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Living Wage

Oral Answers to Questions — Business, Innovation and Skills – in the House of Commons at 9:30 am on 10th April 2014.

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Photo of Heidi Alexander Heidi Alexander Opposition Whip (Commons) 9:30 am, 10th April 2014

What steps the Government are taking to encourage firms to pay a living wage.

Photo of Chris Williamson Chris Williamson Labour, Derby North

What steps the Government are taking to encourage firms to pay a living wage.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

The Government support a living wage and encourage businesses to pay it when it is affordable and not at the expense of jobs. We recognise that these have been challenging times and we applaud companies that have chosen to pay higher wages.

Photo of Heidi Alexander Heidi Alexander Opposition Whip (Commons)

The UK’s largest supermarkets, Tesco, Sainsbury’s, Asda and Morrisons, together make billions of pounds in profits every year, but they still do not pay all their staff a living wage. Will the Secretary of State look at amending the corporate governance code to require all publicly listed companies to report annually the number of individuals they employ who earn less than a living wage?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

That is an interesting suggestion for nudging companies in the right direction, and I will certainly have a look at it. I am certainly very opposed to coercive measures because those would simply add to unemployment, but I will reflect on that suggestion, which is a new one.

Photo of Chris Williamson Chris Williamson Labour, Derby North

I am pleased that the Secretary of State says that he supports the living wage, but as he will know, and as my hon. Friend Heidi Alexander has already pointed out, of the 4.8 million people who are paid less than the living wage, many work for multinational, highly profitable companies. What specific steps is he taking to encourage those highly profitable companies to pay the living wage? The people deserve to know that.

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

The hon. Gentleman’s constituency is a good example of what is happening in the labour market. The claimant count is down to about 2.5%, which is much lower than it was when we took office. Many engineering companies are short of labour and wages are going up. We have been through a difficult period, but one of the success stories is that employment has massively increased—465,000 during the last year. His constituency is a very good example of the policies working.

Photo of David Nuttall David Nuttall Conservative, Bury North

Does the Secretary of State agree that retailers would find it easier to pay higher wages if they were allowed to open all day on Sunday?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

I suspect that it would make relatively little difference. We had a modest experiment at the time of the Olympics. The results did not show a great deal of real economic consequences, but we are always open to new evidence.

Photo of Andrew George Andrew George Liberal Democrat, St Ives

Provided that it does not undermine fair trade or UK competitiveness, a significant increase in the minimum wage would clearly be both desirable and the right thing to do. But will my right hon. Friend look particularly at the care sector, where I fear there is a race to the bottom as a result of there simply being a floor where the minimum wage has been set?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

I remind my hon. Friend that, based on the recommendations of the Low Pay Commission, the Government announced recently the biggest increase in cash terms since the financial crisis—a 3% increase, which is an increase in real terms. I suspect that with the central problem in the care sector, which is with domiciliary care workers whose travel times are not properly counted, we are dealing with an abuse of the minimum wage system, and it needs to be pursued in that context.

Photo of Mike Kane Mike Kane Labour, Wythenshawe and Sale East

A KPMG study found that the introduction of a living wage increased productivity and reduced sickness absenteeism and staff turnover. In fact, its introduction was cost-neutral for all these firms. As it makes such a good business case, why are the vast bulk of local authorities that have introduced a living wage Labour ones?

Photo of Vincent Cable Vincent Cable The Secretary of State for Business, Innovation and Skills

The process that the hon. Gentleman described is the right one: if it is good business practice, good businesses will follow it and out-compete their competitors, and I hope that that is what will happen.