The Living Wage is nifty politics – but let’s see more help for small business too

What is George Osborne’s Living Wage? Is it a ploy to shift cost from the taxpayer to the employer by reducing in-work benefit claims; or a sop to Tory MPs who were bombarded with angry questions about earnings inequality during the election, as well as a neat way of turning one of Labour’s few effective lines of attack? Or is it a principled act of fairness, acknowledging that the lowest earners bore the brunt of the recent recession? Knowing how the Chancellor operates, it is probably all of the above except the last: he is, as Sir Samuel Brittan once remarked, ‘one of those people who do the right things without knowing why’.

Either way, new research from the Resolution Foundation indicates that the cost of the Living Wage — £7.20 an hour for over-25s from next April, aiming for £9 by 2020 — will be relatively insignificant in the big picture: a 0.6