Major companies who do not pay their staff a "living wage" of at least £7.20 an hour would be named and shamed under plans being considered by Ed Miliband, the Labour leader tells The Independent on Sunday today.
A Labour government could also introduce rules to award Whitehall contracts to firms who pay workers above the living wage – the minimum hourly rate needed for an acceptable standard of living, he added.
Mr Miliband, in an exclusive interview with The IoS, said the living wage was a central part of his "One Nation" vision to "share prosperity". One in five workers is paid below the living wage, the vast majority in catering, cleaning and retail.
Labour's policy review is looking at three ways in which the living wage, currently £7.20 an hour outside London and £8.30 an hour in the capital, can be introduced by employers in both the public and private sectors:
• Listed companies would be required to sign up to new corporate governance rules stating they paid the living wage, exposing those who did not. Small and medium businesses would be exempt.
• Central government would use powers of procurement to give preferential treatment to contractors who paid the living wage. Some 19 local authorities are already doing this.
• Firms could also be incentivised by receiving money back from the Treasury. The Institute for Fiscal Studies estimates that for every person moved on to the living wage, the Treasury would save around £1,000 from less spending on tax credits and from increased tax revenue.
A number of major firms, including City giants KPMG and Barclays, already pay workers and contractors such as cleaners and catering staff a living wage or higher, while 19 local authorities have been accredited as "living wage employers".
Tomorrow marks the start of Living Wage Week, when details are unveiled of new rates, and firms and councils that are accredited employers.
On a visit to Manchester on Friday, Mr Miliband met cleaners and catering workers who said their lives would be transformed if they earned more than £7.20 an hour. Manchester City Council is expected to introduce a living wage next April.
Joyce Wadsworth, 60, who has worked as a cleaner for the council for 26 years, told the Labour leader she had not had a holiday for six years. Last month her hourly rate increased from £6.84 to £7.15; it is expected to go above £7.20 next year.
Mrs Wadsworth added: "Everything has gone up in price.... But we hadn't had a pay rise in four years until this year. So we're just catching up. It will make a huge difference."
Speaking to The IoS, Mr Miliband said: "You go out, slog your guts out... you deserve a decent wage if the company can afford it.
"We've got a growth crisis in Britain but we've also got a living standards crisis, because the proceeds of economic growth are not being fairly distributed any more... This is the next step for One Nation, because One Nation is about everybody having a stake in society. It is about prosperity being fairly shared.
"It is about giving people a proper stake in the future of the country."
Mr Miliband insisted the living wage was good for businesses because staff turnover was lower. Barclays has paid the living wage in London since 2007. Catering-staff retention rates have increased to 77 per cent, compared with an industry norm of 54 per cent, and cleaning-staff retention rates to 92 per cent, against the norm of 35 per cent. Barclays says savings on recruitment and training have offset the wage-bill rise.
Mr Miliband will use an event in Islington, north London, tomorrow to highlight how that London borough is paying its grounds staff the living wage, while the Mayor of London, Boris Johnson, will also champion the measure at a separate event.
The three-pronged plan is an example of Mr Miliband's grand idea of "predistribution", although he has, since his party conference speech last month, used the "One Nation" concept to set out his vision for the country.
Mr Miliband insisted "One Nation" was "not just a slogan for a conference". "It's not a small-c conservative notion but a really radical one, because if Britain really was 'One Nation', it would be a much fairer place."
The idea of naming and shaming companies through corporate governance rules, and of paying money back to employers through Treasury savings, was set out in a report on living standards by the Resolution Foundation think tank last week.
Gavin Kelly, chief executive of the Resolution Foundation, said: "One in five British workers are low paid and it's a major reason why so many lower-income families feel as if they're running uphill – working hard but getting almost nowhere. The high price of low pay is also borne by the taxpayer through in-work subsidies – so we all have reason to do something about it.
"Requiring listed companies to report how many of their employees receive less than the living wage would introduce the power of transparency to this debate; it would be a vital step and help galvanise change."
Strangers on a train
Boarding a train is an occupational hazard for a politician – just ask George Osborne. But when Ed Miliband walked into Coach A (standard class, Quiet Zone) of the 14.04 Virgin Trains Runcorn to London Euston service on Friday, he was confronted by a raucous group of women on their way to a hen party, where the theme was to dress up as different "Eds".
Julie Fraser, 58, from Liverpool, was in hysterics as she told the Labour leader she was going as Ed Balls. "How do you dress as Ed Balls?" a laughing Mr Miliband asked. Her costume was to be a necklace of tennis balls, said Ms Fraser. Showing a deft human touch not normally associated with the godfather of predistribution, Mr Miliband promptly got the Shadow Chancellor on the phone to chat to his impersonator. It was not known, however, whether anyone was going to the hen party as "Ed Miliband".
During his visit to Manchester and Cheshire, Mr Miliband was inundated with requests for pictures and autographs by passers-by – including one student, who asked him to sign his BLT sandwich wrapper.
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