How do we tackle low pay?
I very much enjoy my work as a Government Whip. It gives me a real insight into how Parliament works, as well as more influence with my fellow Ministers when lobbying on behalf of Croydon.
But it is not without its frustrations, one of which is that I can no longer take part in debates (Government Ministers are only allowed to speak when they are doing so on behalf of the Government - ie when they are responsible for the area of policy that is being debated - and as a Minister who doesn’t have responsibility for a particular area of policy I never get to do that).
On Wednesday, I was on bench duty (there is always a Government Whip on the front bench whenever the House of Commons is sitting) for part of an opposition debate on the national minimum wage and I had the privilege of listening to a speech by Jack Dromey, the Labour MP for Birmingham Erdington. He talked movingly about his work as a union official in the 1970s, 1980s and 1990s, organising those who worked for firms that paid their staff a pittance to fight for a decent wage; and about his pride that it was a Labour Government that introduced the national minimum wage. For me, his speech represented Labour at its best - the passion for social justice, to stand up for those who are not getting a fair deal - and at the same time it revealed Labour’s fundamental flaw, which is that they’re much happier talking about companies not paying their staff a fair wage than addressing the other causes of low pay.
So how would I have responded if I had been allowed to speak?
I would have started by paying tribute to Jack’s work as a trade unionist. I worry that my party sometimes gives the impression that it is hostile to trade unions. We certainly have concerns about the behaviour of the trade union barons - calling strikes without a clear mandate and using union political funds to buy undue influence in the Labour Party. But the work Jack was talking about - representing people in their workplace, ensuring that people get a fair deal - is vital and we don’t say that enough.
I would have gone on to acknowledge that Labour were right to introduce the national minimum wage - it was one of the best things the last Government did - and that Conservatives were wrong to oppose it at the time. I would have talked with pride about how the modern Conservative Party has just delivered the first above-inflation increase in the minimum wage in years and wants to see further such increases.
I would have agreed with Jack that I want to see as many employers as possible going beyond the minimum wage and paying the Living Wage. It is wrong that we as taxpayers should have to subsidise via the benefits and tax credit systems employers who pay their staff the bare minimum but make handsome profits.
But I would have gone on to argue that a higher minimum wage and pressure on employers to pay a Living Wage are only two ways of dealing with the problem of low pay. If Jack’s passion for tackling employers who don’t treat their staff fairly tells you something very good about him in particular and the Labour movement in general, his failure to talk about the other issues is equally telling in the opposite way.
He didn’t have anything to say about overall economic policy and that is key to tackling low pay. This Government inherited a situation where large numbers of people were out of work chasing relatively few vacancies. In such a labour market, employers have the whip hand. But thanks to our policies, unemployment is now falling faster than at any time since records began and faster than in any other advanced economy. If we can sustain that and if we can control immigration (two big ifs), we will move to a situation where fewer people are chasing far more vacancies. People seeking work will then be in a stronger position vis-a-vis employers and wages should rise as a result.
There is a danger with this and that is that if the people who are seeking work don’t have the skills employers need our economy will suffer. It’s not an easy thing to say to the people concerned, but one of the causes of low pay is low skills. Another answer to the problem is therefore raising standards in our schools and colleges, ensuring that everyone leaves full-time education with the basic skills any job will require and as many as possible have higher level qualifications that will enable them to secure well-paid jobs. School standards is another area where Labour had a very poor record in government so again it’s not surprising Jack didn’t mention it.
And the final answer is to look at how much money the Government is taking away from the low-paid in income tax. When Labour left office, people started to pay income tax when they earned just under £6,500 a year. We’ve raised that to £10,000 and next April it will increase to £10,500. That will be worth £800 a year to someone earning £10,500. The Prime Minister has made it clear that a future Conservative Government will increase it even further to £12,500, ensuring that someone working full-time for the minimum wage won’t pay any income tax. That’s a clear contrast with the last Labour Government, which abolished the 10p rate increasing the amount of income tax that the low-paid had to be pay.
Labour used to be the party for the ordinary working man (and woman). It had many more MPs like Jack Dromey whose passion was for fighting for a fair deal for people in low-paid work. But it has increasingly become the party of welfare, bizarrely defending the right of some people to get a higher income on benefits than most of us earn through work; of turning a blind eye to low standards in our schools; and of high income taxes on the low paid.
There is therefore a huge opportunity for the modern Conservative Party if it can convince people on low and middle incomes that it is on their side, rather than being a party for the rich. I didn’t come into politics to stand up for privilege; I want to spread it. I oppose punitive taxes on the wealthy both because they are morally wrong and because, as President Hollande has proved in France, they are counter-productive driving such people abroad and reducing tax income. But I am in Parliament to fight for those who do the right thing by taking low-to-middle paid work and are struggling to get by, not those who are already comfortably off.
And the lesson for Conservatives from Jack Dromey’s speech is that when we talk about what we have done to help such people we need to match his passion, not talk about dry statistics about how economic growth in the UK compares with other advanced economies. About the people who, thanks to a Conservative Government, now have the security of a job and the pride of being able to provide for their family. About our support for a higher minimum wage. About our belief in a fair welfare system that offers a safety net, but doesn’t give unemployed families more than most working families earn. And about our determination to cut income taxes on people on low and middle wages so that they get ti keep more of the money they work so hard to earn.
If we make ourselves the party for ordinary working people, we will win the next Election. And what’s more, we will deserve to.
You can read Jack's speech here.