Five more years of Tory failure on wages and low pay could cost £9 billion more in social security benefits 

In a major speech at Bloomberg on Wednesday 4 February, Rachel Reeves MP, Labour’s Shadow Work and Pensions Secretary, will warn of the huge cost to taxpayers from another five years of Tory failure on low pay. 

She will say that if the Tory failure on wages in this parliament is repeated in the next: 

·         Social security bills could rise by £9 billion according to new Labour Party Analysis of OBR figures, verified by the House of Commons Library.

·         This is the equivalent of a £337 bill for every household in the country.

David Cameron has presided over the largest fall in wages since the 1870s, with working people on average £1,600 a year worse off than in 2010 and those in full time work £2,000 a year worse off. The number of people earning less than a living wage has rocketed from 3.4 million in 2009-10 to 4.9 million according to the latest figures. 

In her speech, Rachel Reeves will set out further details of Labour’s plan to Make Work Pay with a high-wage, high-skill economy. Labour will halve the number of people on low pay by 2025 and drive up living standards by helping businesses to boost skills, productivity and pay. 

Rachel Reeves is expected to say: 

“The Tories’ failure to make work pay, and their failure to deliver their promises on the deficit, are two sides of the same coin.”

“The government’s failure to make work pay has meant they are struggling to keep social security spending under control. Last week the IFS confirmed that, for all David Cameron and George Osborne’s rhetoric, social security spending will be no lower next year than it was when David Cameron took office.” 

On rising costs to taxpayers of the Tory low-wage economy, Rachel Reeves is expected to say: 

“The number of working people reliant on Housing Benefit to keep a roof over their head will have more than doubled over the decade at a cost of over £14 billion.” (by 2020 on current projections) 

“According to new analysis we are publishing today from the House of Commons library, five more years of Tory failure to make work pay, with wages falling short of expectations to the same extent in the next parliament as they have in this, will mean we face another £9 billion in social security spending on top of that already projected - a £337 bill for every household in the country.” 

On the choice facing the country in May, Rachel Reeves is expected to say: 

“The choice we now face is clear the Tories’ low wage, low skill economy driving up benefit bills and undermining tax revenues or Labour’s plan: a plan to help businesses create and fill more productive, high skilled jobs. The Tories will leave us paying the bills of in-work poverty for years to come. Only Labour will make work pay.”