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Leader: The growing consensus for a higher minimum wage

Fifteen years after its introduction, the minimum wage is an established feature of the political landscape, its abolition all but unthinkable. Should it now be increased? 

When Tony Blair first committed Labour to the introduction of a national minimum wage, the reaction from business bordered on hysteria. Higher wages, it was argued, would reduce competitiveness and destroy healthy companies. Although few economists ventured to guess exactly how many jobs would be lost, the consensus was that it would be a lot.

They were wrong. The new rules came into force in April 1999, yet unemployment rates continued to fall and – more damagingly for opponents of the policy – so did youth unemployment. Critics were reduced to claiming sheepishly that the figures would have looked even better without a minimum wage. Within a year of the policy being introduced, the Conservatives had reversed their opposition to it.

A decade and a half later, the national minimum wage is an established feature of the political landscape, its abolition all but unthinkable. The Conservative leadership, indeed, is falling over itself to support a policy it once warned would trigger economic crisis. In January, George Osborne voiced his support for an increase in the wage to £7 an hour, nearly 30 per cent higher in real terms than its value at its introduction. When Matthew Hancock, the skills minister, took to Twitter to attack Labour’s latest plans for an increase, his criticism was not that those wretched socialists were destroying British industry, but that Ed Miliband’s proposals looked tepid compared to what his own party was already offering.

Labour’s latest plan, in fairness, is both more ambitious and more complex than the one put forward by the government. Mr Miliband has declined to set a straightforward numerical target, as Mr Osborne has. Rather, a future Labour government would aim to peg the minimum wage permanently to average national earnings. Although nothing is confirmed, one oft-discussed possibility is that the minimum wage would be fixed at 60 per cent of median earnings, the standard definition of the poverty line (it stands at 54.6 per cent). It would thus become impossible to be in full-time work yet remain in statistical poverty.

To reduce the immediate impact on business, the change would be phased in over the length of a parliament. Nonetheless, it is a certainty that there will be objections to Labour’s plans. Some employees, business leaders will argue, do not generate 60 per cent of the median value: paying them more means employing them at a loss. The original minimum wage may not have resulted in corporate bankruptcies and mass job losses but this new version most assuredly will.

There are a few possible responses to such wolf-crying. One is simply to note that those executives who claim to be most concerned about bankruptcies and job losses remain remarkably reluctant to cut their own incomes to prevent them. Another is to point out that, as things stand, the government is subsidising poverty wages through the welfare system. Such a phenomenon should be an affront to taxpayers and fans of free markets alike.

More to the point, however, certain studies suggest that an increase in the minimum wage can lead to an increase in employment. This should not be surprising: while the rich can hoard an increase in their incomes, the poor are almost certain to spend it and so stimulate the economy.

Even if the doom-mongers are right, most of their predicted job losses are a few tens of thousands. Without wishing to talk down the impact on those directly affected, this is, in the national context, little more than a rounding error and in a healthy and growing economy should pass almost unnoticed. A tiny and temporary increase in unemployment may be a price worth paying for an increase in the living standards available to the majority of those on low wages.

As such, the growing political consensus that it is time for a higher minimum wage is to be welcomed. It is a rare and pleasant feeling to see the politicians engaged in a race to the top, rather than one to the bottom.

If there is a criticism to be made, it is not that the policy is unrealistic but that it is incomplete. The recent crisis of living standards is a result not simply of low wages but of high costs. And the greatest culprit by far is the exorbitant cost of housing, especially in the crowded south-east. Until the political class shows it is willing to make the tough decisions necessary to tackle that, any true increase in living standards will remain out of reach.

This article first appeared in the 21 May 2014 issue of the New Statesman, Peak Ukip

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The Prevent strategy needs a rethink, not a rebrand

A bad policy by any other name is still a bad policy.

Yesterday the Home Affairs Select Committee published its report on radicalization in the UK. While the focus of the coverage has been on its claim that social media companies like Facebook, Twitter and YouTube are “consciously failing” to combat the promotion of terrorism and extremism, it also reported on Prevent. The report rightly engages with criticism of Prevent, acknowledging how it has affected the Muslim community and calling for it to become more transparent:

“The concerns about Prevent amongst the communities most affected by it must be addressed. Otherwise it will continue to be viewed with suspicion by many, and by some as “toxic”… The government must be more transparent about what it is doing on the Prevent strategy, including by publicising its engagement activities, and providing updates on outcomes, through an easily accessible online portal.”

While this acknowledgement is good news, it is hard to see how real change will occur. As I have written previously, as Prevent has become more entrenched in British society, it has also become more secretive. For example, in August 2013, I lodged FOI requests to designated Prevent priority areas, asking for the most up-to-date Prevent funding information, including what projects received funding and details of any project engaging specifically with far-right extremism. I lodged almost identical requests between 2008 and 2009, all of which were successful. All but one of the 2013 requests were denied.

This denial is significant. Before the 2011 review, the Prevent strategy distributed money to help local authorities fight violent extremism and in doing so identified priority areas based solely on demographics. Any local authority with a Muslim population of at least five per cent was automatically given Prevent funding. The 2011 review pledged to end this. It further promised to expand Prevent to include far-right extremism and stop its use in community cohesion projects. Through these FOI requests I was trying to find out whether or not the 2011 pledges had been met. But with the blanket denial of information, I was left in the dark.

It is telling that the report’s concerns with Prevent are not new and have in fact been highlighted in several reports by the same Home Affairs Select Committee, as well as numerous reports by NGOs. But nothing has changed. In fact, the only change proposed by the report is to give Prevent a new name: Engage. But the problem was never the name. Prevent relies on the premise that terrorism and extremism are inherently connected with Islam, and until this is changed, it will continue to be at best counter-productive, and at worst, deeply discriminatory.

In his evidence to the committee, David Anderson, the independent ombudsman of terrorism legislation, has called for an independent review of the Prevent strategy. This would be a start. However, more is required. What is needed is a radical new approach to counter-terrorism and counter-extremism, one that targets all forms of extremism and that does not stigmatise or stereotype those affected.

Such an approach has been pioneered in the Danish town of Aarhus. Faced with increased numbers of youngsters leaving Aarhus for Syria, police officers made it clear that those who had travelled to Syria were welcome to come home, where they would receive help with going back to school, finding a place to live and whatever else was necessary for them to find their way back to Danish society.  Known as the ‘Aarhus model’, this approach focuses on inclusion, mentorship and non-criminalisation. It is the opposite of Prevent, which has from its very start framed British Muslims as a particularly deviant suspect community.

We need to change the narrative of counter-terrorism in the UK, but a narrative is not changed by a new title. Just as a rose by any other name would smell as sweet, a bad policy by any other name is still a bad policy. While the Home Affairs Select Committee concern about Prevent is welcomed, real action is needed. This will involve actually engaging with the Muslim community, listening to their concerns and not dismissing them as misunderstandings. It will require serious investigation of the damages caused by new Prevent statutory duty, something which the report does acknowledge as a concern.  Finally, real action on Prevent in particular, but extremism in general, will require developing a wide-ranging counter-extremism strategy that directly engages with far-right extremism. This has been notably absent from today’s report, even though far-right extremism is on the rise. After all, far-right extremists make up half of all counter-radicalization referrals in Yorkshire, and 30 per cent of the caseload in the east Midlands.

It will also require changing the way we think about those who are radicalized. The Aarhus model proves that such a change is possible. Radicalization is indeed a real problem, one imagines it will be even more so considering the country’s flagship counter-radicalization strategy remains problematic and ineffective. In the end, Prevent may be renamed a thousand times, but unless real effort is put in actually changing the strategy, it will remain toxic. 

Dr Maria Norris works at London School of Economics and Political Science. She tweets as @MariaWNorris.