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 373.

    A minimum income is meaningless unless there is a cap on the the highest incomes.
    Not a popular notion with those on those ludicrously high incomes...

  • rate this

    Comment number 372.

    Cut thepay of the swathe of state employed over the so called 'living wage' to pay for it so their compatriots can have a 'living wage' not take it all themselves. From politicians to police, Civil servants to nurses, Judges to teachers. redistribute the wage bill from these fat cats to the low paid.

  • rate this

    Comment number 371.

    This will just encourage employers to employ migrants and under 21's.
    I am 32 so I have no hope of getting into work now as employers will not pay top whack for me.

  • rate this

    Comment number 370.

    @334 Tesco ? Well that doesn't surprise me.

    I'm glad I already boycott that awful supermarket. They treat their employees, customers, suppliers and local council planners with utter contempt.

  • rate this

    Comment number 369.

    So why not have the balls to up the 'minimum' wage to 'living' wage standards? Just typical rhetoric from a party who's answer to everything is to throw money at it.

  • rate this

    Comment number 368.

    355. Peter Buck 
    I have worked out the leanings of our moderators.
    one wonders where, given their propensity for poor fiscal performance, the Labour party expects to get this money

    From Taxing to death the workers Borrowing open door immigration and stealing what little is left in any '' Private Sector Pension funds '' like buffoon brown !

    It was ever so..

  • rate this

    Comment number 367.

    #339: "why can't the Tax cheats like Apple, Amazon, Facebook, Starbucks who are all american be fined also?"

    Maybe something to do with the fact that none of these companies, to the best of our knowledge, broken any laws?

  • rate this

    Comment number 366.

    The British Economy would be a whole lot healthier if it wasn't suffocating in debt. More focus needs to be put on removing this layer of inefficiency from our businesses.
    Using the QE money to replace company's high interest bank loans with interest free govt loans (with a bar on further borrowing until govt repaid), would have been better than simply giving all our money to parasitic bankers.

  • rate this

    Comment number 365.

    Cheap vote grabbing ploy... nothing more....

  • rate this

    Comment number 364.

    The living wage is only relevent if you work full time the amount of part time work on offer is a disgrace. Super markets are taking libwerties offering contracts under 16 hours per week - we need a minimum contract of 25 hours per week perhaps then my son could live away from home with only a minor subsidy from his parents

  • rate this

    Comment number 363.

    322. ichabod "Hang on, Labour of which Ed Milliband was a cabinet member had THIRTEEN YEARS to do this. Did they do it ? No."

    They introduced the minimum wage. Before that, people were working service jobs for a pittance (e.g., £3/hr care home workers), others were expected to live off tips. Since then inflation on the essentials has far outstripped overall inflation, so a living wage is needed.

  • rate this

    Comment number 362.

    just pass a law that says for every £1 workers for a company receive in benefits, £1 is taken off the profit in extra tax, If that company doesn't "make enough" to declare a profit then they are trading illegally due to government subsidy .

    This should hit the shareholders profits ,fat cat bonus and hopefuly then won't be so keen to grab the quick "buck" and might just look to the long term

  • rate this

    Comment number 361.

    Ed Militant Millionaireband and Ed Balls Up - where is the money coming from and why didn't you do it when you were in power !!!!
    I recall a little yellow sticker being left saying sorry no money left.
    Please don't fall for these phoney pledges - so disingenuous.

  • rate this

    Comment number 360.

    bravo to your country! In the US out min. wage is LESS than dollars! In addition there are, by far, more people living within 20% of our min. wage than there are being paid significantly more. bravo UK!

  • rate this

    Comment number 359.

    The setting of the minimum wage is one thing that has pulled our country down. I would think 10 times before employing anyone if I had to pay £7.45/hour - will probably have to make job losses, instead of employing people. That seems to be Labours ideal.!!!!

  • rate this

    Comment number 358.

    Is the minimum wage too low or the tax, NI, Vat and duty burden too high for low wage earners?

    Tackle the real issues, namely those higher earners and companies not paying their fair share of tax.

    Of course on this last issue people could vote with their feet. I have.

  • rate this

    Comment number 357.

    It is a great idea and it should be higher however a lot of employers will only pass the increase on ie Supermarkets
    at the moment we should be thinking about reducing the cost of living reduce fuel duty reduce VAT give income tax releif for rent This way we can also reduce the money spent on benefits

  • rate this

    Comment number 356.

    This gimmick by pro-capitalist Labour is a diversion. Business will be protected at the expense of ordinary taxpayers, who will foot the bill. Labour is a neo liberal party who will implement anti-working class cuts if elected, just as the Tory coalition does. This is a cynical ruse that attempts to hide that fact. Time for a new, mass party the really represents the working class with socialism.

  • rate this

    Comment number 355.

    Like many HYSs I have worked out the leanings of our moderators, so getting some comments approved can be a game.

    As for this subject, one wonders where, given their propensity for poor fiscal performance, the Labour party expects to get this money

  • rate this

    Comment number 354.

    I'm sorry, but, why not just raise the 'minimum wage'?

    I also have a fundamental greivance with companies that only pay the minimum wage, as their attitude seems to be "I would pay you less, but it would be illegal for me to do so"


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