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 333.

    We have a minimum wage and now talk of a living wage, no mention of a Maximum wage ?

  • rate this

    Comment number 332.

    A lot of the public workers on low pages were privatised over the years (cleaners, maintenance, etc.,) - one of the reasons that private sector workers (on average) earn less than public sector workers (on average).
    Why aren't we going after the Vodaphones, the Coffee companies, amazon, google etc for their taxes they dodge. (even if it is 'letter of the law')

  • rate this

    Comment number 331.

    Great idea.

    I know there will be issues about what actually constitutes 'a living wage', but in principle, this idea is great.

    The current system, which allows employers to pay below a decent wage, and then get the taxpayer to top up the wages, is wrong.

    It is a classic case of privatising profit, and nationalising cost. Even more galling, when the employers (Starbuck etc) aren't paying tax.

  • rate this

    Comment number 330.

    There is a lot of talk making sure that people should always be better off working rather than sitting at home on benefits. Rather than cutting already inadequate benefits they could make poverty wages a thing of the past. That would encourage people to get off benefits.

  • rate this

    Comment number 329.

    Good old Ed, always there with an idea as to how to spend more money or force others to. Labour will never learn.

  • rate this

    Comment number 328.

    285. dave "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."

    In that case they can always downsize, and give up their house with empty bedrooms they bought in the good times (before 2002) and then make use of the massive house price inflation they have benefited from to make their retirement more pleasant.

  • rate this

    Comment number 327.

    Interesting that the most popular comment has been referred for moderation. I wonder what it was that we're not allowed to think.

  • rate this

    Comment number 326.

    294. Gordon bennett
    If people are prevented from earning a wage which covers household costs, they may be forced to borrow money, increasing the national debt.
    Personal debt and the national debt aren't the same thing. However if people are paid peanuts they DO end up borrowing from companies like Wonga at 1000% APR. These companies are notably underregulated in the UK....

  • rate this

    Comment number 325.

    Nice one Ed. It is about time the Labour party took a firm stance on low pay. Those who get out of bed and do a decent days work should at least be rewarded with a decent living wage.

  • rate this

    Comment number 324.

    And if Labour get elected they will breal all of their promises just like they always do.
    Just love spending money.

  • rate this

    Comment number 323.

    As soon as the minimum wage reaches the "living" wage, the Living Wage Foundation will redefine the term "living" in an attempt to push wages up yet further. Meanwhile prices will rise so that businesses can pay these higher wages. It's what used to be called inflation.

  • rate this

    Comment number 322.

    Hang on, Labour of which Ed Milliband was a cabinet member had THIRTEEN YEARS to do this. Did they do it ? No.
    Now all of a sudden he's had a Damascenian conversion, just like he did last week wiith the EU budget.
    I hope people will see this naked opportunism for what it is.

  • Comment number 321.

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

  • rate this

    Comment number 320.

    Awful idea. Let's get the country back on it's before we bring in unaffordable policies. Typical Labour Spending money it doesn't have or spending it on behalf of other people.

  • rate this

    Comment number 319.

    Dear Edd of The BrainDead,

    Like so many LIEBOUR ideas, you play to the audience for max personal benefit, excluding the MASSES of detriment your policys result in.

    WHO will gain MOST- taxman will.

    UK government taxes low paid into poverty, then you WASTE £millions paying it back via tax credits/benefits.

    SORT UK tax system so that people KEEP more of their HARD EARNED PITANCE

  • rate this

    Comment number 318.

    Interesting paragraph
    "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."

    So if they get paid a higher minimum wage how many will lose the same amount in Government benefits and extra taxation and not be any better off?

    BBC research needed

  • rate this

    Comment number 317.

    As a pensioner who can only dream of receiving the amount suggested as the new living wage, I consider it an insult that this government expects me to live on £3-43 per hour which is less than half the minimum wage, despite now having the additional expense of heating my home 24 hours a day as I am no longer out at work during the daytime. I contributed to the system for my entire working life.

  • rate this

    Comment number 316.

    It's always been said of EVERY government, that what they give in one hand, they take in the other. This will be no different.....

  • rate this

    Comment number 315.

    @234 If you had 2 candidates applying for a job, you'd give it to under-qualified brit...

    No, I wouldn't take the Eastern European, I'd take on a Brit as an apprentice and train them up (where they need it) and pay them a fair wage, knowing I'd reap the benefits in the long term.

    And I hate to break it to you but the majority of economic migrants are "under qualified" also.

  • rate this

    Comment number 314.

    298 could also put bread on the table to feed you

    Typical selfish view of the younger generation. Bet you were not complaining about their pensions when your parents were also working to try to ensure they were also putting bread on the table to feed you


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