Credit: William Warby/Flickr

The minimum wage is set to be raised to £6.70

But will the Government take heed of the Low Pay Commission?

by Jack Torrance
Last Updated: 24 Mar 2015

How much should the lowest paid receive for the fruits of their labour? Yesterday the Low Pay Commission, the Government body tasked with assessing the appropriate level of the minimum wage, recommended that it be increased by 3% to £6.70 in October. It’s news that’s been welcomed by business groups, but there are signs that they’re worried about George Osborne taking things a bit further in a pre-election budget fiesta.

The chancellor has previously implied that it could be higher, saying last year, ‘If the minimum wage had kept in line with inflation it would be £7 [by October 2015]. Because we’re fixing the economy, because we’re working through our plan, I believe Britain can afford above-inflation increases in the minimum wage and make sure we have a recovery for all and that work pays.’

The Resolution Foundation think tank pointed out that reaching £7 by October would mean a 7.7% boost, the biggest nominal increase since 2004. But CBI deputy director-general Katja Hall warned, ‘Any artificial increase due to political expediency will help no-one and ultimately damage one of the most successful government policies in recent years.’

The announcement came on the same day as the Government chose to ‘name and shame’ another 70 companies for falling to pay the minimum wage. The claims range from the relatively benign (‘General Tarleton Ltd, Knaresborough, neglected to pay £300.62 to 6 workers'), to the breathtaking (‘Delcom Systems Ltd, Salisbury neglected to pay £11,731.52 to a worker’). In total the 70 named companies owed more than £157,000 to workers, but were fined just £57,000 on top of that.

The Government's statement implied that social care providers were particularly bad offenders. ‘We know the 100 care companies being investigated are just the tip of the iceberg in the care sector and are absolutely committed to getting back the wages people have worked so hard for,’ said care minister Norman Lamb. ‘We will continue to name, shame and fine these employers until every care provider gets the message.’

Of course the Government's incentive for enforcing and raising the minimum wage isn't purely just an electoral one. As MT founder and former deputy PM Lord Heseltine pointed out in December, it would save the taxpayer money, as less would be spent on in-work benefits. As he looks for ways to improve the deficit, Osborne might be tempted to go further than 3%.

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