Living wage: Ed Miliband pledge over government contracts


Ed Miliband: "Above and beyond the minimum wage we need to do more"

Related Stories

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."


More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites


This entry is now closed for comments

Jump to comments pagination
  • rate this

    Comment number 993.

    @978 'Vampire'
    Multinationals have been pulling jobs out of the UK for a decade. American Kraft bought Cadbury and moved to Poland with EU Grants. Now American Ford are closing in Southampton and moving to Turkey with EU loans - is there a pattern emerging?

    Personally I have more respect for Japanese companies who invest in the UK and source local producers first for their car plant needs.

  • rate this

    Comment number 992.

    Which do you think is best £6.19 an hr for 39 hrs a week
    or £7.56 an hr for 30 hrs a week
    My boss is given X amout a week for wages min wage up hours go down
    That is why you cannot find staff in large DIY stores
    My town centre DIY store has 3 members of staff 7am till 10.30 am and 6.30pm till 8.30pm.
    The shop lifters love it
    The local pound shops are better staffed and only 10% the size

  • rate this

    Comment number 991.

    @987 Andy S
    Although what you say sounds like it makes economical sense at the same time it also sounds like an excuse to pay less and that is the dilemma.

    Because in the "Real World" the wage doesn't cover the cost of living.
    How many of your employed workers on minimum wage claim benefits at the same time?
    Economically it makes sense for you to pay the minimum wage
    But Ethically it seems wrong

  • rate this

    Comment number 990.

    A small business is also forced to pay a lot of costs by the government in terms of maternity/H&S/pension costs. I'm all for the government given something back to them by providing benefits to low paid workers. Germany exempts most cos under 10staff from onerous costs. Ours doesn't.

  • rate this

    Comment number 989.

    Another nail in the coffin of youth employment. Do none of our politicians think joined up any more. Just because you start working on low wages does not mean you're on them for life. How many new school leavers in your office these days?

  • rate this

    Comment number 988.

    Tio Terry
    2 Hours ago

    Rubbish. Job creation is in your own hands. Stop relying on others providing you with a way of sponging of a company and start your own.


    Utterly risible. Companies are sponging off the taxpayer to the tune of £25 billion P.A. in tax credits because they see their employees as not worthy of a livable wage. Prey you don`t see a general strike

  • rate this

    Comment number 987.

    I employ 40 people and it would cost nearly £120,000 to introduce the living wage. We'd then make a loss and have to let people go. It might be fine if you are local or central government to pay the living wage since its tax payers money. But back to the real world, yep increase the minimum wage but keep in mind prices would have to rise to cover the increase

  • rate this

    Comment number 986.

    I wonder how many people have been working 40 hours a week for the minimum wage for years and have at the same time had to claim benefits to cover the costs?

    IDS revealed a figure of about 40% of benefit claimants are in this situation.

    That isn't market economy that is state sanctioned economic slavery

    Tough talk on poverty but No tough action to combat poverty.

    Only action to continue it

  • rate this

    Comment number 985.

    Theres a few points to this. The likes of tesco's/starbucks/next can't move their retail business abroad. However the idea is stupid, wages really aren't the problem, its liiving costs. We need a huge increase in housing or a massive decrease in demand to reduce rent/property prices, utility bills need to come down, as do petrol and the trains

  • rate this

    Comment number 984.

    Issue is cost of living. Improve infrastructure so people can travel further more easily and save on rent, build more homes on some of the 92% of the uk that isn't built on and make bus travel free. Cheap to do and will benefit the low paid, businesses, green-minded, economy and environment. Increased activity will pay for the additional spending.

  • rate this

    Comment number 983.

    Companies need to pay wages that allow them to offer goods and services at prices which consumers will pay. With an expanding global population, unskilled manpower is cheap around the world.
    If multinational companies paid more in taxes then lowly paid workers could receive more benefits and better housing, health care, education.

  • rate this

    Comment number 982.

    sounds typical labour comment to me.
    IF i become pm i will make sure we spend more
    good enough reason not to vote labour

  • rate this

    Comment number 981.

    If it so essential that everyone receives a living wage why does the government tax the low paid so much?
    It is about what is in your pay packet at the end of the week and what you can buy with it. Not some abstract figure pulled out if hat by some out of touch westminster politician.

  • rate this

    Comment number 980.

    Let's be clear that Starbucks, Specsavers, Tesco Direct, Vodafone, Sky, Virgin Media, and gambling companies directly or indirectly associated do not pay their taxes in the UK even though they benefit from trade in the UK.

    Plus, if I see one more expensive ad from Lloyds for the journey or from Tesco with every little helps with celebrity voice overs I will scream.

    Enough already, just shut up.

  • rate this

    Comment number 979.

    Alex you've made a fair point but my view should be that the min. wage should in effect be a living one & that can only be defined if you're in a situation where you don't have to claim benefits in order to keep you're head above water such as tax credits/housing benefits.

    I'm appalled by some of the comments that have posted tonight & I would love to see them on min. pay & see how they survive

  • rate this

    Comment number 978.

    When companies see a loophole to pay less tax, they will inevitably use it. Starbucks, google, vodafone etc...they all did.

    If this minimum wage tax gets implemented, companies will seek to avoid it. Q: How do you avoid paying tax that is directly proportional to the number of employees in the UK? A: Have less employees in the UK. For many multinationals, this is a very easy option.

  • rate this

    Comment number 977.

    Todays living wage is spiralling higher and will continue to do so while households are faced with increased taxes e.g. VAT and fuel duty as well utility and train companies regularly increasing their prices above annual inflation rate. If businesses are asked to pay their employees more so they can in turn pay for these costs, I fear we will end up as an over priced and uncompetitive country.

  • rate this

    Comment number 976.

    The problem isn't so much low pay but more to do with the high cost of living in this country, yet the politicians fail to address the real causes of this.

    Escalating housing costs won't be stopped by just giving people more money to spend on rent, and Increased energy costs won't be solved by just giving people more money to spend on electricity and gas.

    They are all clueless.

  • rate this

    Comment number 975.

    One Nation run by One Idiot? .......... No thank you.

  • rate this

    Comment number 974.

    I think the term "Living Wage" is a dubious one. It implies you can live off it when in reality most on the minimum wage who are claiming benefits to make ends meet will still have to claim one benefit or other to live on the "Living Wage"

    The government wants to "Make Work Pay" but is quite happy to subsidise low wages with Benefits at the same time saying those who do claim are scroungers


Page 1 of 50


More Politics stories



BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.