Starmer ally defends minimum wage quango after Sunak calls for it to be axed
Welfare secretary Pat McFadden has leapt to the defence of the minimum wage quango after former Prime Minister Rishi Sunak called for the body to be axed.
The top ally of Sir Keir Starmer told Morning Wire it “would be a mistake” to abolish the Low Pay Commission (LPC), an independent body that advises the government on the national minimum wage.
“What would happen is much more direct lobbying of government ministers on setting minimum wage rates in a way that might not take into account all those economic conditions, including the employment conditions,” he said.
McFadden added there was a “degree of admiration” in other countries for the model and it had “worked very well for the UK for many years”.
Sunak argued in an article for the Sunday Times that the quango should be abolished, with ministers seizing full control and accountability over the national living wage.
The former Chancellor-turned-PM said he wished he had “been braver” in overruling the LPC as wage increases outpaced productivity gains.
McFadden: Aligning minimum wage to be done at ‘precise pace and scale’
In the current remit, the Labour government has urged the LPC to gradually narrow the gap between pay bands for 18 to 20-year-olds with adults in a move that has drawn criticism for making it harder to employ young people.
McFadden reiterated this ambition on Monday, but added it must be done at “precise pace and scale,” which he insisted the LPC can take into account.
It comes despite the Bank of England sounding off on the consequences of hikes to the lower age bands, with rate-setter Catherine Mann warning a rise in youth unemployment reflected “disproportionately big increases in the minimum wage for that age group”.
Minimum pay for 21 to 22-year-olds has risen by 33 per cent over the past three years, bringing it into line with the £12.71 hourly national living wage paid to older workers. The rate for 18 to 20-year-olds climbed to £10.85 in April, marking an eight per cent jump from £10 previously.
McFadden said the UK has a “particular challenge with young people, which is long-term and deepseated – it’s been going on for some years.”
He added: “It’s been getting worse for about five years… we recognise that sometimes taking on a young person is a risk and we’re trying to work with employers to help them with that risk to expand opportunity for young people”.
‘Who can we tax in order to pay benefits?’
The minister’s comments follow the Milburn review, an investigation conducted by former Labour health secretary Alan Milburn into the rising number of young people not in education, employment or training.
The review revealed that for every £1 the Department for Work and Pensions spends on support for young people getting into work, it spends around £25 on benefits.
Messages revealed in the Mandelson files last week showed the welfare secretary had raised concerns around spending as he wrote to the disgraced peer: “every meeting I have is ‘who can we tax in order to pay benefits to others’”.
On Monday, he told Morning Wire: “I don’t think there’s any surprise in those texts about my views on things”.