Politics

Chancellor Sajid Javid ignored Government adviser by raising minimum wage up to five years early


CHANCELLOR Sajid Javid overruled the advice of the Government’s own academic adviser by hiking the minimum wage to £10.50 an hour, The Sun can reveal.

Whitehall sources said economics professor Arindrajit Dube privately recommended introducing the new rate in eight to ten years.

 Sajid Javid ignored the advice of a Government adviser and promised to raise minimum wage by 2024
Sajid Javid ignored the advice of a Government adviser and promised to raise minimum wage by 2024Credit: Alamy Live News

But Mr Javid announced in his Tory conference speech on Monday that the new £10.50 minimum wage would take effect from 2024 – in just five years’ time.

And a Treasury source admitted the Chancellor had “gone a bit faster” than Mr Dube had recommended.

Mr Dube was tasked with carrying out a comprehensive impact assessment of raising the National Living Wage on the UK’s long-term labour market.

This covered its effect on the earnings of lower paid workers across the workforce and other “unforeseen impacts” such as the potential of job losses and increased costs to businesses.

RADICAL PLANS

Former Chancellor Philip Hammond tasked him with reviewing the international evidence of the effects of a minimum wage hike in his Spring Statement.

It prompted speculation that the Government was planning an ambitious rise in the new minimum wage because of Mr Dube’s support for high rates in the US.

But Mr Javid’s move to raise it from £8.21 to £10.50 went even more radical than even Mr Dube wanted.

Business groups have warned that the radical move threatens job losses and even risk some firms to go bankrupt unless the Government help out with moves to coincide with the wage hike.

And yesterday Business Secretary Andrea Leadsom hinted that the Government could introduce measures to help businesses – such as business rates exemptions.

She also said the Government could look again at the employment allowance, which reduces employers’ National Insurance contributions.

 Economics professor Arindrajit Dube had been tasked with assessing the impact of raising the National Living Wage by former Chancellor Philip Hammond
Economics professor Arindrajit Dube had been tasked with assessing the impact of raising the National Living Wage by former Chancellor Philip HammondCredit: AP:Associated Press

The Sun Says

SAJID Javid made the right call over-ruling his economic adviser to speed up the ­Living Wage hike.

Yes, Governments must be cautious about the burden on business. But rolling out a pay rise over ten years would be bonkers. Sajid’s five is too slow as it is.

The Tories are finally loosening the purse strings after a decade of restraint. Unemployment is at an all-time low and the economy flourishing. They should make hay while the sun shines.

Tax cuts, and giving low-paid workers a deserved and rapid rise, are top priority.


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