30 September 2019

Sajid Javid’s minimum wage increase is good policy, but risky politics

There may be trouble if the Conservatives go to the country saying they've ended austerity when no one feels as though they have.

By Stephen Bush

Chancellor Sajid Javid delivering his speech at the Conservative Party conference in Manchester. (Photo By Getty Images)

Applause lines for old rope? Sajid Javid has announced that the national minimum wage will rise to £10.50 by 2024. In reality, assuming that overall earnings growth continues, that’s simply in line with George Osborne’s policy — continued by Philip Hammond — of seeking to get the minimum wage to more than 60 per cent of median earnings (it would reach 66 per cent).

The actually “new” bit was a sensible bit of housekeeping — reducing the floor for the higher minimum wage to age 21, from 25. As the minimum wage increases, the large gap between that for the under-25s and everyone else was both unfair to those aged 21-25, and incentivised unscrupulous employers to prune their workforce of the over 25s.

While the median earnings target is not a living wage and shouldn’t be described as such, it is a good policy that has increased earnings. But the spin around it feels like an example of what seems to me to be a big risk about the Conservative Party’s messaging, both at this conference and more broadly; which is that it risks sounding a lot like Marie Antoinette in an election campaign.

The thing about announcing a whole lot of infrastructure spending, or money for the NHS, or a minimum wage increase, is that it isn’t like popping to the shops to buy some cornflakes: there is a lead time between the two. What would worry me, were I in CCHQ, is that in a December general election, the Labour Party will effectively be running on an “isn’t life tough under the Tories?” ticket while the Conservatives will be talking up spending that hasn’t been felt or seen yet, and that might come across as if they are campaigning from another world.

It sums up the difficulty of the political situation Boris Johnson inherited (and to be fair, helped to create) from Theresa May and the economic situation he inherited from Osborne. It makes political sense, I think, to do what they’re trying to do and go into an election having U-turned on the cuts. But the parliamentary situation means that they are going to have to go to the country before those U-turns have actually been felt in the real world — and it’s not certain that they can weather having abandoned the rhetoric of austerity but not having yet moved away from the reality of it.