Labour members present the party's "cost-of-living contract" during a campaign rally on May 21, 2014 in London. Photograph: Getty Images.
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Labour should pledge to make the government a living wage employer

Even at a time of austerity, it is a small price for a big gain. 

The government claims to be a proponent of the living wage. David Cameron says he supported it at the last election and believes it is an idea "whose time has come". Earlier this year he told the World Economic Forum in Davos that "where companies can pay the living wage, they should". Yet for all the warm words, government departments continue to drag their feet over becoming accredited living wage employers.

Rather than leading the way, ministers still insist that a living wage is a cost we perhaps can’t afford. As Lord Deighton, the Commercial Secretary to the Treasury, told Parliament in 2013: "requiring employers to pay a living wage could be burdensome to business and damage the employment prospects of low-paid workers". When confronted with the argument that it may be a price worth paying, Downing Street retorts that, anyway, living wage clauses in public procurement breach EU law (a view strong disputed by the European Commission, as well as by Boris Johnson).

If the GLA and a long list of local authorities, universities and charities can pay the living wage, why not Whitehall? Indeed, our study on "setting a fair pay standard: the government as a living wage employer" (here) shows that the cost of paying all low-paid Whitehall workers the living wage would be only £18m – equivalent to 0.002 per cent of total public spending. This would include all in-house employees as well as cleaners, security, catering staff etc who are contracted in. The cost would still be only around £23m even if contractors didn’t absorb any of the costs involved in taking pay rates up to the London living wage level (£8.80).  

Alan Buckle’s recently published report on low pay for the Labour Party recommends that central government departments should become accredited living wage employers and use the power of procurement to encourage organisations bidding for contracts to pay their staff a living wage. This would ensure that all sub-contractors pay the living wage to any staff working on government contracts. Our analysis suggests that this would cover nearly 200,000 people, and approximately 30,000 people would see their pay increase as a result. Many of those low-paid workers who would benefit are currently working for the DWP, which is committed on paper at least to paying the living wage.

There’s a lot of complex number crunching involved in evaluating the cost to government of paying the living wage. Some workers are paid close to the living wage which means the uplift costs are low, others are on the National Minimum Wage and could see their wages rising significantly; there are issues around how much different contractors in different services can afford to contribute, and how phasing might operate; how best to factor in know-on employment effects and productivity gains; and what impact will pay rises at the bottom have on wage differentials? All are important considerations, but not impossible for government to work out. What is most striking is that the overall costs to the taxpayer are low because government gets a dividend back from tax receipts and reduced benefit payments. According to our analysis, the tax and benefit savings of moving 30,000 workers onto the living wage would be some £20m. That’s roughly half the total cost of becoming a living wage employer.

Ed Miliband has flirted with several ideas over how to support the living wage, including council-backed living wage zones and tax breaks to private firms. Each have their merits and demerits. But surely it is best to start with the public sector. Government, after all, is a major employer of low-paid workers and has huge buying power. Ministers can set the pace on the living wage and force and cajole the business community to follow.

In Scotland, Holyrood recently voted down an amendment to the Procurement Reform Bill by Labour to introduce a "Scottish Living Wage duty" - which would make it compulsory for companies who wanted to win work from the public sector to pay the living wage. This was something of an embarrassment for the SNP, which boasts that the Scottish government is an accredited living wage employer.

Labour should be bolder on the living wage than Salmond or Cameron and give a clear and unequivocal commitment over the term of a parliament to making not just Whitehall, but all public bodies living wage employers. The opportunity is there to outflank the Tories, whose credibility on tackling low pay and endorsement of the living wage needs to be challenged. There is a cost and the big contractors will fight against paying their share, but as our report shows, even at a time of fiscal austerity, it is a small price for a big gain. 

Paul Hackett is the director of The Smith Institute.

Photo:Getty
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Why isn't Labour putting forward Corbynite candidates?

Despite his successes as a candidate, the organisational victories have gone the way of Corbyn's opponents. 

The contest changes, but the result remains the same: Jeremy Corbyn’s preferred candidate defeated in a parliamentary selection. Afzhal Khan is Labour’s candidate in the Manchester Gorton by-election and the overwhelming favourite to be the seat’s next MP.

Although Khan, an MEP, was one of  the minority of Labour’s European MPs to dissent from a letter from the European parliamentary Labour party calling for Jeremy Corbyn to go in the summer of 2016, he backed Andy Burnham and Tom Watson in 2015, and it is widely believed, fairly or unfairly, that Khan had, as one local activist put it, “the brains to know which way the wind was blowing” rather than being a pukka Corbynite.

For the leader’s office, it was a double defeat;  their preferred candidate, Sam Wheeler, was kept off the longlist, when the party’s Corbynsceptics allied with the party’s BAME leadership to draw up an all ethnic minority shortlist, and Yasmine Dar, their back-up option, was narrowly defeated by Khan among members in Manchester Gorton.

But even when the leadership has got its preferred candidate to the contest, they have been defeated. That even happened in Copeland, where the shortlist was drawn up by Corbynites and designed to advantage Rachel Holliday, the leader’s office preferred candidate.

Why does the Labour left keep losing? Supporters combination of bad luck and bad decisions for the defeat.

In Oldham West, where Michael Meacher, a committed supporter of Jeremy Corbyn’s, was succeeded by Jim McMahon, who voted for Liz Kendall, McMahon was seen to be so far ahead that they had no credible chance of stopping him. Rosena Allin-Khan was a near-perfect candidate to hold the seat of Tooting: a doctor at the local hospital, the seat’s largest employer, with links to both the Polish and Pakistani communities that make up the seat’s biggest minority blocs.  Gillian Troughton, who won the Copeland selection, is a respected local councillor.

But the leadership has also made bad decisions, some claim.  The failure to get a candidate in Manchester Gorton was particularly egregious, as one trade unionist puts it: “We all knew that Gerald was not going to make it [until 2020], they had a local boy with good connections to the trade unions, that contest should have been theirs for the taking”. Instead, they lost control of the selection panel because Jeremy Corbyn missed an NEC meeting – the NEC is hung at present as the Corbynsceptics sacrificed their majority of one to retain the chair – and with it their best chance of taking the seat.

Others close to the leadership point out that for the first year of Corbyn’s leadership, the leader’s office was more preoccupied with the struggle for survival than it was with getting more of its people in. Decisions in by-elections were taken on the hop and often in a way that led to problems later down the line. It made sense to keep Mo Azam, from the party’s left, off the shortlist in Oldham West when Labour MPs were worried for their own seats and about the Ukip effect if Labour selected a minority candidate. But that enraged the party’s minority politicians and led directly to the all-ethnic-minority shortlist in Manchester Gorton.

They also point out that the party's councillor base, from where many candidates are drawn, is still largely Corbynsceptic, though they hope that this will change in the next round of local government selections. (Councillors must go through a reselection process at every election.)

But the biggest shift has very little to do with the Labour leadership. The big victories for the Labour left in internal battles under Ed Miliband were the result of Unite and the GMB working together. Now they are, for various reasons, at odds and the GMB has proven significantly better at working shortlists and campaigning for its members to become MPs.  That helps Corbynsceptics. “The reason why so many of the unions supported Jeremy the first time,” one senior Corbynite argues, “Is they wanted to move the Labour party a little bit to the left. They didn’t want a socialist transformation of the Labour party. And actually if you look at the people getting selected they are not Corbynites, but they are not Blairites either, and that’s what the unions wanted.”

Regardless of why, it means that, two years into Corbyn’s leadership, the Labour left finds itself smaller in parliament than it was at the beginning.  

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