Monday, 22 June 2015

David Cameron's Political Bunkam

David Cameron has said today that Britain needs to move to a “higher wage, lower tax, lower welfare society” yet, in reality this is just political bunkum!

To achieve a higher wage society requires an interventionist government prepared to spend extensively and legislate to reduce corporate profitability, both things being the antithesis of Tory Party ideology.

For example, care work is a notoriously low paid job. To make care work a higher paid job it would require the public sector to invest a huge amount of money to pay care companies in order to improve wages. This in turn would significantly raise the cost of social care, potentially requiring some form of increased taxation to pay for it.

Yet even if the Government were to increase the amount of money it paid to social care providers there is no immediate guarantee that the money would translate into higher wages for workers. The majority of care providers (around 80%) are in the private sector where profitability is important (after all why would anyone run a business unless they made some form of profit), so to ensure higher wages for the low paid staff there would need to be legislation to ensure that private companies use the extra monies for wages otherwise it could simply be taken as profit.

In general private sector businesses higher wages would have to be met by either reduced profitability or increased prices for consumers, and I think it would be fairly predictable that the latter would happen. In which instance higher wages would be simply and easily wiped out by increased the increased costs that everyone would have to pay. Again, the only way to prevent this would be Government intervention and, again, the antithesis of Conservatism.

The other issue to consider is that higher wages could also impact on employment, paying higher wages may force companies to employ less people, which, in turn leads to higher unemployment and, therefore, higher welfare!

David Cameron’s political bunkum is obviously designed to appeal to someone but who exactly is a mystery. Anyone with any sense would see that a higher wage society would need serious Government change and be near impossible to achieve under conditions of austerity. Business leaders in the City are probably cringing at the thought of giving their workers more money and losing profits because of that.

Obviously we know MP’s themselves are leading the way in the higher wages stakes but if they truly want the rest of us to earn higher wages then they need to show real commitment to it rather than coming out with unrealistic rhetoric that nobody really believes anyway.