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?

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Tuition fees uphold socialist principles - the left should support them

The amount of disadvantaged students applying for university between 2005 and 2015 went up 72 per cent in England, which was bigger than all other countries within the UK, including Scotland.

Since their introduction under the Blair Government, tuition fees have been a contentious issue amongst the British left. Under the leadership of Ed Miliband, Labour adopted a compromise position of reducing tuition fees – a seemingly inoffensive concession from his original position supporting free education within higher education.

Whilst they may appearing to promote educational inequality, research has shown that tuition fees have actually had the opposite effect within education. Political Scientist Martin Robbins wrote in the Guardian that “in 2015, application rates of 18 year olds living in disadvantaged areas in all countries of the UK increased to the highest levels recorded”. Though it is unlikely that the increase of fees and their reinvestment within education would have had a large effect on that crop of students, it does demonstrate that tuition fees are not the educational barrier some present them to be.

In fact, the amount of disadvantaged students applying for university between 2005 and 2015 went up 72 per cent in England, which was bigger than all other countries within the UK, including Scotland.

The largest drop-off between the least and most deprived children within educational attainment is between the ages of three and fourteen. Despite this, the higher education budget is around double that of pre-school education, which is where the inequality of education begins to kick in. A more adept way of solving the inequality within education would be a tuition fees system where a set percentage of a student’s fee is retained by their university, and a set percentage put towards pre-school education, to set the taxation of education into a progressive context.

In the latest government White Paper on tuition fees, the Universities Minister Jo Johnson lays out the idea of a teaching excellence framework (TEF). In theory, this is not problematic. Rather than raise the chargeable rate of fees (as done in 2012) the TEF would allow universities to tax above the chargeable rate on account of good teaching. This would mean for the vast majority of university students, rates would be unchanged. However, as tuition fees are currently at the chargeable rate of £9,000, the policy within the current climate is too objectionable.

Jo Johnson’s TEF model is an example of a reasonable concept which would be ineffective in practice, due to the difficulty in ranking the quality of teaching at the point of use, rather than through the means of a policy such as a graduate tax, based off earnings. If the British left championed a version of the TEF with a lower base rate, or instead just a graduate tax, it would mean Labour would be able to once again control the narrative with a sensible but redistributive policy on education. This would not only regain Labour credibility amongst the electorate on financial matters, but could be used as a base to build on, as a positive case for wealth redistribution - whether it be to pre-school education, or through increasing grants for those at university, or via restoring EMA.

Taxation of further education is one of the few issues which can boast a large level of bipartisan support across the political spectrum, and is one of the few viable ways to ensure a fully-funded but regulated further education system, as tuition fees make up over half of many universities budgets. In fact, many political commentators have stated that tuition fees are the only example of taxation upon the middle class that Labour has got the Tories to agree on, albeit if it is a pre-emptive form of it.

Whilst tuition fees are not ideal, they ensure the safeguarding of much university funding, the freeing up of the educational budget to close educational inequality between younger students and to help move towards a meritocratic system of education - which is a thoroughly socialist principle.

Ben Gartside is the Under 19s Officer for North West Young Labour and founder and chair of the Young Greater Manchester Fabians.