Kevin Hollinrake MP: The real Living Wage is more important than ever

Last week official figures showed that inflation remains at the highest level in decades, a crisis spawned in the global economic disruption of COVID and accelerated by Russia’s invasion of Ukraine. In this context, transforming Britain into a high-wage economy is more important than ever. Employers who can, should help us deliver on this ambition by paying the Living Wage Foundation’s new, voluntary Living Wage rates announced this week. 

Everybody is feeling the pressure from rising costs, but I know from my work as the former Chair of the All-Party Parliamentary Group for Poverty that it is low-paid workers who will be hit harder than most. Tackling low pay therefore remains at the heart of solutions to improve people’s living standards. 

Successive Conservative Governments have made good progress on this. The National Living Wage, introduced in 2015, rose 6.6% to £9.50 an hour in April this year, providing a pay-rise for millions on the lowest pay. We’ve also raised income tax and National Insurance Contribution thresholds, which benefit the low-paid particularly. But with living costs rising so steeply, I know that on its own, this won’t be enough to keep everyone afloat.

There is another rate, advocated by the Living Wage Foundation to tackle in-work poverty. It is independently calculated based on living costs. The new rates for 2022-23 were announced this week and are £11.95 for London and £10.90 for the rest of the UK. In the cost-of-living crisis, it’s a lifeline like never before. 

Employers who can afford to pay the Living Wage Foundation’s rate adopt it voluntarily. There are now over 11,000 employers accredited with the Foundation paying all their directly employed and contracted staff a wage that meets everyday needs. Nearly 400,000 workers have been lifted out of in-work poverty since the campaign began, putting over £2bn back into their pockets.

These are challenging times for businesses too, and only those who can should pay it. But the extraordinary growth of the Living Wage movement since the start of the pandemic, with 5,500 employers accrediting since March 2020, a doubling of the number of real Living Wage Employers in only two and a half years, shows that it’s not only the right thing to do for workers, it makes good business sense too.

Of accredited businesses 93% say they have benefited since accrediting, including 86% who say it has improved the reputation of their business, 75% who say it has improved motivation and retention of employees, and 64% who say it helped differentiate them from others in their industry. 

The benefits will be wider than to individual businesses too. Research by the Smith Institute found that if just 25 per cent of all below Living Wage jobs in the UK were raised onto the real Living Wage, the UK economy would enjoy a £1.5 billion boost. This would be vital in achieving the new Prime Minister’s ambition of rebuilding the economy after COVID.

The cost-of-living crisis is hitting people and businesses hard, but as we saw with the pandemic, we are a strong and resolute country and it’s well within our abilities to overcome this challenge and come back stronger. I urge businesses who can to pay the real Living Wage to support their workers through hard times and to help build our dynamic, high-skill and high-wage economy.