The Living Wage
As part of his bid to become leader of the Labour party, Ed Miliband has pledged to offer substantial tax concessions to companies guaranteeing a ‘living wage’ of £7.60 an hour.
The ballot papers for the leadership election will be sent to party members at the beginning of next month, and Miliband hopes that this step will appeal to the party’s core supporters who feel that New Labour did not do enough to combat low pay.
According to research conducted by the Institute for Fiscal Studies, workers who earn less than the ‘living wage’ cost the taxpayer between £5.9bn and £6.3bn a year. This is because many people who earn below the ‘living wage’ are entitled to tax credits and benefits to subsidise their low income, and they will also pay less in income tax.
The reduction in corporation tax will only be offered to companies that agree to set the ‘living wage’ as its minimum rate. Companies who agree to do so also stand to benefit in other areas. Research has found that it will not only reduce staff turnover but also increase worker productivity.
Miliband said: ‘We need to be willing not just to urge and cajole but to act to encourage companies to behave responsibly to achieve greater social justice.’
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