Living wage – coming to a city near you

The challenges are real, but the living wage chimes with the public mood.

The last time a letter left on a desk caused such a stir it involved an exchange between two senior politicians about the future of the country’s finances. This time the note was from a group of Whitehall cleaners to Iain Duncan Smith asking him to make good on his commitment to make work pay and make his department, DWP, a living wage employer. The fact that it so caught the public mood says something about how the question of low pay has risen in salience.  

This is in no small part due to the success of the living wage campaign, a grass-roots movement formed just over a decade ago, to push for a decent wage – above the minimum wage - for workers. It has helped shine a light on the rising problem of in-work poverty. In an era when there are many structural forces bearing down on low pay – from shifts in technology and trade to the continued demise of collective bargaining and the real terms falls in the minimum wage - the momentum behind the campaign for a living wage is a rare example of at least some countervailing pressure.

Yet for all the verve and campaigning success it is still the case that only a relatively small number of people are getting paid a higher wage as a result of working for a living wage employer. For example, in London it is estimated that around 650,000 employees are paid less than the London living wage (£8.30 per hour) yet only around 10,000 have gained an accredited living wage since 2005. Look at the national picture, where a total of six million employees are being paid less than a living wage, and the scale of the low pay challenge becomes clear.

None of which is to say that progress has not been made - thousands of low-paid workers will attest to the difference a living wage has made to their lives – just that the living wage faces a difficult set of challenges as it comes of age.

First, there is the need for the living wage to reach out beyond the public sector and the select parts of the private sector (relatively small numbers of high-profile financial and legal firms) where it currently resides into more mainstream employers. So it is timely that a new report  from the Resolution Foundation and IPPR estimates the impact on the wage bill of large firms across different sectors and challenges some prevailing assumptions. In key sectors like banking, construction, food production and communications - where roughly a million people in total work below the living wage – the typical impact of paying a living wage on the wage bill of large employers is pretty modest at around 1% (and that assumes a knock-on effect on wage differentials for those earning above the living wage).

Average firm-level wage bill increase in different sectors

Source: Resolution Foundation

Of course, the precise cost of a living wage will vary from employer to employer but figures of this size should be absorbable.

Second, is the need to make real progress beyond London where the campaign has traditionally been anchored. The US experience shows how campaigns can move quickly from one city to another, as was the case when the living wage movement first succeeded in securing a higher wage floor in Baltimore in the early 1990s and then quickly spread elsewhere. In the UK we’ve seen the emergence of many new city initiatives over the last year or so - Sheffield, York, and Newcastle have all set up Fairness Commissions following on from the experience in Islington - with the aim of promoting fairer pay across local public and private sectors. It remains to be seen what these processes will achieve but so far it appears that a healthy degree of civic competition is proving a useful spur – and the newly expanded base of Labour-led authorities is only likely to generate more interest.

Third, is the need to ensure that being ambitious about the potential of the living wage doesn’t mean being unrealistic about tax credits. Contrary to what many think (though not the main campaign groups) the living wage is nowhere near high enough to ensure a typical household with children can live independently of state support: indeed the level of the living wage has always been premised on full take-up of in-work tax credits. If it didn’t then the London living wage, for example, would rise from £8.30 an hour to an eye-popping £10.40.  

Finally, there is an unresolved conundrum, both for campaigners and sympathetic politicians, as to the role government should play in expanding coverage of the living wage. This is about philosophy as much as policy. Pure voluntarism, which has been the essence of the campaign to date, may well mean relatively slow progress. Too much statism, for instance through calls for legislation – effectively replacing the minimum wage with a living wage – or expensive tax incentives for employers, would, however, contravene the character of the living wage campaign which has been rooted in a civic process to get employers to take responsibility themselves for paying a decent wage on ethical grounds.  The chasm that exists between relying on moral suasion on the one hand, and top down legislation on the other, needs to be better explored.

While these challenges are real, they all arise from rare success. The living wage is an idea that chimes with the times, allied to a label that works, rooted in a progressive argument that doesn’t rely primarily on more state spending. And that puts it in a very small category indeed.

Many working in key sectors like construction are working below the living wage. Photograph: Getty Images

Gavin Kelly is a former adviser to Downing Street and the Treasury. He tweets @GavinJKelly1.

Photo: Getty
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Shadow Scottish secretary Lesley Laird: “Another week would have won us more seats”

The Labour MP for Kirkcaldy and Cowdenbeath on the shadow cabinet – and campaigning with Gordon Brown in his old constituency.

On the night of 8 June 2017, Lesley Laird, a councillor from Fife and the Labour candidate for Kirkcaldy and Cowdenbeath, received a series of texts from another activist about the count. Then he told her: “You’d better get here quick.”

It was wise advice. Not only did Laird oust the Scottish National Party incumbent, but six days later she was in the shadow cabinet, as shadow Scottish secretary. 

“It is not just about what I’d like to do,” Laird says of her newfound clout when I meet her in Portcullis House, Westminster. “We have got a team of great people down here and it is really important we make use of all the talent.

“Clearly my role will be facing David Mundell across the dispatch box but it is also to be an alternative voice for Scotland.”

At the start of the general election campaign, the chatter was whether Ian Murray, Labour’s sole surviving MP from 2015, would keep his seat. In the end, though, Labour shocked its own activists by winning seven seats in Scotland (Murray kept his seat but did not return to the shadow cabinet, which he quit in June 2016.)

A self-described optimist, Laird is calm, and speaks with a slight smile.

She was born in Greenock, a town on the west coast, in November 1958. Her father was a full-time trade union official, and her childhood was infused with political activity.

“I used to go to May Day parades,” she remembers. “I graduated to leafleting and door knocking, and helping out in the local Labour party office.”

At around the age of seven, she went on a trip to London, and was photographed outside No 10 Downing Street “in the days when you could get your picture outside the front door”.

Then life took over. Laird married and moved away. Her husband was made redundant. She found work in the personnel departments of start-ups that were springing up in Scotland during the 1980s, collectively termed “Silicon Glen”. The work was unstable, with frequent redundancies and new jobs opening, as one business went bust and another one began. 

Laird herself was made redundant three times. With her union background, she realised workers were getting a bad deal, and on one occasion led a campaign for a cash settlement. “We basically played hardball,” she says.

Today, she believes a jobs market which includes zero-hours contracts is “fundamentally flawed”. She bemoans the disappearance of the manufacturing sector: “My son is 21 and I can see how limited it is for young people.”

After semiconductors, Laird’s next industry was financial services, where she rose to become the senior manager for talent for RBS. It was then that Labour came knocking again. “I got fed up moaning about politics and I decided to do something about it,” she says.

She applied for Labour’s national talent programme, and in 2012 stood and won a seat on Fife Council. By 2014, she was deputy leader. In 2016, she made a bid to be an MSP – in a leaked email at the time she urged Labour to prioritise “rebuilding our credibility”. 

This time round, because of the local elections, Laird had already been campaigning since January – and her selection as a candidate meant an extended slog. Help was at hand, however, in the shape of Gordon Brown, who stood down as the MP for Kirkcaldy and Cowdenbeath in 2015.

“If you ever go out with Gordon, the doors open and people take him into their living room,” says Laird. Despite the former prime minister’s dour stereotype, he is a figure of affection in his old constituency. “People are just in awe. They take his picture in the house.”

She believes the mood changed during the campaign: “I do genuinely believe if the election had run another week we would have had more seats."

So what worked for Labour this time? Laird believes former Labour supporters who voted SNP in 2015 have come back “because they felt the policies articulated in the manifesto resonated with Labour’s core values”. What about the Corbyn youth surge? “It comes back to the positivity of the message.”

And what about her own values? Laird’s father died just before Christmas, aged 91, but she believes he would have been proud to see her as a Labour MP. “He and I are probably very similar politically,” she says.

“My dad was also a great pragmatist, although he was definitely on the left. He was a pragmatist first and foremost.” The same could be said of his daughter, the former RBS manager now sitting in Jeremy Corbyn's shadow cabinet.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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