Minimum wage increase 'would boost public finances by £5.6bn a year'

Raising minimum wage rates to £10 per hour for workers over the age of 18 would boost the public finances by an estimated £5.6bn a year says new study from Landman economics for UK trade union Unite.

The new study found that increasing the national living wage and the national minimum wage to £10 per hour up from £7.83 per hour for workers aged 25 and over, £7.38 per hour for workers aged 21-24 and £5.90 per hour for workers aged 18-20, would boost net income on average by over £1,300 per year.

This measure could benefit up to 5.2m women workers and over 78% of young workers aged 18-20, especially those workers in hospitality and retail.

According to the study, an ‘intermediate’ increase to £9 per hour for workers aged 25 and over, £8.70 for workers aged 21-24 and £8 per hour for workers aged 18-20 would help 6.25m workers.

The research also estimates increases the wage rates could add an additional £5.6 billion to the public finances per year through the increased tax receipts, national insurance contributions and reduced expenditure on in-work benefits that would come from the raise.

On Thursday, shadow chancellor John McDonnell is set to give a speech at Unite’s policy conference and debate the issue. The Labour party is committed to raising the minimum wage to £10 by 2020.

Commenting Unite assistant general secretary Steve Turner said: “Increasing the minimum wage and national living wage to £10 per hour would be a huge boost for young workers and help end poverty pay rates that hospitality workers have to endure.

“It would be a virtuous circle helping ease the squeeze on incomes, while increasing the public finances through greater tax revenues and reduced spending on in-work benefits.

“A £10 per hour minimum wage would mean extra money in people’s pockets which would be spent in communities and on high streets across the UK. It would help breathe life into a flagging economy and make work pay.”