In a bid to shift the focus of the ongoing Conservative Party Conference, Chancellor Jeremy Hunt is set to announce a significant policy change on Monday.
Amid escalating debates over high levels of taxation, Hunt’s announcement aims to position the Conservative Party as champions of “workers versus shirkers.”
The centerpiece of this announcement is the plan to increase the National Living Wage to at least £11 per hour starting from April next year, benefiting approximately two million of the lowest-paid workers in the country.
The current National Living Wage stands at £10.42 per hour, serving as the legal minimum hourly wage for individuals over 23 years of age.
According to a report by the BBC, Chancellor Hunt will unveil this proposal during his address at the Conservative Party Conference, emphasising its potential to alleviate financial struggles for millions of people who often find themselves grappling with mounting debt.
Growing demand from senior Tories
Chancellor Hunt’s announcement comes as a response to the growing demand from senior Tories, including some ministers, to lower taxes before the upcoming election. In addition to the minimum wage increase, Hunt is set to introduce stricter sanctions on benefit claimants who refuse to seek employment, potentially affecting up to 100,000 individuals. He argued that it is a matter of fairness to ensure that those who are not actively seeking work receive lower benefits.
Former Prime Minister Liz Truss is also expected to make her case for radical tax cuts during the conference. However, Chancellor Sunak has been cautious about committing to tax cuts before the election, emphasising the importance of combating inflation. Hunt’s spring Budget is being eyed as a potential moment for pre-election giveaways, with some Conservative activists and MPs growing impatient. Levelling up secretary Michael Gove added his voice to the call for tax reductions, urging Sunak and Hunt to go further.
As the debate over tax cuts continues within the Conservative Party, there is increasing pressure to prioritise tax cuts that benefit workers rather than wealthier individuals and older voters. The Institute for Fiscal Studies recently warned of a record increase in taxes per household since 2019. In a sign of growing restlessness on this issue, 33 Tory MPs, including Liz Truss, have pledged to their constituents not to support further tax increases. Another group of right-wing MPs is pushing for an increase in the threshold at which VAT is levied from £85,000 to £250,000, a move advocated by The New Conservatives, led by MPs Danny Kruger and Miriam Cates. They will present their case for this tax cut for small businesses during a rally in Manchester.
Terry Payne, Global Managing Director of leading recruitment agency Aspire, expressed his views on this anticipated development, stating:
“This has been a long time coming and could start to make a difference to millions of people struggling to make ends meet and finding themselves falling into more debt every month. Another 58p or so an hour might not sound like a lot, but across a month, it might just mean that people who can’t pay their rent or mortgage or put food on the table for their family are able to do so. It’s certainly a step in the right direction, but more could and should be done by the government. The reality is that inflation – while falling – remains three times higher than the government’s target, which means that costs are still rising. This calls for action.”
Aspire’s quarterly Workplace Trends report has shed light on the economic challenges facing the job market, with over 60 percent of surveyed workers expressing an active interest in seeking new employment opportunities to improve their income. Payne emphasised, “The jobs market is a useful gauge of the economic climate and how worried or confident people are financially. The fact that two in three people are actively looking for a new job, as they look to find better-paying roles, tells you everything you need to know.”
Ben Harrison, Director of the Work Foundation at Lancaster University, says:
“It is welcome that the Chancellor has announced the National Living Wage will increase to at least £11 per hour in April 2024.
“But the Government is seriously mistaken if they think toughening sanctions for some of the most vulnerable people in society will result in more people in good quality, secure and long-term employment.
“Pushing people into ‘any job’ will not alleviate worker shortages that some sectors are facing, and the Department for Work and Pensions’ own evidence from 2020 suggests sanctions are not effective and slow people’s progress back into work.
“To tackle persistent worker shortages amidst record long-term illness we need to avoid more punitive measures, and focus on tailored support for jobseekers with different needs, and a renewed drive to work with employers to increase the quality of jobs on offer.”
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.
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