’s about justice, really,” she says. “I think everybody should be paid equally. I don’t see why a man who is doing the equivalent job to what I was doing should earn two to three times more than I was.” She believes that by setting a fee of £950, the government “wouldn’t have even begun to understand” how much it disempowered low-paid workers.

She has a point. The Taylor Review on working practices noted the sharp decline in tribunal cases after fees were introduced in 2013, and that the claimant could pay £1,200 upfront in fees, only to have their case dismissed on a technical point of their employment status. “We believe that this is unfair,” the report said. It added: "There can be no doubt that the introduction of fees has resulted in a significant reduction in the number of cases brought."

Now, the government has been forced to concede. On Wednesday, the Supreme Court ruled in favour of Unison’s argument that the government acted unlawfully in introducing the fees. The judges said fees were set so high, they had “a deterrent effect upon discrimination claims” and put off more genuine cases than the flimsy claims the government was trying to deter.

Shortly after the judgement, the Ministry of Justice said it would stop charging employment tribunal fees immediately and refund those who had paid. This bill could amount to £27m, according to Unison estimates. 

As for Janes, she hopes low-paid workers will feel more confident to challenge unfair work practices. “For people in the future it is good news,” she says. “It gives everybody the chance to make that claim.” 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.