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 413.

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

    Good point, though in this case, they'd be getting employers,rather than taxpayers, to spend money.

    But no one should forget that Labour, and the left in general, favoured the mass immigration that brought the wages down in the first place!!

  • rate this

    Comment number 412.

    Instead of putting wages and prices up. Why not cut the cost and rent of houses and commercial properties. Make it better for business and employers. And no more extra on prices or inflation.

  • rate this

    Comment number 411.

    Wouldn't any increase in the amount companies pay their workers be made up by an increase in prices? For supplies counting towards this 'living wage' if their prices increase then so would the amount needed to live comfortably, so this whole thing is a vicous circle really...

  • rate this

    Comment number 410.

    The knock on: Small business's will be disproportionally affected resulting in Job loses and closures... Also once you set a 'Living Wage' level you create another knock on that raises other monitory values. You will have £7.45 per hour but you will find your weekly shopping has gone up, will you really be any better off..?

  • rate this

    Comment number 409.

    380.Mark Williams

    Labour are in the midst of a charm offensive, promising anything, while also objecting to everything the Coalition tries to do (regardless of their views) in a desperate bid for an early election.
    This has everything to do with their fixation with power and absolutely nothing to do with what is best for the UK: and their chums at the BBC are doing everything they can to help.

  • rate this

    Comment number 408.

    4 Minutes ago

    I criticised Labour when they were in power, (lord knows they deserved it), now I criticise the Tories as they are in power, (lord knows they deserve it).

    What is so hard to understand?

  • rate this

    Comment number 407.

    To be fair the lowest wage in any company should not be say 200% of the top wage. A guess, but it would mean a balance of the wage bill and a fair wage for all. Plus if the top earner wants an increase then he has to spread the wealth. The only objection to this would be from the top earners and then they would find ways round it and there in lies societies problem, selfish bosses. Look at cabinet

  • rate this

    Comment number 406.

    I work 45 hours a week, earning £3 an hour on an internship that pays a comparatively generous wage. I've just graduated, I'm 22, and I'm living in London. How about making internships pay a fair wage? I'm thousands in debt after university, and now the government won't even support me with getting a job after uni, in the messed up economy they've failed to fix. Thank you Cameron, Clegg, et al.

  • rate this

    Comment number 405.

    Inflation will not be caused by a living wage. Inflation, historically, is caused by the high costs of energy, food, water and other basic necessities required by the population.

    As the Treasury have chosen to take the higher VAT out of their calculations on inflation I don't believe a word they say.

    We are all paying more for basics + fuel duty + 20%.VAT. Higher gas/electric + 5% VAT = 25% VAT

  • rate this

    Comment number 404.

    This was Camerons idea before the last election

  • rate this

    Comment number 403.

    surely, the minimum wage has got to be a living wage.

  • rate this

    Comment number 402.

    It Didn't work for the USSR. It Isn't working for North Korea. It Won't work for us.

    Yes and Capitalism is working so well, what with so many millions struggling to pay their basic bills, let alone have a life. Isn't it?

    Do you have any other bright ideas other than making (repeated) ridiculous comparisons to the former USSR?

  • rate this

    Comment number 401.

    It does not go far enough. If we pay workers enough so that they have a decent amount of disposable income, it will create demand and jobs. Cap wealth at £5m and redistribute excess into the system. We should be trying to find a fairer system to replace Capitalism, which is only a man made invention.

  • rate this

    Comment number 400.

    Tax cheats like...Amazon"

    Amazon is a company based in Luxemberg that sells goods in the UK.

    If you were a UK company and sold goods to customers in Luxemberg, you'd pay tax here in the UK, not in Luxemberg even though you have sales in Luxemberg.

    It's not 'tax avoidance' it's the way it works. You don't pay tax where your customer is, you pay tax where you are.

  • rate this

    Comment number 399.

    If the markets don't allow employers to pay their employees enough to live on there is something wrong either with the markets, the employer's ability to make money from said markets, or the cost of living itself. Someone will doubtless point out that the employee could be at fault for not being productive enough. Really? 1 in 5 of employees?

  • rate this

    Comment number 398.

    "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." - Using the Living Wage as part of contract procurement has been cleared by the EU since 2009 - Another example of this ConDem Gov, not knowing the facts but making announcements all the same.

  • rate this

    Comment number 397.

    If you can't afford to pay a living wage you shouldn't be in business.

  • rate this

    Comment number 396.

    @279 MySelf
    I should clarify my statement on London waiting;
    London is a city therefore has its own internal market forces, London has over the past 150 years excluding war time, so WW1 + 2 made its self as a whole massively overvalued / overpriced, after all if you take away its support, thats the rest of the UK, London would collapse all I am asking for is fairness for the rest of the UK

  • rate this

    Comment number 395.

    The cost of all goods and services are based upon the costs of the goods and services used in production. Labour is a service. Increasing labour costs nationally forces jobs abroad aggravating unemployment in general and youth unemployment in particular. Coordinating with other countries to increase the cost of labour globally would increase the cost of all goods or services proportionally.

  • rate this

    Comment number 394.

    Surely the wage you earn is a reflection of the work you carry out and your scarcity value.
    Forcing upon the market higher wages for the least educated and least driven means you will be taking any reason for these people to aspire to better knowledge bases in the first place.
    Total lunacy from the Labour party yet again.
    Their lack of grasp upon basic economics is shown up yet again.


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