We're afraid that the Real Living Wage people are telling an untruth here

It could be that they’re just allowing their own propaganda to run away with them, or that they’re actively trying to dissimulate, but this is an untruth:

The real Living Wage rates remain the only wage rates independently calculated based on what people need to live on.

As they’ve spent a couple of decades telling us, the calculation is based upon Adam Smith’s linen shirt example. A linen shirt is not a necessity, but. If you live in a society where not being able to afford a linen shirt is regarded as being in poverty, then, if you cannot afford a linen shirt in that society you will be regarded as poor. From which it is possible to ask representative groups what it is that you should be able to afford in order not to be regarded as poor - we seem to recall a carvery meal once a month, a couple of pints out once a week as making such a list - and back calculate to the wage necessary to be able to afford those things.

But it is not, it is not by design, the amount “people need to live on”. It is the amount to be had and to not be regarded, by this current society, as being poor. To switch that statement is to tell an untruth.

Tsk.

There is also the criticism that we have been levelling at this calculation for this past couple of decades too. Exactly the one which led to the personal allowance for income tax and national insurance to be raised to the current £12,500 or so. The Real Living Wage is a pre-tax number. Meaning that a significant reason it is so high is the appallingly high tax rates faced by those on or around that minimum wage (of whatever kind, the minimum wage, national minimum wage or this, the real living wage). Thus also why we have been arguing - these past couple of decades - that the solution is to lower the tax rates on those at around this level of income. By increasing the personal allowances, of course.

The claim is that this real living wage is now £10.90 an hour, 37.5 hours a week, full year working. £21,294 a year. On which, under the current system, £12,570 is free of income tax, the rest pays 20% - £1,744.80. National insurance starts at £242 a week at the rate of 13.25%. On £408.75 per week in earnings, that’s £22.09 a week in employees’ NI or £1,148.68 a year.

That’s £2,893.48 charged in tax to this real minimum wage income. Or, post tax, £18,400.52 in net income.

If you work on the current national minimum wage of £9.50 an hour for the same working hours then your gross income would be £18,525. This before we even think about the influence of employers’ national insurance (which, yes, is incident upon wages).

So, if the national minimum wage were tax free then it would be higher than this real living wage post-tax. The problem is not low wages, it is high taxes. So, the solution is also obvious, lower taxes.

As we’ve said - again over these past two decades, repeatedly - the only real and accurate minimum wage is £0. But assuming that there is one then that should - must, on equity and good sense grounds - be the personal allowance for both income tax and national insurance. For the only argument for a minimum wage is that this is the de Minimis amount that an hour of labour is worth. So, why should Westminster get a chunk of that minimum amount?

So, again as we’ve been saying this past couple of decades, raise the personal allowance to the level of the minimum wage and the problem is solved. All those earning it will now, by the standards of the society we live in and as constructed by the real living wage campaigners, be earning both the real living wage and not be in poverty according to the standards of this population and society.

When we’ve raised this with the campaigners - again, that couple of decades - we’ve been told “Yes, yes, but” and the but has never been very convincing.

Increase the personal allowance and the minimum wage will be higher than the real living wage. So, let’s do that then, shall we?

We also note this little line they use “This year’s Living Wage rates have been brought forward in recognition of the sharp increase in living costs over the past year.” Hmm. In previous years the real living wage was calculated in November. The recent national insurance rise will be cancelled in November. So, if we were extremely unkind, possibly even conspiracy minded, we might suggest that the calculation has been brought forward so as to not include the effect of that tax cut upon the real living wage. But who would believe something like that of the Resolution Foundation? Tsk, it’s unthinkable.

Some things in life really are simple. If you want the working poor to have more money then stop taxing the working poor so damn much.

Action This Day, as the man said.