Where next for the living wage?

Progress on low pay is imperative.

Tomorrow marks the start of the first Living Wage week. It is tangible proof that, 11 years after a small broad-based East London community alliance revived an idea first forged in the industrial heartlands of 1870s Britain, momentum for increased living wage coverage continues to gather pace.

And with good reason: at a time when powerful forces are bearing down on wages at the bottom end of the labour market, living wage campaigns have delivered tangible gains for thousands of low-paid workers. More widely, living wage initiatives have served as a powerful rallying cry against endemic levels of low-paid work, highlighting the power of social norms in challenging a low-pay, low-productivity economic model that is anything but pre-determined. 
 
Yet for all the success of the living wage campaign relatively few workers have secured a higher wage as a result of a living wage initiative. For example, there are an estimated 651,953 workers in London earning less than the London Living Wage, yet only around 10,341 London workers won a living wage in the six years between 2005 and 2011. This is not a cry of despair, simply a call for realism about the role that living wage initiatives can play in tackling our reliance on an extensive pool of low-paid labour and for targeting efforts where they will be most effective.  
 
Of course, the latter would be far easier if there was greater transparency around low-paid work. There is therefore a powerful case for amending the UK Corporate Governance Code to require listed companies to report on how many of their employees receive less then a living wage – as called for in the final report of the Resolution Foundation’s Commission on Living Standards. At a stroke such a move would begin to alter our tolerance of endemic levels of low pay, laying the ground for further gains. 
 
And we know that further progress is possible. Our estimates suggest that for large private sector companies in key sectors like banking, construction, food production and communications – where roughly a million people in total work below living wage rates – the costs of paying a living wage for all directly-employed staff are affordable at around 1 per cent of the firm’s wage bills. 
 
Of course, different companies will be better able to absorb these costs than others and the introduction of a living wage pay floor will be more challenging for companies in the major low-wage retail sectors (increases in wage bills of between 4.7 and 6.2 percentage points) but progress is still possible.
 
It is also imperative given the growing awareness that the public purse can no longer sustain the high cost of the UK’s reliance on 5 million workers – 1 in 5 employees – who earn above the legal minimum but below a living wage. It is not just low-paid workers and their families that bear the cost of low-paid work on this scale in strained budgets and diminished life chances. Taxpayers also pay to the tune of around £4 billion a year in in-work support for low earners. 
 
With few, if any, believing that the growth in tax credit support that occurred over the past decade can be repeated in these fiscally straitened times there is an urgent need to start developing an ambitious policy agenda to tackle low pay at source. For any policymaker serious about doing so living wages are an integral, if only partial, part of the solution. 
 
But there is a very real need to start matching words with deeds. Over the past decade politicians from across the political spectrum have competed to associate themselves with the idea of the living wage, safe in the knowledge that the voluntary nature of living wage agreements and their partial coverage made doing so almost consequence-free. With the role, rationale, strengths, limitations and policy potential of living wages now under increased scrutiny the window for endorsement devoid of decision is beginning to close. 
 
The transition from approval of living wage initiatives to concrete policy ideas to support their proliferation will not be easy. Yet there is a path for policymakers between inaction and reaching for a legislative solution in the form of a statutory living wage which few living wage advocates would endorse. That path not only involves fostering greater transparency around low pay but also thinking about the use of central and local government’s purchasing power and how the notional savings in state support that would accrue from more extensive living wage coverage might be used to help firms transition to better business models. None of this will be simple. But the alternative of not matching words with deeds is no longer a justifiable option at a time when we need wages to do far more of the heavy lifting if the living standards of low earners are not to decline rapidly. 
 
Matthew Pennycook is senior research and policy analyst at the Resolution Foundation
A street cleaner passes the Jobcentre Plus office in Bath (Photo: Getty Images)

Matthew Pennycook is MP for Greenwich and Woolwich, and member of the Energy and Climate Change Committee. He is PPS to John Healey. 

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Is defeat in Stoke the beginning of the end for Paul Nuttall?

The Ukip leader was his party's unity candidate. But after his defeat in Stoke, the old divisions are beginning to show again

In a speech to Ukip’s spring conference in Bolton on February 17, the party’s once and probably future leader Nigel Farage laid down the gauntlet for his successor, Paul Nuttall. Stoke’s by-election was “fundamental” to the future of the party – and Nuttall had to win.
 
One week on, Nuttall has failed that test miserably and thrown the fundamental questions hanging over Ukip’s future into harsh relief. 

For all his bullish talk of supplanting Labour in its industrial heartlands, the Ukip leader only managed to increase the party’s vote share by 2.2 percentage points on 2015. This paltry increase came despite Stoke’s 70 per cent Brexit majority, and a media narrative that was, until the revelations around Nuttall and Hillsborough, talking the party’s chances up.
 
So what now for Nuttall? There is, for the time being, little chance of him resigning – and, in truth, few inside Ukip expected him to win. Nuttall was relying on two well-rehearsed lines as get-out-of-jail free cards very early on in the campaign. 

The first was that the seat was a lowly 72 on Ukip’s target list. The second was that he had been leader of party whose image had been tarnished by infighting both figurative and literal for all of 12 weeks – the real work of his project had yet to begin. 

The chances of that project ever succeeding were modest at the very best. After yesterday’s defeat, it looks even more unlikely. Nuttall had originally stated his intention to run in the likely by-election in Leigh, Greater Manchester, when Andy Burnham wins the Greater Manchester metro mayoralty as is expected in May (Wigan, the borough of which Leigh is part, voted 64 per cent for Brexit).

If he goes ahead and stands – which he may well do – he will have to overturn a Labour majority of over 14,000. That, even before the unedifying row over the veracity of his Hillsborough recollections, was always going to be a big challenge. If he goes for it and loses, his leadership – predicated as it is on his supposed ability to win votes in the north - will be dead in the water. 

Nuttall is not entirely to blame, but he is a big part of Ukip’s problem. I visited Stoke the day before The Guardian published its initial report on Nuttall’s Hillsborough claims, and even then Nuttall’s campaign manager admitted that he was unlikely to convince the “hard core” of Conservative voters to back him. 

There are manifold reasons for this, but chief among them is that Nuttall, despite his newfound love of tweed, is no Nigel Farage. Not only does he lack his name recognition and box office appeal, but the sad truth is that the Tory voters Ukip need to attract are much less likely to vote for a party led by a Scouser whose platform consists of reassuring working-class voters their NHS and benefits are safe.
 
It is Farage and his allies – most notably the party’s main donor Arron Banks – who hold the most power over Nuttall’s future. Banks, who Nuttall publicly disowned as a non-member after he said he was “sick to death” of people “milking” the Hillsborough disaster, said on the eve of the Stoke poll that Ukip had to “remain radical” if it wanted to keep receiving his money. Farage himself has said the party’s campaign ought to have been “clearer” on immigration. 

Senior party figures are already briefing against Nuttall and his team in the Telegraph, whose proprietors are chummy with the beer-swilling Farage-Banks axis. They deride him for his efforts to turn Ukip into “NiceKip” or “Nukip” in order to appeal to more women voters, and for the heavy-handedness of his pitch to Labour voters (“There were times when I wondered whether I’ve got a purple rosette or a red one on”, one told the paper). 

It is Nuttall’s policy advisers - the anti-Farage awkward squad of Suzanne Evans, MEP Patrick O’Flynn (who famously branded Farage "snarling, thin-skinned and aggressive") and former leadership candidate Lisa Duffy – come in for the harshest criticism. Herein lies the leader's almost impossible task. Despite having pitched to members as a unity candidate, the two sides’ visions for Ukip are irreconcilable – one urges him to emulate Trump (who Nuttall says he would not have voted for), and the other urges a more moderate tack. 

Endorsing his leader on Question Time last night, Ukip’s sole MP Douglas Carswell blamed the legacy of the party’s Tea Party-inspired 2015 general election campaign, which saw Farage complain about foreigners with HIV using the NHS in ITV’s leaders debate, for the party’s poor performance in Stoke. Others, such as MEP Bill Etheridge, say precisely the opposite – that Nuttall must be more like Farage. 

Neither side has yet called for Nuttall’s head. He insists he is “not going anywhere”. With his febrile party no stranger to abortive coup and counter-coup, he is unlikely to be the one who has the final say.