James Katz

Naked Politics Blogger

In his keynote speech to the Labour Conference in Liverpool this week, John McDonnell, Shadow Chancellor of the Exchequer and Jeremy Corbyn’s closest ally, promised to write into law a “real living wage”. He said that this would more than likely mean a new minimum wage of over £10 an hour by 2020.

As someone who has earned the minimum wage for much of my short working life so far and as a member of the Labour Party and a committed social democrat, this is just the policy that should appeal to me and hundreds of thousands, even millions of people like me. However, it is precisely the type of policy that is why Labour and the Corbyn project are floundering so desperately at present.

Everybody wants to see the minimum wage as high as possible, everyone wants to see those who do crucial jobs paid a decent and dignified wage, enough to not only survive on but thrive on; enough to support their families, invest in their futures and create a better life. Yet, poorly thought through and overly simplistic approaches like this are not the answer. Policies like McDonnell is presenting is a sure fire way to achieve one of two things: economic catastrophe or electoral oblivion.

If he wanted lowest earners to earn more then why stop a £10? He could just as easily say £15 or, lets live a little, £25 an hour or. Lets through away the rule-book all together and pay everyone £100 an hour. Why does this not happen? It is because employers cannot afford to pay those kinds of wages.

George Osborne introduced the ‘living wage’ in his 2015 Budget, which is due to rise to around £9 an hour in 2020, but the Tories have already received criticism from small and medium sized business owners as they believe this is unaffordable. The result of this could be lay-offs and rising unemployment, products and services becoming more expensive, which could lead to high inflation or the pushing out of small businesses in place of even greater dominance by large corporations who enjoy better margins. None of these options should be welcome, especially by social democrats like my fellow Labour Party members and I.

I believe the minimum wage should be higher than it is (and also extended to under-25s which it is currently not, a shameful decision by the previous government) but I believe that good sound bites like “£10 an hour for all” is not the way to achieve this. You need more nuanced, perceptive ways of increasing living standards for the worse off. This was the idea of working tax credits, introduced under the last Labour Government and what caused such controversy when the Conservatives tried to abolish them recently.

Indeed the Tories, by presenting the increased minimum wage, presented an opportunity for Labour. They could have said something along the lines of we want to find a way to pay people more and support small businesses people who may struggle to pay it – a group of people which Labour should strive to speak for. Instead McDonnell has played to those that have just re-elected his mate Jeremy by announcing a policy that sounds redistributive and generous but may well be ill conceived and potentially damaging.

Speaking to Corbyn voters and not the country is why Labour is in the position it is and unless this starts to change a wipeout of the Party in Westminster seems depressingly inevitable. The only casualties of that would be the people who need Labour most of all: normal, hard-working people.

I want to see those who are most vulnerable in our society better off just as much as the next person. I am not clever enough to say what is the best way to achieve this, but worryingly it appears John McDonnell isn’t either.

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Last Update: April 28, 2018