How much would Miliband's living wage plans actually change?

"Naming and shaming" employers who don't pay the living wage is likely to have disappointing results.

Labour says it would "name and shame" employers that don’t pay all their workers a living wage – the income a person needs to be able to afford a basic standard of living. But how shaming would inclusion on Miliband's list of offenders be? Employers on it wouldn’t exactly stand out: KPMG calculates that one in five UK workers are not paid a living wage, which stands at £7.45, or £8.55 in London.

That makes for safety in numbers, and with low wages heavily concentrated in certain sectors – 70 per cent of cleaners, waiters, and kitchen staff are paid less than the recommended rate – the competitors of affected companies would be even less likely to pay the wage, keeping the pressure to change low.

Miliband’s pledge recalls the strategy of anti-tax-avoidance protest group UK Uncut, which drew attention to high profile companies that avoided large sums of tax, in the hope of shaming them into paying more. The campaign succeeded in raising the issue up the political agenda – but corporate tax avoidance is still rife, and there have so far been no major public reversals by their targets: at the height of the protests last year, companies like Vodafone reported record profits, whilst spokespeople simply repeat that they are following the law.

One aim of UK Uncut was to urge politicians to act on the issue and change the law, but as a politician himself, Miliband’s approach to low pay seems somewhat confused. Low paid workers may well also ask why Labour needs to be in government to do what a small campaign group did with a Twitter account and a lot of time on their hands.

UK Uncut also had the advantage of focusing its fire on specific, high profile offenders. But if a Labour government were to target specific companies to get high-profile results, they'd be likely to fall foul of EU state aid regulations: governments are strictly forbidden from picking on certain companies, or offering an "advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities".

The "name and shame" approach could even be embarrassing for Labour, which doesn’t have a spotless record on the living wage itself. Relying on negative media coverage and civil society to do the job could end up with the party turning its fire on itself. The party’s longest serving living Prime Minister only recently signed up to paying his staff the bare minimum wage, and Tony Blair, among others, would be one of those shamed for not paying the living rate if the proposals were comprehensively implemented.

If Labour is serious about workers earning a living wage then it will probably find the results of its flirtation with business voluntarism disappointing. The actions of companies are ultimately guided by the profit motive and shareholder value, and recent history suggests that activism can rarely, by itself, create corporate social responsibility out of thin air.

Ed Miliband is campaigning for companies to pay the living wage, currently £7.45 an hour. Photograph: Getty Images.

Jon Stone is a political journalist. He tweets as @joncstone.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.