Sajid Javid acknowledges that he is in no small part a product of the City’s big bang. Faced with closed shops in some of the more traditional banks, this British-Asian outsider worked his way up the chain first in an American bank and then in a German one. Many in the Square Mile reckoned they’d got one of their own through the door when this trailblazer walked into No. 11.
So his announcements yesterday certainly raise an eyebrow. Yes, there were welcome commitments on broadband and road-building, and he rightly took pride in the fact that our job numbers are at record highs. But like both of his recent predecessors, he couldn’t resist putting politics before pragmatism as we approach a general election.
The pledge to hike the minimum wage to £10.50 is not as radical as it may sound, though the lowering of the age at which it applies will pile up significant costs on businesses – as much as £16 billion, by some estimates.
But more importantly, it is now clear that the minimum wage – rebranded the ‘National Living Wage’ by George Osborne – is now resolutely a political football. When the minimum level was first brought in by the Blair government it came alongside the Low Pay Commission, an independent body which would advise on what levels of wage growth employers could sustain. Osborne tore up this contract, using it as a prop to liven up a budget speech. Philip Hammond and now Javid have doubled down.
We wonder what John McDonnell and Jeremy Corbyn might be considering.
Those independent experts will have pointed out to the chancellor that we are very much pushing the envelope already on the minimum wage. Retailers in particular will expect a business rates discount, as it is hardly likely that the high street is going to be revived by putting up the cost of labour. Most firms pay what they can afford. Indeed, most strive to do the right thing.
If the Conservatives make it through a coming election, the first order of business would be to give employers scope to afford a little more – with the sort of radical tax plan of which Mr. Javid has, in the past, been so enthusiastic.