A Living Wage for Britain

During Blog Action Day, the Green Party advocates for raising the minimum wage to a living wage to t

I'm writing this late on Wednesday - Blog Action Day 2008 - and bloggers all over the world are posting on the subject of poverty. The poverty crisis in less developed countries - and Europe's crucial place in that as one of the causes and one of the main potential solutions - forms a large part of my work as an MEP. I've crossed swords many times with the now Baron Mandelson of Foy and Hartlepool, who as European Trade Commissioner was very much in the 'problem' camp, and was delighted this week to be named MEP of the Year for Trade. But in this Blog Action Day post I'd like to look at solutions to poverty closer to home. People in the UK don't generally think of themselves as being in poverty, but many thousands are.

Total up the absolute basic living costs that families need to cover, and you get what’s known as a poverty threshold wage – and every study finds this to be already higher than the minimum wage set by the government.

But a real ‘living wage’ must also provide a secure margin so that the family involved does not fall into poverty and debt when it faces the kind of day-to-day challenges those of us who are better off can take in our stride: a broken kettle, the need to buy shoes for a growing child, the cost of a train journey to visit a sick relative.

The absolute minimum needed for a basic existence, calculated by this approach, shows that the minimum wage falls well short of what’s needed. More than a pound an hour short in fact. Every calculation of a living wage that has been done in towns and cities in the UK has found a living wage this year lies above seven pounds an hour. But from October this year, the minimum wage is just £5.73.

This means that anyone receiving the minimum wage is receiving poverty wages. And in 21st century Britain this is just not on.

If the Greens were in government, the national minimum wage would be set at least at the level of a real living wage. But meanwhile, we're pledged to use every piece of influence we can get to fight poverty pay.

In 2007, the lowest paid workers in the London Fire Brigade got a pay rise. Previously the people who clean fire stations were paid the national minimum wage, at that time just £5.35 per hour. But thanks to the work of the London Living Wage Unit, this changed and now the cleaners earn at least the London living wage of £7.45 an hour, enough to support themselves and their families at last.

What many people don’t know is that the Living Wage Unit was set up under Ken Livingstone’s administration thanks to the Green Party members of the London Assembly, Jenny Jones and Darren Johnson.

They held a casting vote over the Mayor’s budget for four years and used it to get a fair deal for all London government’s employees, and create the Living Wage Unit to calculate the amount needed to get by in the capital.

While they don’t have the same influence over the new Mayor, Greens in London are continuing to support the efforts of groups such as London Citizens, the Fair Pay Network and The East London Communities Organisation fighting for fair pay for cleaners, shop staff and catering and hotel workers across London.

In Oxford, Greens have also succeeded in passing a motion through the city council, bringing in a living wage for council workers there. But when the Greens brought the same motion to Oxfordshire County Council this June, the Liberal Democrats and Conservatives shamefully voted it down.

In Lewisham, the six strong Green Group is proposing a living wage for all council employees, and are proposing extending this to all council contractors as well. And our Deputy Leader, Adrian Ramsay (who is also taking part in Blog Action Day) defeated Conservative opposition to commit Norwich City Council to the principle of the Living Wage.

Over the next months, Greens all over the country will be following the example of Oxford, London, Lewisham and Norwich Green Parties. They will be campaigning hard so that millions more of the lowest paid workers in Britain get a decent wage.

The Greens have spent a long time being right about things like this, but pushed to the political margins. It makes me so proud that as we win more and more elections, we refuse to rest on those laurels but use that influence to make real changes in the lives of ordinary people who have also been marginalised by the establishment parties.

So next time you're tempted to think of the Greens as a single-issue party, ask a Fire Brigade cleaner.

Caroline Lucas is the MP for Brighton Pavilion.

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Let's turn RBS into a bank for the public interest

A tarnished symbol of global finance could be remade as a network of local banks. 

The Royal Bank of Scotland has now been losing money for nine consecutive years. Today’s announcement of a further £7bn yearly loss at the publicly-owned bank is just the latest evidence that RBS is essentially unsellable. The difference this time is that the Government seems finally to have accepted that fact.

Up until now, the government had been reluctant to intervene in the running of the business, instead insisting that it will be sold back to the private sector when the time is right. But these losses come just a week after the government announced that it is abandoning plans to sell Williams & Glynn – an RBS subsidiary which has over 300 branches and £22bn of customer deposits.

After a series of expensive delays and a lack of buyer interest, the government now plans to retain Williams & Glynn within the RBS group and instead attempt to boost competition in the business lending market by granting smaller "challenger banks" access to RBS’s branch infrastructure. It also plans to provide funding to encourage small businesses to switch their accounts away from RBS.

As a major public asset, RBS should be used to help achieve wider objectives. Improving how the banking sector serves small businesses should be the top priority, and it is good to see the government start to move in this direction. But to make the most of RBS, they should be going much further.

The public stake in RBS gives us a unique opportunity to create new banking institutions that will genuinely put the interests of the UK’s small businesses first. The New Economics Foundation has proposed turning RBS into a network of local banks with a public interest mandate to serve their local area, lend to small businesses and provide universal access to banking services. If the government is serious about rebalancing the economy and meeting the needs of those who feel left behind, this is the path they should take with RBS.

Small and medium sized enterprises are the lifeblood of the UK economy, and they depend on banking services to fund investment and provide a safe place to store money. For centuries a healthy relationship between businesses and banks has been a cornerstone of UK prosperity.

However, in recent decades this relationship has broken down. Small businesses have repeatedly fallen victim to exploitative practice by the big banks, including the the mis-selling of loans and instances of deliberate asset stripping. Affected business owners have not only lost their livelihoods due to the stress of their treatment at the hands of these banks, but have also experienced family break-ups and deteriorating physical and mental health. Others have been made homeless or bankrupt.

Meanwhile, many businesses struggle to get access to the finance they need to grow and expand. Small firms have always had trouble accessing finance, but in recent decades this problem has intensified as the UK banking sector has come to be dominated by a handful of large, universal, shareholder-owned banks.

Without a focus on specific geographical areas or social objectives, these banks choose to lend to the most profitable activities, and lending to local businesses tends to be less profitable than other activities such as mortgage lending and lending to other financial institutions.

The result is that since the mid-1980s the share of lending going to non-financial businesses has been falling rapidly. Today, lending to small and medium sized businesses accounts for just 4 per cent of bank lending.

Of the relatively small amount of business lending that does occur in the UK, most is heavily concentrated in London and surrounding areas. The UK’s homogenous and highly concentrated banking sector is therefore hampering economic development, starving communities of investment and making regional imbalances worse.

The government’s plans to encourage business customers to switch away from RBS to another bank will not do much to solve this problem. With the market dominated by a small number of large shareholder-owned banks who all behave in similar ways (and who have been hit by repeated scandals), businesses do not have any real choice.

If the government were to go further and turn RBS into a network of local banks, it would be a vital first step in regenerating disenfranchised communities, rebalancing the UK’s economy and staving off any economic downturn that may be on the horizon. Evidence shows that geographically limited stakeholder banks direct a much greater proportion of their capital towards lending in the real economy. By only investing in their local area, these banks help create and retain wealth regionally rather than making existing geographic imbalances worce.

Big, deep challenges require big, deep solutions. It’s time for the government to make banking work for small businesses once again.

Laurie Macfarlane is an economist at the New Economics Foundation