WHEN it rains, it pours. A phrase Ed Miliband must know all too well at the moment ahead of today’s European and local elections.
The Labour leader has been battling to convince his party’s own supporters, let alone the rest of the country, that he would make a good PM. Even 40 per cent of Miliband’s own supporters have expressed misgivings about his leadership.
He’s grinned through hapless selfies, suffered viral Vine videos and the cherry on the cake came when his world-renowned new campaign advisor, David Axelrod, misspelt Miliband’s name and then linked to a spoof account on Twitter.
This week saw another downpour for Party HQ. The Labour leader’s pledge to link the minimum wage rate to average earnings was slammed by the major business groups and received a mauling in the media. It preceded another awkward moment when Miliband appeared to miscalculate the cost of his family’s weekly food shop.
The National Minimum Wage is a source of national pride and, in my mind, it was one of the best achievements of the last Labour government.
This safety net wage rate has protected low-paid workers through a thorny recession and, as we move towards economic recovery, the coalition is raising this to £6.50 from October.
After all, covering the costs of the bare essentials has been a challenge for millions of people in recent years.
Outside of the billionaire bubble, the recession has decimated parts of our country and the party that wins in 2015 will be the one that can bring us back into bloom.
This does not, however, involve tinkering with the system that measures minimum wage – one that already works perfectly well.
The Low Pay Commission makes the calculation based on the economic trade off between jobs and wages.
Since 1999, average earnings are up by 61 per cent but the National Minimum Wage by 75 per cent.
The wages of the lowest-paid are higher than those of other workers than they have been for decades.
By restructuring the system and marrying the wage rate with average earnings, as Miliband proposes, we risk putting pressure on less productive regions and squeezing younger, less experienced workers out of the labour market altogether.
The Social Market Foundation estimated that Miliband’s plan only works while wages rise. Indeed, had this policy been in place since 2010, workers would be £250 a year worse off. In other words, not only is this plan unnecessary but it might prove damaging for the economy and household incomes. In the midst of a fragile economic recovery we cannot expect enterprise to foot the bill of the rising costs of living. It makes investing in technology over manpower a more logical solution and discourages growth.
Rather workers should be allowed to pocket more of the money they earn. Running into the General Election, political researchers should be eyeing up tax and National Insurance thresholds. This Government got the ball rolling by raising the income tax threshold to £10,000 and scrapping employers’ National Insurance for the under-21s.
We need to press on further down this track, especially for young people. A youth tax rate would allow young workers trying to get a foothold in the jobs market, to pay for the upfront costs of working and setting up a new life – a month’s rent up front, work clothes and staving off the interest payments on a student overdraft.
At just £153 per week, the National Insurance threshold is far too low. This means that a 19-year-old scraping by on just £5.03 an hour loses more than £220 per year in National Insurance payments. To reward their hard work, to encourage them to persevere with entry-level jobs and progress up the income ladder, they must be able to keep hold of the money they earn.
These sorts of measures would be of real value to the low-paid and pose no risk to job security. We need common sense policies to get the low-paid and youth vote turning out in their droves come 2015.
Ed Miliband should stop flirting with minimum wage rates and have a series discussion about tax and National Insurance. He might then start to see some rainbows on the horizon.
Lottie Dexter is founder of the Million Jobs campaign.