London Living Wage increases by 35p to £9.15 per hour

London Mayor Boris Johnson launches living wage Image copyright PA
Image caption London mayor Boris Johnson says retail and hospitality companies need to sign up to the scheme

A new London Living Wage rate of £9.15 an hour has been decided.

The wage - the amount needed to cover the basic costs of living - has increased by 4% on the current £8.80. Outside London, the Living Wage will rise 20p to £7.85.

In the capital, more than 400 companies have been accredited and have signed up to the voluntary scheme.

About 634,000 people employed in London earned less than the new rate in 2013, a report by KPMG estimates.

The wage, which is calculated each year by the Greater London Authority, is designed to tackle the problem of "in-work poverty".

Launching the wage at a coffee shop, mayor Boris Johnson said: "Importantly, this isn't just about economic dividends, but the immeasurable improvement to quality of life and workplace morale.

"We need even more converts, particularly in the retail and hospitality sectors. I hope that even more organisations this year will decide to do the right thing."

The compulsory National Minimum Wage is £6.50 an hour for people aged 21 and over - 40% lower than the new London Living Wage.

'Paying poverty wages'

Commenting on KPMG's report, TUC general secretary Frances O'Grady said: "Low pay is blighting the lives of hundreds of thousands of families in London.

"And it's adding to the deficit because it means more spent on tax credits and less collected in tax.

"The fact is there are more employers in the capital who can afford to pay living wages, but aren't.

"It is now time for all responsible employers to commit to adopting this standard, which enables workers to earn just enough to be able to live a decent life."

Green London Assembly member Jenny Jones said it was "horrible to think that nine in 10 big businesses are holding out and paying poverty wages, while many pay their top executives multi-million pound bonuses".

Staff at Ritzy cinema in Brixton recently campaigned to be paid the London Living Wage having previously been on a starting wage of £7.53 an hour.

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