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25 March 2015

The next Mayor of London must be able to control rents and raise wages

Labour's national agenda sets a promising direction - but London's next Mayor must seek the powers to to go further.

By Gareth Thomas

The next Mayor of London should have the power to introduce a living wage and introduce further controls on rents in the capital. National minimums and national rules need to be improved but the next Mayor should be able to go faster and further to meet London’s needs. There has already been much debate about what extra powers London’s Mayor should push for in a future devolution settlement but little focus so far on what could make an immediate difference to the living standards of ordinary Londoners in the capital.

Research by the Trust for London reveals that inequality in London is accelerating. This is true for Britain as a whole but it is in London where it is most pronounced. London needs its Mayor to have additional powers quickly to help tackle this growing inequality.

Kickstarted by the Travers Commission and accelerated by the fallout from the Scottish Referendum, the potential of extra income and powers to help build more affordable homes, support London’s entrepreneurs and prevent crime all mean that the future choices the next Mayor makes about what to seek, and what to accept from the next government in terms of more devolution, has huge implications for Londoners.

What is striking about the last five years in London’s economy is the increasing proportion of jobs that pay less than the living wage and the explosion in the cost of renting.

Where once the inner city areas of London were where poverty wages were concentrated, increasingly it is the suburbs where the percentage of low pay jobs are increasing. Harrow and Bexley are opposite parts of this grim reality; under David Cameron and George Osborne they are the parts of London with the highest proportion of low paid jobs in the capital. Overall, 24% of jobs located in Outer London were low paid. In 12 London boroughs a quarter of jobs were low paid. All but one of these were located in Outer London. This is not to underplay the low pay crisis in central London too, but rather to demonstrate that the current Mayor has failed to address Outer London as well as Inner London’s poverty pay crisis.

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I remember staying in the House of Commons very late as Tory MP after Tory MP mounted a desperate last effort to stop the minimum wage coming into law. It remains one of the great achievements of the last Labour government and Ed Miliband’s pledge to increase it significantly is very important. But a London Mayor needs to be able to go further.

Any sensible future Mayor would want to consult with business about whether, and if so, when and how to use a new power to introduce a living wage. Businesses paying good wages for decent jobs recognise the benefits of proper rewards for good staff whilst the negative impact on motivation and productivity when employees are paid less than the living wage is well documented. And any Mayor wanting to implement the living wage and recognising the inevitable concerns about the impact on business competitiveness would want to be sure they could demonstrate a strong pro-business record. But surely a Mayor should have the power to top up the minimum wage to living wage levels and not merely beg future governments to introduce it?

Other cities give their Mayor this responsibility and expect them to help influence wage and rent levels in a sensible direction listening to businesses and other stakeholders but ultimately taking responsibility one way or the other. It continues to be a scandal that London’s richest football clubs, with the honourable exception of Chelsea, won’t pay all their staff at least the living wage, expecting instead London taxpayers to subsidise the incomes of their staff so they can afford to live in the capital.

There is a growing debate too about the pace of rent rises and how to tackle bad landlords. Longer tenancies, rent caps and landlord accreditation schemes are increasingly the subject of debate as answers, or part answers, to challenges in London’s private rented accommodation. Hilary Benn and Emma Reynolds’ plan for 3 year tenancies will be a significant improvement. Yet at the moment the Mayor has very little scope to go further and intervene directly in the rental housing market to improve Londoners situation. Again, not that Boris has done so, but the Mayor under the current devolution of powers to London can do little more than appeal to Eric Pickles’ better nature (hardly likely to produce a well-judged response); if they want to tackle bad practice in the private rented sector.

Again before any future Mayor intervened to go beyond whatever national rules were then in place, they would want to consult on what approach would work best to help control rent levels and tackle rogue landlord behaviour without killing off investment. But surely they should have the power to intervene and the responsibility to exercise their judgement on something so fundamental to Londoners living standards as the cost of renting a home.

The demand for housing is likely to outstrip supply for some time to come, increasing the inflationary pressure on rents. Tougher rent controls, including the possibility of rent caps, are important tools for a Mayor to help bring the housing market under control.

The debate about what extra powers or income a Mayor should have is already raging. The powers to introduce a living wage and to intervene in London’s private rented housing market are just two; a crucial pair, of the new powers the next Mayor of London should seek.

Gareth Thomas is MP for Harrow West. 

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