I think you're being very cavalier Clive. Ignore the labels that are being used for the moment to pigeon hole people (as they needn't help) and take a step back and follow the money instead rather than falling into the trap of badge association Doubtless you'll be aware of the debate that's surfaced in the last few years regarding 'the living wage'. If the minimum wage was doing it's job, this wouldn't be an issue. However pressure in the low paid sector has pushed the living wage to the forefront of the political agenda. Where has this pressure come from? Almost exclusively it's come from pressure in the private sector rental market where inflation has ripped to pieces any defaltion in other areas The Living Wage Foundation have set the figure at £7.85 and £9.15 for London. This eclipses the £6.50 of the minimum wage The government have recognised this pressure and responded through the tax system, and to a lesser extent 'in work' benefits. Government's don't normally enact policy that reduces their revenue If you don't believe me, I'll submit the verdict of KPMG for you as they're partners in the LWF and have run their own numbers "5.28million UK workers are being paid less than the Living Wage, with huge swathes of employees working in the retail, catering and care sectors, clustered around minimum wage pay levels. Mike Kelly, Head of Living Wage, KPMG said: “Far too many UK employees are stuck in the spiral of low pay. The research identifies statistics and trends, but it also reports the concerns of people earning below the Living Wage who expect their finances to worsen during the next 12 months and shows that debt levels have continued to rise among this group. “Unless wages rise, a significant sector of the UK population will see themselves caught between the desire to contribute to society and the inability to afford to do so. “Business benefits of the Living Wage include higher retention and productivity, and over 1,000 responsible businesses recognise this. The Living Wage may not be possible for every business, but is certainly not impossible to explore the feasibility of paying it.” I'm sure you'll agree, 5.28M is not a small percentage? (it's a little bit less than the entire population of Scotland). There are other economic costs; Rhys Moore, Director, Living Wage Foundation said: “As the recovery continues it’s vital that the proceeds of growth are properly shared. It’s not enough to simply hope for the best. It will take concerted action by employers, government and civil society to raise the wages of the 5 million workers who earn less than the Living Wage. “The good news is that the number of accredited Living Wage employers has more than doubled this year – over 1,000 employers across the UK have signed up. In the last 12 months the number of Living Wage employers in the FSTE 100 has risen from four to 18 including Canary Wharf Group and Standard Life. “Those businesses that can should follow the example of Nestle and Nationwide, as well as hundreds of smaller, independent businesses like CTS Cleaning and Hodgson Sayers Roofing, who pay the Living Wage. “Low pay costs the taxpayer money – firms that pay the minimum wage are seeing their workers’ pay topped up through the benefits system. So it’s right that we recognise and celebrate those employers who are voluntarily signing up to the higher Living Wage, and saving the taxpayer money in the process. Now I'm seriously struggling to believe that HM Treasury would have introduced these changes to the tax and benefits system if this grievance wasn't real? So I invite you to trace the pressures back up stream and see where they sprang from? The inescapable conclusion is that they've come from private sector landlords renting at extortionate rates brought about through a deadly cocktail of low supply and increasing demand. In effect the Treasury and tax payer is subsidising the private incomes of landlords to prevent the burden falling on business. Is that sensible? Is it moral? Are private sector landlords so integral to the UK economy? Are they the only people capable of providing this service? The clear answer is that they aren't, but billions of pounds disappear from the economy by way of potential consumer spend into this black hole every year and the taxpayer foots the bill. Why oh why are we prioritising the personal wealth of private sector landlords like this? It's crazy OK it's to simplistic to perform this transfer as I describe it, but we would be better off as a society and an economy if we could reduce the cost of renting by say £300 a month using alternative methods of supply side provision, or changes to policy, and then increase the level of tax by £200. It represents a net gain to the Treasury and the tenant. The only loser is the private sector landlord. So what? A lot of these landlords don't buy new build anyway, so they won't kick start a housing boom. They tend to buy Victorian houses and convert them into as many rabbit hutch bedrooms as they can cram in. Further more, they aren't really wealth creators or job generators (well certainly not to the extent that can justify their subsidy - and what jobs they do create could still be carried out by sub-contractors through other supply side providers). If anything they suck wealth out of the economy. The best they can claim to do is circulate money instead. They don't really generate export sales, or foreign income earnings either, which is going to be so vital to our economy now. It's a really bad area to prioritise and shelter I do believe however that there might be another culprit lying even further back, and that is the UK consumer who could do some real damage to our balance of payments if they were suddenly unburdened of £3500 property bondage per annum. Contrast with Germany where they can be relied on to spend their higher incomes on German products which will defend German jobs and economic objectives.
