Kevin Hollinrake is Conservative MP for Thirsk and Malton and Chair of the APPG on Poverty.
As Chair of the All-Party Parliamentary Group on Poverty, I am always looking to increase the understanding of poverty amongst parliamentarians and, most importantly, looking for solutions.
Getting more people into work is one important solution to alleviating poverty in the UK, and I’m proud that the since the Conservative Party has been in office, employment rates have continued to climb, and the jobless rate is at its lowest since 1975.
However, poverty isn’t just about getting people into work. It is imperative that we find solutions to in-work poverty.
Of the 13 million people who are living in poverty in the UK, more than half are in work. For employers who can afford it, paying the real Living Wage, as defined by the Living Wage Foundation, is a simple solution to alleviating in-work poverty for all directly and indirectly employed staff.
The campaign for the voluntarily-paid, independently-calculated Living Wage and London Living Wage has had cross party-political support since 2001, when community organisers in East London discovered that people were working three jobs just to get by, leaving them with little time to spend with their families.
Early supporters include Boris Johnson, who as Mayor of London knew that promoting the higher voluntary wage as a best-practice hourly rate was good for society. Baroness Philippa Stroud also recently acknowledged the great work of the Living Wage campaign and the positive impact that the higher voluntary rate has on people’s lives.
George Osborne’s National Living Wage was conceived following years of the community-led Living Wage campaign, and has changed the low pay landscape. However, despite the huge steps the National Living Wage has made for many, employers that can afford to should go a step further and pay the real Living Wage to ensure that none of their employees are struggling to keep their heads above water.
But it’s not only a moral case: there’s a significant benefit to the public purse when employers sign up to go further than the government minimum. Research out today shows that 35p in every £1 spent on uplifting people’s hourly rate goes back to the Treasury in tax receipts. It doesn’t make sense for taxpayers to be subsidising employers who can afford to pay their staff a Living Wage.
The case has been made that employers in every sector and industry can sign up to pay the independently calculated rate. Even in challenging sectors where margins are tight, like retail and hospitality, there are major household names like IKEA and craft beer pub chain Brewdog signed up. Hundreds of SMEs and over 35 per cent of the FTSE 100 also pay the voluntary rate – it can be done. It’s important that businesses aspire to the Living Wage, although there may be some instances where employees’ wages are supplemented by a system of bonuses which would bring their level of income up to an equivalent level.
Today’s spotlight on the public sector has shone a light on the 1.2 million people paid by the public purse who are not earning enough to get by. We should be setting an example. Nearly 500 public institutions including the Houses of Parliament, councils, universities, and NHS trusts are signed up already, but that’s a drop in the ocean and it would be great to see more of our public sector joining the movement.
On top of this, there’s broad public support to uplift these workers to the voluntary Living Wage. I agree: it is unacceptable that workers in the public sector aren’t earning enough to get by and it would be a welcome signal for the public sector to lead the way in paying the voluntary Living Wage. It is unsustainable to subsidise employers who pay lower wages through income support measures such as Tax Credits.
As well as benefits to the public purse, there are significant business benefits too. A survey of accredited real Living Wage employers, ranging from SME’s to FTSE 100 companies, found that 93 per cent had gained as a business after becoming a real Living Wage employer, and 75 per cent saw increased motivation and retention rates from their employees, Moreover, the more people given a pay rise in any given organisation the more the benefits were felt by the employer. People stayed at organisations longer when the were paid the rate, and the businesses found that it helped improve their reputation, brand, and gave them an edge over competitors.
The staff are happy, the public are happy, the bosses are happy, and it’s good for the public purse. It’s clear that in many cases where employers go further than paying the statutory minimum and opt to pay the Living Wage, calculated to reflect what people really need to live on, there are benefits all round.
Poverty is one of the most troubling issues facing our society today, paying the Living Wage is a key solution to tackling poverty whilst also providing business and financial boosts back to the employer. It’s time for the public sector to lead the way and uplift its 1.2 million low paid workers up to the real Living Wage rate.