Tories to consider raising minimum wage as in-work poverty rises

Tue, 03/09/2013 - 13:53 -- nick

The Conservative party is considering ways of raising the minimum wage, the BBC is reporting.

Options include offering tax breaks to companies that pay more than the minimum and changing the law to force all but the smallest companies to pay a higher rate.

The minimum wage now stands at £6.19 per hour for older workers and will rise to £6.31 in October.

The government has introduced a raft of measures on benefits, including real terms cuts, a cap of £26,000 on the total a family can receive, housing benefit cuts and others, with the stated aim of ensuring work always pays.

Ian Duncan Smith has also introduced the Universal Credit system joining up benefits and tax credits for the same reason, although some, particularly lone parents, are likely to be worse off.

With all the coalition's efforts concentrating on the benefits side, its policies have had the effect of raising poverty among those on the lowest incomes.

The Children's Society recently revealed that the number of children of working people living in poverty has been on the rise over the last year.

Wages for the lowest-paid half of the UK's workforce have been declining in real terms since 2003, but the pace has picked up under the current government.

Inflation is currently 2.8% while wages are only increasing by around 1% per year, meaning the problem for poor working people continues to get worse and unemployed people struggle to find work they can afford to take.

Critics have pointed out that the target of making work pay better than benefits has included nothing on the work side to date.

In fact, some benefit cuts, including to housing benefit and tax credits, have made work less lucrative.

The Labour party is likely to commit to some form of living wage legislation in its manifesto for the 2015 general election, and the Tories will be under pressure to show they understand the concerns of poorer working people.

The living wage is the amount a person needs to be able to live a reasonable basic life, and currently stands at £8.55 in London and £7.45 outside it.

Any changes may have to wait until then; opposition within the government to these changes means they are likely to be part of the 2015 offer rather than taking place within this parliament.

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