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
    +2

    Comment number 293.

    We need to be working on the bottom line not the top line. Increased hourly rates means less competitive businesses. We need lower tax, NI etc and lower prices in the shops driven by reductions in VAT. That way we will be more competitive with countries such as China and perhaps we will then have a chance to make work pay for more people.....

  • rate this
    +1

    Comment number 292.

    You know some employers just dont deserve employees, if you employ someone and they cant even live above the poverty line then there's something wring these is it? but they probably expect the tax payer to make up the difference in benefits.... very sad

  • rate this
    -1

    Comment number 291.

    281. finaldest 
    What about the tax taken by the Govt such as employer contributions NI and VAT and all the other liabilities ?? also the Tax Taken from the Corporations via the work force they employ. ?
    Have you ever thought of that while reading the Beano Bumper book of Socialist economics hand signed by ED Balls UP ??

  • rate this
    +3

    Comment number 290.

    I can see the problem for small start up business'.

    However, what is wholly unacceptable are large companies, like major supermarkets who squeeze British suppliers and pay their staff NMW.

    The same applies to Starbucks, Specsavers, Sky, Vodaphone and endless ads by gambling companies on our screens who don't pay UK taxes.

    These companies don't create jobs in the UK - they operate off-shore.

  • rate this
    +1

    Comment number 289.

    Maybe the boy Millipede could volunteer to live on his proposed London minimum wage, and adjust his gold plated pension accordingly, and see if this really makes sense.
    After all, he is proof beyond doubt that being a politician is an unskilled job.

  • rate this
    +1

    Comment number 288.

    @bastiat
    They are luxury goods your refering to.
    So price fixing isnt rife throughout every industry i think it is water, gas, electric all price fixed, petrol price fixed, council rents price fixed, council tax price fixed, these are necessities thats not even starting on corporate conglomerates.

  • rate this
    +3

    Comment number 287.

    Another week, another bandwagon.

    Yet more opportunism, more muddled thinking, more crass 'policy' statements from the UK's most opportunistic politician.

    If force government departments to use only those companies that meet this arbitary wage figure then you will push up the costs of all government services which, ultimately, the tax payer will fund.

    So, vote Labour and be worse off.

  • rate this
    -1

    Comment number 286.

    If they want to increase people's wages, campaign for a higher minimum wage.

    This is just irrelevant rubbish- it's legally unenforceable and therefore pointless.

  • rate this
    +1

    Comment number 285.

    275 GB
    Utter tosh "Of course the pensioner has paid off their own house (or gets very subsidised housing), they're not travelling to work, can get credits for council tax, fuel bills, and so on."

    Not every pensioner will have paid off their mortgage and if they have any savings they won't get any of the benefits you mentioned.

  • rate this
    +2

    Comment number 284.

    Not sure how a living wage is assessed, but an employer can't influence the costs of housing, fuel & food, probably the biggest items we all have to pay for. Labour need to get a grip, most of our manufacturing jobs have gone east, this will ensure the rest do to and destroy the economy completely. It doesn't work to pick and choose what is regulated, has to be all or nothing.

  • rate this
    0

    Comment number 283.

    Here we go again, Labour promising things THEY don't have to pay. When is Miliband going to realise that by forcing this through yet more small companies will go to the wall.Oh I get it, close down as many small businesses as you can, put them all on benefits and tell them that if they don't vote for Labour at the next election those nasty Tories/Coalition will make them work.Devious scaremongers.

  • rate this
    -4

    Comment number 282.

    If wages were set by the free market & not bureaucrats, what would happen? There was no minimum wage during the industrial revolution, & in the space of 2 generations we moved from general serfdom to general financial independence. Yes there were many hiccups, but there is no better mechanism for defeating poverty than the free market. None.
    Socialism has only ever resulted in socialised poverty

  • rate this
    +18

    Comment number 281.

    Corporations are the problem. E.G Apple paid only 2% corp tax. If these companies paid a decent wage and their fair share in taxes then we would not be in such a mess. Higher wages equates to higher employment due to increased spending and jobs creation.

    The biggest problem though is the cost of housing as most of the average persons salary goes towards rent. This is subsidized by benefits.

  • rate this
    +1

    Comment number 280.

    ..and the more things cost, the higher the living/minimum wage has to be.

    How about reducing the overall costs of the country then the cost of living would decrease, which would be fairer on everyone.

  • rate this
    -1

    Comment number 279.

    London is a great city, and it hosts loads of opportunities’ lacking elsewhere in the country, all be it not all people benefit form the whole London experience, for those that move there or those that are born and raised there, however the whole London waiting system is not justified, perhaps one wage for all citizens would lift the rest of the UK out of the multigenerational poverty it in now.

  • rate this
    +33

    Comment number 278.

    257. Mark_from_Manchester
    The UK lost 1 million manufacturing jobs after the minimum wage was introduced by Tony Blair. Far more than under Mrs Thatcher.
    --
    So what you're saying is that if we introduced sweat shops, or even better slavery/the workhouse we'd be a manufacturing giant again?

    Typical tory.

    The fact Germany can pay high wages and provide stronger workers rights is awkward though...

  • rate this
    0

    Comment number 277.

    Does this include Old Age Pension no of course not we are expected to live on a pittance !!

  • rate this
    +1

    Comment number 276.

    If the government thinks that this amount is a living wage, why do they give old age pensioners £200 per week less than this figure.

  • rate this
    -1

    Comment number 275.

    218. willythewombat "State pension £107.45 calculates to £2.69 on a 40 hour week, how many years were your lot in power?"

    Or £3.07/hr for a 35 hour week. Still very low. Of course the pensioner has paid off their own house (or gets very subsidised housing), they're not travelling to work, can get credits for council tax, fuel bills, and so on. But yes, it's very hard to live on under £500pm.

  • rate this
    -4

    Comment number 274.

    All sounds good and noble, but are we all fogetting that by time of the next general election in 2015, these amounts will not be enough to live on, especially if we continue to experience exponential living costs like we are now? Nice try Ed, but I'm not buying it.

 

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