Iain Duncan Smith, the Living Wage, and THAT fist pump

By Virginia Moffatt
July 10, 2015

Within hours of Wednesday’s budget, a video was circulating round social media of Iain Duncan Smith punching the air with delight. Given that even the Daily Mail has noticed the damage the budget is going to do to the poorest,many saw that as yet another sign of the minister’s heartlessness.

But it’s not quite as simple as that. The section of the speech that received Mr Duncan Smith’s applause was in fact the part relating to George Osborne’s version of the ‘Living Wage’. And in this interview on LBC, the minister explains he was celebrating because at last low paid workers would be getting a pay rise.

The proposal to raise wages to £9 an hour by 2020 is indeed a welcome one. Indeed, it is a slightly better deal than the one put forward by Labour during the election, which was dismissed by the Conservatives at the time. However, as with so many of this government’s proposals, it falls apart on close examination.

Firstly, as the Resolution Foundation has pointed out, the calculation of a ‘Living Wage’ is £9 an hour only when you include tax credits. Without the credits, the real cost of the Living Wage will be £11.65/hr. Secondly, the rise won’t come in for five years, long after tax credits have been reduced. Thirdly, though I am a massive supporter of the Living Wage, I do recognise it is particularly hard for small businesses working on tight margins to implement it. It remains to be seen what the impact will be in the small business sector. It is also unclear whether public sector workers will benefit, as they continue to have pay rises frozen at one per cent for the next four years. And we know that all workers under 25, who may be young parents, will be excluded from the Living Wage.

So while the Minister’s bullish celebrations may not have been as cold and unfeeling as some believed, they certainly seem to be premature. As always, the frustration with Iain Duncan Smith, is that he genuinely believes he is doing the right thing, despite all the overwhelming evidence to the contrary. And this massive self belief has led to a situation where many in the media never questions his assumptions.

It was for this reason that Catholics wrote to him last week, requesting a meeting to discuss alternative methods of achieving his aims. And the reason that today we sent a polite prompt, reminding him of the request.

We’ll let you know if we receive a response.

* Full 2015 budget coverage and commentary from Ekklesia at: http://www.ekklesia.co.uk/budget2015

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© Virginia Moffatt is the Chief Operating Officer of Ekklesia.

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