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 153.

    Here we have an issue that all the mainstream politicians agree on and would make a real difference to the living standards of many people in the UK yet the government is afraid that it would break EU procurement laws. This is a perfect example of why we need to stay as far away from the Euro zone as it is simply a burden to the UK.

  • rate this

    Comment number 152.

    Ed - it's not about how much you pay per hour, it's about how many hours of work there are. How about we sort out the jobs problem first and get people regular working hours, and then talk about upping the hourly wage?

  • rate this

    Comment number 151.

    Rather then relying on the Government to increase their wages, people should be encouraged to take control of their own destiny. By working hard and making your case to your employer, a GOOD employer will increae your pay. If they don't you should be looking for a new job.

  • rate this

    Comment number 150.

    I struggle to pay the minimum wage for any employees due to the ridiculously high business rates. I therefore choose not to hire anyone, reducing employment rate. The living wage theory is even more impossible to comply with so it will cause small business especially to hire less or lessen employees hours. It will also only contribute more to the hyperinflation as history has already shown.

  • rate this

    Comment number 149.

    "Labour's plans to award government contracts in this way could breach EU procurement law."

    Whether Milliband's idea is a good one or not, once again a domestic initiative from any domestic politician attempting to enhance the UK's domestic well-being, is likely to be scuppered by a law from outside of the UK.
    And we're expected to pay £12billion+ for the privilege of this shackle.

  • rate this

    Comment number 148.

    Since Clegg I take politicians promises when out of power with a large pinch of disbelief.

  • rate this

    Comment number 147.

    £7-45/ h is a rate of pay to me, not a wage. You don't live off a rate of pay, but what you earn in a week/ month/ year. Am I right to assume that the 'living wage' equates therefore to a 37 hour week minimum?

  • rate this

    Comment number 146.

    The minimum wage has not risen with inflation since 2001 if it had it would be at £8.40 an hour right now. The reason the government did not raise it at the rate of inflation is because they had cheap migrant workers from europe willing to do a job for less. The government admitted this on newsnight last week

  • rate this

    Comment number 145.

    This is not a proposal for an enforceable 'living wage' (like the minimum wage), but to 'encourage' or 'shame' employers into paying - many employers will evade it.
    A 'living wage' needs to lift someone out of means tested benefits, otherwise much if not most of any rise will disappear in lost entitlements to tax credits, housing benefit etc.
    On both tests, Labour's plans aren't good enough.

  • rate this

    Comment number 144.

    Perhaps Mr Miliband should consider an alternative... reduce the cost of fuel, be it gas, electricity, PETROL or DIESEL.

  • rate this

    Comment number 143.

    Will those on half a living wage be classified as half alive ?

  • rate this

    Comment number 142.

    Why exactly is the national minimum wage not high enough to live off?

  • rate this

    Comment number 141.

    25.Keep F1 on the BBC said " If the UK can afford top level pay and a tax cut for the rich it can afford a living wage.The amount of profits made by companies not paying Corporate taxes in the UK shows many companies can afford it."

    Absolutely. If any business can't afford a living wage & only survives by taxpayers' subsidising it, then its top people need the sack - or perhaps lower salaries.

  • rate this

    Comment number 140.

    114: Socialist Apocalypse The Thieves Amongst Us

    Maybe but if you care to look at the Civil service all the changes affect the low paid staff not the senior civil service or MP’s who are trying to get 40% pay rises etc

    They all go early with big pensions a normal admin worker cant go till 65 at earliest with full pension

  • rate this

    Comment number 139.

    at least he is trying to help ordinary people.not like the tory toffs who talk about having to make "tough decisions"like cutting public sector pay,demolishing the nhs etc.Then cutting tax for the super rich.Thatcher wasfamous for not giving an inch to the workers ie the coal miners,history is repeating itself.Ordinary people have no chance against this lot.Labour may have its faults but will try.

  • rate this

    Comment number 138.

    120 Conger

    A bit discriminatory isn't it. Surely that is the choice of the worker as to whether they accept a job or not. I am not certain if you are advocating wage amounts depending on lifestyle choices here.

  • rate this

    Comment number 137.

    Ed Millipede is getting on another bandwagon again, I notice he will not legislate this if he gains power! If he really wants to get on a bandwagon, pursue criminal action against Mcshane, that would be popular!

  • rate this

    Comment number 136.

    Just now
    £8-00 an hour as married person with kids is no way enough...
    £8-00 as single 21 year old is more than enough ...

    ..... If they are doing the same job they should get the same pay - or are you then saying a single person with kids should get paid more than a married one?

  • rate this

    Comment number 135.

    @113.forwarnedthinking, Also its not just the increase in base wage, the employer also has to pay out more in NI contributions,so if it becomes illegal to fire people on these grounds (as it surely would need to be), then the price of goods has to increase making them less competative and risking even more jobs.

  • rate this

    Comment number 134.

    Oh look another thread about Ed promising something he is never going to be able to deliver on to get a bit of news coverage.

    Just give up Ed, Labour has no hope with you as their front man.


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