DESPITE the repeated claim that they want to "make work pay", the UK Coalition Government appears to be considering plans to freeze or cut the national minimum wage ("Tens of thousands face minimum wage freeze", The Herald, April 3).
Such contradictions in social and economic policy should come as no surprise when we consider the mess that is emerging around welfare reform. For many thousands of Scottish workers the national minimum wage does not provide an income that allows them to achieve a decent standard of living, even with the addition of tax credits and other in-work benefits. For the UK Government to suggest that what these workers need is to have their pay frozen or cut (whilst the benefits many will rely on will increase by only 1% this year) only serves to show how disconnected it is to the challenges that low-paid workers have in making ends meet.
The national minimum wage needs, as your editorial states, more effective enforcement to ensure that all employers comply. But even more than that, what low-paid workers need is a decent living wage. Thousands in Scotland have already secured this, but more desperately need it. If George Osborne wants to show his commitment to making work pay, he should think more about how to ensure more workers can be paid a living wage, rather than undermining an already inadequate minimum wage.
Peter Kelly,
Chairman, Scottish Living Wage Campaign,
c/o The Poverty Alliance,
162 Buchanan Street,
Glasgow.
TELLING it as it is, Andrew McKie does not do April Fool stories ("Without reform, welfare state steals money from the neediest", The Herald, April 1). Benefit payments consume nearly 30% of tax revenue, and comprise more than 20% of public spending, more than 7% of which is funded by public borrowing. Clearly this situation is no joke: it cannot go on.
If the Chancellor is right (and I am not convinced at all), the annual public deficit will be closed by 2018, and the national debt will peak in that year at £1.6 trillion, equivalent to 100% of UK Gross Domestic Product. Involving annual interest payments of more than £60 billion, these enormous burdens, kick-started by Gordon Brown after 2001 and supported by those gullible voters who believe in something for nothing, will be dumped on our children and grandchildren.
But that is nowhere near the full story. Before 2018, annual interest payments on public debt will start to rise inexorably. Quantitative easing of £375 billion since 2008 has artificially depressed interest rates. Unless Mr Osborne intends to ruin millions of savers and pensioners, real interest rates will start to rise from negative to a more "normal" level of 2%. As cheap public debt incurred after 2008 is rolled over, it will be replaced by more expensive borrowing for an increasing proportion of total public debt. On top of this comes demographic change – more older people who will live longer, throwing the public finances into further chaos with ballooning NHS and care costs, and with an even bigger state pension bill.
The only way out of this one in the long run is for young people to do what only they are equipped for – work more and breed more. There is no prospect of reducing the national debt by running a budget surplus over many years, so expect years of inflation instead to deal with the burden.
Nevertheless we need economic growth in order to increase tax revenues, and neither of these will arise from more public borrowing, as the Left feebly tries to argue. Historically economic growth has arisen from energising labour productivity. With water power and canals, coal and steam power, oil and petrol, hydrocarbon-generated electricity and nuclear power, output per man has leapt forward, and growing income has enriched us with a profusion of goods and services. But today our Government wastes nearly £10 billion a year on wind, solar and tidal energy. Under foolish EU rules, it meekly agrees to decommission coal-fired power stations. The Government dithers over exploiting our vast reserves of shale gas and oil, and it quietly conceals our similarly large availability of thorium for clean nuclear power. Both of these sources of energy are much cheaper and infinitely more efficient than the so-called sustainable alternatives being foisted on us by self-serving pressure groups.
Our political class wastes a further £10 billion a year on foreign aid to tinpot dictators and their grasping entourages in the Third World, and much more than that on membership of the mercantilist, corrupt and broken European Union. We are governed by April fools, and they are not just in Brussels and London.
Richard Mowbray,
14 Ancaster Drive,
Glasgow.
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