Living Wage

Lord Razzall Excerpts

Thursday 5th November 2015 Lords Chamber

[The Earl of Courtown]

My Lords, my noble friend is right on that. It is so important that these small businesses have as much help as possible, and the fact that we have this high threshold for value-added tax helps them. I add that the Government are increasing the employment allowance from £2,000 to £3,000 from April 2016. This will benefit up to 590,000 employers, and as a result those businesses could employ four people full-time on the national living wage and pay no national insurance contributions.

[Lord Razzall (LD)]

My Lords, the justification given by the Chancellor of the Exchequer for reducing the payment of tax credits was that recipients would be compensated by increases in the minimum wage, incorporating the living wage. Even on the Chancellor’s own figures, this will not happen until 2019-20, and now the Institute for Fiscal Studies has confirmed that the increase will not provide adequate compensation for the loss of income by many recipients. Does the Minister now agree that the justification given by the Chancellor of the Exchequer was deeply flawed?

[The Earl of Courtown]

My Lords, my noble friend Lord Ashton of Hyde answered a Question on this subject yesterday. With the leave of the House, I shall repeat part of what he said:

“As the Chancellor has made clear, the Government will set out in the Autumn Statement how we plan to achieve the same goal of reforming tax credits and saving the money we need to save to secure our economy”.—[Official Report, 4/11/15; col. 1631.]