Free market think tanks have denounced “left wing” Tory plans to hike the minimum wage to £9 an hour as “intellectually bankrupt.” They accused the government of knowingly sacrificing jobs and “putting politics ahead of good policy.”
By the government’s own prediction the move will costs 60,000 jobs, which will be concentrated in deprived parts of the country, they say, putting even more people on benefits.
The “bizarre” policy caused shock on both sides of the chamber when announced in the budget, with Osborne using the fashionable Labour lingo by calling it “a living wage.”
The stern warning comes from two of the most respected think tanks in the country; The Adam Smith Institute (ASI) and the Institute of Economic Affairs (IEA), who spoke exclusively to Breitbart London.
Deputy Director of the ASI, Sam Bowman, said: “It’s a really bad idea. Even the Office For Budget Responsibility says it will cut the number of jobs. By their own estimates it will cost 60,000 jobs, so they really know they shouldn’t be doing this.
“All the empirical evidence we have shows that raising the minimum wage cuts jobs. We should care about putting people out work because putting people out of a job is much worse than the benefits of getting a extra 50p or so an hour.
“What we’re doing is redistributing wealth from the absolute poorest people who are unemployed, to those who have a job – that’s a really bad form of redistribution. [The government] would be much better off… leaving the minimum wage in the hands of the Low Pay Commission and… making the supply side of reforms (such as housing) and so making it cheaper for poorer people to live.
“You can’t make water flow uphill, and raising the minimum wage attempts to do just that.”
Also speaking to Breitbart London, Ryan Bourne, Head of Public Policy at the IEA, was in concurrence: “The decision to introduce the National Living Wage is intellectually bankrupt. The reform is based on the idea that tax credits currently subsidise employers – something for which there is scant evidence.
“For a political party which says it believes in markets to cheer this development is bizarre.”
When asked what could have possibly motivated the Tories to do this, Bowman exclaimed: “It’s politics isn’t it! It doesn’t cost them anything in the short term. They get this amazing, shocking announcement that they’re supporting a left wing policy. The minimum wage is a left wing policy, and a Labour policy.
“It’s a great headline, but many people don’t realize that the minimum wage costs jobs – they’re not aware of the evidence – so it will be very popular. They’re putting politics ahead of good policy.”
“… The living wage foundation – which used to say they only wanted to make this voluntary – now say there should be a different rate for London and the rest of the country. Well, then the logic is pretty obvious; if it is different between London and the South East, then it should be different between Northern Ireland and the South East, and so on.
“So not only is it really bad in and of itself, it could be really bad for extremely deprived parts of the country, where it will be much, much higher than what the market can bare. You could see disproportionately high job losses in places like the North and Northern Ireland.”