Election 2015: Ed Miliband targets minimum wage for maximum gain

Labour promises five years of increases to close gap on average earnings - and puts reversing inequality at heart of election strategy

Labour will pledge today dramatically to increase the minimum wage paid to millions of low-income workers in the biggest shake-up of the scheme since its inception.

Under plans to be set out by Ed Miliband, Labour will commit itself to raising the minimum wage significantly faster than growth in average pay over five years if the party wins the next election.

Currently, the minimum wage is just 53 per cent of median earnings and has fallen by 5 per cent in real terms since 2010. Labour pledged that its target for increasing the minimum wage would help to reverse years of growing income inequality.

But the move will lay Mr Miliband open to charges from the Conservatives that he is taking a dangerously interventionist approach to wages that could damage economic growth and lead to rises in unemployment.

Labour badly needs to reignite support, with recent polls showing the party has slipped behind the Tories.

Read more: Ed Miliband sells ‘fairer’ Britain to voters

Labour is also backing proposals to set sector-by-sector minimum wages – so that minimum hourly rates of pay could be higher in some jobs than in others. Under current arrangements, the minimum wage – which is due to rise to £6.50 in October – is set by the independent Low Pay Commission, which is made up of representatives of industry, unions and academics.

It is tasked with striking a balance between the need for wage growth and concerns about the impact on employment and economic growth.

But Labour believes that the commission has been too cautious in setting the minimum wage.

A third of all women in work, nearly two-fifths of 16- to 30-year-old employees and 43 per cent of part-time workers are now characterised as low-paid. Under Labour’s plans, which will be set out with the publication of a report into low pay by Alan Buckle, the deputy chair of the consultancy firm KPMG, the remit of the commission would be significantly strengthened.

It would be given a five-year target to reduce the gap between national median pay and the minimum wage – in a similar way that the Government sets the Bank of England an inflation target.

While Labour will not  commit itself to an exact  level until closer to the election, party sources said it would be ambitious. The party claims the policy will benefit the Exchequer through reduced spending on in-work benefits and higher tax receipts. The Government currently spends more on benefits and tax credits for families in work than it does on unemployed families at a cost of around £3.2bn.

Under the plan, if the commission felt it could not meet the target, it would have to write to ministers explaining and justifying its position.

“Policymakers should set the target to be stretching rather than easy, aiming to make a significant difference to people’s lives and to put pressure on businesses to adapt their business models, to chart a course to a higher-wage, higher-skills economy,” the report concludes.

It also suggests that the Low Pay Commission should be allowed to set sector-by-sector minimum pay – and launch investigations to improve productivity in those areas of the economy that are particularly affected by low wages.

Those industries, the report suggests, that might be able to pay higher minimum wages include IT, construction, business and financial services.

Areas of the economy such as hospitality, care work  and the service sector could have slower increases in the minimum wage – but with a focus by the commission on driving long-term productivity gains that could allow  wage increases.

“The evidence suggests the need for a more intelligent approach that puts more pressure on sectors that could afford to pay more, and also supports low-paying sectors to tackle low pay and low productivity,” Mr Buckle says in his report.

“The comparison with other countries also suggests that ambitious wage floors can provide an effective incentive for employers to move towards higher-skill, higher-wage business models.”

Launching the report today Mr Miliband will point out that it was a Labour government that first introduced the minimum wage but the party now needs to “go further” to “make work pay”.

“Britain is still one of the lowest-paid countries among the world’s advanced economies,” he will say. “So we have to go further. We have to restore the link between hard work and building a decent life for your family.

“A Labour government  will establish a clear link between the level of the minimum wage and the scale of wages paid to other workers in our economy.”

The Buckle report rejects calls by campaigners for Labour to introduce a mandatory living wage but says all central government departments should ensure that their subcontractors pay the living wage to any staff working on government contracts. It also rules out setting a separate minimum wage for London, arguing it would exacerbate existing inequalities.

Sport
Laura Trott with her gold
Commonwealth GamesJust 48 hours earlier cyclist was under the care of a doctor
Life and Style
Upright, everything’s all right (to a point): remaining on one’s feet has its health benefits – though in moderation
HealthIf sitting is bad for your health, what happens when you stay on your feet for a whole month?
Arts and Entertainment
Peter Griffin holds forth in The Simpsons Family Guy crossover episode
arts + ents
News
Orville and Keith Harris. He covered up his condition by getting people to read out scripts to him
People
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
France striker Loic Remy
sportThe QPR striker flew to Boston earlier in the week to complete deal
Arts and Entertainment
Gal Gadot as Wonder Woman
arts + entsFilmmaker posted a picture of Israeli actress Gal Gadot on Twitter
Sport
Vincenzo Nibali rides into Paris on the final stage of the 2014 Tour de France
Tour de FranceVincenzo Nibali is first Italian winner since Marco Pantani in 1998
News
Bryan had a bracelet given to him by his late father stolen during the raid
people
Arts and Entertainment
Chris Pratt stars in Guardians of the Galaxy
arts + ents
Arts and Entertainment
Pedro Pascal gives a weird look at the camera in the blooper reel
arts + entsPrince Oberyn nearly sets himself on fire with a flaming torch
News
Danny Nickerson, 6, has received 15,000 cards and presents from well-wishers around the world
newsDanny loves to see his name on paper, so his mother put out a request for cards - it went viral
Arts and Entertainment
Zoe Saldana stars in this summer's big hope Guardians of the Galaxy
filmHollywood's summer blockbusters are no longer money-spinners
Sport
Red Bull Racing's Australian driver Daniel Ricciardo (C) celebrates with Scuderia Ferrari's Spanish driver Fernando Alonso (L) and Mercedes' British driver Lewis Hamilton
sport
Arts and Entertainment
comedy
Arts and Entertainment
Public vote: Art Everywhere poster in a bus shelter featuring John Hoyland
art
Arts and Entertainment
Judd Apatow’s make-it-up-as-you-go-along approach is ideal for comedies about stoners and slackers slouching towards adulthood
filmComedy was dominated by the romcom at its most insufferable
Sport
Tour de France competitor Bartosz Huzarski’s legs have highlighted the gruelling nature of the race, after he posted a picture on Facebook showing extremely prominent veins stretching from his feet and all the way up his legs
Commonwealth Games
Life and Style
Elle Kaye demonstrates the art of taxidermy
food + drinkFood revolution taken a step further in new ‘edible taxidermy’ class
News
A rub on the tummy sprang Casey back to life
video
Sport
Halsall broke her personal best in the 50m butterfly
Commonwealth GamesEnglish swimmer is reborn after disastrous time at London 2012
Arts and Entertainment
O'Shaughnessy pictured at the Unicorn Theatre in London
tvFiona O'Shaughnessy explains where she ends and her strange and wonderful character begins
Life and Style
Workers in Seattle are paid 100 times as much as workers in Bangladesh
fashionSeattle company lets customers create their own clothes, then click 'buy' and wait for delivery
Arts and Entertainment
Red Bastard: Where self-realisation is delivered through monstrous clowning and audience interaction
comedy
Arts and Entertainment
booksForget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Voices
The Express offices in the 1930s when writers (such as Orwell) were paid around £2 weekly
voicesWebsites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Life and Style
A cut above: Katy Guest at The Ginger Pig
food + drinkThe Ginger Pig's hands-on approach to primary cuts
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Data Analyst

£30000 per annum: Ashdown Group: A highly reputable software house is looking ...

Application Support Analyst / Junior SQL Server DBA

£40000 - £45000 per annum: Ashdown Group: An established professional services...

Commercial Litigation

Highly Attractive Salary: Austen Lloyd: CITY - SENIOR COMMERCIAL LITIGATION SO...

BI Developer - Sheffield - £35,000 ~ £40,000 DOE

£35000 - £40000 per annum + competitive: Progressive Recruitment: My client is...

Day In a Page

A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

A new Russian revolution

Cracks start to appear in Putin’s Kremlin power bloc
Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

Apartheid’s sadistic killer that his country cannot forgive

The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

Standing my ground

If sitting is bad for your health, what happens when you stay on your feet for a whole month?
Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

Greene prays for chance to rebuild after injury agony

Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
Israel-Gaza conflict: Secret report helps Israelis to hide facts

Patrick Cockburn: Secret report helps Israel to hide facts

The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
The man who dared to go on holiday

The man who dared to go on holiday

New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

Best comedians: How the professionals go about their funny business

For all those wanting to know how stand-ups keep standing, here are some of the best moments
The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

The Guest List 2014

Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

Jokes on Hollywood

With comedy film audiences shrinking, it’s time to move on
It's the best of British art... but not all is on display

It's the best of British art... but not all is on display

Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
Critic claims 'I was the inspiration for Blanche DuBois'

Critic claims 'I was the inspiration for Blanche DuBois'

Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
Sometimes it's hard to be a literary novelist

Sometimes it's hard to be a literary novelist

Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

Edinburgh Fringe 2014

The comedy highlights, from Bridget Christie to Jack Dee
Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

The woman stepping down as chair of the Heritage Lottery Fund is worried