Croydon Central MP responds to Living Wage criticism

By - Thursday 19th November, 2015

Croydon Central MP Gavin Barwell responds to Cllr Jamie Audsley’s article on winning “the REAL Living Wage!”

Photo public domain.

I read Cllr Jamie Audsley’s article about the living wage with interest. I share his passion to end poverty pay in Croydon – and not just in Croydon, throughout our country. However, I found his article both partisan and over-simplistic.

Let’s deal with the accusation of partisanship first. Despite Jamie’s passion for ending poverty pay, he is dismissive of the government’s flagship National Living Wage. He says that even in 2020 it will still be “well below” the current level of the London Living Wage”. If I were a pedant, I would question whether £9.35 an hour (what the National Living Wage is predicted to be in 2020) is “well below” £9.40 an hour (the current London Living Wage). But his underlying point – that the National Living Wage is and will continue to be lower than the London Living Wage – is true and a fair criticism of the government’s policy.

The National Living Wage is, however, undeniably a significant improvement not just on the current National Minimum Wage of £6.70 an hour, but on the National Minimum Wage of £8 an hour by 2020 that Jamie’s party were promising at the recent general election. By 2020, someone who is currently working full time on the National Minimum Wage will see their salary increase by £5,200 a year. 2.75 million people will benefit directly and it is estimated that a further 3.25 million people will benefit indirectly as employers are forced to increase wages to maintain differentials. Surely that’s something that someone who claims to care about poverty pay should welcome, even if like they’d like the government to go further?

This assumption may seem eminently plausible at first sight, but that doesn’t make it true

What’s more worrying than Jamie’s perhaps inevitable partisanship, however, is the false assumption which permeates his article, namely that the poorest working households are those whose members are receiving poverty pay and that the living wage will therefore help those households, creating a more equal society.

This may seem eminently plausible at first sight, but that doesn’t make it true. According to the independent Office for Budget Responsibility:

Although the National Living Wage boosts individuals’ earnings towards the lower end of the individual income distribution, it is expected to have a more even effect on the distribution of household incomes since many workers on the National Living Wage will be households’ second earners. Indeed, around half the cash gains in household income may accrue to the top half of the household income distribution.

If you’re interested, you can read the analysis for yourself in paragraphs B27 to B30 on pages 207-208 of this document.

The poorest working households will tend to be those where a) only one person works b) that person works part-time and c) that person receives a low hourly rate of pay.

It follows that a strategy to build a more equal Croydon and indeed a more equal Britain would need to involve:

  • having a growing economy that creates lots of jobs so that there is full-time work for everyone who wants it;
  • help with childcare for working parents so that both parents in two-parent households can work;
  • a welfare system that incentivises people to work full-time rather than for just a few hours a week;
  • lower income taxes for those on low incomes; and
  • action to tackle low pay, both by forcing employers to pay a living wage and by improving people’s skills so that they can command a higher wage without government intervention.

The government of which I am proud to be a member is taking action on all these fronts.

Jamie recounts how when he was a new teacher in Croydon eight years ago he could see the damage inequality was doing and “wanted to scream at everyone, ‘This simply isn’t fair, this is so wrong, do something about it!’”. It’s great that he has a passion to tackle inequality, but politicians also need the ability to analyse what drives inequality if the policies that they put forward are to solve it.

Gavin Barwell

Gavin Barwell

Gavin was elected as a Conservative Member of Parliament for Croydon Central in 2010. He has lived in Croydon all his life and has set up a number of volunteer projects, including a group who help to keep parks and open spaces clean, a Job Club and a group of teenagers who do regular community work to improve the town and in the process change some people's perceptions of our young people. He has won wide praise for his response to the Croydon riots (Asian Voice voted him Conservative Backbencher of the Year for 2011) and for his campaign to strengthen the law in relation to drug driving after the tragic death of his constituent Lillian Groves (The Sun named him MP of the week twice). Gavin's Private Members Bill to tackle discrimination against those with mental health conditions became law in April 2013.

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