Why the new national living wage will leave some workers worse off

A slightly higher minimum wage will not be enough to offset cuts to tax credits


Boris Johnson made a lot of noise about the living wage in the lead-up to the Budget. He has always resisted my calls for it to become compulsory, but was on London’s side when he warned last week that the new ‘national living wage’ is nothing of the sort.

With the chancellor trying to pull a fast one, I’m going to press the mayor on Wednesday with three reasons why he shouldn’t quieten down.

My first is simple – why is there still no higher minimum wage in London?

The government now accepts the need in the capital for a higher benefit cap (a shameful policy), and has set the staggeringly stupid ‘pay to stay’ income threshold for social housing tenants at a higher level for London.

It’s obviously more expensive to live here, so why not make employers pay people more? The mayor hinted at this on Friday – will he publicly call for it?

The new national minimum wage will leave the average UK worker £26 per week below a basic standard of living, but it leaves Londoners £78 a week behind.

I also want to know why City Hall apprentices are paid a full London Living Wage of £9.15 an hour, when the national rate for apprentices is a miserly £2.73.

Why does the mayor ensure an 18-year-old starting out at Transport for London earns at least £9.15 an hour, when the national minimum would be just £5.13? Why did he not criticise the decision to only pay the higher minimum wage to people over the age of 25?

I’m utterly fed up with the casual discrimination against young people. Why should an employer be able to pay a 24-year-old poverty wages? What happens when they turn 25?

My third question is, will the mayor stand up for all the existing London Living Wage workers?

The living wage campaign has brought 20,000+ Londoners above £9.15 an hour. They won’t benefit from the slightly higher national minimum wage, but many of them will lose out from the benefit and tax credit cuts.

Those who work part time will be hit by the cuts to working tax credits. Those renting privately are likely to claim housing benefit to help pay their rent, but this has been frozen for the next four years. Anyone who has a third child will have to find the extra costs from their shrinking income.

This so-called ‘living wage budget’ will be terrible for a large number of living wage workers.

This matters for the mayor of London.

Each year the City Hall calculates the new living wage level, taking into account changes to tax and social security. The living wage will rise faster to compensate for these cuts.

But the big brains in City Hall look at the current set-up, they don’t look ahead. These cuts don’t come in until April 2016, so the new level announced in November won’t account for them. Anyway, it usually takes employers at least a few months to uprate their pay based on the new figure from the GLA.

This means workers on the London Living Wage could actually be earning poverty wages for most of 2016.

So I’m going to ask the mayor to change the methodology, to compensate for these cuts this year instead of waiting for the next.

The moral purpose of the living wage is that everybody ought to be able to build a life on their wages. The emergency budget betrayed this simple promise. If the mayor really believes in it, he will join me this Wednesday in calling for a genuine living wage for all Londoners.

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

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.