In his Budget, the Chancellor claimed that ‘those currently on the minimum wage will see their pay rise by over a third this Parliament, a cash increase for a full time worker of over £5,000.’ But this wasn’t quite the whole story. What he didn’t say is that a full-time worker could see just 7pc of this pay rise in their pockets due to the withdrawal of benefits and tax credits. Osborne’s Treasury will accrue the remaining 93pc in reduced welfare payments and increased tax revenue.
The simple truth is that the Living Wage helps government more than it does workers. In Britain, tax credits and other benefits conspire to make low-paid work a fiendishly complex network of allowances and taper rates. It can be very difficult for workers to know, if they take a job or extra shift, how much better off they’ll be.