Published:

By Peter Hoskin
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Here’s
a
story
that could turn out to be significant. The Government has told the
body that sets the minimum wage, the Low Pay Commission, to formally take
account of its wider effect before signing off on increases. Indeed, the
Commission’s remit will now contain a clause on “the understood and accepted
goal to raise the wages of the lowest paid without damaging employment or the
economy.”

As
the Daily Telegraph’s report suggests, this heightens the possibility of a
freeze or even a cut in the minimum wage. You know the argument by now: that an
ever-rising minimum wage might dissuade employers from taking on new staff,
particularly when it comes to young people. And so a lower minimum wage could help
raise the employment numbers.


The
Government has displayed some sympathy to this argument, even before today. Indeed,
it defended a freeze in the youth rate of the minimum wage last year – the
first freeze in any of the rates since 2005 – by citing the “balance
between pay and jobs”
. And then there was the prospectus set out by Matt
Hancock last
week
, which included a provision for “strengthening” the minimum wage by
ensuring that it incentivises work ahead of benefits.

The
question now is whether the Coalition will take this thinking further. As I’ve reported
before
, ideas such as regionalising the minimum wage, or suspending it for
young people, have certainly been floated around Downing Street since 2010. And
they were considered
by the Brown Government before then, too. Today’s formal adjustment of the Low
Pay Commission’s remit could be more than just words.

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