The party conference season has showcased two very different visions of Britain. Jeremy Corbyn speaks of the country as one giant Victorian-style workhouse. We are living in zero-hours Britain, apparently — a land where workers subsist on starvation wages and cannot even rely on those. So this is why Labour proposes a great upheaval, mass nationalisation, the confiscation of private property and — as of last month — the abolition of private schools. Corbyn would plunge Britain into a socialist experiment more radical than any seen since the 1970s — but the abject failure of the free enterprise system, he says, demands no less.
In Manchester, a Conservative chancellor announced his intention to ‘end low pay altogether’ by lifting the National Living Wage to £10.50 an hour within the next five years — one of the highest rates in the world, let alone Europe. This can be done because years of progressive Conservative reforms have pushed unemployment to a 45-year low and income inequality near a 30-year low. Britain is a magnet for foreign investment, thanks to a stable economy, respect for private property, world-class, properly funded universities and the rule of law. Disposable income is near an all-time high. The Tory mission is to drive it higher and ensure that, as under the Cameron years, the lowest paid benefit the most.
This is a strange kind of failure. Just 3 per cent of the working population are employed on zero-hours contracts in their main job, and most say this suits them because they prefer not having to work specific hours. Those on the contracts work an average of 24.5 hours a week, and only a quarter of them would like to work extra hours. The threshold at which individuals pay income tax has risen from £6,475 in 2010 to £12,500 today. Social justice is pursued by leaving more money in the hands of the people who earn it. Tax cuts for employers have meant higher pay and more jobs. It is the contemporary formula for a strong society.
But this is not an unmodified Thatcherism of yesteryear. The Tories have been on a journey: when the young Sajid Javid was an Ayn Rand-reading radical at Exeter University he’d have savaged the notion of a minimum wage. It destroys jobs, he’d have said. But two decades of experience have shown otherwise. When the Blair government introduced a minimum wage in 1999, William Hague’s shrivelled Conservatives opposed it, saying it would damage the economy. It soon became clear that Hague’s Tories were wrong and they swiftly reversed their opposition.
It turns out that tax cuts mean jobs are created even if minimum wages rise. The current rate of £8.21 an hour makes Blair’s initial £3.60 minimum wage look miserly by comparison. According to the Low Pay Commission, the lowest-paid 5 per cent of the population are now £5,000 a year better off than they would have been had no minimum wage been introduced. In his conference speech, Boris Johnson put it well: there is no choice to be made. NHS funds are rising because the Tories are ‘the party of capitalism — not because we shun it or despise it’. It understands the link between enterprise culture and strong public services.
Clearly, many are still struggling with living costs, as the lowest-paid always have done. More needs to be done for those who fall victim to personal debt, drug abuse, mental health or relationship breakdown. Rising prosperity helps a society become more ambitious about the problems that it can remedy: hunger was far greater in the 1970s than today, but we have food banks because people are less inclined to tolerate destitution and misery.
It is hard to deny that for the lowest-paid people in work, conditions have improved steadily over the past two decades. Yet Corbyn’s Labour party tries to do just that. It can’t be emphasised enough that the fortunes of the lowest-paid have increased sharply without Britain having a socialist government — or even one that has been close to the unions. It is not the threat of strikes that has improved life for the lowest–paid. It is a combination of a dynamic economy and a very straightforward regulation, setting minimum levels of pay. How much better for everyone that businesses are obliged to pay higher wages but in return face lower corporation tax rates.
There’s more to do. Employers are not investing in automation as they ought to be. Part of the reason is that they have become over-reliant on what they thought was a bottomless source of labour: pay has been low, in part, because too many people are doing jobs that robots ought to do. Brexit provides an opportunity to reset this. With migration policy back under UK control we can limit the number of workers coming to Britain to fill low-paying jobs while simultaneously making it easier for firms to seek the skills they need from outside the EU. Theresa May’s wretched ‘hostile environment’, which forced skilled employees to jump through hoops in order to take up jobs they have been offered in Britain, or in some cases denied access to their families, needs to be thoroughly dismantled.
The Conservatives cannot always claim to have been the party which stands up best for ordinary workers. But they are now — and should not be afraid of making the point.