Living Wage

Debate between Chris White and Guto Bebb

Thursday 6th November 2014 Commons Chamber

[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?