Liz Truss backs plan to cut minimum wage, paid holidays and redundancy cash

14 November 2023 , 13:35

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Liz Truss attended the launch of the Growth Commission's Growth Budget 2023 (Image: PA)

Liz Truss today backed a plan to tear up workers’ rights, freeze the minimum wage and attack paid holidays.

The former Prime Minister hailed a 101-page report from the Growth Commission which authors claimed would fire-up the economy. Speaking exclusively to the Mirror, the ex-Conservative leader said: “I think it’s a very important exposition of what needs to happen to grow the British economy.” Pressed on the recommendations over workers’ rights, she added: “I think it’s an important part of the debate.”

Ms Truss launched the Commission in July - nine months after her 49-day premiership came crashing down following her disastrous mini-Budget which included £45billion of unfunded tax cuts and sent mortgage rates spiralling. Experts were tasked with drawing up plans to overhaul the economy, focusing on supply side measures such as ripping up red tape, improving infrastructure and making it easier for people to find jobs.

The former Prime Minister was at the event in the heart of Westminster (PA)

Publishing its Growth Budget 2023 today - a week before Chancellor Jeremy Hunt’s Autumn Statement - it lashed out at a host of employees’ protections. “Of course, labour protections to prevent abuse and exploitation are necessary, but the data suggests that the UK’s comparatively poor scores in this area are holding back its economy, and the balance between labour protections and voluntary exchange in the provision of labour services is more restrictive in the UK than is optimal,” it claimed. "Returning the UK to a better balance could unlock significant amounts of GDP per capita.”

It cited “paid annual leave”, “notice period for redundancy dismissal”; “severance pay for redundancy dismissal”; “restrictions on overtime work”; and the minimum wage as areas to tackle. The Government plans for the minimum wage for over-23s - currently £10.42 an hour - to hit 66% of median earnings by 2024. But the Commission wanted it frozen then downgraded to 61%.

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Commission co-chairman Shanker Singham said: “There’s nothing wrong with the minimum wage - what matters in terms of competition is where it’s set. What we’re intending to do in the UK is move it to 66% of median wage - that’s far higher than any other OECD (Organisation for Economic Co-operation and Development) by next year and will be a significant drag on the economy. We are suggesting freezing it and targeting it down to 61%.”

The ex-Conservative leader listened intently as a host of recommendations were outlined (PA)

Fellow co-chairman Douglas McWilliams claimed: “The minimum wage at its current level is actually destroying jobs because employers can’t afford to take people on. We calculate that about 900,000 jobs are currently being made uncompetitive by the existence of the minimum wage.”

However, figures released today by the Office for National Statistics show 957,000 vacancies in the economy which need filling. An estimated 152,000 of those are in social care where many workers receive the minimum wage. Lifting their pay is widely seen as key to tackling the sector’s recruitment crisis.

The study also called for income tax cuts for the highest earners, greater rail privatisation and welfare reform - particularly around sickness benefits. Mr McWilliams told the Mirror: “One needs to be quite careful about what one accepts as a sickness claim, and that is a matter of carefully looking at claims of this kind.” While he stressed the need for helping people whose illnesses currently prevented them from working, he added: “Some people with health claims may be stretching it a bit; with other people, the probability is that they need assistance if they’re ever going to get back to work.”

The former Premier braved the rain in Central London (PA)

In the latest broadside to Prime Minister Rishi Sunak, who as Chancellor hiked corporation tax from 19% to 25%, the Commission demanded it be slashed to 15%. "We’ve seen it work in Ireland, why should the Irish gain? Why should it not be us?” said Mr McWilliams.

The Commission insisted implementing all its measures would deliver 23% more growth by 2043 - handing every Briton £11,300 or each household £26,000. Failing to follow its plan would, the Commission suggested, mean GDP will hover at 1% for the next 20 years.

Ms Truss, who attended today's launch along with former Business Secretary Sir Jacob Rees-Mogg and ex-Brexit Minister Lord David Frost, is understood to believe implementing the proposals would be “politically very difficult”.

Ben Glaze