Ed Miliband speaks to supporters at Bloxwich Leisure Centre on May 19, 2014 in Walsall. Photograph: Getty Images.
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Labour's minimum wage plan will ensure all benefit from growth

There are some sectors that could easily afford to pay workers more. 

Today I visited Birmingham with Ed Miliband. We met Rachel Palmer, a single mum who was made redundant and now works in retail on the minimum wage. Rachel has a 19 month old son and has to pay £40 a day for childcare. She travels seven miles to work. She told Ed and me about her struggle to ensure there’s enough food to feed her family and to pay the cost of rising bills. Rachel wasn’t asking for luxuries, just the basics to enable her to get by.

Stories like hers are far too common today, with the number of people earning less than a living wage soaring from 3.4 million people in 2009 to 5.2 million today. As Alan Buckle argues compellingly in his report on Britain’s low pay challenge published today, this isn’t just a problem for increasing numbers of low paid workers and their families. It’s a cost to the Treasury for which taxpayers pick up the bill – with low pay now costing us an estimated £3.23bn a year in lost revenue and extra expenditure on benefits and tax credits. So making work pay is essential to dealing with the deficit in a fair way and getting the costs of social security under control.

And low pay is a barrier to building the high-skill, high-investment, high-productivity economy we need to compete in a global "race to the top". The UK economy is more reliant on low paid workers than most others in the OECD. And this is especially true of service sectors such as retail and care where people often assume low pay is inevitable, but where training levels and progression pathways are often inferior to those seen in other countries
We can and must do better than this. That’s why Ed Miliband and I asked Alan Buckle to look at options for strengthening the minimum wage and promoting the living wage, learning from and building on the brilliant work of the Low Pay Commission which the last Labour government established, and the inspiring campaigns for the living wage we have seen from progressive businesses, trade unions and campaigns like Citizens UK.

At its heart is a compelling argument for setting a medium-term target for the minimum wage that the Low Pay Commission would be asked to aim for over a five year period. This would be consistent with maintaining the partnership and evidence-based approach that has worked so well in the past, as well as the flexibility needed to safeguard jobs and the economy. It would be the Low Pay Commission’s job to meet this target with recommendations year to year on the cash level of the National Minimum Wage. If they believe that the target cannot be met they would be expected to write to the Secretary of State for Business, Innovation and Skills with compelling reasons for that judgement.

Ed Miliband confirmed today that Labour will set an ambitious target for the minimum wage over the length of the next parliament, so we set the nation’s sights clearly on the goal of an economy that works for working people and work together with employers and employees to make the progress we need. Alan Buckle’s powerful report contains much valuable analysis and further persuasive recommendations which we will also consider carefully as part of Labour’s policy review.

He suggests new powers for the Low Pay Commission to address variations in productivity and the affordability of pay increases across the economy. We know there are some sectors that could easily afford a higher minimum wage, but in others a large increase in the minimum wage would pose significant challenges to their business models. At present, there is nothing in the remit of the Low Pay Commission to address either case. Alan’s report proposes empowering the Commission to set up partnership-based taskforces that could draw up plans to tackle productivity problems that make it hard for some sectors to make progress, while considering higher rates for those sectors that could afford them. 

Another critical part of the package is a tougher enforcement framework. It is estimated that as many as a quarter of a million workers aren’t even paid the current legal minimum wage. Alan Buckle proposes stronger tools for the HMRC and a new role for local authorities in monitoring compliance.

The report argues that the legal minimum wage should remain distinct from the living wage, which has proved to be such a powerful idea precisely because it is a voluntary commitment that has galvanised and empowered working people, consumers and communities. But that doesn’t mean that government has no part to play in the movement for a living wage. Ed Miliband has already proposed that if employers commit to paying the living wage in the first year of the next parliament, government should share some of the initial fiscal savings that result through "Make Work Pay" contracts.

Alan suggests that in addition to this government could require greater transparency of large companies so that campaigners can see which don’t pay the living wage, and what it would cost them to do so. And he suggests that government could lead the way and set an example through its own employment and procurement policies. Analysis shows that if central government departments required contractors to pay staff working on government contracts a living wage, about 30,000 workers would benefit.

Of course, any these measures, would have to go hand-in-hand with the full raft of policies Labour has been setting out to strengthen our economy and support the creation of more high-skilled jobs paying decent and rising wages, from ending the abuse of zero hours contracts to strengthening vocational pathways and improving infrastructure planning. There has to be a joined-up effort across government to build an economy that competes globally not on the basis of cutting costs and increasing insecurity but through investment and innovation to drive up quality and productivity. But the best economic evidence as well as the experience of other countries shows that effective wage floors can have a positive and complementary role to play in such strategies, as well as ensuring that all workers can share fairly in their success.

A constituent of mine in Leeds West reminded me of an astonishing advert for a security guard job advertised in the mid-1990s. It said "£1 an hour, 100 hours a week. Supply your own dog." In 1999 the National Minimum Wage brought in by a Labour government made a huge difference, for the first time putting a legal floor on wages, putting an end to this sort of exploitation. But today we need to go further and as Ed Miliband set out today, a strong and rising National Minimum Wage will be a critical component of Labour’s plan to earn our way out of the cost of living crisis and raise living standards for the next generation.

Rachel Reeves is shadow work and pensions secretary

Photo: Getty
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Jeremy Corbyn faces a dilemma as Brexit solidifies: which half of his voters should he disappoint?

He comes from a tradition on the left that sees the EU as a capitalist club.

Imagine a man who voted to leave the European Economic Community in 1975. A man who spoke out against the Maastricht Treaty in 1993, saying that it “takes away from national parliaments the power to set economic policy and hands it over to an unelected set of bankers”. A man who voted against the Lisbon Treaty in 2008.

You don’t have to imagine very hard, because that man is Jeremy Corbyn. When campaigning for the Labour leadership in 2015, he told a GMB hustings, “I would ­advocate a No vote if we are going to get an imposition of free-market policies across Europe.”

When Labour’s Brexiteers gathered to launch their campaign in 2016, several seemed hurt that Corbyn and his shadow chancellor, John McDonnell, were not there with them. “It is surprising, when we voted against the advice of the chief whip on a number of European issues over the last decades, that Jeremy and John, who have always been in that lobby with us, that they would want to lead a campaign that isn’t even asking for a renegotiated position,” said the MP Graham Stringer.

I mention this because since the election campaign started in April, I keep having an odd experience – people insisting that Corbyn is not a Eurosceptic, and that he will use Labour’s new-found strength to argue for a softer Brexit. Others claim that Labour’s current position on freedom of movement (ending it) is the obvious, common-sense – even progressive – choice.

This matters. Look, if the evidence above doesn’t convince you that the Labour leader is intensely relaxed about exiting the European Union, I don’t know what else would. Yet it’s clear that some Labour activists strongly identify personally with Corbyn: they find it hard to believe that he holds different opinions from them.

The second factor is the remaking of Brexit as a culture war, where to say that someone is a Eurosceptic is seen as a kind of slur. Perhaps without realising it, some on the left do associate Euroscepticism with Little Englanderism or even flat-out racism, and see it as a moral failing rather than a political position.

But I’m not impugning Jeremy Corbyn’s character or morals by saying that he is an instinctive Brexiteer. He comes from a tradition on the left that sees the EU as a capitalist club. You can disagree with that premise but it’s a respectable line of reasoning.

Also, the Euroscepticism of Corbyn and his allies will undoubtedly give them an advantage in the months ahead; they are not consumed by fatalism, and the members of McDonnell’s shadow Treasury team feel that the removal of European state aid restrictions can help revive ailing bits of the British economy. They have a vision of what an ideal “Labour Brexit” would be – and it’s not just sobbing and begging Emmanuel Macron and Angela Merkel to take us back.

We do, however, need a reality check. Now that the necessary humble pie has been eaten, Labour’s unexpected revival at the ballot box means we can begin to treat Corbyn as a normal politician – with the emphasis on the second word. He’s not the Messiah, but he’s not a joke either. He is a charismatic campaigner who is willing to compromise on second-tier issues to achieve his main objectives.

From the general election, we can see just how good a campaigner Corbyn is: he can fire up a crowd, give disciplined answers to interviewers and chat amiably on a sofa. That throws into sharp relief just how limp his performances were last year.

He might have little else in common with Theresa May, but they both looked at the EU referendum and thought: yeah, I’m going to sit this one out. He called on activists to accept the EU “warts and all”; and said he was “seven, or seven and a half” out of ten in favour of staying in it.

For both leaders, this was a pragmatic decision. May did not want to be overtly disloyal to David Cameron, but neither did she wish to risk her career if the result went the other way.

Anyone in Labour would have been equally sane to look north of the border and back to 2014, and remember just how much credibility the party immolated by sharing stages with the Conservatives and allowing itself to be seen as the establishment. By limiting his involvement in the Remain campaign and whipping his MPs to trigger Article 50, Corbyn ended up with a fudge that gave Labour some cover in heavily pro-Brexit regions of the country.

That’s the politics, but what about the principle? I can’t shake the feeling that if Corbyn campaigned as hard for Remain in 2016 as he did for Labour in 2017, we would still be members of the European Union. And that matters to me, as much as left-wing policies or a change in the rhetoric around migrants and welfare claimants, because I think leaving the EU is going to make us poorer and meaner.

That’s why I worry that many of my friends, and the activists I talk to, are about to be disappointed, after waiting and waiting for Labour to start making the case for a softer Brexit and for the single market being more important than border controls. As Michael Chessum, a long-standing Momentum organiser, wrote on the New Statesman website, “Recognising the fact that immigration enriches society is all very well, but that narrative is inevitably undermined if you then choose to abolish the best policy for allowing immigration to happen.”

Labour’s success on 8 June was driven by its ambiguous stance on Brexit. To Leavers, it could wink at ending freedom of movement when they worried about immigration; to Remainers, it offered a critique of the immigrant-bashing rhetoric of recent times. But can that coalition hold as the true shape of Brexit solidifies? Over the next few months, Jeremy Corbyn’s biggest decision will be this: which half of my voters should I disappoint?

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 22 June 2017 issue of the New Statesman, The zombie PM

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