Living Wage

Chris White Excerpts

Thursday 6th November 2014 Commons Chamber

[Chris White (Warwick and Leamington) (Con)]

I beg to move,

That this House has considered promotion of the living wage.

I am sure that the House is grateful to you, Madam Deputy Speaker, for your clarification with regard to the noises outside the Chamber.

The second debate this afternoon is on a very important, but more domestic topic, on which I am pleased to say that there is a great deal of cross-party support and consensus. Despite the fact that not as many Members are in the Chamber as I would have wished, I am sure that they are working hard in their constituencies, or particularly hard in one constituency.

We can all agree on the importance of a fair day’s pay for a fair day’s work, and there is a sincere commitment on both sides of the House to ensure that hard-working people are rewarded for their efforts. I look forward to contributions to the debate from both sides of the House.

Today’s debate is also timely, taking place as it does during living wage week. As Members are no doubt aware, earlier this week the UK living wage was raised to £7.85, and the London living wage to £9.15. The new figures represent an increase of 2.6% on the 2013 rate and will improve the take-home pay of some 35,000 people, who are among the lowest paid workers in the country.

Since 2013, more than 60,000 people have been given a pay rise through the living wage. This year, the number of FTSE 100 companies that have signed up to the living wage has increased significantly from four to 18. I lay down the challenge as to which will be the next.

[Guy Opperman (Hexham) (Con)]

I congratulate my hon. Friend most wholeheartedly on securing such an important debate in living wage week and welcome the work that he is doing, especially on behalf of the all-party group on poverty. Does he agree that those companies that adopt the living wage are bound to see not only a dramatic improvement in their staff retention and a reduction in their turnover but an increase in the productivity of their staff? That has been demonstrated by Costco in America, and Barclays, and KPMG in this country?

[Chris White]

I agree wholeheartedly with some of my hon. Friend’s points, and I thank him for being such a strong advocate of the living wage.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I am glad that the hon. Gentleman has brought forward this debate today, along with other colleagues. But we must get real. It is also a fact that under the Government whom he supports, the number of people below the living wage has risen from 3.4 million to 4.9 million in this country, so we need to think how to move forward. Does he agree that we need to get to a situation where every worker employed by Government or local government, or contracted to Government or local government, should be paid at the very least the living wage?

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[Chris White]

I am grateful to the hon. Gentleman for his comments and I certainly will deal with how we can encourage other Government Departments to lead the way on this.

I am delighted to have the opportunity to lead the debate. The all-party parliamentary group on poverty is most ably chaired by the hon. Member for Stretford and Urmston (Kate Green), and I as the vice chair and other members have been strong advocates of increasing and supporting the living wage. I take this opportunity to thank the hon. Member for North East Derbyshire (Natascha Engel) and the Backbench Business Committee for scheduling the debate today.

The all-party group has done a great deal of work, alongside the Living Wage Foundation, to promote the living wage and the benefits that it has for business, employees and society in general. According to a recent report by KPMG, an estimated 5.24 million people in the UK earn below the living wage.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman should be congratulated on bringing forward this debate. As large numbers of people are paid below the living wage, surely we should review the benefits system that seems to subsidise employers who pay very low wages. Should that not be looked at?

[Chris White]

The hon. Gentleman makes an important point. How we improve the take-up of the living wage will address some of his concerns. I hope that some of my right hon. and hon. Friends will show how this can be a benefit not just to employees but to society in general.

Despite the comments made so far, there is a positive trend in the number of employees receiving the living wage. Research from Queen Mary university of London has shown that the total number has grown significantly during the last decade. The benefits of paying staff the living wage have been widely documented. Research shows that those working in organisations that are signed up to the living wage have better psychological well-being than those working for non-living wage employers. This research also found that two thirds of employees on the living wage reported improvements in their work, family life or finances.

Businesses have reported positive effects. London Economics found that 80% of employers noticed an increase in productivity. Further research revealed that employers reported improvements in staff retention and well-being. The Living Wage Foundation research found that 75% of employees reported increases in their work quality as a result of taking up the living wage. Also, half of employees felt that the living wage had made them more willing to implement changes in their working practices.

As many in the House will be aware, the Living Wage campaign began 15 years ago as Citizens UK. It felt there was a need to respond to the levels of deprivation being experienced by people despite the fact that they were in full-time work. Although record numbers of people are in work, the Low Pay Commission found that the majority of those in poverty had a job.

In 2010-11, the Living Wage Foundation was established to develop a system through which to recognise those employers who were paying their staff a living wage.

Accreditation is awarded to companies that pay the living wage to all directly employed staff and those regularly working on their premises.

In the private sector, provision of the living wage has become a key part of many organisations’ corporate social responsibility agendas and—dare I say it?—the social value agenda. I refer hon. Members to my private Member’s Bill—now the Public Services (Social Value) Act 2012—which Members across the House supported, and I pay tribute to the work it has achieved. In Monday’s edition of The Guardian—that shows how consensual I am being—an article by Matthew Jackson specifically referred to the potential use of that Act in encouraging the uptake of the living wage:

“The living wage should be embedded into the way councils commission and procure goods and services. Councils can link procurement to strategic priorities to address low pay. They can have contracts that state potential suppliers must pay the living wage and they can use the Social Value Act…to encourage and cajole suppliers.”

That is an idea well worth pursuing.

This week it was announced that more than 1,000 companies now pay their staff the living wage—another milestone—which is more than double the number at the same time last year. It is an impressive result, and one that I hope marks a tipping point and the beginning of a cultural change.

I am pleased to note that the living wage campaign has consistently enjoyed cross-party support. This Government believe that work is the surest way out of poverty, and I share that view, as does the Living Wage Foundation. Government Departments have signed up to pay the living wage and Whitehall is now leading the way. The Department for Work and Pensions and HM Treasury are two of the Departments doing that. However, there is still some discrepancy between the pay received by contract staff, particularly cleaners, within Government Departments. I would like to take this opportunity to call on all Departments to follow the example of those that pay their contract staff the London living wage.

[Guy Opperman]

At the meeting of the all-party group on poverty this morning, along with the Living Wage Foundation and Citizens UK, I was lucky enough to meet a young man called Nana-Ben, one of the cleaners at the Department for Transport. He is not paid the living wage, and he spoke very eloquently of the problems he suffers as a result. The fair point to be made, however, is that he is one of 45 cleaners employed by Amy Cleaning, a large corporation that provides services to the Government. Do not those companies, as well as Government Departments, need to look at what they are doing so that we can get the change we all wish to see?

[Chris White]

I think that both parties have to work very closely on that. I believe that when contracts are being tendered there is certainly an opportunity that we should not miss. It is not right for either party to look for the lowest cost contract by excluding the living wage from the discussion.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate the hon. Gentleman on securing the debate. He is making an important point about Government Departments paying the living wage through agencies. It is also the case—I am finding this with private companies as well as the public sector—that those agencies can be paid an equivalent of more than the living wage, when their costs are combined. Is that not something that the Government and other commissioners should look at, because the companies are not getting a great deal, and neither are their employees?

[Chris White]

I am grateful to the hon. Gentleman for that thoughtful intervention. If payment is made with the intention of paying staff the living wage, that increase should feed through directly to the employees. One reason for promoting this discussion today is to see how such employers can be embarrassed into making the right decisions for the people who work so hard doing these jobs, which sometimes we do not notice, but we would if they were not done. I pay tribute to all the people who work under these circumstances. Their tremendous work should be recognised.

Here in the House, the living wage is paid to staff. That is a leading example of doing the right thing, not least in my office, where an intern worked for me. He was paid the London living wage until I took him on on a full-time contract. He is probably watching this speech, and I congratulate him on his excellent work.

The living wage logo, which some of us, probably inappropriately, are wearing in the Chamber this afternoon, is a badge of honour for many employers. I am pleased to note that when, like me, they finally get the badge, a number of MPs have stated that they would be happy to support and promote it.

The best way to illustrate some of the positive impacts of the living wage is to highlight examples of employers and staff who have directly benefited from it. The Living Wage Foundation has compiled a list of employees and employers who have spoken of the benefits and the effective results that they have experienced through paying, and being paid, the living wage. Most employees speak of a reduction in stress and anxiety about financial pressures. Employers point out that paying a higher wage may attract better staff whom it rewards for their hard work. There is obviously ultimate value for their businesses as a whole.

[Guto Bebb (Aberconwy) (Con)]

I congratulate my hon. Friend on securing this debate. Does any of the evidence collected relate to very small businesses? In my constituency, a lot of small businesses would be keen to pay the living wage, but they are concerned about the impact on their very small profit margins. Does any of the research undertaken indicate a benefit for those smaller businesses in communities such as mine?

[Chris White]

I will come to some of the data that have been provided by the Federation of Small Businesses, which paint a picture that is perhaps rosier than my hon. Friend might think.

I should like to recognise the organisations in my constituency that have been accredited as living wage employers: Alsters Kelly solicitors, St Margaret’s church in Whitnash, and Warwick Gates community church. I pay particular tribute to WAYC—the Warwickshire Association of Youth Clubs—of which I am a trustee.

I call on local authorities that are not accredited living wage employers to follow the example of many across the country that are. Too few local authorities have committed to paying their staff the living wage. This might seem a naive question to the Minister, but I wonder why some do and some do not. Local authorities that do not pay their staff a living wage should speak to those that do, and see at first hand the benefits that it can provide.

Take-up of the living wage has grown exponentially, but we need to think about how it can go further. We can achieve that by encouraging employers, sharing case studies and best practice, and generally promoting the benefits that I have stated. The voluntary nature of the living wage scheme is currently working well. At this stage, as we see the numbers increase, encouragement is perhaps a better start than compulsion. The Government are committed to raising the minimum wage and, through a provision in the Small Business, Enterprise and Employment Bill, cracking down on employers who are evading their statutory responsibilities by significantly increasing—from £5,000 to £20,000—fines for underpaying staff. I note that the Living Wage Foundation does not recommend the introduction of a statutory living wage on the basis that a strong minimum wage protects workers from exploitation. Instead, it seeks a position for the living wage as a voluntary, stretching target that employers can aspire to and on which they should be challenged, encouraged, and supported to achieve at a level beyond their statutory obligations.

I appreciate that it is not possible for all employers to pay a living wage. Its provision depends on many factors, including the size of the company. Some companies are in a position to take on the required increase in staff costs. Employers should not be unfairly criticised if they cannot afford to pay their staff the living wage. As the Institute of Directors has pointed out, we must be wary of stigmatising such companies. Nevertheless, as a general principle everyone should be able to share in economic growth. Employers who can afford to pay the living wage should be encouraged to do so. Perhaps the Minister can help with that.

Since the last election, businesses have created more than 2.1 million new jobs. Those businesses deserve our support and encouragement for their hard work and dedication in boosting our economy. Research by the FSB found that 77% of small firms pay all staff above the minimum wage and 53% pay them above the living wage. Another key statistic revealed by that research was that seven in 10 small firms expected to increase staff pay in 2014.

That brings me back to the purpose of this debate: the promotion of the living wage, which is good for employees, good for business and good for society. Businesses need to be encouraged, supported and shown the benefits. Let us have an ambitious target for the living wage next year. My final question to the Minister is: how can we encourage more employers to adopt the living wage so that many more can share in the proceeds of growth?

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[Chris White]

This debate has been about the promotion of the living wage, and thanks to the contributions from both sides of the House, we have very much had that debate. I am grateful to Members who shared their experience and supported the development of this very important discussion. We have heard evidence of how important and good the living wage is for individuals, businesses and society. I think we all realise that we need to go further. It is important to remind ourselves that this is not just about living wage week; we need to be discussing and thinking about the living wage all year round. To all Members who took part, thank you very much indeed.

Question put and agreed to.

Resolved,

That this House has considered promotion of the living wage.