LibLink: Nick Clegg: George Osborne’s Living Wage is a trick and workers have been betrayed

Very, very strong words from Nick Clegg this lunchtime in an article on the Standard. He talks about how the Liberal Democrats’ carefully constructed initiatives to help people into work and eliminate the poverty trap have been swept away by George Osborne.

He starts by outlining why he thinks work is so important:

Work is not just an economic necessity. It brings identity and self-reliance. It is a spur to ingenuity and a catalyst for growth. Work demands the learning of new skills. It sustains communities and nourishes families. Without work, society crumbles.

He goes on to say what the Liberal Democrats did to help people into work:

That is why seven years ago — shortly after I became leader of the Liberal Democrats — the party started arguing in favour of lifting the income tax personal allowance. It seemed a little technical at the time — harder to explain than headline-grabbing reductions in tax rates — but the aim was simple enough: working taxpayers, especially those on low pay, should keep more of the money they earn as an incentive to work.

It seemed indefensible at the time that the taxman was taking money off you the moment you earned £6,035. The rest, as they say, is history: the aim of lifting the tax allowance to £10,000 and beyond became the principal tax reform of the Coalition. It took millions of people on low pay out of paying income tax and proved to be so popular that the Conservatives now claim it was their idea all along.

He said he thought that that legacy of the coalition years would be safe, but was horrified at the budget:

Imagine my dismay, then, at George Osborne’s Budget in early July. It was all going so well: an excellent new commitment to lift the minimum wage; a welcome further increase in the personal income tax allowance; and then the bombshell — an extensive dismantling of the working incentives for millions of low-paid workers. Tax credits — a subsidy for work — slashed. Universal credit — an attempt to get people off benefits and into work — shredded to the bare minimum.

He goes on to spell out what it will mean:

Why should, say, a single mother with a young son at home working as a nurse for 28 hours a week earning £18,000 lose a staggering £2,000? Or the couple with three children, both working 37 hours a week on the minimum wage, one in a restaurant and the other as a shop assistant, suddenly lose more than £1,200 of their household  income? Their income may rise in line with the minimum wage but this will be offset by cuts to tax credits. What possible incentive do they have to work more hours?

He then goes on to ask, with some uncomfortable truths for the Westminster Bubble, why there hasn’t been more of an outcry.

He uses some pretty strong language to condemn what’s been going on. The article is quite long and well worth reading. You can find it here.

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28 Comments

  • “He starts by outlining why he thinks work is so important:

    Work is not just an economic necessity. It brings identity and self-reliance. It is a spur to ingenuity and a catalyst for growth. Work demands the learning of new skills. It sustains communities and nourishes families. Without work, society crumbles.”

    And that’s as far as I got. Send him to spend a year behind the counter in a McDonalds, then he can tell me about how work brings identity and self reliance and is a spur to ingenuity. Work is what people do to survive. It is not an innate good.

  • Ben Gardner 10th Sep '15 - 2:18pm

    The main problem with both the increase in the tax threshold and the tax credits system is that it’s an effective subsidy to hire cheap labour. By reducing the net tax people pay you are lowering the pressure on companies to pay a level of salary that employees would otherwise demand. It’s somewhat ironic that Osbourne is shifting the burden of paying a ‘living wage’ on to business but it’s hard to argue against it.

    A sensible policy from the Lib Dems would be to support both the living wage and a partial reduction in tax credits that could follow but pledge to use that money to re-enforce welfare and public services where it is really needed (for example social care for the elderly) rather than the tax cuts the Tories propose.

  • Matt (Bristol) 10th Sep '15 - 2:26pm

    “He said he thought that that legacy of the coalition years would be safe”
    REALLY??? After the election???

    He genuinely thought, after the election, that the Tories wouldn’t hack, slash and burn away at the little he’d been able to achieve, in a concerted attempt to wipe him and his colleagues out of history and reduce the LibDem period in government to nothing more than a cul-de-sac, footnote or a joke???

    Egad.

  • Jennie 10th Sep ’15 – 2:09pm…………… And that’s as far as I got. Send him to spend a year behind the counter in a McDonalds, then he can tell me about how work brings identity and self reliance and is a spur to ingenuity. Work is what people do to survive. It is not an innate good……

    My thoughts exactly… It just shows how out-of-touch he still is….We’d all love to be doing a job we love but when 1700 chased a job in Costa Coffee surely Nick could just stick to facts instead of wandering off into hyperbole…

  • Not often you see the word “egad” used so well.

  • well, the anti clegg coalition is alive and working well. However instead of some negativity, what about the positives. People were keeping more of their earnings, work was becoming a springboard for advancement although more needed to be done obviously.
    For the labour supporting moaners , could they please rejoice in all that Labour did in 13 years to advance the cause of the poor in our society. Did they encourage work, did they provide equity between social housing tenants and private rents, Did they construct a support system for children to receivce a hot meal or anything resembling additional money in educating our children from poorer backgrounds. They did not
    Why Nick is horrified is because he genuinely felt that the Tories he worked with saw the benefits of what Lib Dems proposed…he was naive as many of us who have battled the uncaring left and right for years already knew

  • Matt (Bristol) 10th Sep '15 - 3:32pm

    Bob sayer: ‘he was naive as many of us who have battled the uncaring left and right for years already knew’

    That is what I was saying. I feel somewhat slandered to be portrayed as part of an anti-Clegg conspiracy.

    I can (just about) see why Nick could reasonably have thought before the election that what we had achieved in government, which I personally see as being limited, flawed but honourable and not indefensible, would last. But I am genuinely gobsmacked that he is claiming that in between the election and the Budget he did not see Oxbourne coming and felt he had his legacy was free of attack from the Tories.

    I am not a labour-supporting moaner, I hope, and I have said before that calls for Nick to step down were counter-productive, that I felt Nick was the great Liberal Home Secretary we never had, and still, his critiques of Osbourne all ring true. But I genuinely am staggered that he was naieve to that continuing extent, after the dam broke on May 8th.

  • George Kendall 10th Sep '15 - 4:06pm

    Having read through the whole original article, I thought it was excellent. My only negative reaction was knowing that it would get pilloried, because Nick Clegg was the author. If another politician had spoken out in this way against Osborne’s deceitful use of an increase in the minimum as cover to savage the pay of the low paid and reduce their work incentives, they’d get widespread admiration.

    And he makes a very important additional point. It is shocking is that the reaction from the media to Osborne’s trickery has been so muted.

    @Matt (Bristol)
    I don’t think he’s being naive at all. The following quote from his article shows he knew perfectly well that the Tories would reverse a lot of what the Coalition did:
    “So I thought, reasonably enough, that this emphasis on promoting work would surely be one of the legacies of the Coalition which would be continued by the new government even if so much else — green jobs, our place in Europe, civil liberties — has been called into question. ”

    In reality, I suspect Nick isn’t that shocked. But when writing an article like that, it’s important to use dramatic language in order to engage your reader.

  • Jenny Barnes 10th Sep '15 - 4:11pm

    Universal Credit. ZHCs. low paid work in general. food banks, benefit sanctions,What we need is a citizens income. It could be quite small, to start with at least, but would eliminate a lot of bureaucracy, would mean that work would always pay, and that the real rubbish, dangerous, exploitative jobs would have to pay a decent wage. Work in itself is far from an unalloyed good.

  • David Allen 10th Sep '15 - 4:46pm

    What exactly is the point in harking back to the Coalition years?

    As Ben Gardner points out, both tax credits (a Labour idea) and raising the tax threshold (a Lib Dem idea) have similar good and bad points. Both subsidise cheap labour. So although both do provide some immediate help to poor people, both also distort the free market and entrench a sweat-shop economy.

    In principle, getting away from all that by raising the minimum wage, and thus insisting that employers cannot get away with paying exploitation wages, is the right way to go. Employers should meet their responsibilities. British workers should not need to be subsidised by other taxpayers.

    Osborne’s trick, however, has been to combine a small enforced rise in the minimum wage with a large cut in one of the two forms of taxpayer subsidy, so that poor people end up worse off. He has also cut that type of subsidy associated with Labour, for political effect, because he has labelled it as a Bad Labour Thing. He hasn’t cut the subsidy associated with the tax threshold, because although that is equally a market-distorting subsidy, he would like to label it as a Good Coalition Thing.

    To attack this effectively, therefore, we have to forget about what the Coalition did, and just look at what Osborne is doing now.

    Clegg seems more interested in burnishing the halo of a past government than in helping Tim Farron make a new start.

  • Jenny, sadly the portrayal of work as an unalloyed good by all and sundry makes a citizens’ income far less likely.

  • Matt (Bristol) 10th Sep '15 - 5:16pm

    David Allen, I don’t think George wants anything labelled as a Good Coalition Thing, he wants the LibDems trashed and forgotten, and anything good (whether a short-term good or a long-term good or an ephemeral good) done in the last 5 years either denied if he doesn’t like it, or re-badged in Tory blue.

    Labour share this aspiration too, I think. They don’t want us to have gone into coalition, and they don’t want anyone to remember anything good to have happened in it.

    We will have to re-fight the coaltion at some point. It cannot be forgotten, because significant changes happened during it; to say ‘forget about that, it’s bunk, it’s an evolutionary dead-end’ ain’t a longterm strategy, even if you think the whole 5 years on our side were flawed and ultimately, sadly, self-defeating.

    Admittedly, that time might not be now, and in that sense I agree with you. The challenge for us is how can those of us – whether we honour or despise or despair of Nick Clegg – not become dismissed as the Party of Clegg, the Party of Failure?

    I’d like to see Farron attacking Osbourne’s cynicism from the end of the Coalition to now, and Clegg striking out to attack the Tories on issues that won’t be seen as polishing his personal legacy.

    PS – I have now read the article properly and can see why George Kendall is saying what he is saying, but I stand by my mid-Victorian-expostulation…

  • The problem with banging on ad nauseam about raising the tax threshold, is that it did sweet fa to help people who may be fit to work but not in employment because they are doing something else which is essential but not valued by soundbite loving politicians. Like looking after a disabled parent partner or child.

  • Clegg doesn’t understand that tax credits are needed in such numbers (£30b per annum and far above any comparative EU country) as living costs as SO HIGH. It’s not just about low wages. What did he do to solve the problem of the most expensive housing in Europe, relative to average wages, and sky-rocketing rents? And transport which is similarly the EU’s most expensive. Compare fares in Manchester, London or Glasgow to any comparable EU city. Vastly more expensive.

    Instead of spending money to reduce these, which would benefit ALL the poor, he wants to do little (cant hurt interests of private transport companies and landlords) and then subsidise only some of the poorest with tax credits. The poor who are childless or those with children above 18 are almost always ineligible and have to suffer those high costs, and get very little help.

  • Graham Evans 10th Sep '15 - 7:40pm

    It seems that some people are either are either suffering from amnesia or else are too young to remember that for most of the 20th century, even in times of low unemployment, most working people were employed in boring jobs, often in extremely arduous conditions. Most people have always worked to live, rather than lived to work, whether it be in McDonalds, down the mine or on the docks, and there are no examples anywhere in the world, past or present, where it has been, or is likely to be, different. In all societies much of the work which needs to be done is actually low skilled, and low paid. It is either done by natives, or by immigrants – or by machines.. There is no alternative. Rather than criticising the work offered by the likes of McDonalds, we should ask what actually makes a fulfilling life. It does not have to revolve simply around money and consumption.

  • Paid work is an economic necessity for most people, i.e. those without wealth. However any type of rewarding work can provide benefits such as ingenuity, personal growth, and new skills it doesn’t have to be paid work. Does Nick really believe that the benefits of paid work are such that the state should tax unearned income at 100%? I don’t think so. There shouldn’t be one rule for the wealthy and another for the rest of us.

    I would like to see a Citizen’s Income and I would like to know how much it would cost annually to replace the Income Tax Personal Allowance of £10,600 with a Citizens Income of £40.77 a week. Then I would like to know what the 2% National Insurance rate on incomes of over £40,044 would need to be increased to, to cover the increased costs.

  • Little Jackie Paper 10th Sep '15 - 8:59pm

    Graham Evans – ‘we should ask what actually makes a fulfilling life. It does not have to revolve simply around money and consumption.’

    My parents brought my sister and myself up to believe that hard work was its own reward. My parents were of course spouting rubbish.

    The fundamental problem is the devaluation of labour. Or, at least the devaluation of lots of labour. We can, of course, argue about why that it. But the fact remains that in 1962 my Dad was able to walk out of school at 15 with 2 O-Levels and walk straight into a production line. No – no should ever think this was some sort of easy life. A lot of people have a very rose-tinted view of the past. However the point remains that on ONE wage he was able to pay a mortgage (with double-digit interest rates), drive a car and raise a family within ten years. Try leaving school now at 15 and see how far you get relying on labour.

    No, life does not revolve around money and consumption, but at least not pretend that it is neutral. The word I think missing here is, ‘security.’ For an awful lot of people out there now labour brings less security. What we do about that is another matter.

  • Little Jackie Paper 10th Sep '15 - 9:05pm

    Shaw – ‘It’s all too easy to be snobby about what other people do in the way of work.’

    Sure, but I don’t think that was really the point. I hate these silly TV shows where politicians are asked to live on benefits or similar. That’s nonsense. What politicians should try is the university leaver on £20k type lifestyle. No car, living in buy-to-let, competing with three-quarters of Europe for a job.

    I’m sure politicians know quite a lot about minimum wage/benefits living. I’m generally impressed by how knowledgeable they are when I hear them. The group they seem to have lost touch with are those who are by no means poor in any real sense, but who are really taking the brunt of instability and insecurity. Nick talked about, ‘alarm-clock Britain,’ and Ed M talked about, ‘the squeezed middle,’ but neither really gave me the impression they understood that they were talking about insecure lives rather than poor lives per se.

    Anyway – I’ll sit back and let you hit me with some passive-aggression and trivial point-scoring now.

  • Conor McGovern 11th Sep '15 - 2:22am

    Jenny Barnes – Definitely, and if I’m not mistaken it was our policy in the 90s!

  • John Tilley 11th Sep '15 - 9:15am

    I cannot beat the comment on this story that appears in the blog Liberal England —

    “But next time you hear the claim that the Government is standing up for working people, just remember — it’s A-grade, 24-carat baloney.”

    Yes, Nick, we’ve been aware of that for about the last five years.

  • Peter Parsons 11th Sep '15 - 11:52am

    The IFS have published a report on this:

    http://www.ifs.org.uk/publications/7975

    Summary: The new minimum wage levels make up just over a quarter of the losses in tax credits and benefits that those on lower income levels are facing.

  • Clegg: “Work is not just an economic necessity. It brings identity and self-reliance. It is a spur to ingenuity and …. demands the learning of new skills.”

    This is an appallingly insensitive thing to say. The fact that some people in Mac jobs may be glad they are not unemployed does not make Clegg’s remarks the slightest bit better.

    Clegg lives in a bubble, in which everybody he meets is a professional, with a job requiring learning, with a job that provides scope for ingenuity, with a job that provides status and self-respect.

    To ignore the other half of society so comprehensively disqualifies the speaker as a competent politician. (Unless the speaker is a Tory, that is!)

  • Why is it so bad to suggest that -for many people- the work they do is about more than the salary? Why is Clegg being called out for saying that -many- people see personal growth through paid work?

    It doesn’t matter if you’re a receptionist, a McDonald’s cook, a politician, lawyer, clinician, etc. Your identity may not include the job you’re doing, but surely one should aspire to gain more than just cash from the hours of your life you put into work?

    Someone who can now confidently speak to strangers, quickly and safely serve up a meal for the whole family, make a change in their local community, help an innocent person get justice, save a life – all show learning and skills, all are rewarding, all through work, and none of it in the least bit degrading – all deserving of respect & dignity.

  • Unfortunately I feel it’s necessary to add…

    All of the above can be achieved without paid work – and indeed by anyone. I don’t think being employed and paid makes anyone better than another person, nor is work the panacea.

    I’m just angry at the suggestion that taking pride in ones work is somehow an elitist concept reserved for the privileged few.

  • @David Allen “This is an appallingly insensitive thing to say. The fact that some people in Mac jobs may be glad they are not unemployed does not make Clegg’s remarks the slightest bit better.”

    That’s an appallingly insensitive thing to say. Many people do valuable jobs in society that involve serving the public in the private or public sector for relatively low wages, and they are worthy of our respect; to class them somehow as “McJobs” says more about the person making this value judgement than it does about the person doing the work. Any job requires a degree of learning and self-improvement.

  • David Allen 11th Sep '15 - 5:03pm

    AM,

    Clegg didn’t say that work is fulfilling for some people, or for many people. He made a general statement, which therefore must have been intended to apply to most or all people.

    Clegg said that work brings identity. How do you suppose a toilet cleaner or a shelf stacker feels when told that their identity is defined by the work they do?

    Clegg said that work requires ingenuity and learning new skills. Many jobs, including many non-professional jobs, do do that. But many just don’t.

    You demolish a straw man when you get “angry at the suggestion that taking pride in ones work is somehow an elitist concept reserved for the privileged few”. I didn’t make that suggestion, or anything remotely resembling it. I quite agree that many people with a range of jobs are able to take a measure of pride in what they do, and that when this is the case, it is a good thing. However, many other people feel enslaved and humiliated by the work they have to do.

    I am angry that a Liberal Democrat can be blind to that.

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