Low-paid Workers: Take-home Pay

The Government are committed to making work pay and ensuring that people keep more of the money they earn in their pockets. Last week, we saw another above-inflation increase in the national living wage, meaning that a full-time worker on the national living wage would be earning £690 more over the coming year. This week, the personal allowance has increased to £12,500. A single person on the national minimum wage, working 35 hours a week, would have taken home £9,200 in 2010; this year, they will take home £13,700.

One way of increasing take-home pay is to create more high-paying jobs in the first place. Does my right hon. Friend agree that Cheltenham’s Government-backed cyber innovation centre, which sees the country’s finest cyber-security minds from GCHQ nurturing small businesses, is an excellent example of how the state and the private sector can combine to boost the economy and generate great jobs to boot?

I agree that the public and private sectors can work together to support digital businesses, including in the vital area of cyber, and that is why we have established the Cheltenham innovation centre as part of our £1.9 billion commitment to cyber-security.

There are two parts to our approach. The first is a laser-like focus on raising productivity—investing in the infrastructure and skills that we need to raise productivity—because that is the only way to raise wages sustainably. We have also introduced the national living wage, and have increased it way ahead of inflation. We will have to set a new target for the national living wage from next year. I announced in the Budget that I have asked Professor Arindrajit Dube to conduct a survey of the literature on minimum wages and employment opportunities for people on low pay, so that we can address this issue and seek to raise the pay of the lowest paid as fast as we can without destroying their employment opportunities.

Further increases in the national living wage are vital to tackling the low pay culture, but does the Chancellor agree that as the rates increase, so does the risk of non-compliance? Does he therefore think that Her Majesty’s Revenue and Customs is adequately resourced to be able to go after rogue employers who do not pay a fair wage?

Yes, my right hon. Friend is right. We have provided HMRC with additional resources, and wherever HMRC get reports, it pursues them. It also proactively looks for employers who are not meeting their legal obligation.

A recent survey by the Centre for Labour and Social Studies showed that a third of workers struggle with the cost of living and two thirds of workers expect to get poorer this year, yet FTSE 100 CEOs have been seeing their wages rise six times as fast as those of the average worker. To me, that sounds like a laser-like focus on increasing inequality.

The Government are responsible for the productivity agenda and the setting of targets for the national living wage. As I have already set out, working in those two tracks is the way to deal with the challenge of low pay. I can tell the hon. Lady what will not help workers on low pay: having their personal allowance taken away from them.