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Living Wage

Volume 740: debated on Thursday 8 November 2012


Asked by

My Lords, the living wage is a voluntary minimum level of pay above the national minimum wage that companies and other bodies can choose to pay their employees. The Government back the idea of a living wage, and we encourage businesses, where possible, to take it up. However, we have no plans to require employers to pay the living wage.

My Lords, work should be the surest way out of poverty. Will the noble Lord join me in congratulating those employers who pay the living wage, as well as the Living Wage Foundation, Mr Ed Miliband and the Mayor of London, Mr Boris Johnson, on the work they are doing to support it? When will the Prime Minister catch up and do something about this issue?

My Lords, the Government have directed their focus entirely in terms of low pay on taking action to help through the tax system. Indeed, they raised the income tax allowance to take 2 million of the lowest-paid people out of tax altogether. From next April someone on the minimum wage working full time will see their income tax bill cut in half, and if they work 28 hours a week they will no longer pay income tax. That is a direct result of what this Government are doing to assist the low paid.

My Lords, how many jobs do the Government estimate would be lost if the living wage was substituted for the national minimum wage?

My Lords, I do not have that figure in front of me but my noble friend has raised something which I think has also been raised by the Federation of Small Businesses. It is clearly important that we make sure that in asking and encouraging business to pay more, it happens only where it is possible. What we cannot have is job creation and job retention put in jeopardy.

Does the Minister recall the dire warnings offered about what would happen to employment with the introduction of the statutory national minimum wage? Does he also recall that in the years since the introduction of that national minimum wage we have reached the highest ever levels of employment in the United Kingdom? Will he rebuff those who now argue, in the same way as they did before, that the introduction of a living wage—which is surely a basic requirement of a civilised society—would result in some form of higher unemployment?

My Lords, I acknowledge very much what has been done since the national minimum wage was put in place, but the point, again, is that we need to make sure that this is a voluntary proposal because we cannot have small businesses, in particular, put in jeopardy. The Government very much encourage businesses, including contractors supplying services to government departments, to take up the living wage. However, I emphasise that it should be a voluntary structure.

My Lords, is the Minister aware that self-employed people—and I am thinking particularly of the many carers who work with elderly or frail people—do not get any guaranteed minimum wage at all? Very often these semi-senile people say, “Oh no, I’m sorry—I’m not paying you any more”. I keep meeting people who are in a desperate position. I checked with the Inland Revenue and it says that it is correct that there is no guaranteed minimum wage, no holiday—no anything—for any of these people. Is it not time that we looked at doing something for them?

My Lords, in thanking my noble friend I think that the clearly important feature of all these things is to ensure that we have a growing economy. That is why the Government are so determined to pursue the growth strategy with many apprentices and all sorts of advantages that we hope to bring through that.

My Lords, given that low pay makes a major contribution to poverty in rural communities, what plans do the Government have to promote the living wage in rural economies?

Noble Lords may be surprised to hear that I, with a rural background, do not see it as a town and country matter. We have a national economy and we need to encourage businesses to come to the countryside as, indeed, to urban areas. That will be the route to ensure that the living wage and good employment creation are in all parts of our nation.

The Government are determined to ensure that there is a vibrant economy with employment prospects. Clearly, one reason we emphasise the voluntary side—encouraging people to take up the living wage—is precisely to ensure that there is business flexibility. It would clearly be unhelpful for job creation and retention if we were to move from that position.

My Lords, it is very good to hear of the support of the Mayor of London and the Government for the living wage. Can the Minister assure the House that the Greater London Authority and the Conservative Party are paying the living wage?

I am most grateful to the noble Baroness—I checked with Conservative Central Office this morning because I rather thought that this might come up. I can assure her and, indeed, the House that Conservative Central Office not only pays the living wage but above the living wage.

My Lords, does the Minister accept that, as far as the national economy of Wales is concerned, the income per head is only 74% of the average of the United Kingdom as a whole? Does he also accept that only the most massive and dedicated effort on the part of government can fundamentally change the situation?

The noble Lord raises the issue of Wales. Indeed, this was raised not only in the debate last night but a few weeks ago when I was in a position to say that the number of jobs created in Wales since the last election has increased very favourably. Clearly this is all part of a UK strategy to ensure that growth comes to all parts of the kingdom. I am particularly pleased, therefore, that the news in Wales is improving. We need to do more to ensure that it gets better.

My Lords, does my noble friend accept that in a progressive society we all want the weakest to be assisted and that the best way of doing that is through a taxation system where you increase the personal allowance to allow people to keep the maximum amount of their earned income themselves without the state intervening? How many millions of people have been taken out of taxation altogether since the Government were formed?

As I said in answer to an earlier question, the proposal is that from next April, 2 million of the lowest paid people will be taken out of tax altogether.