Living wage: Ed Miliband pledge over government contracts


Ed Miliband: "Above and beyond the minimum wage we need to do more"

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Ed Miliband has unveiled plans to deliver a "living wage" of at least £7.45 per hour for millions of people, if Labour wins the next election.

Whitehall contracts would only go to firms paying the living wage, while those who paid less could be "named and shamed", said the Labour leader.

His speech came at the start of a week of events promoting the idea.

Downing Street backed firms paying a living wage, but said restricting contracts in this way could be illegal.

Others backing the wage include the Scottish government, which says all staff will get the living wage, and London's mayor, who said it made economic sense.

The living wage - which is £7.45 per hour across the UK except for London where it is £8.55 per hour - does not have any legal force, but is part of a campaign by the Living Wage Foundation and Citizens UK.

It is considerably higher than the official minimum wage that employers must legally pay, which stands at £6.19 per hour for those over 21, £4.98 for those over 18, and £3.68 for 16 and 17-year-olds.

As part of its policy review Labour is looking at ways of making the living wage the new norm, including naming and shaming companies who do not pay the wage and introducing rules forcing government contracts to only be given to those firms who pay it.

Number 10 said the government backed a living wage and "would encourage business to take it up" but warned Labour's plans to restrict government contracts in this way could breach EU procurement law.

Mr Miliband said this was "completely ridiculous" because local councils were already showing it could be done.

What is the living wage and how is it calculated?

  • The living wage is calculated to reflect the basic cost of living and is based on the principle that work should pay enough to provide for the essentials of life.
  • It is part of a campaign led by the Living Wage Foundation and Citizens UK.
  • It is an entirely voluntary scheme for employers and the wage is updated every year.
  • The Centre for Research in Social Policy at Loughborough University calculates the rate for workers outside London. The Greater London Authority calculates the rate for those in the capital.
  • The latest annual calculation saw the wage rise by 25p from £7.20 to £7.45 for those outside London and from £8.30 to £8.55 for those in London.
  • Living wage employers are expected to implement the new rate as soon as possible, and within 6 months of the announced rise.

During his speech, Mr Miliband said: "Just as in the 1990s, the minimum wage was a signature achievement of the last Labour government.

"So in the coming years, the living wage will be central to our work.

"We need to build an economy where everyone has a stake.

"Not where millions of people feel they never have a chance for a decent life however hard they work."

Employers who have voluntarily committed to pay the living wage are expected to start paying the new higher rate within six months of the announced rise.

The Scottish government, which has been paying directly employed staff the living wage since last year, has announced it will implement the rise from April 2013. This will benefit up to 3,300 workers, it said.

Speaking at the launch of the increased London rate, Mayor of London Boris Johnson said paying the wage made "economic sense" for the city by giving employees more spending power.

'Sharing fairly'

He said: "By building motivated, dedicated workforces, the living wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living."

Marlene Brownlee Marlene Brownlee, a cleaner with Newcastle City Council, thinks she will be £70 a week better off

If everyone was paid the living wage, the Institute for Fiscal Studies estimates, the Treasury would save £1,000 a year for every person from less spending on tax credits and from increased tax revenue.

Barclays is one of a number of major companies already paying the living wage while 19 local authorities have been accredited as "living wage employers", including Newcastle City Council.

One of those benefiting is cleaner Marlene Brownlee, who has worked at Newcastle's civic centre for 15 years and estimates she will be about £70 a week better off.

She said: "It'll make a big difference... that little bit extra - well I'm saying little, it's a lot really - is excellent, for me and everybody else at the council."

Mr Miliband unveiled the new policy at Islington Council in London, which recently became another "living wage employer".

He said: "There are almost five million people in Britain who aren't earning the living wage; people who got up early this morning, spent hours getting to work - who are putting in all the effort they can - but who often don't get paid enough to look after their families, to heat their homes, feed their kids, care for elderly relatives and plan for the future.

"Too many people in Britain are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren't sharing fairly in the rewards."


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  • rate this

    Comment number 13.

    He's prepared to 'back it' but will he put his money where his mouth is....doubt that somewhat!!

  • rate this

    Comment number 12.

    Electioneering by Miliband.

    Living wage? Don't treat me like I'm stupid. Never gonna happen.

  • rate this

    Comment number 11.

    So now you can be on the minimum wage but that isn't a living wage?

    Am I the only one who can see something wrong with that?

  • rate this

    Comment number 10.

    Who will foot the bill for this living wage? We can all dream of a utopian economy but, when we are in such dire straights and competing against the economic might of the likes of Germany (where there is not even a minimum wage) it is just pie-in-the-sky!

  • rate this

    Comment number 9.

    Right,these are the same politicians that use graduates and the like as UNPAID interns working bob knows how many hours a week.Its a commonsense idea but we're expected to believe this is now a politicians priority?Why the tacit approval of London needing a higher level,shouldn't we be finding out why costs are somuch higher and dealing with that.

  • rate this

    Comment number 8.

    This is a step forward. But the cost of living needs to be brought down too, and the skyrocketing profiteering and greed of large corporations brought under control. Utilities and transport all need re-nationalising.

  • rate this

    Comment number 7.

    thats all well for the common workers BUT I havent seen qualified peoples wages go up in years My other half is a HGV1 drive he has had the same wage for the last 20+ years if the min wage goes up it will only be roughly £2 off from what he gets per hour for qa 60+hour week but will his and fellow drivers wages go up? alot of hgv2 drivers are already one £7+ an hour what about them?

  • rate this

    Comment number 6.

    If you raise wages, what do you think that will do to living costs?
    We should be looking at measures to make the cost of living more progressive, not creating an infinite loop of wage and cost inflation.
    There needs to be bigger gaps between council tax bands and some kind of rent control. Sort those two and the minimum cost of living will drop like a stone

  • rate this

    Comment number 5.

    Just legislate that no company can pay any 'executive bonus' or dividend unless it pays all employees a living wage...

    After all, if they cannot afford to pay workers properly they have nothing to spare for bonuses or share dividends, have they poor dears?

  • rate this

    Comment number 4.

    This sort of thinking has to be welcomed, but not sure abut "naming & shaming" idea. Better to encourage ALL employers to act within these parameters than put a punitive slant on what is a positive theme.

  • rate this

    Comment number 3.

    The national minimum wage is far too low and the rate for the under 22's nothing short of slave labour.

    Whilst even the suggested living wage is on the lowish side, it would be a big step in the right direction.

  • rate this

    Comment number 2.

    Labour trying to win votes again.

    With the cost of living rising a "living wage" will be just as useful as the current NMW. Unless the proposals are to keep that "living wage" rising with the cost of living.

    I fully support a "living wage" if done properly, but cynical employers will use it as an excuse to cut jobs, and it would be better to reduce the cost of living in the UK.

  • rate this

    Comment number 1.

    That fact that multi national companies claim tax breaks, employ team of tax lawyers and accounts to avoid tax and still pay minimum wage that has to be topped up by the taxpayer in benefit payments is an absolute disgrace.


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