Letters From A Tory Daily views on British politics and the Conservative Party from a centre-right thinker who writes letters on his blog to politicians, journalists and many others.

Dear Ken Clarke,

You’ve been a little quieter than usual in recent months as Lord Mandelson, your opposite number, has been strutting his stuff in Downing Street and elsewhere.  Perhaps now is the time to think hard about policy in the run up to conference season, although I suspect that the Minimum Wage is probably not on the agenda.  But should it be?

The BBC have an interesting article on their website today about the history of the National Minimum Wage, which celebrates its tenth birthday this year.  Ironically, it was the Left which adamantly opposed the idea in the 1970s and early-1980s, as they feared that it would undermine the principle of free collective bargaining and that it would pull down pay rates above it, reducing so-called “differentials” - the gap between the skilled and unskilled workers.  There was also self-interest at work too: if a minimum wage protected people’s wages, what was the incentive to join a union?  Even into the 1990s, there was no consensus about the minimum wage on the Left.  In 1991, Ed Balls even wrote: “The allure of a minimum wage is deceptive and should be resisted … Fostering a high wage, high skill economy is the only way to reverse Britain’s relative economic decline and to generate the resources to eradicate poverty. But the minimum wage is not the answer. If anything the minimum wage will make it even harder to achieve these ends.”  NUPE, the public service union who broke the trend by supporting the minimum wage, reached an agreement with the then shadow chancellor John Smith, in 1991 – the minimum wage would be set to 50% of male median earnings initially, rising to two-thirds over time.  Things didn’t work out like that, though. Smith died in 1994, and his replacement, Tony Blair was having none of it.  The set rate went out of the window and in came a Low Pay Commission.  The initial figure, an hourly rate of £3.60 for adults and £3.00 for 18-21 year olds, was considered too low by the unions. However, as George Bain, the first chair of the Low Pay Commission, said at the time any idiot can set a minimum wage. What matters is getting the level right: high enough to protect the low-paid, not too high to damage the economy.

Since 1999, political opposition to the minimum wage has all but fizzled out.  The low starting level and subsequent small rises have kept employers (relatively) happy and unions have completely changed their tune over the years.  Despite their vehement opposition before the 1997 election the Conservatives accepted the minimum wage within a year of its introduction and the current party leadership has made it clear that it has no plans to repeal it.  That said, the Conservative MP Christopher Chope recently introduced a private member’s bill which would have allowed people to opt out of the minimum wage.  For all the controversy when it was first introduced, amidst predictions that it would lead to an additional two million unemployed, it is now almost impossible to find any senior political figure who wants its repeal.  Is the absence of a concerted opposition to the minimum wage a good thing?  Politically, I understand that this issue is not up for discussion right now because it would make the Conservatives an easy target.  It is hard to say whether Christopher Chope had the right idea, seeing as a recession is surely the best time to allow employers to keep people on the payroll by any means possible – even if it means working for less than £5 an hour.  Now that the UK economy has begun to stabilise, this position naturally weakens but it is still compelling given the awful unemployment statistics.

I’ve always felt that there was a clear argument against a minimum wage for every worker in every industry.  For example, the idea of letting waiters and waitresses work for less than the minimum wage after introducing legislation to make them pocket every tip that they get over the course of their shift has always seemed tempting as it would drive high standards without hurting employers.  In general, I can see why the minimum wage is not so high as to cause a headache to most employers.  Nevertheless, it would be nice – as with the NHS – if someone could mention the minimum wage without facing a political backlash of almighty proportions plus a stupid Twitter campaign.

Yours sincerely,

A.Tory