Minimum Wage: Impact on Benefits (Hansard, 22 July 1998)

§ The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

There are no plans to make changes to the cut-off levels for benefits as a direct consequence of the introduction of the national minimum wage.

The impact of the national minimum wage on council tax levels is expected to be negligible. The Government maintain a strong influence on the level of council rents through the ring-fencing of the Housing Revenue Account (HRA) and the rent guidelines assumed for the payment of HRA subsidy. Effects on costs are more likely to influence the levels of services offered rather than rents, and the impact of the national minimum wage will be only one of a range of influences on the costs of providing services to tenants.

However, following the Government's Comprehensive Spending Review of housing, local authority rents will be increased by 1 per cent. in real terms next year and by 2 per cent. in real terms in each of the following two years. Part of the increases in rents will be available for increased revenue expenditure on maintaining the stock. In addition, tenants will be given more say in how their homes are 109WA managed and maintained. This is part of reforms to be introduced requiring councils to plan their maintenance better and hold them accountable for investment decisions.

The National Minimum Wage is a key element in a range of policies introduced by the Government to help make work pay. Those on the New Deal will be treated in the same way as other workers of a similar age undergoing training. The Working Families Tax Credit, which is central to this Government's welfare to work strategy, will make work pay for a further 400,000 families, by guaranteeing a minimum income, above and beyond the level of the minimum wage.

The structure which we are proposing for the minimum wage is therefore consistent with our aim of getting people from welfare to work.