National Minimum Wage

Part of Opposition Day — [6th Allotted Day] – in the House of Commons at 12:41 pm on 15th October 2014.

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Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills 12:41 pm, 15th October 2014

I am just going to make a little more progress, because I sense that I have been going on for a while.

The minimum wage is set by reference to economic factors, including growth levels, the labour market, economic forecasts and so on. The living wage is calculated by looking at the basic cost of living and the salary needed for an individual to meet their own or their family’s basic day-to-day needs, including housing, food, clothing and so on. We recognise it is very challenging for employers to pay a living wage, so we would not impose it on them by having a statutory living wage. Instead, a future Labour Government will encourage employers to pay the living wage through new “make work pay” contracts. Firms that sign up to becoming living wage employers in the first year of the next Parliament will benefit from a 12-month tax rebate of up to £1,000, and an average of £445, for every low-paid worker who gets a pay rise. This will help firms towards a higher-productivity, higher-wage model. The measure will be funded entirely from the increased tax and national insurance revenue received by the Treasury when employees receive higher wages. Additional savings in lower tax credits and benefit payments, as well as increased tax revenues in future years, will cut social security bills and help pay down the deficit. Not just ensuring people are in work but that they get a decent salary when they are working, is the most effective way to reduce the social security bill.

In conclusion, I would like to go back to where I started. This area—what people are paid at work and the nature of the work they do—will be a key battleground at the next general election. That is why we have come out with the most detailed proposals, both in respect of wages and security at work, that will make a difference to people’s lives. Instead of mocking us, and instead of coming forward with proposals of their own, we see Government Members sitting on their hands while we carry on in the situation in which too many people who work hard do not earn a wage that they can live on. Ultimately, that is why the only way to do anything about this is to elect a Labour Government next year. I commend this motion to the House.