Osborne’s living wage is just a glorified minimum wage

George Osborne Speaks

The chancellor may have announced a ‘living wage’ for those over 25, but it falls short of the recommended living wage.

George Osborne, the UK chancellor, has announced a surprise mandatory living wage for those over 25 from next year, but the ‘living wage’ being advocated is lower than the living wage recommended by the Living Wage Foundation.

Osborne’s living wage will begin at £7.20 from next April and is set to increase to £9 an hour by the start of the next decade, according to the BBC.

However, the Living Wage Foundation calculates that the current living wage is £7.85 outside London and will likely be even higher next year, showing a big difference between what is being implemented and what is being recommended.

The £7.20 figure would have been appropriate four years ago when the Foundation suggested that £7.20 was the living wage back then.

According to the Foundation, the NLW is calculated by the Centre For Research In Social Policy.

For more information on the budget click here (link to BBC: budget at a glance).

Analysis:

Overall, the fact that potentially millions of people will benefit from this increase is great news for many individuals. In that respect the Chancellor has helped tackle some low pay issues and for many it might negate benefit cuts to come.

But the fact that the proposed living wage is lower than the recommended one is still significant and shows that those fighting for a living wage still have some fighting left to do.

However, the chancellor has received some unlikely praise from Green Party leader, Natalie Bennett, who said that:

"The move towards a living wage standard as a minimum wage is welcome - and reflects a long-term Green Party campaign - but the tax credit and other benefit cuts are going to leave many struggling families close to or over the edge of financial disaster. And the living wage not applying to the under 25s, many of whom also won't be eligible for housing benefit, will leave many in impossible situations.”

There are of course criticism from the Greens, but she does say the living wage is welcome.

Labour on the other hand have pointed out (via Labour Press Twitter) that :

“Lone parent with 2 kids working 16hrs a week at NMW gains just over £400 from living wage but loses £860 from tax credit changes in 2016/17.”

The living wage announcement was a surprise, but for many it will be a welcome one. Labour have pointed out some people will lose out, but because of the increase this will be a budget that will be remembered.

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