Tackling the Cost of Living Crisis with Make Work Pay Contracts

As hard-working families in Oldham East and Saddleworth are struggling as they face the greatest cost of living crisis in a generation, wages are continuing to rise slower than prices –  just as they have done for 39 out of 40 of the months.

Average wages are over £1,500 lower than they were when the Tories came into power in 2010 and year after year people are working harder, for longer, for less.

Hard-working people right across Oldham East and Saddleworth are struggling to pay the bills despite getting up early to go to work and despite doing the right thing.  It cannot be right that we’ve now reached the point where more of the people bringing up families in poverty are in work than out of work.

We need to make sure work always pays.  That is why I welcome Ed Miliband’s announcement that he plans to introduce Make Work Pay contracts.

Under Make Work Pay contracts, firms that sign up to paying their employees the living wage, currently £8.80 in London and £7.65 elsewhere, in the first year of the next Parliament will benefit from a 12-month tax rebate of up to £1,000 – and an average of £445 – for every low paid worker who get a pay rise.

The measure will be entirely funded from the increased tax and National Insurance revenue received by the Treasury when employees receive higher wages. Additional savings in lower tax credits and benefit payments, as well as increased tax revenues in future years, will cut social security bills and help pay down the deficit.

This scheme would  cut social security bills for the taxpayer– as well as seeing businesses get cash for every worker they pay a decent wage.

Make Work Pay contracts will benefit employees, businesses and the British taxpayer. Employees will be paid more and firms will receive a tax rebate and will benefit from higher staff morale, increased productivity and lower turnover of staff.  Taxpayers will see a reduced social security bill from lower spending on tax credits and benefits for people in low paid work.

Make Work Pay contracts are a concrete way forward to help thousands of families in Oldham East and Saddleworth struggling to deal with the rising cost of living, helping them deal with the cost of living crisis.

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