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 353.

    Minimum wages are great and I fully support them, the only issue I see is we are a global economy and our UK companies out source work overseas where there is no minimum wage.
    How do we compete with that or should minimum wages only apply to the jobs we can't out source overseas ?
    I fear if our governments don't have a fuller solution we will price ourselves out of the world markets.

  • rate this

    Comment number 352.

    Great to see that Ed and the Labour Party have the answers to all of our problems.

    In fact, isn't it amazing how ALL of our politicians know ALL of the answers when in opposition?

    Of course, that might change if they find themselves in power.......

  • rate this

    Comment number 351.

    The so called experts who set these minimum wage figures should try living on them. The drop in the unemployment figures are in reality companies taking on part time staff doing 16 hours a week, instead of full time emplyees, saving themselves a fortune of what they would have to fork out if they were full time staff. The figures disguise the REAL TRUTH.

  • rate this

    Comment number 350.

    It is 100% IMPOSSIBLE to pass on such costs without across the board rises in prices.

    How many low earners does state/councils/government employ, either directly or via subcontractors.

    Has Ed worked out how much money we need to ADD to UK growing national debt to pay for this rise, or does he think increased tax income will cover the costs.

    Please Ed, talk about LARD, I'd feel much safer

  • rate this

    Comment number 349.

    Any employer that does not pay a living wage should not be in business. Any business plan should include the payment of decent wages to the emplopyees, and It is simply not good enough to expect the taxpayers to have to subsidise anyones wages with benefits because they are so low.

  • rate this

    Comment number 348.

    'Rather than cutting already inadequate benefits they could make poverty wages a thing of the past.That would encourage people to get off benefits.'

    I presume you are talking of the workshy rather than those who are desperate to work but anyway if benefits are already inadequate isn't that sufficient encouragement alone for people to get off welfare asap?

  • rate this

    Comment number 347.

    where are you going to get the money from Ed? You spent 13 years maxing out the UK credit card and hitting the overdraft limit and we're suffering for that now. So just how are you going to pay for it? Fool.

  • rate this

    Comment number 346.

    We need a minimum wage that is in line with similar European countries, eg. France. Obviously you need a limit, but the current level of minimum pay is much too low to motivate people to do certain jobs and to ensure that they are able to live decently once they are doing these jobs.

  • rate this

    Comment number 345.

    I'd wager he was a Tory voter too!

  • rate this

    Comment number 344.

    If Govt wanted to help the poor why not axe fuel taxes, which makes up to 60% of its cost?

    Why not axe the income tax, it's a regressive tax that discourages people to work & produce things we need

    Why not axe corporate taxes. They would hire more people here rather than go off-shore with their jobs

    Why not axe Govt spending. e.g. U just spent over £9Bn for Games promised at only £2.5Bn

  • rate this

    Comment number 343.

    How anybody who is single-handedly fighting a class war in the House of Commons week in week out can stand in front of a banner exclaiming "One Nation" is beyond me.

    Like most politicians, he is really only interested in the people who will vote for him and he really couldn't give a damn about anyone else.

    "One Nation" or "We are all in this together"; both are complete BS.

  • rate this

    Comment number 342.

    1 Minute Ago

    "Let each person be paid what they are worth , not a penny more and not a penny less."

    Good idea, if everyone was indeed "paid what they are worth" then many wages at the bottom would rocket up, whilst many of those at the top would plummet.

    As it should be.

  • rate this

    Comment number 341.

    Another example of out of touch career politicians who have never has a "proper job" making grand announcements before thinking through the implications not just on business but on people.

    If the Living Work Foundation claim that this policy would increase tax revenues and reduce the amount paid out in tax credits, just how much better off would people actually be ?

  • rate this

    Comment number 340.

    Why not cap the amount at the top to a multiplier of the lowest wage in the compnay. Companies can pay what they like at the bottom but it will effect what those at the top get paid.

  • rate this

    Comment number 339.

    The big banks are getting fined by the US, so why can't the Tax cheats like Apple, Amazon, Facebook, Starbucks who are all american be fined also?

    If the government collected the Tax they should be paying there would be less cuts to public services.

  • rate this

    Comment number 338.

    By 2015 I will be feeding my elec and gas meters about 7.45 a hour !

  • rate this

    Comment number 337.

    How will the public sector fund this?
    More borrowing?
    More taxes?

    How will the private sector fund this?
    Higher prices?

    Buying power will be reduced so the Living Wage will increase etc... permanent escalating inflation. BRILLIANT!

    Moribund will promise absolutely anything to improve his party's opinion poll ratings, cling onto the leadership, and get Labour back into power at any cost.

  • rate this

    Comment number 336.

    Why not start at the top.

    ALL politicians should be paid the minimum wage for their first 4 years. Those in government should then be assessed to see if they met all the targets they promised in their manifesto. If they did meet them then there salary can be paid to them as with bonuses.

    Any fiddling expenses, etc should have their benefits cut completely.

  • rate this

    Comment number 335.

    So you increase the costs for private business, this either results in redundancies and more off-shoring or price rises. You increase the costs for public sector so taxes have to rise. Why don't I hear Mr Miliband talking about how we can increase skills and improve productivity so that people can earn more? This is a blatant attempt to buy votes, the Greeks did that for years, look at them now.

  • rate this

    Comment number 334.



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