Living Wage

Jim Cunningham Excerpts

Thursday 6th November 2014 Commons Chamber

[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.