George Osborne's 'Living Wage' will soon set wages for 11pc of UK workers

George Osborne’s Budget plan to raise the minimum wage to £9.35 for over-25s was a surprise – which means it has not yet been much scrutinised. Ed Miliband’s £8 by 2020 pledge was pretty much a non-pledge as inflation would probably have taken the £6.50 minimum wage to £8 by the end of the decade anyway. So it would not be controlling a greater share of the workforce; Miliband’s apparent generosity was a trick of inflation. But Osborne goes far further; and this has implications.

The chief question, to me, is: what share of the workforce will have their wages set by the government under the proposed National Living Wage (NLW)? Since the inception of the National Minimum Wage it has been about 5 per cent, a small share, so it didn’t really create the job losses that economists had feared. (The problem with a £9 minimum wage is that it renders unemployed those whose skills are not worth £9 an hour – the OBR estimates about 65,000 will be put on the scrap heap by Osborne’s policy; supporters of the NLW would argue that’s a price worth paying for helping the rest).