A column in the Times yesterday by Rachel Sylvester suggested that senior Conservatives are pushing for an above-inflation rise in the National Minimum Wage (a move also suggested by Ed Miliband). MPs Oliver Letwin, Matt Hancock and Robert Halfon, plus think-tanks the Policy Exchange and Bright Blue are said to be keen, with George Osborne also persuaded of its political as well as economic merits. Increasing low wages fits the party’s core narrative of making work pay. It also chimes with an emerging argument that continuing to subsidise employers through in-work benefits is unsustainable (see Hancock’s speech to the Resolution Foundation last year as well as the DWP quote in today’s piece).
It seems obvious that raising the minimum wage (like increasing take up of the Living Wage) would reduce in-work poverty by increasing overall household incomes. But it is worth pausing for a minute to assess exactly how much we should expect such policies to achieve; and what else is needed to tackle very high levels of in-work poverty.
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