To promote the living wage, we need to reform the tax system

We must end the absurdity of companies being financially penalised for becoming living wage employers.

The living wage is one of the few policies that garners consensus across the political spectrum. Which politician would be crazy enough to speak against the idea of companies paying their low-paid employees enough to live on? Cue Ed Miliband and Boris Johnson giving speeches today to mark the start of Living Wage Week – with David Cameron not letting the fact that he’s in the Middle East prevent him from pitching into the debate.

Yet when it comes to what supporting a living wage actually means, the differences begin to show. The to-ing and fro-ing between the Labour Party and No 10 today highlight the slippery nature of an idea that is – since no politicians are advocating a statutory living wage – in essence about businesses doing the right thing.

Cameron and Johnson – if their contributions today are anything to go by – stand for business voluntarism in its purest sense. Politicians should stand alongside campaigning organisations like London Citizens in imploring businesses to pay a living wage, but there the buck stops. This ignores the fact that early living wage adopters have tended to be City corporations with a very low proportion of low-paid staff – for whom the costs of becoming a living wage employer are relatively low – and values-driven public sector organisations (of which Boris Johnson’s Greater London Authority is not yet one). The idea that a moral campaign led by civil society and government can by itself shift working conditions for millions in the low-paid, low-skill service sector remains a distant prospect.

Ed Miliband recognised this today by floating the idea that the tax system should reward those companies that become living wage employers. This is an idea that merits serious consideration. The idea that we would financially penalise companies for doing the right thing – for using green energy, for investing in R&D, or for supporting local communities, seems ridiculously self-defeating.

Yet when it comes to the living wage, that is exactly what we do. The IFS estimated back in 2010 that the annual cost to the taxpayer of employers paying below the living wage – in terms of tax credits, benefits and foregone tax – is approximately £6bn. Yet we financially penalise companies taking the decision to become living wage employers. An employer would face an extra bill of £570 a year in employer national insurance contributions (NICs) as a result of moving a full-time employee from the minimum to the living wage. This is despite the fact that the cost to the Treasury of employers paying below living wage is around £1,000 per employee. The tax system effectively charges employers to do something that not only is the right thing to do, but which saves the Treasury a substantial amount of money.

A good way to address this anomaly would be to take the disincentive to pay the living wage out of the system – by introducing a new, flat-rate employer national insurance contribution for employees earning below living wage. This would be set at the same level for a full-time employee actually on the living wage, paid pro-rata for part-time employees. The Treasury could recycle the extra revenue this generates through targeted NICs holidays for small businesses taking on new employees.

Of course, the tax bill is only one of a number of factors companies take into account when making decisions about how much to pay their employees. But if the energy invested by business lobby groups into making the case for lower national insurance is anything to go by, it is something that weighs heavily on the minds of employers, particularly in these straitened times.

Politicians are wary of legislating for the living wage, and they are right to be so: the effects of a big increase in the statutory minimum wage for unemployment are untested. But the Tory approach of just asking nicely won’t bring about the change we need. The Labour party is right that we need government to be much more creative in terms of how it encourages employers to pay the living wage. A reform of employer national insurance contributions for low-paid employees would be one pragmatic way of doing so.

Sonia Sodha is a former senior policy adviser to Ed Miliband. She writes in a personal capacity. She tweets @soniasodha.

Labour Party leader Ed Miliband addresses workers at Islington Town Hall. Photograph: Getty Images.

Sonia Sodha is head of policy and strategy at the Social Research Unit and a former senior policy adviser to Ed Miliband. She tweets @soniasodha.

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When it comes to the "Statin Wars", it's the patients I pity

Underlying the Statin Wars are two different world-views: the technological and holistic.

September saw the latest salvos in what has become known in medical circles as the Statin Wars. The struggle is being waged most publicly in the pages of Britain’s two leading medical journals. In the red corner is the British Medical Journal, which in 2014 published two papers highly critical of statins, arguing that they cause far more side effects than supposed and pointing out that, although they do produce a modest reduction in risk of cardiovascular disease, they don’t make much difference to overall mortality (you may avoid a heart attack, only to succumb to something else).

In the blue corner is the Lancet, which has long been the publishing platform for the Cholesterol Treatment Trialists’ (CTT) Collaboration, a group of academics whose careers have been spent defining and expounding the benefits of statins. The CTT was infuriated by the BMJ papers, and attempted to force the journal to retract them. When that failed, they set about a systematic review of the entire statin literature. Their 30-page paper appeared in the Lancet last month, and was widely press-released as being the final word on the subject.

A summary would be: statins do lots of good and virtually no harm, and there really is no need for anyone to fuss about prescribing or taking them. In addition, the Lancet couldn’t resist a pop at the BMJ, which it asserts acted irresponsibly in publishing the sceptical papers two years ago.

Where does all this leave the average patient, trying to weigh up the usefulness or otherwise of these drugs? And what about the jobbing doctor, trying to give advice? The view from no-man’s-land goes something like this. If you’ve had a heart attack or stroke, or if you suffer from angina or other conditions arising from furred-up arteries, then you should consider taking a statin. They’re not the miracle pill their proponents crack them up to be, but they do tip the odds a little in your favour. Equally, if you try them and suffer debilitating side effects (many people do), don’t stress about stopping them. There are lots more effective things you could be doing – a brisk daily walk effects a greater risk reduction than any cholesterol-lowering pill.

What of the millions of healthy people currently prescribed statins because they have been deemed to be “at risk” of future heart disease? This is where it gets decidedly murky. The published evidence, with its focus on cardiovascular outcomes alone, overstates the case. In healthy people, statins don’t make any appreciable difference to overall survival and they cause substantially more ill-effects than the literature suggests. No one should be prescribed them without a frank discussion of these drawbacks, and they should never be taken in lieu of making lifestyle changes. Smoking cessation, a healthy diet, regular modest exercise, and keeping trim, are all far more important determinants of long-term health.

Underlying the Statin Wars are two different world-views. One is technological: we can rely on drugs to prevent future health problems. This perspective suffers substantial bias from vested interests – there’s a heck of a lot of money to be made if millions of people are put on to medication, and those who stand to profit make huge sums available to pay for research that happens to advance their cause.

The other world-view is holistic: we can take care of ourselves better simply by living well, and the fetishising of pharmaceutical solutions negates this message. I have great sympathy with this perspective. It certainly chimes with the beliefs of many patients, very few of whom welcome the prospect of taking drugs indefinitely.

Yet the sad truth is that, irrespective of our lifestyles, we will all of us one day run into some kind of trouble, and having medical treatments to help – however imperfectly – is one of mankind’s greatest achievements. In arguing for a greater emphasis on lifestyle medicine, we must be careful not to swing the pendulum too far the other way.

Phil Whitaker’s latest novel is “Sister Sebastian’s Library” (Salt)

This article first appeared in the 20 October 2016 issue of the New Statesman, Brothers in blood