South Lakes MP Tim Farron has welcomed the news that the Chancellor has said he wants to see an above-inflation increase in the minimum wage.
George Osborne told the BBC that the ‘economy can now afford’ to raise the rate, which is currently set at £6.31 an hour for people over the age of 21. The value of the minimum wage, paid to an estimated 1.35 million people, has fallen in real terms since the financial crisis of 2008. The current rate of inflation is 2%.
The Chancellor followed on from a call from Vince Cable, who wrote to the Low Pay Commission in August to ask them to consider how the minimum wage could be increased further, including looking at the structural factors in the economy which limit how far it can be raised.
Over the New Year, Mr Farron called for bigger fines for employers found to not be paying the minimum wage. Yesterday the Government announced that it will rise to £20,000 - over four times higher than the previous limit.
The MP said: “Our area has low unemployment but low wages. I have been pushing the Government very hard to look at this and then act. I have long thought and argued that the minimum wage must rise. However we must be mindful of small businesses and the tourism sector. I will be making the Government aware of their concerns in the coming days.
“Vince Cable has asked the Low Pay Commission to consider how the minimum wage may be able to rise faster over the medium term. Additionally low and middle income earners will feel the benefit of the Liberal Democrat income tax cut in April that will save them over £700 a year compared to 2010.”