Guy Opperman: the Conservative case for a living wage

For too many people in our society, a hard day’s work no longer means a fair day’s pay.

As a Conservative MP, I believe that lower taxes stimulate growth and jobs, that smaller government is invariably better government and that governments must “ensure that work always pays” by making sure those in work are better off than those on benefits. I also believe in hard work. Yet, for too many people in our society, a hard day’s work no longer means a fair day’s pay.

Ever since the financial crash of 2008, the topic of “pay” has been dominated by the pay of those at the top. From golden hellos to golden handshakes, the discussion has often ignored those at the bottom. I sit on the advisory board of the High Pay Centre, alongside the Green MP, Caroline Lucas, and the TUC general secretary, Frances O’Grady. At the High Pay Centre, we have been making the case for corporate responsibility and pay restraint in the boardroom. It is now time for us to make the case for fairer pay at the bottom, too.

Britain is a country in which some workers earn so little that the government has to step in and provide aid. That is the system of tax credits we have; a subsidy by any other name and a £4bn one at that. How and why did we let it become acceptable for a full-time job not to pay enough to live on? The living wage isn’t just a wonkish idea – it’s the political world catching up with many Britons’ reality.

When the national minimum wage was adopted in 1998, many were sceptical. The fear was that it might hit the number of jobs available. There is ample evidence to show this is not the case. For instance, in 2012 the Institute for Social and Economic Research at the University of Essex studied the minimum wage and “found almost no evidence of significant adverse impacts on employment”. Today, the minimum wage is supported by all three mainstream parties and rightly so. Yet, for many, the minimum wage does not represent a fair wage.

There are some who have the same scepticism about the living wage – that it could penalise business and hold back growth. It may just be the old socialist in me but when did it become a hindrance rather than a duty for a business to look after its employees? The days of William Armstrong and Joseph Rowntree building houses for their workers and ensuring a decent standard of living may belong in a bygone age but surely some of those principles should still apply?

Some businesses already embrace the principle. In the US, the wholesale retail giant Costco has broken the mould: it pays its staff $11.50 an hour (£7.50), compared to the federal minimum wage of $7.25 (under £5). Costco’s chief executive, Craig Jelinek, made the point succinctly: “We know it’s a lot more profitable in the long term to minimise employee turnover and maximise employee productivity, commitment and loyalty.”

Businesses and organisations that have committed to paying the living wage include everyone from the big corporate beasts such as Deloitte and Barclays to Aquila Way, a housing association in Gateshead, north-east England. I have met with some of these accredited firms and they all talk of improved morale and productivity. One firm increased staff retention in one department by 65 per cent.

If those on the right won’t listen to the arguments of an old left-winger such as me, then, at the very least, they should listen to the HR director of Barclays, Dominic Johnson, who says “it makes sense for business”. The living wage doesn’t just work for business, it makes sense for the government, too. IPPR and the Resolution Foundation have found that even if only those employers that could easily afford to – the so-called “non-low-wage employers” – paid the living wage, the savings to the Treasury each year would be in the hundreds of millions. This would be the result of increased tax receipts, increased National Insurance contributions and savings on benefits such as tax credits.

Yet even enthusiasts have to accept that there remains a lack of detailed analysis of the effects of a living wage on individual sectors. I will be working hard to ensure that the government takes seriously the conclusions of the Living Wage Commission, chaired by John Sentamu, the Archbishop of York. It is vital that we monitor the economic effects of the living wage and demonstrate the benefits and the negatives of paying a living wage.

David Cameron was right when he said that here “is an idea whose time has come”. The living wage started off as a belief and became a campaign. It is now time for us in Westminster to return to our constituencies and make the case for our individual businesses to start paying the living wage.

Guy Opperman is the Conservative MP for Hexham

A London bus. Photograph: Getty Images.

This article first appeared in the 12 August 2013 issue of the New Statesman, What if JFK had lived?

Photo: Getty
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Theresa May's Brexit gamble

The Prime Minister is betting that the economic hit from putting border control first will be delayed and go unnoticed. 

Britain’s European referendum was about immigration. That doesn’t mean the country was divided on it. Had the question been a Yes/No proposition on whether or not immigration was a good thing, it would have between a 78 to 22 per cent rout for Brexit.  As it was, what separated those who opted for a Remain vote over those who backed a Leave one was not whether or not you thought that immigration to Britain should be lowered. Remain did, however, 88 per cent of the vote from the pro-immigration majority.

The real dividing line was between people who thought that bringing down immigration would come at a cost that they were unwilling to pay, and people who thought that it could be done without cost, or, at least, without a cost that they would have to pay. Remain voters, on the whole, accepted both that there would be an economic consequence to reducing immigration generally and they’d pay for it personally, while Leave voters tended only to accept that there was a cost to be paid for it in general.

That leaves politicians in a bind, electorally speaking. There undoubtedly is a majority to be found at the ballot box for reducing immigration and there is an immediate electoral dividend to be reaped from pursuing a Brexit deal that puts border control above everything else.

But as every poll, every election and the entire history of human behaviour shows, the difficulty is that this particular coalition is single use only. It’s very similar to the majority that David Cameron and George Osborne won to cut £12bn out of the welfare bill. People backed it at the ballot box but revolted at the prospect of cuts to tax credits, one of the few ways that the cuts could possibly be achieved. In the end, the cuts were abandoned and George Osborne’s hopes of securing the Conservative leadership were, if not permanently derailed, at least severely delayed.

The nightmare scenario for Theresa May is that the majority for border control dissolves as quickly on impact with reality as the planned cuts to tax credits did.  That’s also the dream for the Liberal Democrats and Greens, who, due to Labour’s embrace of the Conservative approach of abandoning single market membership, are well-placed to benefit if everything comes unravelled.

Who’s right? In both cases, the gamble is clear. There will be a heavy economic price to be paid through leaving the single market. The question is whether that price will come in one big shock or be paid out over a number of years. If the effect of leaving the single market is an immediate fall in people’s standard of living, job losses and negative equity, then Theresa May will find herself in jeopardy. But if the effect is longer-term, and the consequences of Britain’s single market exit are only made clear when in 2030, the Chancellor of the Exchequer has to abandon promises made to pensioners at a time when the pound was worth more than the Euro, then May will be able to reap the electoral dividend of getting Britain’s borders under control.

But there’s a more pessimistic future than either of these. The worst-case scenario isn’t that we all become poorer and the freedom of future governments to do what they want is sharply reduced by its weaker financial consequences. It’s that the economic hit is immediate, noticeable, but that the blame centres not on the incumbent government, but on immigrants and minorities.  

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.