Labour And The Unions Must Make The Case For A ‘Living Wage’

Grahame Morris is Labour MP for Easington and Chair of the LabourLeft policy think tank

WHATEVER David Cameron and George Osborne may claim, the British economy continues to struggle. The Tory led Coalition’s promise of a private sector led recovery has simply failed to materialise, and the much vaunted deficit reduction simply isn’t taking place as the economy is continuing to contract.


Under the last Labour Government, we were beginning the slow climb out of a global recession caused by the greed of international financiers and speculators. All of that has turned to ashes as this Tory led Coalition follows the failed economic policies of the 1930s and 1980s.


This is a know nothing; learn nothing Government, which has no ‘Plan B’ because it can’t admit how wrong it has managed to get everything.

We know it is the most vulnerable in society who are bearing the brunt of the policies of “austerity” policy implemented by Cameron, Osborne and their side-kick, Nick Clegg.
Since the Coalition Government entered Downing Street, the jobseekers claimant count has risen by over 700 people in my constituency on Easington, and over 13,000 in the North East as whole. We have yet to see the announced job losses at Caterpillar, Cumbrian Seafood’s, JJB Sports and Dewhirst filter into the system, and I anticipate yet more crocodile tears from Ministers as they get prepared to announce another set of “disappointing” employment figures.


A new report from Sheffield Hallam University – ‘The Real Level of Unemployment’ – which includes the estimated 900,000 unemployed, who have been diverted onto incapacity benefits since the Government assumed office, shows the true extent of unemployment in the UK. The real unemployment figure in my constituency may be as high as 16.3% of the working population, which is more than two and a half times higher than the Government’s claimant count. The report indicates that in comparison to the UK Government’s official unemployment figure of 1.5 million using JSA claimants, the real level of unemployment is closer to 3.4 million.
This Government insist on holding on to relics from a by-gone era.


Cameron, Osborne and Clegg, believe in a “trickle down effect”, by seeking to further concentrate wealth at the very top. Their last budget’s income tax cut will make millionaires better off to the tune of £40,000 a year, but will not help a single constituent of mine in East Durham. It cannot be just that those who benefitted most during the boom years should also be shielded during the lean years.  It is outrageous that this Government believes that such people cannot pay their fair share. After all, aren’t we all meant to believe that “We are all in this together”?


I believe we should have another economic stimulus, to support jobs and growth in communities like mine, though this time, instead of bailing out the banks, or paying for a tax cut for the top 1% in society, or funding the Government’s failing work plan, I propose we introduce a living wage. The private sector is failing to grow in the UK, especially in the poorest neighbourhoods, because the Government at every opportunity are driving demand out of the economy.  A living wage is just one measure that would start to create demand in our flat-lining economy.


David Cameron promised to “Make Work Pay”, and he has succeeded for those earning over £150,000, but what about the other 99% of people in the UK?


Let’s look at some of Cameron’s other claims;
Have changes to Tax Credits made work pay?
Cameron’s welfare reforms have lowered the household income threshold for a family to claim child tax credits from £41,300 per year to £26,000 for families with one child, and to £32,000 for a household with two children.


Eligibility for Work Tax Credits have changed so that a couple with at least one child will only qualify if the couple’s joint work hours total at least 24 hours a week, up from the previous level of 16 hours.


Over 200,000 households, which include 470,000 children, are at risk of losing up to £3,870 per year unless they are able to find the extra eight hours per week to meet the Government’s new criteria. The Institute for Fiscal Studies has suggested that families with children would lose an average of £580 per year due to tax and benefit changes. So how is making the working poor, poorer helping our economy?
Through the Enterprise and Regulatory Reform Bill, the Government are dismantling employment rights.  Business Secretary, Vince Cable, who wants us to believe that he is the softer, social democratic conscience of the Coalition, recently sneaked out a written statement stating that in addition to extending the qualifying period from 1 to 2 years before an employee can bring forward an unfair dismissal claim, he would also significantly reduce the compensation cap for claimants.


So Vince Cable, just how does creating new job uncertainties and making it easier for bad bosses to unfairly hire and fire their employees “make work pay”? Perhaps it doesn’t occur to Cable that, the best way for employers to avoid paying compensation for unfair dismissal is to stop treating their staff unfairly!


This is “Beecroft Lite” – after the report that recommended basic protections at work should be savaged – but we all know that the Conservative Party want to go further. Bee croft would dilute some of the most basic employment rights – allowing employers to “fire at will”. As for Bee croft himself, this is “a price worth paying”!


In the censored Downing Street version of the Beecroft Report, he recommended


  • Dropping legislation on flexible working for parents
  • Scrapping licensing regarding the employment of children
  • Scrapping of the Gang masters legislation that was set up following the deaths of the 23 Chinese cockle pickers in Morecambe
  • And, the relaxation of the National Minimum Wage taking us back to the bad old days of £2 per hour.

Beecroft’s “Bad Boss Charter” belongs in the pages of Charles Dickens and the Victorian era, not 21st Century Britain. Though he has many supporters on the Tory benches, especially amongst those on the Conservative Right such as Phillip Davis MP who has suggested that disabled people should be allowed work below minimum wage, or Damian Collins who thinks young people should busk to raise travel fares and that a lack of motivation is to blame for one million unemployed under-25s.  Or Christopher Chope who sponsored a private members bill to abolish the Minimum Wage supported by the likes of Peter Bone MP, once labelled Britain’s” meanest boss” for defending himself after paying a 17-year-old trainee just 87p an hour, back in 1995 – I can’t imagine Mrs Bone doing a working week for just £34.80, for that would make her a real ‘bone-head’.


Despite being set at just £3.60 an hour in 1999, Labour’s new National Minimum Wage immediately raised the pay of 1.9 million low-paid workers. It was an important first step, but the time has come to move beyond a minimum to a living wage.


In a time of “austerity” there are tough decisions to be made; however, one of the easiest is to introduce a living wage and really make work pay.


As the minimum wage is not a living wage nearly all low paid employees are eligible to receive tax credits. I do not oppose the additional support for the lowest paid worker – I do oppose profitable employers failing to pay their own wage bill. The taxpayer wouldn’t tolerate the Government paying a private businesses energy cost, or its advertising bill, so why is it acceptable that they receive a subsidy to meet their staffing costs, enhancing the profits of some of the largest multinationals who continue to rely on cheap labour and pay poverty wages?


The international charity Save the Children recently launched its first ever domestic campaign in order to raise £500,000, to help low-paid working families, who according to their new report –‘It Shouldn’t Happen Here ‘- are going without hot meals, new shoes and winter clothes, and missing out on school trips, toys and treats because their parents cannot afford the rising cost of living.


Save the Children plans to spend money raised on its Eat, Sleep, Learn, Play programme, which gives cookers, beds and other essential household items to families living in poverty, and its Fast scheme, which helps low-income parents to provide at-home educational support to their children.


Low income families are bearing the brunt of austerity, with spending cuts hitting the poorest tenth of the population 13 times harder than the richest tenth.  Let us not forget that all three main political parties signed up to the 2010 Child Poverty Act with the aim of ending child poverty in the UK by 2020.


Making Work Pay should be at the centre of lifting children out of poverty.
Shockingly, 61% of children in poverty live in households with working parents. All working parents should be able to earn enough to raise their family free from poverty and with enough income to provide their children with a healthy childhood, providing them with the opportunity to succeed.
Social mobility has ground to a halt in the UK, where only one out of every nine children from a low income background will eventually join the top 25% of earners as an adult. Poor children are still becoming poor adults.
Only the Labour Party can stop this destructive cycle and no matter what the economic position at the next election, the first line in any Labour budget for 2015 must state that:


‘Work must pay and must provide a route out of poverty; we will ensure work always pays with the introduction of a living wage.’


This would be the next step towards creating a future fair for all.


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