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1 April 2016

George Osborne’s living wage is nothing of the kind

The wage rise, while welcome, won't make up for the Conservatives' wider failures.

By Angela Eagle

Today sees the introduction of the National Living Wage. Labour whole-heartedly welcomes any move to boost pay for working people on low wages. But there are two big problems.

First, the so-called ‘National Living Wage’ is nothing of the sort. It is £1 lower than the real living wage which is calculated by the independent Living Wage Foundation based on the cost of living. It is over £2 lower than the living wage in London. A nursery assistant working full time on the National Living Wage in Liverpool will earn £2,184 a year below the real living wage; a cleaner in London on the National Living Wage will earn over £4,500 a year below the real living wage.

Second, whilst the increase in the minimum wage is welcome, it will not come close to making up for savage cuts in support for working families on low pay. Last year we forced the Tory government into a humiliating U-turn on tax credit cuts. But they are planning another raid on the in-work benefits that make work pay and reduce poverty. As a result of planned cuts to universal credit and tax credits, two million working families will lose an average of £1,600 a year; far more than they would gain as a result of the National Living Wage. While the Tories are slashing support to poor working families, they’re cutting capital gains tax for the wealthiest. That tells you everything you need to know about their priorities.

The Tory government have utterly failed to tackle low pay. Working people have suffered the longest squeeze on incomes in well over a century. Average wages remain one per cent lower in real terms than they were when the Tories came to power and a staggering six million people still earn below the living wage. Two in three children growing up in poverty now live in a working household. This just isn’t good enough.

Working people have suffered six long years of Tory failure on wages and things are not getting better fast. In his omnishambles budget a couple of weeks ago, George Osborne was forced to revise down wage growth projections for last year, this year and the next four years. Growth and productivity were revised down too. Only one thing was revised up; borrowing. The Chancellor now plans to borrow £38.5 billion more than he had planned just four short months ago. This is a discredited Chancellor, with a failing economic plan, who is letting down working people.

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Labour have a proud record of tackling low pay. We introduced the national minimum wage in the face of fierce opposition from the Tories. We introduced tax credits which helped make work pay for millions of families.

Working people will not be fooled by the Chancellor’s empty spin and rhetoric. They know that while he is giving with one hand, he is taking away far more with the other. We need real action to boost pay. This means addressing the growing productivity crisis, boosting growth, and ensuring that working people get their fair share.

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