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
    0

    Comment number 253.

    So Ed Miliband plans to deliver £7.45 per hour. That's very generous of him. Maybe the employers will contribute a few bob extra too.

  • rate this
    +1

    Comment number 252.

    If we don't pay minimum wage, then we pay benefits to fill the gap. Or we discourage people from working, and we pay them benefits. The tory dilema in a nutshell: Reduce the benefit bill, but we want people to work for lower wages, and we don't want to provide council houses...

  • rate this
    +1

    Comment number 251.

    I seem to remember the Labour government in the 70's doing much the same thing and look how that ended! Public service contracts were always more expensive than the private sector equivalent and no better. The public sector became a by-word for being a soft touch. You cannot engineer market forces without creating distortion. It ends with inflation and being uncompetitive.

  • rate this
    +1

    Comment number 250.

    126 - Your idea makes no sense - to answer your question, if there was no tax paid on overtime then most people would do nothing all week to guarantee overtime which would end up costing companies a fortune in lost productivity.

  • rate this
    +1

    Comment number 249.

    @237 The more I hear Milliband the more I am convinced he is not fit to lead this country!!!!!

  • rate this
    -1

    Comment number 248.

    238. Bodster27
    It would be better to cut taxes so that people can keep more of their hard earned money.
    --
    If people were paid more (by companies that often pay virtually no tax themselves) the benefit bill would go down, income and national insurance takings would increase & the govt could AFFORD to cut tax. At min.wage wages the worker pays virtually no tax anyway. Your idea suits the wealthy

  • Comment number 247.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +1

    Comment number 246.

    If you want to give low paid workers more money increase the tax threshold to £12,000 and to ensure that those earning more than £45,000 per year don't benefit, decrease the 40% threshold to £40,000...not sure if my break points are correct but you get the drift.

  • rate this
    +3

    Comment number 245.

    @ 199 Simonthepieman

    You forgot to mention the eradication of both the coal industry and ship building oh wait, sorry, that was the Tories!

  • rate this
    +1

    Comment number 244.

    Once again Labour promise free money for nothing - first time around it was tax the rich to subsidise the rest now its penalise companies to give more money presumably for the same performance.
    Net result fewer jobs and more off-shoring.
    If you really mean it Ed, make the living wage the minimum wage, at least that would show some guts!

  • rate this
    0

    Comment number 243.

    224.
    Bastiat

    "
    There'd be less poverty, less dependence, less Govt"

    Less dependence? The real dependence is that of the businesses that depend on cheap labour to survive

  • rate this
    +1

    Comment number 242.

    Its clearly debatable that 7.45 per hour outside London is adequate to provide a living wage but surely equally importantly is how many hours employment you can get. £7.45 on a 40 hour week is only 15 and a half thousand per year. Possibly the earner will then pay tax, insurance, pension etc which to my mind does not leave a living wage. In addition not everyone gets a 40 hour week job

  • rate this
    -3

    Comment number 241.

    How many gov employees are on less than £7 per hour? How will he pay for it? Cut spending elsewhere, raise more tax from everyone else or borrow? The last Labour govt wasn't prepared to tax more to fund it's 10% year on year increase in spending so why will this Ed Milliband Govt be any different?!

    Minimum wage varies hugely across the country and min wage / living wage should account for it!

  • rate this
    +1

    Comment number 240.

    Labour still doesn't understand the laws of supply and demand. You can't build an economy based on higher costs than your international competitors pay.

  • rate this
    +1

    Comment number 239.

    I work in a big supermarket. Every two weeks, there were Mystery Shoppers visiting our shop and scoring our performances. I got a lot of 100% and shining stars. The boss used to give me a small voucher for rewards, but now they just say “well-done”. Regardless performances, all workers got same contract and pay.

  • rate this
    0

    Comment number 238.

    It would be better to cut taxes so that people can keep more of their hard earned money. That way they could afford to live but it wouldnt deter employers from hiring people.

  • rate this
    -17

    Comment number 237.

    The more I hear Ed, the more impressed I am with him. He's fighting for fairness whilst the coalition is dividing society.

  • rate this
    +1

    Comment number 236.

    a few things;

    1. The NMW clearly isn't enough to live on if there is talk of a "living wage", a solution: make the NMW that of the minimum wage.

    2. If you have a business that can not pay employers the "living wage", let alone NMW then you DO NOT HAVE A VIABLE BUSINESS.

    3. If the above makes companies put costs up to allow people to live then they should be inspected by HMRC for mismanagement.

  • rate this
    +2

    Comment number 235.

    On the face of it, good idea and 'vote winner'. However, how do companies pay for the extra wages? Redundancies?

  • rate this
    0

    Comment number 234.

    209.Sionee
    Because they are born in this country, they are too good for hard work or are somehow worth more?
    --

    Yes we are worth more. The cost of living dictates that we are.

    The average migrant worker comes here and finds that compared to their country they are rich, then they realise the cost of living means they can't continue to be rich unless they live as they did in their country.

 

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