House of Comments - Episode 94 - Cash4Fracking

Episode 94 of the House of Comments podcast "Cash4Fracking" is out. I am joined by Labour activist and council candidate Claire Spencer and Ruth Porter of the centre-right think tank Policy Exchange to discuss Ed Miliband's banking reforms, Osborne's £7 minimum wage intervention, cash incentives to councils for fracking and the continuing fallout from the Lord Rennard case.

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PS: A big thanks to Audioboo for hosting the podcast for us. We would also like to thank Kevin MacLeod from Incompetech.com for our theme music.

Freezing or reducing the minimum wage would be economically wrong-headed

So there are rumblings that the government is planning to freeze or perhaps even reduce the minimum wage for those over 21 years of age. This would be completely wrong-headed for at least three reasons.

Most importantly it is simply not fair to penalise those who earn the least (which by definition are those earning the national minimum wage). They are the so called "strivers" that George Osborne keeps banging on about. Surely this government should want to protect them rather than see their real-terms salary fall?

But if that's too wishy-washy namby-pamby sandal-eating muesli-wearing for you then here are a couple of economic reasons for you.

If salaries are reduced then benefit claims will increase. The government will simply be shifting the burden from the private sector to the taxpayer and hence helping to further subsidise companies that should be paying their staff more not less. If anything this will make the deficit even worse.

Also those earning the least are the most likely to spend what they get. This is exactly what you need to boost growth and hence the mooted policy is the exact opposite of what the country requires.

I hope this is just bank-holiday flag flying. I also hope that Lib Dem ministers will have nothing to do with this mean-spirited and economically dubious nonsense.