Government plans to bring in a national living wage have been described as a “con” by a top Preston councillor.
The living wage, which starts at £7.20 next April and rises to £9 an hour by 2020, will be compulsory and replaces the minimum wage which is now £6.50. Preston Council already pays the living wage – seen as the minimum amount a worker needs to earn to meet the basic cost of living.
The Conservative government is setting a new minimum wage, which they are saying is a living wage, but it is actually much lower than the living wage.Matthew Brown
Matthew Brown, Preston Council’s cabinet member for social justice, inclusion and policy, today described Mr Osborne’s living wage announcement in the Summer Budget as a “con”.
But Coun Brown said: “The living wage is set nationally by the Living Wage Foundation.
“It is currently £7.85 an hour and it’s likely to rise above £8 an hour in October.
“The Conservative government is setting a new minimum wage, which they are saying is a living wage, but it is actually much lower than the living wage. Obviously any increase in wage is a good thing, but we are seeing cuts in tax credits and other benefits.”
Elsewhere in the Budget, Mr Osborne took an axe to tax credits, declaring that families will only receive the handouts and Universal Credit payments for the first two children.
People under the age of 21 will no longer be automatically entitled to housing benefit, all working age benefits will be frozen for four years, and social rent payments will be cut one per cent a year until 2019.
He also confirmed that the benefits cap is being reduced from £26,000 to £23,000 in London and £20,000 in the rest of the country.
Student grants are being scrapped and replaced by loans to save £1.6 billion.
Coun John Swindells, deputy leader of Preston Council, said young people came off worse in the Budget – losing out in benfits and educational grants.
He said: “Scrapping maintenance grants could be a big blow. It will affect social mobility and the ability of people to get decent jobs – which is a real worry.”
A Lancashire spokesman for the Assocation of Teachers and Lecturers said the budget would damage people’s educational opportunities.
The group feared that scrapping student maintenance grants could deter many youngsters from going to university.
She said: “The Chancellor’s Budgets may attract headlines but simply do not add up for Britain’s future.
“Boosting the country’s economy will be limited as long as the Government’s policies make it hard for people to take advantage of opportunities and fulfil their potential.
“We fear scrapping maintenance grants will stop some young people from going to university.”
Meanwhile Barnardo’s has warned that thousands of Preston families could be left struggling if tax credits are scaled back. Barnardo’s has calculated that 10,400 families in the Preston area currently use tax credits to top up low incomes.
Barnardo’s Chief Executive, Javed Khan, said: “Without this income, many parents could not afford their weekly food shopping let alone school uniforms and books.
“With low wages and high living costs stretching budgets, tax credits are an everyday lifeline for British families.”
“Children who grow up poor are more likely to be ill, do worse at school and be jobless in future.”
David Gorton – head of corporate services at Lancashire-based PM+M: said: “No-one wants the government to be borrowing excessive amounts.
“I have a concern that the benefit caps will lead to reduced consumer spending – primarily in the North of England – which could well slow the pace of economic recovery.”
Gary Lovatt, Federation of Small Businesses Chairman for Lancashire & Cumbria said: “This Budget is a mixed bag. The Chancellor has offered some support to businesses through the Corporation Tax reduction and further support with the Employment Allowance.
“However the news on the Living Wage, while possibly not impacting on some small businesses who may already pay this, will pose a threat to businesses in sectors which have extremely tight margins such as retail, social care and hospitality.”
The budget at a glance...
• From next April, a national “living wage” will be brought in. Everyone over 25 will be entitled to £7.20 an hour - and the figure would rise to £9 by 2020.
• Mr Osborne took an axe to tax credits, declaring that families will only receive the handouts and Universal Credit payments for the first two children.
• People under the age of 21 will no longer be automatically entitled to housing benefit, all working age benefits will be frozen for four years, and social rent payments will be cut one per cent every year until 2019.
• The benefits cap is being reduced from £26,000 to £23,000 in London and £20,000 in the rest of the country.
• Student grants are being scrapped and replaced by loans to save £1.6 billion.
• Corporation tax is being cut to 18 per cent by 2020.
• The personal tax allowance will rise from £10,600 to £11,000 next year, and the higher rate threshold from £42,380 to £43,000.
• Public sector employees now face four more years with increases capped at one per cent.
Read more reaction to yesterday’s summer Budget here...