The minimum wage is too high

Council tax is going up. Train fares are rising. Broadband will cost more, and so will electricity and water. April opens with a blizzard of price rises that will make it far harder for everyone to make ends meet, especially if they are on a low income. The one compensation is that the minimum wage is going up as well. There is just one catch, however. The UK now has one of the highest minimum wages in the world – and very soon it is going to become painfully clear it will start costing jobs.

It is the one statistic the government will be boasting about on Tuesday. The National Living Wage is rising from £11.44 an hour to £12.21, a rise of 6.7 per cent, significantly ahead of inflation, currently running at 2.8 per cent. For an eligible full-time worker, it will mean a pay rise of £1,400 a year. ‘Making work pay is good for workers, will strengthen businesses’ workforces, and will grow our economy for years to come,’ bragged the Chancellor Rachel Reeves, no doubt relived to have something other to discuss than whether she would have to break her fiscal rules, or raise taxes still further.