Budget 2015: The one chart that shows Osborne’s Living Wage is not as good as he says it is

The living wage up to today has not been imposed by the government

Hazel Sheffield
Thursday 09 July 2015 11:13
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George Osborne holds up the red briefcase outside No 11 Downing Street prior to announcing his budget to parliament in London
George Osborne holds up the red briefcase outside No 11 Downing Street prior to announcing his budget to parliament in London

Osborne has just triumphantly declared that the Conservatives are raising the living wage to £7.20 per hour by April 2016 for the over 25s, rising to £9 per hour by 2020.

"Of course it is the Conservatives that are transforming welfare and introducing the new national living wage," he said. "The Conservatives are the party of the working people."

Iain Duncan Smith, for one, was pleased.

But hang on a minute.

The living wage up to today has not been imposed by the government. It’s a calculation of living costs and how much money people need to earn to pay them.

These calculations are done by the Living Wage Foundation.

It uses numbers provided by the Greater London Authority and the Centre for Research and Social Policy at Loughborough University.

It says the national living wage is £7.85.

In London, the Living Wage calculation is much higher: £9.15.

That means Osborne’s new ‘living’ wage of £7.20 is 60p lower than the calculated living wage.

The Living Wage Foundation said that without a change of remit for the Low Pay Commission this is effectively a higher National Minimum Wage and not a Living Wage. "Is this really a Living Wage? The Living Wage is calculated according to the cost of living whereas the Low Pay Commission calculates a rate according to what the market can bear," said Rhys Moore, director, Living Wage Foundation.

Osborne has actually just rebranded the national minimum wage – which is currently £6.50. So we’ll see wages go up, but still not enough to afford the cost of living in the UK.

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