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 313.

    Given the choice between raising wages or giving young people a start to their career which will it be? I doubt you can do both right now.

  • rate this

    Comment number 312.

    @297 Pete

    Luxury goods? You'd call a hair cut, Clothes or land are luxury? What about Food?

    The laws of economics are universal; U can't just suspend them for one commodity because U deem it more essential than the next. The same laws apply. The things Govt fixes the price of cost the most: petrol, rent, energy etc. Do U want this further repeated on wages too?

  • rate this

    Comment number 311.


  • rate this

    Comment number 310.

    This,of course will unfortunately bump up the inflation figures and reduce whatever competitiveness we still have in our manufacturing sector, which means the living wage will have to go up to compensate, which will.........

  • rate this

    Comment number 309.

    A far better idea would be to abandon the concept of a minimum wage.
    Let each person be paid what they are worth , not a penny more and not a penny less.

  • rate this

    Comment number 308.

    We need bigger ideas than this. A large percentage of people work but have their wages 'topped up' via tax credits and so on just to make ends meet. Some of those people work for companies (bookmakers,supermarkets etc) who post huge profits but pay staff wages so low that they to claim those tax credits.Some business leaders are bleeding us all dry.

  • rate this

    Comment number 307.

    Know of a company who don't pay a living wage ?

    Then name and shame them here !

  • rate this

    Comment number 306.

    Ed Miliband is sounding like Nick Clegg 3 years ago - making popular promises that he knows will make the UK even less competitive in a global workforce.

    He's a socialist con-man at heart, so let's see how many voters he can trick.

  • rate this

    Comment number 305.

    299. The cost is passed on to consumers as a 20% increase and in the end no one's better off.

    Agreed, not treating root cause just trying to treat symptoms
    i am living proof of this me and my partner are forced into seperating this month because there isnt enough money coming in

    I dont think you should be blaming the govt for this!

  • rate this

    Comment number 304.

    281.finaldest "Corporations are the problem. E.G Apple paid only 2% corp tax" Yet the government will not do anything about it as they are too afraid of the big corporations. I think Starbucks paid £0 corp tax on £300m sales last year. For profit purposes these corporations are happy to be in the UK. For tax purposes,all of a sudden they are outside the UK and somewhere like the Cayman Islands.

  • rate this

    Comment number 303.

    i live on £6.51 an hour i struggle to live on this so im having to do the overtime to be able to live without any worry's
    it would be nice to do overtime without having to be taxed on it also it would be nice that everyone gets £7.45 as this would be fair across the board, but just to have certain people to live on £7.45 will be unfair and unjust


  • rate this

    Comment number 302.

    Thought there already was a minimum wage in the UK, the French minimum monthly wage is 1425.67 euros.

  • rate this

    Comment number 301.

    no need to put up wages, just get government to CUT TAXES,

  • rate this

    Comment number 300.

    Not being able to buy alcohol each week, or embark on "leisure activities", doesn't mean you are in poverty yet it is included in the "living wage" that everyone seems to be championing at the moment.

    The problem is if you ask people what they need they will generally tell you what they want.

  • rate this

    Comment number 299.

    Sounds fine but here's the problem. Increase minimum pay by 20% & the next person up the ladder wants 20% increase & the person after that & the person after that. The cost is passed on to consumers as a 20% increase and in the end no one's better off. Increasing pay without increasing productivity/efficiency only leads to increasing inflation.

  • rate this

    Comment number 298.

    277. keith8 "Does this include Old Age Pension no of course not we are expected to live on a pittance !!"

    You had your 45 years of working already to ensure your retirement went well. Sorry if it didn't work out (e.g., embezzled private pension, etc). However this is about today's working people being able to live, and hopefully be in a position to retire before the age of 80.

  • Comment number 297.

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

  • rate this

    Comment number 296.

    i am living proof of this me and my partner are forced into seperating this month because there isnt enough money coming in and we cant afford to live i was always under the impression ud be ok if u worked but sadly we are not i am better off on the benefits system the worst of this is my kids now have to have a weekend dad because of nothing other then the crap government

  • rate this

    Comment number 295.

    LOL, is Edd brain dead or what.

    So, who is going to fund this wage for ALL the low paid council workers, including the MILLIONS that LIEBOUR sacked & re-employed on reduced wages working for contractors.

    Does Edd of The Brain Dead party not realise we are in a desperate situation & to get MORE jobs/employment the thing you NEVER EVER do is inflate wages & create costs & uncompetitivness

  • rate this

    Comment number 294.

    If people are prevented from earning a wage which covers household costs, they may be forced to borrow money, increasing the national debt.

    The current situation will surely not help a fragile economy, which is now reliant on the spending of the few who still have disposable income?


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