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 393.

    So public employers are going to pay the living wage are they?
    Now remind me who funds those public employers.

  • rate this

    Comment number 392.

    I think someone needs to remind Ed that his parents Stalanist/communist equality ideals were tried & tested & which is why USSR just does not exist anymore.

    Anyway, I was wondering if anyone would notice if Ed had a secret face transplant, with his brother, or be bothered about it!!!

  • rate this

    Comment number 391.

    Good idea with caveats : 1 if the company can afford big wages and/ or bonuses for top earners they MUST pay this rate minimum
    2 Long term un employed MUST take ANY job Offered at this rate,NO
    3 If people refuse job offered all benefits cut NO excuses.

  • rate this

    Comment number 390.

    ALL politicians should be paid the minimum wage for their first 4 years.
    Know your history, For many years politicians weren't paid at all, only the rich could afford to be in parliment. They bought and sold seats and only the rich could afford them.

  • rate this

    Comment number 389.

    Labour supporters are either cynical or just plain dumb when they criticise the Tories on tax or business.

    who was in power 1997 - 2010. What was different then? You think tax havens and tax avoidance didn't exist before 2010? Youthink Labour would do any different if they got back in power?

    Someone earning £1m p.a. paid £100k LESS tax 2009-10 under Labour than now.

  • rate this

    Comment number 388.

    367. Tanglewood
    #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?

    Yet the likes of Jimmy Carr are fair game for the Prime Ministers attention yet, he broke no laws, the Tax robbery is plain to see sort it out!

  • rate this

    Comment number 387.

    Excellent idea, win for employers that sign up to it through free advertising and brand enhancements factors, happy, motivated adequately rewarded employees are more productive. By leaving it out of the minimum wage laws you give smaller business or struggling businesses the chance to opt out whilst they turn around their fortunes.

  • rate this

    Comment number 386.

    375. michellegrand
    An awful lot of the tax havens mentioned are actually british responsibilities - Gernsey, jersey, Isle of Man, Gibralter, British Virgin Islands... Why can't the Conservatives get to grips with this?
    The Queen is queen in Jersey, Isle of Man etc but Cameron isn't PM. They're not part of the UK.

    Incidentally Cameron's dad made his money running a Jersey tax haven.

  • rate this

    Comment number 385.

    It sounds good. Too good to be true, in fact.

    Reminds me of bribes the Greek people got to join the EU.

    Will Ed's Labour party also restore their pre-Kinnock policy and free us from the EU's wicked clutches? PLEASE!

  • rate this

    Comment number 384.

    An awful lot of the tax havens mentioned are actually british responsibilities - Gernsey, jersey, Isle of Man, Gibralter, British Virgin Islands... and so the list goes on - nearly 40 at the last count.
    Why can't the Conservatives get to grips with this?"

    Why single out the Conservatives? Labour were in power for 13 years 1997 to 2010 in case you hadn't noticed.

  • rate this

    Comment number 383.

    Your Captains of industry are NOT required to pay TAX thats all you really need to know isn't it, if you get confused just ask George Osborne I understand his Yacht is on the chain off Grand Cayman, funny as he's Her Majestys head of revenue & customs extracting the urine but there again you might get a job in Comet!

    Regards Commander Bond
    PS How's the arms deal doing?

  • rate this

    Comment number 382.

    We move one step closer to the USSR. The more central economic planning imposes the price of something in an otherwise free & voluntary market place, the more distortion we see. If history is anything to go by, if we follow Miliband's logic all the way; we end up with total central economic planning.
    It Didn't work for the USSR. It Isn't working for North Korea. It Won't work for us.

  • rate this

    Comment number 381.

    Really this only warrants a one word answer. Inflation.

    ..Or idiot. One or the other.

  • rate this

    Comment number 380.

    It's completely worthless flim flam, not policy and I'm shocked the BBC has been duped into giving it air time. I could announce my own 'Aspirational Salary' of £45k. So what? If it's not compulsory, it's pointless gesturing. If it is compulsory, it's the national minimum wage.

  • rate this

    Comment number 379.


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


    355. Peter Buck
    "I have worked out the leanings of our moderators."

    Many have their comments removed as being "off topic" but I referred one for talking about tax avoidance when this article is about Living Wage, and it was re-instated.

  • rate this

    Comment number 378.

    This is nothing new. The Green party had the "Living Wage" in their 2010 general election manifesto but not many people seemed that bothered to vote for it.

    Same old Labour, borrowing other political party's ideas and rebranding them as their own.

  • rate this

    Comment number 377.


    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."

    Works very well for John Lewis, and is proof that having a boss who cares about is job is far better than one who 'deserves' massive pay - compare Lewis's performance to M&S and their bosses pay.

  • rate this

    Comment number 376.

    Yet another piece of Political opportunism by Milliband and New Liebour. They had 13 years to do this and never said a word. Even now it is only voluntary. In other countries if your not paid enough to suit your living standards to go and get another job. In the UK you claim benefits. It cannot be right.

  • rate this

    Comment number 375.

    An awful lot of the tax havens mentioned are actually british responsibilities - Gernsey, jersey, Isle of Man, Gibralter, British Virgin Islands... and so the list goes on - nearly 40 at the last count.
    Why can't the Conservatives get to grips with this? It might even cut down the amount of overseas aid that's stolen.

  • rate this

    Comment number 374.

    A living wage should be welcomed by everyone, but how come labour when asked about reversing the tax cuts for the rich say they will not commit to any spending programme until they write their manifesto before the next election?


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