How to reduce the reliance on benefits: cut welfare or raise the minimum wage?

Lower benefits in the form of tax credits might mean greater productivity and higher wages. But would a rise in the minimum wage be better?

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Which is best: cutting benefits or raising the minumum wage?

I wrote last week about the way in which the UK benefits system affects productivity. The basic case is that tax credits encourage those in low-income jobs to work part time rather than full time, and that this has an impact on the efficiency of the economy.

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.