Living wage: we cannot leave 1 million Londoners reliant on one small campaign

The best way for Osborne to cut the benefits bill would be to make the living wage compulsory



Have you ever asked your boss for a raise? If the mayor of London, the prime minister or the chancellor had done so while working in a low paid job in the capital, they’d quickly realise why we need a statutory living wage to achieve their aim of reducing the in-work benefit bill.

The prime minister said in a speech last week that he wanted to move from a ‘low wage, high tax, high welfare society to a high wage, low tax, low welfare’ society, and that he would ‘always make sure that work pays’.

I don’t agree about taxes – and I don’t think I’m alone in feeling proud of paying them, nor in wanting us to pay a slightly greater share of our national wealth towards decent public services.

But I do agree that working full time should earn you enough to pay the bills, and that we shouldn’t subsidise employers so much in the form of in-work benefits and tax credits. I also agree that it would be better for wages to rise than the employers’ subsidies.

I’ve pressed Boris Johnson on the idea of raising wages many times in recent years. I want him to join me in calling for a statutory living wage, which would involve raising the National Minimum Wage from its current level of £6.50 per hour to a living wage of £9.15 in London and £7.85 elsewhere.

According to this study by the IPPR and the Resolution Foundation, if the government made the living wage compulsory the Treasury could stand to gain £1 billion a year.

This should be the first place the chancellor looks at as he tries to cut £12 billion from the benefits budget.

A couple of years ago the mayor admitted to me that there ‘clearly would be a reduction in the in-work benefits that they receive’ if the living wage was compulsory, but insisted it should remain a voluntary campaign.

Two weeks ago he complained that ‘hardly any [billionaires] are taking the trouble to ensure that the companies they lead or invest in are paying their employees the London living wage’, but he had no explanation as to how they could be persuaded.

After his seven years in office, nine out of ten big businesses in London still haven’t signed up to the living wage campaign, and so the in-work benefit bill has risen.

Infuriatingly, both the mayor and prime minister apparently think that the best approach to all of this is to pick the pockets of the poor with benefit cuts, and then expect employers to voluntarily raise wages to make up the difference.

But they are ignoring a huge power imbalance in the economy. With 286,000 unemployed people looking for work in the capital, few workers can afford to lose their job by bargaining for higher wages. People are more able to pinch pennies on their food and energy bills than they are to demand higher wages.

We’ve seen this as the government has cut housing benefits, and rents have continued to rise in London. Far from negotiating lower rents, people have forgone meals or moved further afield.

The low pay sectors like hotel workers, shop assistants and cleaners are almost completely un-unionised.

Countries like Denmark have higher pay without a statutory living wage because four-fifths of people are covered by collective bargaining agreements, but I haven’t heard the mayor or prime minister calling for stronger trade unions!

Since Johnson became mayor in 2008, the number of people earning less than the living wage has risen from 569,000 to 917,000 as of last year. That’s almost one in five working Londoners not earning enough to afford a very basic quality of life.

The voluntary living wage campaign has been an inspiration, and I’m glad the mayor has supported it. But if the government further shreds the social security system with £12 billion of cuts, we cannot leave one million Londoners reliant on this small campaign to earn them a basic quality of life.

Jenny Jones is a member of the London Assembly for the Green Party. Follow her on Twitter

9 Responses to “Living wage: we cannot leave 1 million Londoners reliant on one small campaign”

  1. swat

    I’ve got a feeling that this is the very rabbit he’s going to pull out of the hat on 8 July. Since the Tories and All Parties are in favour of a living wage; it would show the Tories as a ‘with it’ Party. The implementation is going to be a lot trickier, even impossible to achieve, but just announcing it may induce people to think we are almost there.

  2. MichaelHFerguson

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  3. ianbodgerbrown

    Yes, if everyone got a decent wage there would be no need for welfare and it would be a big boost for the economy. A lot of poor people spend more money than a few rich people. You couldn’t expect thicky Osbourne to know that. Also, if the workers in London, and other large cities, aren’t paid enough to live there, the rich people will find there are not enough people to tidy up after them!

  4. ianbodgerbrown

    Margaret Thatcher thought that everyone could have a job earning loads of money but that’s not economically viable; someone has to pay for your $7K a month.

  5. Nick

    My wife works in a well-established care home attending those before they die and looking after their relatives needs after they die

    all on under £7 per hour. Rich or poor she always gets told the same story be
    it from the person she’s looking after or the relatives that she’s a saint.

    Well it’s about time those who run businesses remember they
    or their families may at some point need the likes of my wife and unless things change on the wages front there’ll be no care workers left

    most care workers can’t undertake this work at that level of
    pay and work elsewhere also the fact most of those in work could never undertake
    this type of work leaving the very few genuine care workers left in society and the agency workers who are not that ideal as they are very expensive who have to stand in for holidays etc.

  6. MaryCSmith


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  8. Keith M

    The Tories may support it but they won’t implement it.

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