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Employment

Bring in £15 minimum wage to level up the North of England, says think-tank

The research claims to do the maths to calculate that a £15 minimum wage would be affordable for both the government, and small and large businesses alike

Critics of the policy say that a £15 minimum wage would be unaffordable for small businesses. Image: Ewien van Bergeijk - Kwant / Unsplash

The government should raise the national minimum wage to £15 per hour by 2024 to decrease regional inequalities and level up the north of England, a think-tank has argued.

Research conducted by the Progressive Economy Forum (PEF) found that a £15 minimum wage would also save the government £4.2bn on benefits payments that top up the wages of people on low-incomes, allowing it to cut taxes on small businesses, and raise an extra £30bn in taxes.

Positioned as a “a strong ‘levelling up’ measure” the think-tank found that while 33 per cent of employees in London would benefit from the wage increase, 51 per cent of employees in the north of England would be better off. Across the country, 14 million people would see their pay increase under the proposals. 

Co-author of the report James Meadway argued that a £15 minimum wage by 2024 would make up for a “lost decade” of stagnating wages.

“Despite living in one of the richest countries on the planet, too little of Britain’s wealth goes to its workers. This research shows that a £15 an hour minimum wage is affordable and would be a huge boost for millions at a time of rapidly rising prices,” he said. 

The research argues that lowering National Insurance Contributions for small businesses would reduce their tax burden and compensate for the increase to the cost of wages. For larger businesses, it finds “there is significant ‘slack’ available on their balance sheets to absorb increased labour costs.”

However critics of the policy have argued that with around half of the entire workforce of the UK currently earning less than £15 per hour, it could impact on motivations to get jobs which require higher levels of training, skill or stress.

“Fifteen pounds an hour is probably more than what many nurses are paid, and they’ve gone through three years of training. If you suddenly say that any job pays £15 an hour, why is anyone going to train as a nurse?…It’s risky in the sense that just because it sounds good, that doesn’t necessarily mean it’s going to be good in practice,” Alan Manning, professor of Economics at the London School of Economics, told the Big Issue last year. 

Labour party members voted unanimously for a £15 minimum wage at the party’s annual conference in Brighton last September. The day before, former shadow cabinet member Andy McDonald quit claiming he was instructed to argue against the wage policy. 

Rising inflation has caused real wages to fall by an average of £68 a month since last year, figures released by the Office for National Statistics have revealed. 

A host of Labour MPs have given their support for the case for a £15 minimum wage. Zarah Sultana MP said: “Energy bills are soaring, food prices are rocketing, but wages are standing still. The national minimum wage simply isn’t enough and more and more people are facing poverty pay. 

“The Tories like to talk about ‘levelling-up’, but a £15 an hour national minimum wage by 2024 would actually do it.”

The national wage will eventually reach £15, says think-tank The Resolution Foundation, however it is not an “an economically viable policy in the short-to-medium term.”

The think-tank has estimated that if the national minimum wage were to increase yearly by 4 per cent – a fairly typical rate of increase for the minimum wage – it would reach £15 per hour by the mid-2030s.

The national minimum wage for people aged 23 and above, called the national living wage by the government, is currently £9.50 per hour.

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