George Osborne looks on as David Cameron delivers a speech to business leaders in Manchester. Photograph: Getty Images.
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Osborne falls far short of £7 minimum wage target

The proposed figure of £6.70 fails to meet the Chancellor's aim of restoring the minimum wage to its pre-recession value. 

In a characteristically calculated intervention last year, George Osborne sought to compensate for the Tories' past opposition to the minimum wage by declaring that he hoped the main rate would rise to £7 by 2015-16. "If, for example, the minimum wage had kept pace with inflation it would be £7 by 2015-16, £6.31 at the moment, so that is an increase," he said, with an eye to his party's blue collar wing. "I think we can see an above inflation increase in the minimum wage and do it in a way that actually supports our economy precisely because the economy is recovering and many, many jobs are being created." The Treasury published an accompanying analysis modelling the impact of an increase to £7, lending further weight to the figure (which at the time would have restored the minimum wage to its pre-recession value). 

But it is now clear that Osborne was raising false hopes. The Low Pay Commission, the body that advises the government on the minimum wage, has today published its recommendations for 2015-16 - and they do not include an increase to £7. Instead, the LPC has called for a smaller rise to £6.70 (up from £6.50). The government is not obliged to accept its proposals but Vince Cable, who is formally responsible for this area as Business Secretary, has signalled that ministers will almost certainly not oppose the figure. He said: "I will now study these recommendations and consult my Cabinet colleagues with a view to announcing the final rates in the next few weeks. The Low Pay Commission strike a delicate balance between what is fair for workers and what is affordable for employers, without costing jobs. It does so impartially and without political interference. No government has ever rejected the main rates since it was established fifteen years ago. It is important that it is able to continue to do its work ten weeks before a general election."

Cable is known to have been angered when Osborne floated the figure of £7, believing that the LPC would never approve such a large rise. Indeed, Osborne pre-emptively retreated when the government failed to propose this rate in its final submission to the body. The Chancellor can point out that he maintained at the time that 'the exact figure has to be set by the Low Pay Commission'. But that does not alter the fact that he sought (and won) headlines on his support for a £7 rate. Through this careless act, he has handed Labour political ammunition with which to attack him and ensured that a 20p rise (3 per cent above inflation) will now disappoint expectations. 

Although inflation has fallen significantly, a rate of £6.77 would still fail to restore the minimum wage to its peak value. As the Resolution Foundation noted: "The minimum wage is set to rise by 3 per cent in October 2015, roughly the same percentage by which it rose in October 2014. Last year, the Low Pay Commission described its decision to recommend a 3 per cent increase last year – rising from £6.31 to £6.50 – as reflecting “a new phase” for the minimum wage, following a period in which it had suffered repeated falls relative to inflation. But that lost ground has yet to be fully made up. The Resolution Foundation estimates that an increase of 4.2 per cent to £6.77 would have been necessary to take the minimum wage back to its highest ever value in real-terms, which it held in 2008-09."

To be on track to meet Labour's promise of an £8 minimum wage by the end of the next parliament, the rate would need to rise to £6.78. That means the opposition faces some tough questions of its own: would it have become the first government to overrule the LPC? 

George Eaton is political editor of the New Statesman.

Photo: Justin Tallis/Getty Images
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What does our latest poll mean for the Labour leadership race?

Jeremy Corbyn is ahead among councillors - and looks ever more certain to become Labour's next leader. 

This morning the Labour History Research Unit at Anglia Ruskin University released its last set of polling data of Labour councillors in marginal constituencies’ prior to the election of the new leader.

It’s certainly a limited enough snapshot but in broad terms the data suggests four things. Firstly, that Jeremy Corbyn will win the leadership. Perhaps no great shock there at this point. But Corbyn’s slight lead in our poll of only two points or under above Yvette Cooper and Andy Burnham masks the fact that he has picked up over 11 per cent of councillors since June - whilst all other candidates have lost support here. Given his reputation as a centraliser, it is remarkable that Corbyn is also neck and neck with Andy Burnham as the candidate councillors believe ‘would be best for local government.’ If he’s just about won over this tough crowd it may indeed be game over.

Secondly, the £3 registered supporter experiment is viewed as a damaging one by many within the party. With almost six in ten councillors thinking it should be ‘scrapped ahead of any future contest’ compared to just over one in four seeing it as a positive, there may well be clamour to reform this model going forward. Whether Corbyn will want to challenge the legitimacy of a reasonable proportion of his backers is one thing, but he would likely have some support in doing so if others were to press the issue.

Thirdly, on whatever mandate Corbyn is elected the good news for him is that key councillors clearly back Corbynomics. His plan to create a regulated and publicly-run service to deliver energy supplies is backed by 78 per cent of councillors who either “strongly agree” or “agree” with the policy, while 77 per cent support nationalising the railway network as soon as practicable. Introducing a 50p top rate of income tax is backed by 79 per cent of councillors, while 73 per cent agree with a “mansion tax” on homes worth over £2million. Most of those individually poll well amongst the electorate, though the 75 per cent of councillors who think scrapping tuition fees would aid the Labour vote in their constituency are out of kilter with the only one in six members of the general public who support that measure.

But lastly, perhaps most crucially, the rub is that less than two in ten councillors surveyed think Jeremy Corbyn will win the 2020 General Election. Even amongst councillors pledging to vote for Corbyn that figure tops out at six in ten.

Our data aside, Corbyn’s medium term challenge will clearly be enormous, as they would be for any new leader. For one, Labour’s current core vote just doesn’t turnout in enough numbers – not only in terms of voting for Labour, but at all. In 2010 and 2015 Labour’s most successful demographics were the semi-/low skilled working class (40 per cent to 31 per cent over the Tories in 2010, 41 per cent to 27 per cent in 2015) and ethnic minorities (60 per cent to 16 per cent in 2010, 65 per cent to 23 per cent in 2015). Turnout for both these groups is at least one in ten less than the national average, and barely bobs over one voter in two generally.  

Instead, in 2015 the most likely people to vote were men over the age of 55 (79 per cent), the middle class (75 per cent), or property owners (77 per cent). And so Jon Cruddas’ reviews’ conclusion that Labour has fallen behind on the average Prospector vote – those who ‘vote pragmatically for whichever party they think will improve their financial circumstances’ – has much resonance. The grey middle class might not be the sexiest of demographics, but they often decide elections. Miliband may have gained 12 per cent more 18-24 year olds (turnout 43 per cent) in 2015 than five years earlier, but the fact that he managed to do 8 per cent worse than Gordon Brown’s 2010 performance with the crucial over 65s (turnout 78 per cent) put the final chisel in the Edstone.

Perhaps if you give young voters a “radical alternative” they really will turn out – though worth recording that turnout amongst under 25s at the ‘real choice’ election of 1979 was the lowest either side of the majority Labour governments of 1966 and 1997 – but there are no guarantees. All this is a challenge for Labour per se however, not just Corbyn.

For the bookies’ favourite himself there are some specific complications. Big ticket policies like People’s Quantitative Easing have been queried by fellow leadership candidates (to declare an interest, while I am a Kendallite, I wrote a report arguing for a much truncated, one-off form of People’s QE in 2012), though it is just about backed by councillors in our survey. Corbyn’s foreign policy choices of threatening to leave NATO (rejected by two thirds of councillors) and scrapping Trident (rejected by a third) are also likely to be controversial. And the sum total of a left leaning agenda – as Ed Miliband discovered – is often less than its constituent parts. If Jeremy Corbyn is going to become the first opposition leader since 1906 to gain a full parliamentary majority whilst pledging to raise the top rate of income tax, he’s got a lot of work to do.

But our survey suggests that he’ll get the time to do it. If our data suggests Corbyn is at present unlikely to be Prime Minister, for all the talk of an early coup against him, he looks in a strong position to at least contest that election. And that remains an astonishing rise.

Richard Carr is a Lecturer in History at the Labour History Research Unit (LHRU), Anglia Ruskin University. The LHRU has today released new polling data on the Labour leadership. The views expressed in this article are not necessarily those of the LHRU, the kind councillors of all parties who took time to answer the survey, or Anglia Ruskin University.

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