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 73.

    The least employable and the least hard working can't expect holidays, plasma tv's and to live in large houses with 5 kids. A couple both earning £6 an hour anywhere but London can live a basic but happy life. That is the point of the minimum wage. All Living Wage does is raise expectations and moves the goal posts. £6 is enough if both are working

  • rate this

    Comment number 72.

    Come on Ed be brave, lets have a maximum wage of, lets say £8, to be paid to politicians, footballers, entertainers and their like.

  • rate this

    Comment number 71.

    The Labour Government allowed the nations finances to run out of control leading to a boom in property values. Those high values now are supported by low interest rates, protecting many from real exposure to high borrowing. BUT those high values have translated into high rents as buying is now prohibitive to many so rental demand has boomed. The outcome - living costs too high for the poorest.

  • rate this

    Comment number 70.

    It will have to be more than this by the new year. £8.00 at least. We can stop people needing to claim benefits at this price assuming the job is full time and permanent. Big firms can manage this small business might require some help until they reach a profit threshold.

  • rate this

    Comment number 69.

    Thanks Ed. workins as an Admin Officer for the DWP, annual salary for a 42 hour week is £16,250.00 so if you name and shame all those employers name and shame yourself!!!!!! salary is £7.44 ph only a penny but thats not the point is it!!!!!!!!!!!

  • rate this

    Comment number 68.

    If the value of your work to your employer is only £7 an hour, why should he be compelled to make a loss by employing you? You could solve that problem by scrapping tax credits and having negative employers' NI contributions for low-paid workers. Actually, that's not a bad idea, but anything that smacks of "swelling employers' profits by giving them public money" would be political suicide.

  • rate this

    Comment number 67.

    There is a market in wage rates. If we removed the artificial constraints (excessive immigration, tax dodging, benefit paying more than work, children reduced to housing vouchers and benefit tokens, and so on) there would be no need for either a NMW or a "living wage".

  • rate this

    Comment number 66.

    #56 Michael Weir - maybe the small business sector's profits will increase if other companies workers have a bit more money to buy more of the small business sectors goods!

  • rate this

    Comment number 65.

    I wonder how Labour plan on paying the living wage to the public sector employees...oh yes.. they'll borrow the money no doubt. Public sector will now see this as their right so they won't be anymore motivated than they are now.
    Labour introduced the min wage, they set the wage for 12 years so if they want a living wage then they are admitting their idea of the min wage is worthless!

  • rate this

    Comment number 64.

    35. bitofrealism

    "What if I want to work for less than the living wage?"

    Well then you're a strange individual. People don't work for the good of their health (well technically they do, but I'm not that pedantic)
    The idea is to do as little as possible, at work, so YOU get your monies worth. People have been brainwashed into thinking working is morally virtuous. It is not!

  • rate this

    Comment number 63.

    Labour looking at the well-being of the low paid- the Tories giving tax cuts to the millionaires"

    The coalition have raised the tax free allowance faster than ever before and restricted the benefit to basic rate taxpayers.

    They have closed EBTs and cut the maximum tax free pension contribution from £325k to £50k

    Labour's top tax rate was 40% for 155 of its 156 months in power

  • rate this

    Comment number 62.

    53.Hugh Oxford
    People are stagnating on welfare because the unions have driven the minimum wage.

    Prior to the NMW being introduced people on the lower end of the scale were not paid nearly as much.

    Employers would pay far less then they should (and are as seen by the rise in NMW only jobs) if the NMW was scrapped - how would you then deal with the increase in the Tax Credit claims?

  • rate this

    Comment number 61.

    This is political opportunism. Labour introduced the minimum wage, something I support. However, if now they are saying that its too low, why did they set it at that level?
    As a tax payer I am disgusted, at a time when services are being cut, to see Councils and other public sector bodies coming out and saying look at us we pay the living wage.

  • rate this

    Comment number 60.

    Good idea, but I cannot see it happening. Wages are being driven down at the moment with apprentices on c£2/hour.

    We currently have a ludicrous situation where people on low wages are subsidised through tax credits and benefits, thus the taxpayer if aiding and funding businesses.

  • rate this

    Comment number 59.

    Increasing the pressure on employers to increase the wages of their employees at a time where businesses are finding it hard to survive doesn't seem like the smartest move. It also makes it more difficult for new businesses to start-up, especially if they are being 'named and shamed' by the government.

    However, how you can have a minimum wage classified below 'living wage' seems somewhat flawed.

  • rate this

    Comment number 58.

    For this to work implement rent control on both commercial and residential property, commercial rent control will free money to pay workers, residential will stop landlords increasing rent to match the new living wage, also stop corporate tax dodging! Disgusting we have to pay working tax credits to subsidise lucrative corporations paying M.W. to cream extra profit and not even pay anything back!

  • rate this

    Comment number 57.

    Sorry Ed, I just don`t believe that if you get into power you will do this, to me it is yet another example of gesture politics.
    Don`t get me wrong, this isn`t an anti labour thing, it`s a I don`t trust politicians full stop when they`re promising the undeliverable thing.
    If you truly believe that this should be the minimum wage, then work with the coalition to see how / if it can be implemented

  • rate this

    Comment number 56.

    Will Mr. Milliband also underwrite the costs and meagre profits of the small business sector?

  • rate this

    Comment number 55.

    I personally wonder why there is a minimum wage and living wage? Surely they should be one and the same. It doesn't help that when the Gov work out general life expenses, they see fit to use RPI or CPI depending on which suits them best at the time. (RPI is used for us, CPI is used for them!)

    Meanwhile, in the real world, we don't chose how expensive life is!

  • rate this

    Comment number 54.

    Typical out of touch politician diatribe. I run a care agency in a Labour run council area. My staff deserve a least the living wage which I can't pay them because the council will not pay us enough. If I paid the living wage we wouldn't get any work.


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