The minimum wage rise is good, but not enough in isolation

Raising the minimum wage is a good method for reducing government spending, but it's not enough to fix Britain's ailing economy on its own

If the government has a commitment to reduce public spending, then increasing the minimum wage is one of the best ways of achieving it, because it does so without driving huge numbers of people into poverty or desperate circumstances, as policies like disability benefit cuts and public service austerity do.

Increasing the minimum wage in line with the recommendations of the Low Pay Commission is a demonstration that Labour is actually capable of listening to expert advice, rather than steadfastly ignoring expert analysis, and outright refusing to even conduct impact assessments before making policy changes, as has been the case infuriatingly often so far.

Increasing the minimum wage is a good way of reducing public spending because it decreases rates of in-work poverty, meaning less reliance upon the social security system to make up the shortfall between workers’ poverty pay, and the actual cost of living.

Ensuring employers cover a larger proportion of their workers’ actual living costs does put more pressure onto businesses, but those that will struggle to cover the increased Labour costs were never really viable businesses anyway.

If their business model is dependent upon paying workers below what it costs to even survive, they’re the ones ultimately benefiting from government handouts, not the exploited workers.

There are still problems with Labour’s increase in the minimum wage though.

One of the biggest problems is that increased salaries don’t amount to improved living conditions if the government allows the rentier class to extract all of the gains and more through price gouging.

If your pay goes up by 77p an hour, that’s nothing to complain about in isolation, but if profiteering privatised water and energy companies are allowed to inflict yet another round of above-inflation bill increases, and greedy landlords are allowed to bleed their tenants dry with even more obscene rent hikes, the gains aren’t even enough to cover the increased costs of living.

Before the election Labour repeatedly promised that they would intervene to bring utility prices down, yet they’re now sitting on their hands as the regulators allow the privatised water and energy profiteers to keep inflating prices.

The latest increase in the energy cap is particularly egregious, given that wholesale gas and electricity prices have actually fallen dramatically from the peak of the energy inflation crisis.

It’s unrealistic to expect Starmer’s version of the Labour Party to do anything effective to combat greedy landlords either, given that Starmer has stuffed the Labour benches with more private landlords than ever before in history.

It’s a crying shame that the Labour Party has been usurped by the ideological right to such an extent that they now serve the interests of capitalists and rentiers, above the interests of workers.

Another problem with the minimum wage rise is that it’s not being matched by proportional increases in the wages of middle earners, who often have the burden of rip-off above-inflation university loan repayments to contend with too.

The middle class is being squeezed from both sides. The wealth of the ultra-rich minority is soaring away into the stratosphere, while the benefits of getting qualifications and a well-paid career are declining to such an extent that it often makes more sense from a personal perspective for people to idly hoard property, than to start their own businesses.

Without serious structural reform of the economy, low earners will simply see their wage increases eaten away by greedy rentiers, while middle earners see themselves getting relatively poorer compared to both the ultra-rich above them, and lower earners too.

I’d suggest that it’s not a great electoral strategy to impoverish the most vulnerable in society (disability benefits cuts, pensioner mugging, refusing to repeal Tory economic sanctions on families …); allow rentiers to extract all of the gains being offered to lower earners; and make middle earners feel like they’re getting relatively poorer, but that’s apparently what Starmer’s Labour Party are intent on.

A recent poll showed that an extraordinary 81% of people think Starmer’s Labour are handling the cost of living crisis badly, as opposed to just 12% who think they’re doing a good job.

Furthermore Labour’s general approval rating has collapsed to a dismal Minus 54.

Labour are facing an absolute wipe-out at the next election if they allow this public dissatisfaction to continue growing, and it’s quite extraordinary that so few Labour backbenchers are pressurising Starmer and Reeves to quit their ruinous addiction to austerity book-balancing, and implement significant economic changes that actually improve standards of living for middle earners, low earners, and the poor alike, before it’s all too late.