In these straitened times it is very tempting to look at trying to reduce the benefits bill. A lot of attention is focussed on benefits paid to people who – for whatever reason – are out of work. However, I think we should also look at the benefits paid to people in work and whether it is right that they should be claiming benefits at all.
Fear not, this is not a proposal likely to be supported by the Daily Telegraph. It is more about attacking the principle of low pay. The coalition government – thanks to the Liberal Democrat element of it – has already made progress by increasing the level at which people start to pay income tax, meaning hundreds of thousands of people no longer pay any income tax. However, there is more we could do.
In his opinion piece, John Roffey floated the idea of reducing or even abolishing the minimum wage. But that just compounds the problem we should be tackling.
To take an example, Tesco made profits of almost £3.5 billion in their last company year. Many of their staff such as the people who stack the shelves are paid the minimum wage or a little more. They then claim benefits to bring their income up to a reasonable level.
This all means that the taxpayer is subsidising the likes of Tesco. How is that acceptable? It’s defensible for a small company just starting up but not for a large, highly profitable company.
HMRC will have the data available to calculate how much income support is paid to employees of companies like this. Surely it would be reasonable for the government to legislate so that they can then send such companies a bill for, say, 90% of the cost.
Companies will then face a choice. They can either directly increase their employees’ wages. Or they can continue to pay poverty wages and face an extra bill from HMRC later. Either way these companies will be the ones who pay what it takes for their employees to enjoy a decent standard of living.