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 273.

    I was not aware that Ed Miliband is running the country - did I miss something?

  • Comment number 272.

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

  • rate this

    Comment number 271.

    What a load of tosh from the irrelevant Miliband.

    Instead of coming up with fantasies like this why doesn't he think of real ways to help this country get out of the mess he and his collegues put us in in the first palce.

  • rate this

    Comment number 270.

    The current adult minimum wage should become the 18-22 minimum wage. The living wage should be enforced as the minimum wage for anyone 22 or over. Oh, and Apple/Starbucks etc should pay their flipping taxes already. It's beyond a joke.

  • rate this

    Comment number 269.

    A step in the right direction.

    Working towards an increase in quality of life, education and healthcare standards and generally improving our society for both ourselves and for future generations is important.

    Working towards making sure that rich folk become richer is not.

  • rate this

    Comment number 268.

    @234 We are worth more because we are born in this country?! If you had 2 candidates applying for a job, you'd give it to under-qualified brit rather than qualified Eastern European? That's no way to run a business or an economy!

    How do you calc. Living wage? Is enough to cover rent plus bills plus £20 per day. That's £6 per hour in Cardiff. In London it is more like £7.

  • rate this

    Comment number 267.

    When working as a civil servant in 2006 my hourly rate worked out to less than the minimum wage, something that is actually allowed under the act for those paid as a salary, rather than directly per actual hour worked. Before Ed champions the living wage he should ask himself why when in government he didn't even help those below the minimum wage in real terms. Be judged by actions not words.

  • rate this

    Comment number 266.

    This is the sort of policy a 12 year old would come up with. In fact the an average Economics GCSE student would do better then this.

    If they cannot understand the basic issues with this policy then they are not worthy of a vote. BBC set up a documentory with Ed running a small business that employs 5 people and lets see him get on with it.

  • rate this

    Comment number 265.

    Maybe if Ed is that concerned about the hard workers he could also back the campaign to have the next fuel duty rise cancelled and pledge to scrap VAT on gas/electric etc.

    No good just having a plan to increase wages without ensuring that rising costs won't negate any benefit within a year or so.

  • rate this

    Comment number 264.

    perhaps if Labour had not let 4 million poles, lithuanians etc into the country then pay at the bottom would already be at this level.
    Typical Labour hypocrisy.

  • rate this

    Comment number 263.

    The reason foreignors can afford to do it is because they live in multiple occupancy housing with no bills as its all in the rent. And they dont usually have a family with them to support unlike the millions in this country do. And a lot of them eat carp out of fresh water lakes and ducks as all foreignors have been banned from fishing in east yorkshire lakes.

  • rate this

    Comment number 262.

    Bad idea MiliFail:

    We don't tolerate price fixing the costs of a mobile phone, a pair of shoes, a hair cut, sunglasses, cars, clothes, land etc etc...

    Why do we want the Govt to start fixing wage prices? If fixing prices doesn't work for any other market commodity, why would it work for a person's labour? Do the laws of economics not apply all of a sudden?

  • rate this

    Comment number 261.

    Absolutely agree with L Jenks. Im sick of working over time and getting taxed more than the overtime is worth, this is so corrupt. I work overtime so I can afford a better life for myself. WHY can't there be a new law where any over time you work is tax free therefore increasing spending and keeping the economy going?. amen

  • rate this

    Comment number 260.

    I'd love to be in favour of a living wage, but the simple facts are that there is a finite pot of money to pay wages in the public sector, so increasing certain wages means others made redundant. To give the increased wage to all public sector employees means, yes, higher taxation or council tax so it come out the pockets of others.
    This is a political gimmick rather than intelligent policy.

  • rate this

    Comment number 259.

    They are dabbling at the edges- anything less than about £18k a year isn't a living wage unless you live on value tins own your home and walk everywhere...conversely they expect the unemployed and elderly to live on far less. Eitehr do it properly Miliband or don't bother......

  • rate this

    Comment number 258.

    More clear signs that Liemore and it supporters are not only Bankrupt Fiscally but Morally to boot !
    If this is the '' great white'' hope of the Socialists I am afraid it nothing more than a great white Elephant !!
    The truth is and its the only truth massive cuts in Public Sector Govnt Massive reduction in Benefits and handouts.
    Then Tax Cuts across the board..

  • rate this

    Comment number 257.

    The UK lost 1 million manufacturing jobs after the minimum wage was introduced by Tony Blair. Far more than under Mrs Thatcher.

    Now the Unions want a "Living Wage" or to give it the correct name "More Private Sector Unemployed Living on Benefits and an Even Bigger Wage Bill for the Tax Payer".

    Have Labour learned nothing?

  • rate this

    Comment number 256.

    I anticipate and look forward to receiving a pro-rata increase in my Old Age pension. It will give me another £178 per week and I will be able to put the heating on during the day.

  • rate this

    Comment number 255.

    Please don't vote for Ed, he only comes up with vote winning policies.

    All parties should be working together for the good of the country. We need a change in the way the country is governed.

  • rate this

    Comment number 254.

    So has the tax payer been subserdising these companys with working credits so they dont have to pay a living wageI hope the share holders have been happy.


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