Sir George Bain, the man who designed the minimum wage from the ground up, has stepped forward with a warning so clear that even the most politically sheltered minister should feel a tremor of doubt.
Labour’s plan to abolish the youth rate, he says, will undoubtedly make the employment position of young people worse.
Only Labour could hear the inventor of the policy say “you are using this wrong” and reply with something between a shrug and a self congratulatory grin.
When it comes to Labour and economics, the pattern is reliable. If there is a door marked “Do Not Pull,” they do not simply pull it, they do so with both hands, a running start, and a press release celebrating their boldness.
Ignoring Incentives Never Ends Well, But Labour Keeps Trying
At present, 18 to 20 year olds earn £10 an hour and over 21s earn £12.21. Labour insists this is discrimination. Employers insist this is sanity. Teenagers lack experience, require training, and carry a higher risk of early career unemployment. Bain knew this when he created the youth rate. Every economist with a pulse knows it. Employers really know it.
But Labour has developed the remarkable conviction that incentives do not apply to them. Raise the cost of hiring inexperienced workers, and employers will hire fewer of them. It is as predictable as gravity. It is the same principle that underpins the Laffer Curve, incentives matter, and ignoring them is expensive.
To Labour, however, the Laffer Curve might as well be an offensive doodle created by a right wing think tank.
Feel Good Politics, Real World Damage
Sir George Bain puts it simply,
“There is a conflict between not discriminating by paying young people less and causing them unemployment.”
Only Labour could hear that statement and conclude that unemployment is an acceptable price for a tidier manifesto slogan.
Youth unemployment stands at 15.3 percent, triple the national rate. Nearly a million under 25s are now NEETs, the highest in the G7. Scrapping the youth rate does not solve these problems. It worsens them dramatically.
But Labour has always excelled at addressing problems by making them bigger, then applauding their own compassion while they do it.
The Equality Act Meets the Time Value of Money, Labour Loses
Labour’s fixation on equalising everything by statute is where ideology finally overwhelms arithmetic. In finance, the time value of money matters. Older people have more wealth and less time. Younger people have less wealth and more time. Their economic positions are not equivalents, and pretending they are is not fairness, it is vandalism.
There is nothing inherently unjust about a lower youth rate as long as the minimum wage itself is positive. If anything, basing pay on experience rather than age would be a fairer system. But fairness is not Labour’s goal. Optics are.
Labour’s Habit, A Century of Unemployment
Last year marked a revealing anniversary. The only Labour government to reduce unemployment was Ramsay MacDonald’s in 1924, and only by measley one percent.
Every Labour government since has increased unemployment. Every single one. Not because they set out to, but because they cannot resist the temptation to impose theories on the real world and then act surprised when the real world pushes back.
Yet here they are again, utterly convinced that this time is different. It never is.
Businesses Warned Them, Experts Warned Them, Bain Warned Them, Labour Ignores Them All
Hospitality and retail, the industries that employ the most young people, have already warned that the combined effect of rising wage costs and higher National Insurance will force job cuts and hiring freezes.
The Low Pay Commission recommended only a small rise in the youth rate because it understood the risk.
Labour’s answer, an 8.5 percent jump for young workers, more than double the adult increase. They managed to take the only guardrail designed to protect young workers and rip it out entirely.
This is not policy. It is point scoring dressed up as compassion.
A Government That Still Believes Economics is Optional
Labour clings to the claim that previous minimum wage increases caused little damage. What they omit is that none of those increases abolished the youth rate, the very tool designed to prevent youth unemployment.
They are dismantling the safety mechanism while insisting the machine will run smoother without it. It is the political equivalent of removing the brakes from a car because they make the dashboard look untidy.
A century of Labour governments, a century of rising unemployment, a century of promises that next time will be different.
They never learn because learning would require admitting they were wrong, and Labour would sooner engineer a recession than admit an error.
Sir George Bain is correct. Scrapping the youth rate will damage young people, inflate unemployment, and escalate the NEET crisis.
The tragedy is not that Labour does not know this. The tragedy is that their ideology matters more to them than the consequences.
