A Jeremy Corbyn-led government would introduce a £10 minimum wage, John McDonnell has announced.
In his first policy announcement since being appointed shadow chancellor in the new Labour leader's frontbench, Mr McDonnell said he would go £1 further than George Osborne's £9 living wage to help transform the UK into a "higher wage economy".
The announcement comes on the day that MPs vote on the Government's reforms to welfare, which will see working tax credits cut.
The Chancellor has insisted this move will be counter-balanced by an increase in the 'living wage', set to rise to £9 by 2020, but the Institute for Fiscal Studies said it would come "nowhere near" to compensating for the planned tax credit cuts.
Mr Osborne's new 'living wage' will be introduced at a rate of £7.20 per hour next April, but will only be mandatory for workers over the age of 25.
Mr McDonnell, who has come in for widespread criticism after Mr Corbyn decided to appoint the controversial figure as his shadow chancellor, said: "Labour will bring down the welfare bill, not by punishing the most vulnerable but through supporting a higher wage economy, introducing a real £10 an hour living wage, tackling high rents by addressing the housing crisis and supporting stronger trade unions to drive up pay.
Labour Shadow Cabinet: The key figures
"The IFS have said it is 'arithmetically impossible' for the Government’s so called ‘National Living Wage’ to make up for these loses to ordinary working people.
"It is an outrage that the cuts are being introduced without an impact assessment and that the Social Security Advisory Committee has been denied the explanatory material and evidence it needs in order to properly scrutinise the changes."
Read more:
George Osborne's biggest benefit cuts are for people who actually have jobs, IFS says
Tories' tax credit cuts amount to penalising people for having a job, Jeremy Corbyn says
John McDonnell: Will the former socialist rebel be able to compromise as shadow Chancellor?
John McDonnell profile: Jeremy Corbyn's new shadow chancellor – who once said he wanted to assassinate Margaret Thatcher
