Fact Service October 2019

Issue 41

Javid's jam tomorrow on living wage

Chancellor Sajid Javid announced at the Conservative Party conference that he would increase the National Living Wage to £10.50 an hour. He also said he would expand the reach of the mandatory minimum wage to cover all workers over the age of 21, down from the present 25.

However, it will take until 2024 to achieve the £10.50 rate, so don’t hold your breath. Given that the present rate is £8.21 an hour, it would require an increase of 27.9% over five years to achieve the new rate. for those already aged over 25.

A previous Tory chancellor made similar claims. In his first Budget after the 2015 general election win, chancellor George Osborne told parliament of the introduction of the National Living Wage and that “we’ve set it to reach £9 an hour by 2020”.

Well, that’s unlikely to be achieved unless the Low Pay Commission, which makes recommendation on the National Living Wage, suggests a 9.6% rise on the present £8.21 an hour. Or Javid overrules its recommendation by giving the 9.6% rise next April. 

And then of course there is Brexit. TUC general secretary Frances O’Grady said: “The chancellor’s pre-election promise should be taken with a huge bucket of salt. This pledge would be overwhelmed by a no-deal Brexit. If we leave the EU without a deal, jobs will be lost, wages will fall, and our public services will suffer.”