A fairer share for all – Part Four – Improving working life and skills and investing in local services

This is the fourth and final part of my looking at the consultation paper, A Fairer Share for All. In part three I have set out my thoughts on the work allowance thresholds.

Turning to minimum wages, I believe we need to have regional minimum wages set at 70% of each region’s medium earnings. In 2020 the National Living Wage will be 60% of medium earnings. I believe that it would take about 7 years to increase the regional rates to 70% as some may have to start below 60%.

We should have a policy of providing free training or a guaranteed job to everyone who has been unemployed for more than 6 months. This should be voluntary. The training should be in an area where there are unfilled jobs within a reasonable travelling distance of the claimant. The guaranteed job should be so that the person keeps their skills up to date and not just to give them a job to do.

The paper states, “A 2016 government estimate that 51% of rural households do not have access to a bus route, compared with 4% of urban dwellers. At the same time, 30% of bus journeys outside London are undertaken by those with elderly or concessionary passes”. It also says that “it is now vital to ensure that traditional bus and rail links within and between our smaller towns and rural areas are properly funded to enable everyone to access services and employment opportunities”. However, the paper doesn’t set out that we should increase funding to local government so they can run rural bus services or that we should provide more rail links between towns. It doesn’t even say we should be building better rail links across northern England between Lancashire and Yorkshire.

Philip Alston the UN Special Rapporteur on extreme poverty and human rights reported that since 2011 “local governments in England have seen a 49% real-terms reduction in Government funding” and he recommends that Government “should ensure local governments have the funds needed to tackle poverty at the community level”. The consultation paper is silent on this need for more funding for local government. We should not be silent, we need to restore the cuts to the funding of local government which they have faced since 2011.

The working group seems to want to scrap our policy to increase the threshold for employee National Insurance Contribution to the same level as the Income Tax Personal Allowance. They state, “on balance the Group is inclined to the view that this is an expensive and badly targeted way to help the least well off in society: increasing the threshold would give the greatest benefit to those in higher income brackets. As such, the working group does not currently intend to propose an immediate increase to this threshold as a means to help the least well-off”. I think they are mistaken. For April 2019 the NI threshold is £8,632, if it was increased to £12,500 then those earning £12,500 or more would be £464.16 better off, but those earning less than £8,632 would be no better off. Average earnings are about £30,000 a year so it would be possible to apply an extra 12% on earnings between £30,000 and £33,868 so that those earning below £33,868 are better off but those earning more than £33,868 will not be better off.

The consultation paper is not ambitious enough. If you think we should be more ambitious, then please let the party know during the consultation period which ends on Sunday 31st March.

* Michael Berwick-Gooding is a Liberal Democrat member in Basingstoke and has held various party positions at local, regional and English Party level. He posts comments as Michael BG.

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  • Michael – “Turning to minimum wages, I believe we need to have regional minimum wages set at 70% of each region’s medium earnings”

    I have some concerns about policies like this because I’m not convinced it will ultimately make people better off. If people earn more in certain regions it will likely act to drive up living costs in those regions – particularly rent.

    The increased minimum wage will end up in the pockets of landlords, rather than the minimum wage workers.

  • Nick Baird,

    I have not seen any studies on how increasing national or regional minimum wages affect national or regional average earnings or rents.

    The main reason that I advocate taking seven years to introduce regional minimum wages is the great disparities of average earnings between regions. Here are some examples of average hourly rates for 2018 from the ONS (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/datasets/ashe1997to2015selectedestimates):

    London – £18.69
    South East – £14.91
    Scotland – £14.31
    North West – £13.36
    East Midlands – £12.73
    Wales – £12.67
    Northern Ireland – £12.59

    United Kingdom – £14.31

    60% of 14.31 is £8.59

    70% of 18.69 is £13.08; 60% is £11.21; 56% is £10.47

    70% of 14.91 is £10.44

    70% of 12.59 is £8.81

    Therefore having my regional minimum wages would increase wages most in those areas with the highest average wages. The increase for Northern Ireland is from the national rate of £8.59 to £8.81 an hour; for the East Midland to £8.91. With regional minimum wages businesses will find it more economic to setup in the regions with the lower regional rates.

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