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Ed Miliband talks a good game on the Living Wage

5 November 2012

Ed Miliband’s One Nation circus moves on to tackle low pay this week, with the Labour leader calling for more companies to pay their staff the Living Wage of at least £7.20 an hour. One of his most striking proposals comes from the Resolution Foundation’s Commission on Living Standards, which is to force top companies to publish details of what proportion of their staff are paid below the living wage. Though Miliband isn’t hinting at raising the statutory minimum wage to meet the living wage – clearly acknowledging the adverse impact that this hike could have on job creation when the economy remains so fragile – he still wants to name and shame organisations which fail to sign up to a voluntary scheme.

A living wage isn’t a bad idea so long as it remains voluntary, although Miliband’s name-and-shame plan does make it sound rather less voluntary: woe betide any company whose name appears on the list and finds itself a target of UK Uncut for not doing something that it has no obligation to do anyway. Boris Johnson has enjoyed success with his own voluntary scheme in London, partly because the economy in the capital is very different to the local economy in somewhere like Stoke-on-Trent.

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But if Miliband fancies naming and shaming organisations which are failing to help people on low incomes make ends meet, perhaps he could have a little think about what One Nation housing would look like, given housing costs represent one of the biggest pressures. If there were a List of Shame on housebuilding, the previous Labour government of which he was a part would surely feature: the number of houses built per year peaked at 176,650 in 2007, which is a tiny number compared to the 1968 peak of 352,540. Labour’s lowest offering came in 2001, when 129,510 homes were completed. Economists estimate that the UK needs 250,000 new homes each year. Even when the sun was shining, Labour failed to get to grips with housebuilding in its 13 years of government, and we are now suffering from an affordability crisis, not just for owner-occupiers, but in the private rented sector too.

Miliband does have a positive offer for those on low incomes, rather than just a flagship policy of cutting the benefits of the workless family down the road. And that’s a good thing for Labour as it tries to appeal to strivers. The great shame for the coalition is that it doesn’t just have an even better positive offer for low incomes households: it has already brought it into action, but failed to reap the rewards. The Budget was such a shambles that few noticed the great triumph of taking two million workers out of income tax by raising the threshold to £9,200. That means that those on the very lowest wage that a firm can legally pay don’t then have a chunk of their salary taken back from them by the taxman: the below-living minimum wage is all theirs.

The 2015 election will be fought on the cost of living and voters will be on the lookout for the party which articulates their struggles the best and proposes the most attractive solution. Miliband is talking a good game here: the Coalition parties will need to ensure they can demonstrate they’ve played an even better game.

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  • Sal

    Whilst a ‘living wage ‘ is an ideal and as an employer I am all for it as it gives staff a feeling of worth etc etc however the point is surely IF THE COMPANY CAN AFFORD IT.

    Unfortunately the way this is being publicized and pushed it makes small companies trying their best sound like they are underpaying staff, despite the fact that the staff are on above minimum wage (though not on a living wage being in the NW I would dispute the fact that min wage isn’t far off a living wage when compared with the south!).

    We have always paid minimum wage on start and raised this wage regularly over time as a thanks for staff staying with us and of course as a recognition of increased ability however in this recession we are now no longer making money and the small amount of income we have personally received is not even a minimum wage yet we are being made to feel guilty by staff because we have not given them a ‘living wage’!

    Do the people advocating this realize in many cases this will be the tip over point for small businesses who will then have to go into receivership! More people on benefits!!!

    With the onset of the pension schemes being implemented even for small businesses with few employees this will be the final straw and we for one will be another statistic to add to the number of closed down shops on the high street.

  • Patrick

    Read Guido Fawkes to see what a complete hypocrite this man is – Clearly a case of do as I say rather than do as I do.

  • dalai guevara

    Now the penny has dropped – the discussion about the living wage (and the raising of it) is an attempt to divert from the fact that there is a minimum wage, which unlike the living wage, is statutory.

  • Rich

    Just used Contractors Calculator to figure out cost of employing someone on Living
    Wage is £15,500.00

    Fine, if they are productive, and we’ve never employed anyone under that.
    But if it’s a marginal job, with low skill level?.. are you really going to take a risk on £15.5k. This kind of rigidity is the best way to get European levels of 25% youth un-employment, and lack of opportunites.

    This concentration on the hourly figure is mis representative. Quote the annual cost.
    Or should we start talking about MP’s hourly rates?

  • JerryBear

    It was the Labour Gov’t in which the Millibands so enthusiastically served, which created most of the working poor we now see and feel. That same Gov’t which sucked up to big business propoganda that, “we can’t get the skills” but deceitfully missing out the caveat, “at the lowest wages”. And those who worked in the non-skilled sector, were cruelly labelled as part of the British work-shy. That Labour Gov’t used the propoganda to flood the UK market with cheap overseas workers and thereby flooding the supply of labour. At the same time, and as one Labour MP aslo eventually admitted, “so we can stick it to the Tories”. And then to rub salt into the wounds, they then labelled the British worker as lazy. It isn’t the fault of migrants – they only took the opportunities the Labour Gov’t presented them.

    But now having created all this ‘new’ working poverty, exactly how does Milliband think he can name & shame tens of thousands of businesses paying staff less than a living wage. Well … he could start by naming & shaming the last Gov’t which so enthusiastically over populated the labour supply inorder to ‘stick it to the Tories’.


      I see Guido has noticed a job going at Labour Party HQ for an hourly rate of, yes folks you’re there before me, £0.00!!!!!!!

  • JerryBear

    It was the previous Labour Gov’t who the Millibands so enthusiastically served which presided over the creation of the working poor. They bought into, lock, stock & barrel, big business propoganda that “we can’t get the skills” but deceitfully missing the caveat, “at the lowest possible wage”. The result, – the Labour Gov’t literally flooded the labour market with cheap over-seas workers. As one former Labour MP eventually admitted, “so we can stick it to the Tories”. This is not the fault of those migrants – they only took the opportunities presented to them. But the working poor was created by big business and the Labour Gov’t. who then rubbed salt in the wounds by labelling the British worker as lazy.

    And now having created all this working poverty, exactly how does Milliband think he can name & shame tens of thousands of businesses paying staff less than a living wage. Well … he could start by naming & shaming the last Gov’t which so enthusiastically over populated the workforce inorder to grossly increase the labour supply.

  • LondonStatto

    The concept of a living wage is prima facie nonsensical.

    If the minimum wage isn’t enough for people to live on, it must be raised. It’s as simple as that.

  • John thomasz

    As an engineer I spend a couple of thousand pounds a year at night school, just to keep me up to date with current legislation and professional development (treading water) to get a 2 pc pay rise in a stressful job. Whilst the gaggle of grumpy cleaners at my factory get a 16pc pay rise because they rather go the pub then college? That’s fair.

    • Mike Barnes

      Obviously the answer is to become a cleaner then if it’s so great…

      Oh wait, 16% of 6 quid an hour is much less than 2% of whatever you earn, not to mention the fact you probably enjoy your job, the prestige and the standard of living it gives you.

  • Coffeehousewall

    Just checking whether the word Benghazi has been added to some exclusion list here…

  • Kevin

    As another commenter hinted recently, a name-and-shame plan for landlords could possibly provide more immediate relief.

  • Coffeehousewall

    Can the Spectator explain why it is banning more and more conservative commentators here? How can you have the cheek to run an edition talking about free speech when your best and loyalist commenters are being banned without any sort of communication.


      Another institution changed irrevocably from within and for the worse.

      They didn’t like the people, so they changed the people and likewise, they didn’t like their readers so they’ve changed the readers. But for as long as we can bear it, we should remind them here that being fashionably left-wing may make these Pravda writers feel more comfortable, accepted and preserve their precious “access”, but experience, empiricism and individual freedom will always be made manifest, and happily, as experience has shown us, will always make those incapable or uncomfortable with free and questing thought who seek the comfort of other inadequates in a dogmatic consensus, squirm and lash out in the narcissistic adolescent immature way we know so well.

      We also know from experience, that the adolescence soon turns to totalitarian horror, and as we approach 11 November let’s just stop and think again about the terrible cost of re-running the truth and freedom versus control and extermination battle, and which side of the line we stand.

      In the end, we’re all a minority of one.

    • HooksLaw

      ‘conservative’ commentators? don’t make me laugh.

  • Judy

    Incidentally, adopting the Living Wage will also have a huge impact on our defence and transport infrastructure costs. How much more will it cost to manufacture and maintain those of our weapons systems we produce in the UK? To build our roads and renew our railway and energy systems? Where will the money come from? Or will we have to cut what we need—-such as armoured vehicles for our forces in Afghanistan– in order to pay lower paid workers more? And by the way, what percentage increase does the new “Living Wage” rate represent over the previous rate?

  • dorothy wilson

    David Smith’s article in the Business Section of yesterday’s Sunday Times is worth reading in connection with this. He refers to some research that found, despite the apparent freeze in public sector pay, it has actually risen by 9.6% in the past few years. It appears the managers there have been manipulating the grading system to give staff increases. In the private sector pay in the last three years has risen 5.2%.

    Set against that are the employment figures for each sector. In the public sector the adjusted figure has fallen by 450,000. In the private sector employment has seen strong growth.

    As Smith points out there has to be a strong suspicion that lack of pay flexibility in the public sector has been a factor in the job losses there.

    A further point is that a factor in Germany’s rebound from the problems of reunification was the removal of the minimum wage requirements from small firms. That has also been a factor in the lower level of youth employment there.

    So Milliminor needs to be careful.

    • dorothy wilson

      That should have been “…. despite the apparent freeze in public sector pay, it has actually risen 9.6% in the past three years.”

  • Troika21

    Wages are something you earn, not something you vote for, a distinction that I’m sure is lost on politicians.

    Seems to me that Labour is capitalising on another failed strategy. Lots of graduates who aren’t getting the kind of jobs Labour promised them, which means lots of receptive younger people who can be convinced that companies should be forced to give them better pay. Well played Ed.

  • Holby18

    It is blackmail publishing a list of companies which are not breaking the law. Further, it will bankrupt local authorities and other government agencies – or are we supposed to bail them out to meet such aspiration? I heard Rachel Reeves on the news describing KPMG as paying their catering staff the living wage. Can someone tell me the proportion of catering staff to other employees? I would need this information to equate the cost to other companies such as our supermarkets. I would suggest that 90% of employees of supermarkets would be covered by this demand. The cost to some companies would be huge.

    At the same time there is opposition to regional salaries. I do not understand. I accept that in some parts of the country staff need more money because of overhead costs and indeed to get good staff into impoverished areas. Why are Labour so opposed to this and yet want a living wage? I would have assumed that regional pay would have provided this as rates would be set according to so many factors relevant to each area of the country.

    The taxpayer will end up paying for this. More borrowing if local authorities and government agencies introduce it or costs placed on consumers by the private companies. A great idea – not in my opinion.

  • alexsandr

    this is all based on people working full time. but many low paid are part time. so employers will put the hourly rate up, and cut the hours but still expect the same output.

  • @PhilKean1

    Oh dear. It just keeps getting worse

    How soon after a so-called “living wage” is made law will people be demanding an ever-higher rate because, in today’s Labour engendered, “must-have” society, they aren’t able to afford things that would previously have been regarded as non-essentials?

    Britain’s economy and the British people’s best interests would be best served, NOT by imposing a self-defeating, so-called, “living wage” – but by ABOLISHING the “minimum wage”.

    This would bring prosperity, jobs, opportunity and self-respect.

  • Carole Anne Benton

    Raising the minimum wage of approx £12.5k pa to the living wage of £14.6k pa is not going to bankrupt an SME – but large scale corporations (the ones that still hide equal wage comparisons for gender, part time and other spurious excuses) will suffer. If cleaners who “only” work 30 hours and have their salary pro-rata’d and don’t get paid breaks etc, expect that their pay packet will be an hourly multiple and not a mathematical fiddle factor of an annual f/t wage, then there will be many more queries for payroll.


      What!!!??? I don’t know what sort of SME you run, but adding 16% to a wage bill when margins are typically below 5%, often half that, and the results should be clear to anyone. Or perhaps not.

  • William Haworth

    Will you PLEASE stop using these lame pictures of politicians pointing? It only panders to them.


      Not to mention that if a bus took a wrong turning, it could disappear down Milli’s gob and be lost for days.

  • Judy

    A really brilliant idea, the Living Wage–for exporting UK jobs to China. Why has the UK lost most of its manufacturing jobs to China, Asia, Turkey? Because wage costs there are much lower. Why has the UK lost so many service support (eg call centre) jobs to India? Because wage costs are much lower. Why are businesses closing down all over the UK? Because they can’t cover their costs.

    Along comes Ed Miliband pushing the adoption of the Living Wage as Labour’s core policy. What will its most significant effect in the economy be? To raise the costs of every enterprise. See above. Oh, and to raise the cost of those public sector employment fastnesses– the NHS, local authorities, the police, and all those quangos our Council and personal taxes pay for. Who will pay for that extra cost? We will. And we’ll do that through our government borrowing even more in our name.

    What will adopting the Living Wage do for the deficit we so desperately need to reduce? See above? What will it do for reducing the crushing weight of debt interest we’re paying? It will raise it.

    It’s bad enough hearing the Living Wage being relentlessly pushed on BBCR4. Why is the Spec running such sympathetic articles about it. Where are the articles which strip off the positive verbiage and show what is in fact a campaign to force every organization in the country to raise pay?

    • alexsandr

      you havent mentioned those on about £7-8 now. so the minimum wagers get their raise, so everyone else will need a raise to keep their differentials. and firms that dont do that will lose their best to competitors

    • dalai guevara

      ‘Why has Britain lost so many jobs to China? Because wage costs are much lower’

      Partly, and because consumers in the UK want something for nothing. And of course and more importantly, because industry decision makers want to maximise buck. Do we see the same phenomenon in Germany? No, because they understand the moral obligation to not discard their own people for the profits of a few.

      • Chris lancashire

        Absolutely and totally wrong. The level of penetration of Chinese imports into Germany is not dramatically different from the UK. The Germans don’t have any “moral obligation” to buy German products although they do have a more pronounced nationalistic tendency to do so (as do the French). And, yes, industry decision makers do want to “maximise buck” (I do dislike mangled Americanisms); it’s called making a profit and it’s how you stay in business.
        You are half right on UK consumers wanting something for nothing – we tend to look for the cheapest option with quality, reliability, etc. a poor second to price.

        • dalai guevara

          Excuse my worldliness, I was using the term to emphasise/emphasize my position. Chinese penetration into Germany is totally different to the UK, partly due to the fact that they offer and deliver something in return.

    • Andy

      You are quite right. Miliband is just a student union politician who has done nothing, is nothing and never will be anything. In the real world every time you increase ‘costs’ you destroy jobs.

      I deal with a company who produce things for me. I’m talking a premium product, but the production moved from Lancashire, where it had been for 150+ years to Thailand. I wasn’t very pleased by this, but it was simply impossible for me to take this production ‘in house’, utilising some of the skilled men who had lost their jobs. Financially it would have been a disaster. The reason for the move was that wages were too high but so were business rates and employment taxes. it means that the company can now make a return and be profitable which it wasn’t before.

      Recently I was sat next to an employer who quite openly said he would not employ women of child bearing age because of all the maternity rights they acquired. Can you blame him ? And so it goes on. Juvenile politicians like Miliband, Clegg et all just don’t get it. We have to be able to compete with countries like China and I’m afraid that means that gradually our standard of living is going to decline as it has been doing over the last 10 years. Instead of thinking of new ways to spend money they don’t have, or increase regulations that destroy the economy. the entire political class should be looking at how the liberalise the economy and allow our people to go about their lives with the least amount of state interference.

    • Mike Barnes

      Ahh, the business leaders getting their usual scare stories in earlier.

      The exact same predictions were made when the minimum wage was introduce, that it would lead to mass unemployment etc. The unemployment rate barely changed from 1998 onwards, until the big 2008 banking crash.

      There is literally no evidence whatsoever the minimum wage lead to job losses, there’s no evidence the living wage would either. Did you even read the above article?

      • HJ777

        But we had a boom economy, largely credit-fuelled. Unemployment should have dropped dramatically.

        We had a record rate of job loss in those industries, principally manufacturing, that are exposed to international competition. Meanwhile, we had a large increase in employment in those that weren’t, principally the public sector. It wasn’t sustainable.

        Almost every economist agrees that minimum wages cost jobs. The only question is how many at a particular level of minimum wage. If you set it low enough, the effect will be minimal (although “low enough” will depend on the geographical location). If you set it too high, the effect will be large.

  • alexsandr

    typical socialist. spending other peoples money.

  • HooksLaw

    The level of a living wage is dependent on inflation, so the higher inflation under a labour govt the higher the living wage and if companies are not to be named and shamed they will pay more and add to inflation and then…

    Miliband is offering nothing, other than getting other people to spend money they cannot afford. A jobs worth in wage terms has no relation to outside circumstances, such as the cost of housing.

    • dalai guevara

      Yes, income inequality is rising in Anglo-America only. Perhaps understand Stiglitz and then rephrase?

      • HooksLaw

        I can understand a scam when I see one. Pushing up costs which gets passed on to the poorest, and / or pushing up input costs which cost the poorest their jobs.

        • dalai guevara

          I see we agree on something.

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