Lord Freud: the Lord of the politically incorrect

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Lord Freud, the Welfare Reform Minister, when asked about disabled people and the minimum wage at the Conservative Party conference, remarked: “There is a group, and I know exactly who you mean, where actually, as you say, they’re not worth the full wage.” Freud was secretly recorded at the conference, yet his remarks were not released until two weeks later at Prime Minister’s Questions on 15 October. All political parties, including Freud’s, were quick to distance themselves from the comments. His remark was indeed awfully worded and Lord Freud has since apologised, but he has provoked an important debate.

In the United Kingdom, there are nearly 7 million disabled people of working age; of those, 46% are in employment compared to 76% of non-disabled, working-age people. Despite employment figures, a significantly higher proportion of people living in families with disabled members are in poverty. The welfare of the disabled, even before Freud’s remark, is a significant issue the UK faces today, as discrimination because of disability goes on.
Freud proposes that an unemployed disabled person who is willing to work for just £2 an hour should be allowed to do so. Taking Freud’s comments on disabled people’s “worth” and equating them to productivity suggests they are less productive than those without disabilities. Although this could be true for some disabled people in certain areas of work, generalising them into this one ‘unproductive’ group is wrong and insulting.

Lord FreudLowering the minimum wage for a select group, such as the disabled, opens up the policy to exploitation by businesses – hungry to cut costs and individuals desperately seeking work. Once one group is paid less, it is simply a matter of time before others will also be taken advantage of. This will distort the economy and push wages down for all those in employment. Employees should be rewarded with a good living wage, not one on which they struggle to survive.

The minimum wage is currently £6.50/hour; as a consequence an unemployment trap exists, with those without work sometimes being better off on benefits than they would be earning the minimum wage. Lowering the minimum wage will only worsen the effects of this ‘trap’. Thus the other option is to lower benefits. This, in theory, will encourage the unemployed to seek work. However, this is irrelevant in the UK economy where supply for labour outstrips demand. It is more irrelevant for disabled people who are often perceived to lack the skills or physical ability to do the work that is available.
It is reasonable to suggest that the disabled are not able to do some of the minimum wage jobs that the non-disabled can. However, not all disabled people can be put into the same category. Jobs must be provided that the disabled are able to do and training programs must be put in place to ensure their skills match the jobs available to them. It is important to recognise that even the jobs suitable for disabled people may not necessarily be awarded to disabled candidates. Businesses may need to be provided with incentives to hire those with disabilities.

A lower minimum wage for the disabled may well give such an incentive to businesses, but the disadvantages heavily outweigh the benefits. A system of tax incentives or wage subsidies – whereby the employer pays below the minimum wage and the government tops it up to the minimum level – would encourage hiring of the disabled while allowing for necessary government regulation to prevent exploitation by businesses. Both of these suggestions would act as a form of benefits from the government. But these would be benefits rewarding the individual or business rather than those aimed at sustaining people out of work. This, in turn, avoids worsening the unemployment trap.

The government is fairly good at helping disabled people in work with a series of tax credits. It is time for businesses to step up too and support those in need. However, most attitudes towards the disabled must change; comments such as those from Lord Freud are unnecessary and politically incorrect.

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Liam Gowing is an Economics student. He writes about British national politics.

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