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 113.

    What Ed seems to forget is that there isn't an infinite amout of money. If wage goes up 20% from £6.19 to £7.45, that is 20% cut in workforce.

    What other commentators here seem to forget, is more tax paid by corporates equalls less money available for jobs.

  • rate this

    Comment number 112.

    I work for a company that pays a living wage and makes sure all it's contractors are paid the same. It seems to have improved moral and staff retention rates and hasn't dented their bottom line.

    Given that those on lower wages have a higher marginal propensity to spend, increasing their wage packet can only increase consumer spending, helping to stimulate the economy.

  • rate this

    Comment number 111.

    Out of interest what about the carer's around the country who as the government say have to WORK a min of 35hrs a week to be able to claim carer's allowance.. Many of them have had to give up mainstream employment to care for some one. They receive £55 per week which is like £1.50 ish per hr... How about give the carer's the same deal then. They are saving the government million as it is ..

  • rate this

    Comment number 110.

    Woo hoo! Oh, wait... who's going to be paying for this?

    Answer = we all are.

    Same level of productivity + same level of customers = higher prices.

    Way to go, Ed. Let's put all the prices up, so that EVERYONE earns more, but they have to SPEND MORE just to get by.

    Shows how clueless politicians can be. Please let us have business-minded people in charge, not just career politicians!

  • rate this

    Comment number 109.

    94. 25K on benefits, You need to be on them then cause your mad. I bet there is a 7/10 chance you borrowed that x 3 over. It is the people that borrowed money that caused this mess, not the benefits count. It is not rocket science, however you dont build rockets in the UK, only loans.

  • rate this

    Comment number 108.

    63. AndyC555 - In what way don't the wealthy benefit from the new tax free allowance?
    Does their taxable income start at a lower level than ordinary tax payers?
    And isn't the tax free pension contribution £50,000 A YEAR!
    Why exactly do those on such a high income need any state subsidy to accumulate a healthy pension pot?
    Is that fair?

  • rate this

    Comment number 107.

    I see the 'New Victorians' are out in force again today, i.e. those calling to 'Abolish the minimum Wage, Slash Benefits etc' which would undoubtedly take us back to the era when the poor starved & the rich just said "Are there no Workhouses?"

    Clearly, the minimum wage should be the living wage, because otherwise what choice do people have but to try & claim benefits to make up the difference?

  • rate this

    Comment number 106.

    77 Assuming the retailers are actually paying any taxes which a number are not - especially those who are growing furiously at the expense of established businesses.

  • rate this

    Comment number 105.

    The problem isn't really wages, it's how much we're charged by corporations for everything and how much tax we pay.

  • rate this

    Comment number 104.

    Well I know a way to improve the wages of restaurant workers at least. Stop tipping them then their employers will be forced to pay them a reasonable wage instead of relying on the public to do it for them.

  • rate this

    Comment number 103.

    If that figure per hour is required then I suggest all pensioners should be given the same.
    Put up or shutup Milliband.

  • rate this

    Comment number 102.

    Years ago we had a wages council. That job = that salary. Unskilled jobs paid less + skilled jobs paid more, incentive to better yourself.
    And benefit was paid dependant on what you earnt in your last job!.
    We can learn from the past as well as look ahead.

  • rate this

    Comment number 101.

    A sensible move would be the abolision of the employers NIC, with the money used to pay for an increase in the minimum wage

  • rate this

    Comment number 100.

    64.Baron Brick
    People have been brainwashed into thinking working is morally virtuous. It is not!

    Totally agree.

    Why should I (or anyone) work a full week for a wage that barely covers living costs whilst my employer (talking of the big ones here) is dodging taxes, and getting bonuses left right and centre.

    People do need to wake up - work is only any good if you can live whilst working.

  • rate this

    Comment number 99.

    Is this the same Labour party that scrapped the 10p tax band hitting the lowest paid?

  • rate this

    Comment number 98.

    Many self-employed work for less than minimum wage, let alone 'living wage'. Who's going to pay them the extra?

  • rate this

    Comment number 97.

    This is well intentioned clap trap.

    Given the minimum wage has risen in-line with earnings - why is a "Living Wage" needed?

    Well because it never works - prices just rise for scarce resources like housing that claw back the extra money. So in 2 years time when the Living Wage is not enough, what will they call it then?

    The New Living Wage or Minimum Wage 3?

  • rate this

    Comment number 96.

    good old labour. always so generous with other people's money.

  • rate this

    Comment number 95.

    if the wages goes up, the working tax goes down, and we will all be worse off.

  • rate this

    Comment number 94.

    I've heard it said that people on benefits get an average income of around £25k pa which is deemed the minimum required to live on. Why then, do some people expect others to work in supermarkets, part-time, for the NMW ... and they would do away with that if they could?


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