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National Living Wage

Volume 619: debated on Monday 9 January 2017

9. What assessment he has made of the potential effect of the increase in the national living wage announced in the autumn statement 2016 on levels of employment in the north of England. (908063)

The number of people in employment in the north of England has increased by 112,000 over the past year. The national living wage has already given 1 million people a pay rise, helping to build an economy that works for all.

I thank the Minister for his reply, but has he considered the implications of the national living wage coming in so quickly for small and medium-sized businesses, particularly those in the manufacturing sector? What would he say to those businesses that will not be able to adjust in time, or that simply will not be profitable because the national living wage is being introduced so quickly?

Everybody should benefit from a strong economy, but as well as introducing the national living wage the Government have announced plans to reduce corporation tax further to 17% and to increase the employment allowance, which could be worth up to £3,000 a year.

Is it not perverse of the Government to have reduced work allowances and universal credit at the same time as we have seen increases in the national living wage, meaning that the overall benefit to individuals in work is actually reduced?

The Government have done a range of things. Universal credit is completely different from the legacy benefits it replaced, so it does not make sense to make a direct comparison with tax credits. We have to see it in the context of greater help with childcare and the introduction of the national living wage. Of course, the increased income tax personal allowance also means that people get to keep more of what they earn.

When my right hon. Friend the Member for Tatton (Mr Osborne) introduced the national living wage, the Office for Budget Responsibility said that it would cost 60,000 jobs. Does the Minister think that that is a price worth paying, or is that another forecast from expert economists that we should ignore?

My hon. Friend is entirely correct about the OBR’s projection at that time, but he will have noticed that that came in the context of considerably larger projected employment growth.