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 93.

    He can promise what he likes NOW. It's what he can deliver if his party gain power and are shackled by the same restraints every other Government is. Really the man's an idiot. Promise away. THEN deliver. We need to be able to trigger an new election based on broken promises.

  • rate this

    Comment number 92.

    44. Julian
    If people were paid a living wage, then the benefit bill would be slashed & taxes could be reduced.
    This is all about moving people away from a dependency on the State – surely a good thing.
    Note: Unemployment might be going down, but the benefit bill is still rising & the tax take is going down.
    This is a recipe for disaster.

  • rate this

    Comment number 91.

    wheres milliband going to get the money from?

  • rate this

    Comment number 90.

    I challenge ANYONE to explain how this is any different to the failed wage controls of the USSR? How this will succeed to help those it aims to, when the very same tactics failed in the USSR?

    If a basic packing job is only worth £3 an hour, & would normally be offered to youthful or unskilled workers, how this wont deter that employer from hiring that person, who is now otherwise unemployed?

  • rate this

    Comment number 89.

    41. ace00017 "Why doesn't he just rause the minimum wage? It seems a lot more effective way than trying to morally blackmail firms into doing it"

    Indeed, there should be a local minimum wage adjustment that a local council can set. That's because London is far more expensive to live in, yet still requires unskilled workers. These people should still cover all their costs if they work full time.

  • rate this

    Comment number 88.

    The problem is who pays the increase in wages? Basically, this will put prices up as business struggle to meet all round increasing costs. Then the minimum/living/whatever wage will not be enough again!

  • rate this

    Comment number 87.

    I have got to the point were I no longer believe any UK politicians pledges anymore. It is all talk until they gain power and then they U-turn!

  • rate this

    Comment number 86.

    57 Lemog... I totally agree. It is time for ALL politicians to work together to get us out of the financial mess that money-grabbing bankers and out-of-touch politicians have got us into over the past decades. Instead they are still bickering about who is right. Come on, political spokesmen, speak clearly on how you would solve the national debt and not flak about NMW and LW figures!

  • rate this

    Comment number 85.

    A headline grabber rather than a well thought through policy. The increased costs faced by employers could ultimately lead to higher unemployment as higher wage costs would force employers to either make redundancies or leave vacant posts empty. This is not the time to start adding additional costs to companies finding it hard enough to survive in the current economic climate.

  • rate this

    Comment number 84.

    As a student I'd very much like to see the under 21 minimum wage increase. I believe it to be discriminatory with regards to age, many of my friends work alongside adults who are paid far less for the same job. Unfair!

  • rate this

    Comment number 83.

    Businesses that pay low wages will probably object strongly - but let's be clear, their companies and their bosses' salaries and profits are already being heavily subsidised by the taxpayer who is footing the bill for benefits and various top-ups that are claimed by their staff.

  • rate this

    Comment number 82.

    What about the many workers, many part time, casual and working without a contract who are not even on the minimum wage? No payroll, no PAYE, no minimum wage.

  • rate this

    Comment number 81.

    "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"

    Would a well motivated well rewarded workforce be of any use to struggling businesses?

  • rate this

    Comment number 80.

    As a pensioner, is the labour government going to pay me a pension of £7.45per hour?

  • rate this

    Comment number 79.

    "Baron Brick
    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!"

    And here you have what's wrong with the country. Too many people with your attitude.

  • rate this

    Comment number 78.

    This country is trying to implement the Victorian Economic Model but without the Industry and employment. I mean I watched the BBC Paradise drama and food and board was provided the rest was commission based. So if you want people off benefits stop selling our factories and jobs.

  • rate this

    Comment number 77.

    How about increasing the Income Tax Allowance to 15k per year or even more, people will then have more money to spend on the high street, this will also create jobs and the tax is still collected from the retailer.

  • rate this

    Comment number 76.

    Personally I prefer companies that have low pay for their workers. It makes their products cheaper (or takes less tax if in the public sector). After all, isn't that why most people have houses stuffed full of cheap imported goods. What's the betting that no thought is given to where their gifts come from this Christmas. Living wage - get in the real world.

  • rate this

    Comment number 75.

    Ed can't do anything. This is a voluntary scheme.
    Small businesses can't afford it.
    Miliband takes the electorate for mugs.
    Sadly many people will read this as an intention to give them a higher wage.
    It won't happen.

  • rate this

    Comment number 74.

    Thank God, why do I as a taxpayer have to make up for the MW salaries paid by some employers via tax credit. Listened to KMPG this morning on Today, they & their contractors have done better with low staff over by paying a living wage. Tax payer benefits, employers benefit & employees benefit, that's why its not just Miliband backing this, but Boris Johnson also.


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