“Putting more money into people’s pockets!”

Wednesday blog

Our politicians tell us so many lies, it’s often difficult to choose your favourite. But there’s one that our current Labour Government keeps using which I quite like – “We’re putting more money into people’s pockets“.

Sounds great. But how is our economically-challenged Government putting more money into people’s pockets? Well, they’re trying to slow down the increase in energy bills. But that’s not putting more money into people’s pockets, that’s taking slightly less money out of people’s pockets.

More ‘Breakfast Clubs’. But these ‘Breakfast Clubs’ have to be paid for. As Britain is effectively bankrupt with the Government spending much more than it takes in tax, this means more borrowing, means higher interest rates for the Government, means higher taxes, means less money in people’s pockets.

Then there’s the really big one – increasing the minimum wage. Google tells us: ‘The National Minimum Wage (NMW) is set to increase from 1 April 2025 to between £11.82 to £12.39 an hour to reflect the cost of living under Labour’s Plan to Make Work Pay’.

But who pays for this increase? The Government? No. Employers? Yes. And how do employers pay for this increase in the minimum wage? There seem to be three main ways:

• Absorb the cost – thus reducing profits and therefore taxes paid on those profits. This means the Government (which refuses to cut, and in fact keeps increasing, public spending) then has to increase taxes to make up for the falling tax revenue thus taking more money out of people’s pockets
• Raise prices – but if shop, restaurant and other prices increase to pay for the increased minimum wage, while some people will have a little bit more money in their pockets, many will have less money in their pockets
• Cut jobs (US experience) – if the salary bill keeps increasing, many companies will freeze recruitment and even cut jobs. Some recent research in the US showed that just in 2025, more than 20,000 jobs were lost in California’s ‘fast food’ sector after Governor Gavin Newsom increased the minimum wage from just over $14 per hour to over $16 per hour on 1 January 2025. California’s minimum wage will increase again on 1 January 2026. Of course, you may think that flipping burgers or warming up pizzas is not much of a job. But for many young people these minimum wage jobs provide their first step into work and for students they provide vital money to finance their studies and living costs.
• Cut jobs (UK experience) – The UK hospitality sector experienced significant job losses in 2025, with nearly 9,000 roles cut in December 2025 alone following the Autumn Budget, bringing total losses to over 20,000 since September 2025. Rising employment costs, including increased National Insurance Contributions and minimum wage, have driven this decline, with warnings that up to 100,000 more jobs are at risk. And, of course, job cuts mean more unemployed, means more benefits spending, means the Government having to find more money, means higher taxes, means taking more money out of people’s pockets

Oh, and I thought it worth mentioning New York. Under its exciting new socialist/communist Religion of Peace and Prosperity Mayor, Zohran ‘Mad-man’ Mamdani, effective January 1, 2026, New York State’s minimum wage increases to $17.00 per hour with the intention of raising this to $30 per hour by 2030.

I’ll leave it up to you to work out whether this will lead to a wonderful economic boom in New York with millions of lower-paid workers delighted at having more money in their pockets or whether this will be an economic disaster leading the the closure of thousands of shops, restaurants and bars and a massive increase in unemployment leading to deserted dangerous streets thus turning the city from a thriving metropolis into a dystopian poverty- and crime-ridden slum.

Socialism – don’t you love it?