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 133.

    @64 A person might prefer to get paid £6 an hour than nothing! If benefits were paid correctly, everyone should rather work for £6 than live on benefits. A single person can live very well on £6 per hour anywhere but London.

  • rate this

    Comment number 132.

    Excellant Ed, the idea of awarding government contracts to only those who pay a 'lving wage' is innovative and forward thinking and what the Labour Party should be doing more of.

    Roll on 2015 when we can replace dodgy Dave, nasty Nick and dopey Osbourne.

  • rate this

    Comment number 131.

    "73. Sionee £6 is enough if both are working"
    Assuming 48 hours a week, that's a combined take-home of around £25k. You're not buying a house on that, so you're renting. £10k a year might get you a one-bed flat in an undesirable part of London, then there's £1.5k council tax, £2k utility bills, £3k travel, £5k food, £1k clothes, not a lot left afterwards - if you can both get a job.

  • rate this

    Comment number 130.

    Here's a radical idea: Why don't you force Apple, Starbucks and Vodafone to pay their dues in tax, then we could all live reasonable lives without feeding the tax monkey every five minutes?

  • rate this

    Comment number 129.

    milliband hasnt learnt the number 1 rule in cant have something for nothing.

  • rate this

    Comment number 128.

    I work 35-40 hours a week. I make £6.56 an hour. To get to work I have to drive 36 miles or 45 mins each way. There is no public transport options and I spend £60 a week in fuel. I'm under 21, and i'm just extremely thankful I found a job that doesn't pay £4.93 (the minimum wage for my age group) because I wouldn't even be able to get to work otherwise.

  • rate this

    Comment number 127.

    This will just deter employers from employing, training & giving experience to those who need it most: young, unskilled, uneducated people. Hmmm, who made up the majority of those involved in the riots? Young, unskilled, uneducated people deprived of economic opportunity.

    If this idea really works, why raise the hourly wage by £20? Because it doesn't work.

  • rate this

    Comment number 126.

    How about a new law where any overtime you work is not taxed. That would give us more productivity and we would have more money to spend and keep the economy going.

  • rate this

    Comment number 125.

    When are politicians going to get that it is basic fairness and the difference between the super rich and the poor that we all hate. Stop the gross abuse at the top and reduce the inequality gap that skyrocketed under Labour and the Conservatives and then you may be a party worth voting for.

  • rate this

    Comment number 124.

    And increased VAT to 20% to take away any benefits -their disposable income reduced in one go. Took away RPI measures to hit the poor.
    Tory's millionaires given pay increase with nothing demanded in return. Reduced Corporation Tax - including for their friends in the Banking sector!

  • rate this

    Comment number 123.

    Come on ED Miliband, stop making a universal rule to protect lazy workers and bad performers. Some of my colleagues look very tired at work, because they have 2nd jobs. We have to cover their workload for them. It is quite unfair, really.

  • rate this

    Comment number 122.

    Whistling Neil

    Yes I was going to also mention that when adding my comment. Yes a big problem with Apple, Facebook, Starbucks, Amazon there needs to be a solution to this problem.

  • rate this

    Comment number 121.

    If companies aren't prepared to pay a living wage, they shouldn't be allowed to operate in this country.

    It's time to name and shame companies who don't abide by this, so we as consumers can boycott them.

  • rate this

    Comment number 120.

    £8-00 an hour as married person with kids is no way enough...

    £8-00 as single 21 year old is more than enough ...

  • rate this

    Comment number 119.

    Since becoming out of work after working full time for 33 years I now receive 71 pound a week plus help with council tax its just not enough to cover basic living costs but I have no choice what will happen when my savings have gone I have not a clue in Bolton you can live on the min wage as it is

  • rate this

    Comment number 118.

    97. Mark_from_Manchester
    I take it you have always had a cushy life and never had to survive on minimum wage.

  • rate this

    Comment number 117.

    Increasing wages pushes up costs for companies. They inturn then either put their own costs up, taking us back to square one.

    The alternative being they outsource more jobs, further decimating many industries in the UK, especially manufacturing.

    A much better alternative would be to lower taxes for the low paid, especially since they usually top up the wages of the low paid in tax credits.

  • rate this

    Comment number 116.

    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!"

    Good point.
    70 years ago, a 20 year old was old enough to be sent to war flying a bomber, the most sophisticated weapon at the time.

  • rate this

    Comment number 115.

    I agree there should be more money for poor people, or at least the cost of living needs to come down. The big costs is housing and rents are disproportionate. Rich people with high borrowings are having housing costs subsidised by low interest rates. Rental needs an equivalent subsidy, perhaps rent should be offset against gross income so the rent payer gets tax relief. Miliband is vote buying.

  • rate this

    Comment number 114.

    How about with immediate affect all the Public Sector must work until 67 before they get the tax payer funded pensions that instead of 55 !
    the proceeds of this vast amount of money then allows for a complete tax cut no income tax on people on NWW problem solved
    Come on SillyPeded get on with it !!


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