One of New Labour’s great successes was, as Labour politicians love to remind us, the minimum wage. The idea behind this was that no working person would be pushed into poverty. Now, every working person aged at least twenty-one can earn a minimum of £6.19 per hour. What luxury! However, some wishy-washy lefty liberal Guardian readers argued that people deserved more money than this. This leads us to New Labour’s next success: The Working Tax Credit, which is basically welfare benefits for those on a low wage.
Although this is essentially not a bad idea, it has created a rather strange situation. The Tax Credits paid for those who worked for companies who pay their workers a stupidly low wage. Therefore, the government pays the top-up money. Without this money many people would not be able to feed their families. Yet this means that the government are paying the worker for working for a business which has nothing to do with any part of government. They are taking on the role the business should be doing. This is clearly wrong. Yet one could argue that the government still gets the money back from companies that pay their workers at minimum wage, through the means of taxes, companies like, err, Starbucks.
Unless you live in a desolate wilderness with no contact with the outside world (like Norfolk maybe), you have probably heard about the Starbucks tax kerfuffle. Long story short, without actually breaking any laws (although bending and stretching a few), Starbucks has managed to go the last few years paying almost no corporation tax. This is clearly immoral, destructive and just a little impressive. However, the point I’m making is that this is a company, like many others, that does not pay its fair share of taxes. It also, again like many others, pays only the minimum wage to the majority of their staff. This means that not only is Starbucks not paying its taxes, it’s actually being subsidised by the state, in the form of the Working Tax Credit. It’s a bit like socialism for the multinational corporations and capitalism for the average man.
However, some will point at me and shout ‘But Starbucks pays tax now!’ Indeed they do. Starbucks has voluntarily offered to pay some of its corporation tax for the next two years. How generous of them! It’s not like paying tax is an obligation after all. However, even with this miserable compromise, the tax they pay should not be to pay their own workforce, that’s their responsibility. The tax they pay is the price of the luxury of operating in a legal system that supports their businesses.
In contemporary Britain change in this area is needed fast, but what change? How about a living wage, where you get £7.45 an hour, so the company does what it should do, pay a wage that you can actually live on. And if a small business who pays its fair share can’t find the money to pay its workers the increased wage, that’s when the government helps, and not before.
So what to do with these extra billions of pounds which the government has saved. Maybe solve our housing crisis or cut VAT, or if you want to be all neo-liberal about it you could use the savings to cut the deficit. However, there are some doomsayers who say that the introduction of a living wage will suddenly cause the end of civilisation as we know it. However, these people are generally the people who have vested interests in not having a living wage (and indeed the same people who argued in 1998 that introducing a minimum wage would cause Armageddon). Also, Australia has a minimum wage of $15.96 (£10.33) and their economy avoided recession while the rest of the West collapsed in on itself.
Admittedly, I am a bit partisan – as a member of The Labour Party (the shock and horror!). However, it’s not just Labour who backs this policy; the Greens, Unite and many other progressive groups back this campaign too. Even the Archbishop Justin Welby, took time off fighting marriage equality to give the policy the thumbs up.
If you wish to support this, sign the petition at http://epetitions.direct.gov.uk/petitions/41273