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Public sector contractors should pay the ‘Living Wage’, says Miliband

By Richard Johnstone | 5 November 2012

Government contracts should be used to encourage the roll-out of the ‘Living Wage’ across the country, Labour leader Ed Miliband said today.

Speaking as the Living Wage Campaign called for a rate of at least £7.45 per hour, Miliband said Labour would expand the use of the voluntary rate, which aims to ensure a minimum standard of living.

For Whitehall, this would mean learning the lessons of local government, where 20 authorities have signed up to paying their employees the Living Wage, which is higher than the statutory National Minimum Wage.

The Living Wage Foundation, which campaigns for the adoption of the rate, said it ‘enables those who receive it and those dependent on them to lead vigorous, full human lives’.

Participating councils include the London Borough of Islington and Newcastle and Glasgow city councils. Some, including Islington, have also sought to ensure that the Living Wage is paid to staff in outsourced services.

Miliband added: ‘We should seek to learn from the local government experience with procurement to see whether central government can use its power to insist that large firms that get major government contracts commit to being Living Wage employers.

‘We will look at whether we can apply this lesson to central government procurement.’

He also said that a future Labour government would ‘examine the case for greater transparency’ in private sector wage rates, including forcing large firms to publish the number of employees paid less than the Living Wage.

‘This is not because we think every employer can pay the Living Wage but it will encourage, sector by sector, all to aspire to the ambitions of the best,’ he added.

At least 100 private firms have now joined the campaign, which is led by pressure group Citizens UK. However, the ‘vast majority’ of those being paid below the threshold are in the private sector, Miliband added.

‘Some people will say that in a harshly competitive world nothing can be done. I don’t agree with that.’

Labour was also examining whether the government could introduce ‘Living Wage zones’ to help more firms pay the rate, he said. This would give the companies some of the tax credit and benefit bill savings that would follow the enhanced pay.

‘We are looking at whether it is possible to encourage more firms to pay the Living Wage by sharing some of those savings that come back to government,’ Miliband added.

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