Oral Answers to Questions

Kerry McCarthy Excerpts

Thursday 8th January 2015 Commons Chamber

The Secretary of State was asked—

[Kerry McCarthy (Bristol East) (Lab)]

1. What steps the Government are taking to increase the value of the minimum wage and encourage firms to pay the living wage.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

On our return to Business questions after the break, may I wish you, Mr Speaker, and all Members a happy new year? I am sure that the thoughts of everybody in the House this morning are with France and, in particular, with the relatives and friends of those who were killed and injured in the appalling terrorist atrocity yesterday.

Last year, the Government announced the first above inflation increase in the national minimum wage since the 2008 banking crisis, benefiting more than 1 million workers. Since 1 October 2014, full-time minimum wage workers have seen an annual cash increase of £355 in their pay packets, and we expect real-terms increases to continue as the economy recovers. We support employers paying the living wage where it is affordable and not at the expense of jobs.

[Kerry McCarthy]

I thank the Secretary of State for that response. He will know that for every £1 that employers pay above the minimum wage to lift workers to the living wage, the Treasury reaps 49p in reduced benefits and increased tax revenues. Why will his Department not consider using that increased revenue to incentivise businesses to pay the living wage for the first 12 months, as Labour is proposing with its make work pay contracts?

[Vince Cable]

It is precisely because of that revenue wedge that the Government have invested so much resource in lifting the threshold so that low-paid workers are not caught in taxation. That has substantially alleviated the pressure on the living standards of low-paid workers.