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Living Wage

– in the Scottish Parliament on 1st March 2012.

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Photo of Elaine Smith Elaine Smith Labour

The next item of business is a debate on the living wage in Scotland. I call on Joe FitzPatrick to open the debate on behalf of the Local Government and Regeneration Committee.

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

I start by thanking the committee clerks for their diligent work during the inquiry, which resulted in the important report—“Report on the Living Wage in Scotland”—that we are discussing today. I also recognise the input of Kezia Dugdale and Mark Griffin, who are no longer members of the committee but were involved in the early stages of the inquiry.

Our short-term inquiry into the living wage was held in December and January and we published our report on 3 February. We worked hard as a committee to achieve consensus, and I hope that our report helps to move the agenda forward in an informed way.

Usually, we would wait until we had received the Government’s response before we brought a debate on a committee report to the chamber, but we hope that today’s debate will feed into the Government’s response, as part of the Presiding Officer’s programme for change. Although we look forward to hearing what the minister has to say, we understand that that will not be the Government’s final response.

The aim of our inquiry was to consider the benefits of a living wage for individuals, families and communities. We looked at the introduction of the living wage by local authorities and explored the extent to which procurement can include criteria that are linked to payment of the living wage.

The living wage is intended to address in-work poverty by providing an income level that enables households to adequately provide for themselves. It is set at £7.20 per hour, which is £1.12 above the United Kingdom’s national minimum wage of £6.08 per hour for adults. The figure of £7.20 per hour, which equates to about £14,000 a year, is not an arbitrary figure that was plucked out of thin air. The committee received evidence from Donald Hirsch of the centre for research in social policy at Loughborough University, who explained that the living wage is based on a calculation of the minimum income standard for the United Kingdom.

The minimum income standard is an estimate of the minimum income that households need in order to have a minimum acceptable standard of living as defined by members of the public. It is based on regular research on what the public think, and it is supported by expert knowledge. It is important to note that the standard covers needs and not wants. It is largely made up of necessities such as food and shelter, and not luxuries. However, it is also about people having what they need in order to have the opportunities and choices that are necessary to participate in society. Good examples are swimming lessons and birthday presents for children. Technically, they are not essential, but they are included in the calculation as the public consider them necessary for the normal upbringing of a child, and it could be argued that their absence is detrimental to a child’s development.

Some 550,000 adult employees in Scotland are paid less than the living wage. That is a lot of people who would benefit if the living wage was adopted. Although our inquiry focused on local government, it revealed that a higher percentage of employees in the private sector earn less than £7.20 per hour—the figure is 28.1 per cent—compared with employees in the public sector, where the figure is 3.9 per cent. We also identified a disparity between men and women, with 22.6 per cent of women earning less than £7.20 per hour compared with 14.6 per cent of men.

The committee heard that those 550,000 Scots largely work in sales and customer service positions or as labourers, cleaners or catering assistants. The Scottish Government has been at the forefront of implementing the living wage, and all Government staff, agency staff and national health service staff already receive it. About 15,000 private sector workers have already benefited from the adoption of the living wage, but that leaves about 18,000 directly employed staff in local government who earn less than £7.20 per hour.

We heard that a number of local authorities are actively considering joining, or have recently made the decision to join, the seven councils that are already paying a living wage. I was pleased to learn that Dundee’s Scottish National Party administration has asked officers to examine its implementation in Dundee City Council.

As part of our inquiry, the committee also took evidence from the private sector, which, as I have said, employs the majority of those who are paid less than the living wage. It is fair to say that the witnesses were largely apprehensive about the living wage and raised concerns over its impact on jobs and over businesses becoming less competitive. The Confederation of British Industry Scotland went considerably further, claiming that the living wage would have a longer-term impact on local labour markets and on the affordability of service provision, and that it would have a disproportionately negative effect on young people. The committee was keen to hear the evidence base for that, but CBI Scotland did not accept the invitation to appear before the committee to answer questions on its written submission.

Photo of John Mason John Mason Scottish National Party

Does the member agree that there was also a lot of scaremongering before the national minimum wage was introduced, which has been shown to be largely false?

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

That is exactly the point that I was going to make. At the time of the introduction of the minimum wage, the CBI stated that

“even a low minimum wage would reduce job opportunities and create major problems for wage structures in a wide range of companies”.

It went on to warn of price rises, business closures and unemployment as workers were “priced out of jobs” when we were suggesting a minimum wage of £3 an hour. However, in 1999, six months after the minimum wage was introduced at £3.60, the CBI admitted to the Low Pay Commission that there was little evidence of an adverse impact on jobs or prices.

Photo of Neil Findlay Neil Findlay Labour

I am sure that the member is old enough to recall the CBI making similar comments when we stopped sending children up chimneys to sweep them.

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

I cannot remember that far back. I defer to the member.

In fact, in the five years following the introduction of the minimum wage, the unemployment level in the UK fell from 6.3 per cent to 4.7 per cent. We all know that correlation is not causation, but the committee received no firm evidence that increasing wages has an adverse impact on jobs. One of the reasons for that is that greater disposable income for workers leads to increased growth, which is something that the committee looked at in considering the impact of the living wage on local economies. People at the lower end of the income scale tend to spend more of their disposable income than those at the higher end. In submissions that were received by the committee, it was generally argued that the benefits of the living wage would feed into local economies and benefit local businesses, as recipients would generally spend the extra income locally.

The committee received some positive comments on the living wage from the business sector. Perhaps tellingly, they came from London, where the living wage has been implemented successfully, with Greater London Authority staff receiving the living wage along with some 3,000 employees from the private sector, including employees at Unilever, JP Morgan and Barclays. People might think that, of course, people who work for Barclays would be paid more than the living wage, as bankers get paid huge amounts of money. However, I am not talking just about the folk at the top of those companies; I am talking about cleaners and catering staff in London receiving a minimum wage that is set at a higher level than in the rest of the UK. That has come about as a direct result of evidence from London that the introduction of the living wage makes business sense. The committee heard evidence from Transport for London that the living wage has had a positive impact on recruitment, retention, absenteeism and staff morale.

After looking at the impacts on businesses and communities, we turned back to the impact on the most important group: the individuals on low wages. Evidence that we gathered showed that a living wage would increase low-paid workers’ disposable income, with a corresponding effect on their standard of living and morale. Questions were raised over the effectiveness of the living wage because of the possible loss of other benefits, including passported benefits such as free school meals. However, we were unable to find any evidence to suggest that the majority of recipients would not experience a positive outcome from receiving the living wage.

In fact, if we look at the correlation with the minimum wage, the same potential is there, but there is always the opportunity for continual assessment of passported benefits and so on to ensure that people benefit from the minimum wage. I think that we could do the same to ensure that people benefit from the living wage.

Another important facet of our inquiry was procurement. The committee heard that guidance on whether local authorities can specify payment of the living wage as a condition of the award of contracts under the European Union procurement directive is insufficiently clear. As a result, no local authorities that implement the living wage have managed to extend it and to impose such conditions in contracts. They have preferred to enter into voluntary arrangements, which are only partially successful.

That is why the committee welcomes the fact that the Cabinet Secretary for Infrastructure and Capital Investment has written to the European Commission seeking clarification of the issue. It would be good to hear from the minister whether there has been any progress on securing a response, although I think that I know what the answer might be.

The report concludes that the living wage is a potential driver of preventative spending, which is at the heart of the Scottish Government’s public service reform. However, the committee accepts that it is not for the Scottish Government to determine wages in the private and voluntary sectors.

As far as local government is concerned, the committee accepts that local authorities are accountable to their electorates and not to the Parliament or the Scottish Government, and it is therefore for individual councils to decide whether to introduce the living wage.

Photo of Mark McDonald Mark McDonald Scottish National Party

A number of councils have established arm’s-length organisations. Those organisations deliver council services but the staff are not directly employed by the council. Did the committee consider during its inquiry how those staff would be affected?

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

We questioned local authorities that have introduced the living wage, the most notable of which is Glasgow, about that issue. We received confirmation from the arm’s-length body that came to speak to us that it is possible for arm’s-length bodies to implement the living wage and that some do so.

The committee accepts that councils face different economic circumstances. However, we received evidence from a number of councils that have introduced a living wage as part of an overall package of efficiencies that it has been possible, working with staff and trade unions, to deliver the living wage while making net savings overall.

It is clear that there is a moral case for the implementation of the living wage to give our lowest-paid workers an improved standard of living. As I said, I think that we can deal with the concerns about the loss of benefits. It is becoming increasingly clear that there is also a business case for the living wage and that private companies in London are already seeing the benefits of implementing it.

The majority of Boris Johnson quotes are used for comic effect but on this occasion the Mayor of London hit the nail on the head when he said:

“Paying the London Living Wage is not only morally right ... but also it makes good business sense. What may appear to a company to be an unaffordable cost is more appropriately viewed as a sound investment decision reducing staff turnover and producing a more motivated and productive workforce.”

What we have seen in London is the public sector leading the private sector, and the committee is hopeful that we will follow suit in Scotland.

I commend the report to the chamber.

Photo of Derek Mackay Derek Mackay Scottish National Party

I am pleased to open the debate on behalf of the Government. The bad news is that I will also close on behalf of the Government.

I am pleased to see that the report of the committee’s inquiry into the living wage broadly supports the approach that the Government has been taking to implementation of the living wage in Scotland. Our approach is encapsulated by the Government’s purpose: to focus Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish through increasing sustainable economic growth.

We believe that levels of poverty and income inequality in Scotland are unacceptable and that a fairer distribution of wealth is key to tackling poverty and inequality. Addressing low pay and in-work poverty is an important part of the campaign to tackle poverty, but our powers are limited in this area, because the national minimum wage and employment issues are reserved to Westminster.

The problems of in-work poverty have persisted over the past decade and, while work is still the best route out of poverty, we have to endeavour with the powers we have to ensure that work genuinely provides people with a route out of poverty.

Photo of Kezia Dugdale Kezia Dugdale Labour

Has the minister just given a commitment to a living wage for all employees in an independent Scotland?

Photo of Derek Mackay Derek Mackay Scottish National Party

I am sure that that could be part of our considerations for an independent Scotland. Access to this country’s full resources would give us many choices about how to invest in it. Our immense natural and other resources mean that, yes, that commitment could be considered by any Parliament in an independent Scotland.

We are striving to ensure that the workforce in Scotland has the abilities and skills to get and retain good-quality, well-paid jobs. We are also doing all that we can with the powers available to us to ensure that Scotland is a place where companies can flourish and are able to choose to pay a living wage to their staff.

It will come as no surprise to anyone in the chamber to hear that I believe that we could better serve the people of Scotland in eradicating poverty and reducing income inequalities if responsibilities in relation to wage rates and the tax and benefit system lay with this Parliament.

Photo of Gavin Brown Gavin Brown Conservative

Further to Kezia Dugdale’s point, the powers for the national minimum wage may rest with Westminster, but it would be in the gift of the Scottish Government to start a living wage fund similar to its council tax freeze fund for local government. It could actually make this happen, if it genuinely wanted it.

Photo of Derek Mackay Derek Mackay Scottish National Party

Such decision making is a matter for local government discretion. We do not have to create funds to achieve a policy objective, and I announced last week that a majority of Scotland’s councils are implementing the living wage. That is about good partnership and discussions, rather than the creation of a ring-fenced fund, in achieving a policy objective. We are moving in the right direction.

There is an argument—based if not on fact, then certainly on perception—that some people who receive a pay rise, including part-time workers, may be adversely affected by the benefits system. We must take that into account in considering the living wage. I am not saying that the living wage should not be paid; I am saying that the benefits system should support people in work, rather than discriminate against them. Such powers should rest with this Parliament. We could have a range of powers and could do so much more if we had absolute control over the economic levers and the benefits system.

We fully support the principle of the living wage, and by implementing it in our own pay policy—by paying our own employees the living wage—we are leading the way and setting an example. We encourage all employers in the public, private and third sectors in Scotland to do likewise, but they must take those decisions.

I welcome the fact that a majority of local authorities are implementing the living wage. I welcome what Joe FitzPatrick has said about Dundee. The administration in Stirling proposed a living wage in its budget, but that budget motion did not succeed.

Councils are autonomous, independent bodies that decide their own terms and conditions of employment and set their own rates of pay. Therefore, the question whether to adopt the living wage is one for them, not the Scottish Government. I have, however, been very proactive on the subject—I accept the view that Parliament and the Government should be proactive on the living wage.

I was pleased that, in its report, the committee recognises the need for individual local authorities to consider their own circumstances when deciding whether to adopt the living wage.

Photo of Gavin Brown Gavin Brown Conservative

The report states that seven local authorities have implemented the living wage. The minister has said that a majority have implemented it, so, for the sake of clarity, will he tell us which ones have done so since 3 February, when the report was published?

Photo of Derek Mackay Derek Mackay Scottish National Party

Six councils have agreed to implement the living wage for the financial year 2012-13: Clackmannanshire, Falkirk, Moray, North Lanarkshire, Perth and Kinross, and Renfrewshire. Two councils have indicated their intention to introduce the living wage: Aberdeen and South Ayrshire. Four councils, in addition to those that I have just mentioned, deliver the living wage, in a de facto sense: East Dunbartonshire; Shetland; Orkney; and the Western Isles. I hope that that satisfies the member.

Those authorities have signed up to the living wage and intend to deliver it. That puts us in a position in which the majority are delivering this policy commitment. To be clear, I want to work to ensure that all 32 councils deliver the living wage.

The Scottish Government will continue to encourage everyone in the public sector, including local authorities, to adopt the living wage. We have led by example.

Procurement is a key issue, which I am sure that members will raise and which is covered in the inquiry report. As part of its inquiry, the committee considered the issues that are associated with making payment of the living wage a criterion in the public procurement process. As was made clear in the evidence to the inquiry, European Union case law suggests that the extent to which public bodies can require contractors to pay their staff the living wage as part of the procurement process is limited. We have made inquiries on the matter to the European Commission, as it was suggested that we do, and we await a response. I can provide no further information on that yet. We require feedback from Europe before we can take the matter forward.

The issue will be considered in relation to the sustainable procurement bill, and it would not be unreasonable for members to continue to pursue the inclusion of the living wage in the bill.

I am conscious of time. I might cover more issues in my closing speech.

It remains the Scottish Government’s view that the living wage should be rolled out. We have led by example and will include it in future work, so that we can achieve the aspiration that members have and will continue to express in relation to the living wage.

Photo of Sarah Boyack Sarah Boyack Labour

I, too, welcome the debate. I read the committee’s report with interest and would like to congratulate the committee, the clerks and all those who gave evidence to it for ensuring that we have a really good report before us that we can pick up and take forward.

These are tough economic times, but that cannot be a justification for people being expected to work for a wage that does not enable them to support their families and has to be subsidised by the state to ensure that their children are not brought up in poverty. How can tough economic times be an excuse for our failure to act? Politics is about priorities and about doing what is right, and surely this is a proposal whose time has come.

In our manifesto last year, Scottish Labour supported the adoption of a living wage by public sector employers, and I give credit to our then leader, Iain Gray, for taking a lead on the issue and making it a key plank of our manifesto. I also pay tribute to the campaigning work that has been carried out by my colleague John Park, who has consulted on the introduction of a living wage bill. I also congratulate those councils that have already implemented the living wage and those that have given notice that they intend to do so.

I start from the premise that the Scottish Government is crucial in this debate. We believe that the Scottish Government has a crucial role to play in taking the lead, setting an example and making it easy for people to address the issue. In the public sector, there is clearly an appetite and an opportunity for change. A lead from the Scottish Government could make a real difference.

Photo of John Wilson John Wilson Scottish National Party

I remind Ms Boyack that, when the Labour Party was in government in the UK, it had control over the national minimum wage but that, despite the campaign to introduce the living wage that was started in 2001, it never took the opportunity to raise the national minimum wage to a living wage, even though that would have covered every worker in Scotland and the UK.

Photo of Sarah Boyack Sarah Boyack Labour

The Labour Government increased the national minimum wage repeatedly to ensure that it kept up. The fact that we are discussing the living wage now is testament to the campaigning that trade unions have done with us to ensure that the matter is firmly on our agenda. We have a chance to act.

As others have pointed out, the issue affects not only the staff in the public sector, whether they are employed by central Government or local government, but employees of companies that seek to carry out contracts for the public sector. I listened carefully to the minister’s comments, and I welcome the fact that the Scottish Government is investigating the issue with the European Commission. However, the Scottish Government must take a lead. In evidence to the committee, the Greater London Authority made clear that, in its view, the EU’s procurement legislation was not automatically an obstacle to action. Work must be done across the whole country, and the Scottish Government is best placed to do that.

Action on procurement would also address the concern that some have expressed that it should not just be public sector staff who benefit from the living wage. I agree, but I believe that the transformative power of the Scottish Government should be brought to bear in that regard. A living wage unit is important. I welcome the minister’s comments if he is saying that the living wage should be included in the proposed sustainable procurement bill; it would be good to have that confirmed on the record.

In that context, it is important that we consider the voluntary sector. There is huge pressure on the viability of many voluntary sector organisations, particularly those that are bidding for contracts for local authority work. However, it would not be right for local authorities to raise their own staff out of poverty pay while expecting those who carry out work for them to pay their staff less than the authorities would pay their own. That is particularly important for young women and children, who are often paid much less than the living wage.

The Save the Children briefing highlights the fact that 43 per cent of those earning less than £7 an hour are women in part-time employment, and two thirds of all low-paid workers are women. Where the living wage has been implemented, there has been a huge benefit for women. The Scottish Borders Council is not unusual in that 85 per cent of employees who benefited from the introduction of the living wage were women.

One of the most powerful arguments for the living wage is the need to tackle poverty pay and to lift people out of poverty. Given all the comments that have been made so far about the relationship with benefits, it is worth looking at the work by the living wage campaign and the Save the Children campaign, which shows that people with children are still better off and that we should not get sidetracked by the issue of benefits. We need to pursue it, but it should not stop us campaigning for the living wage.

The benefits that Joe FitzPatrick mentioned are wider than simply tackling poverty. There are benefits for employers in terms of recruitment, retention, absenteeism and staff morale, all of which were mentioned by the GLA. There is an opportunity for smart employers to negotiate with their staff to bring benefits to both sides.

South Lanarkshire Council makes the point that employees who earn at the living wage level spend money locally, which goes back into local businesses. That is surely a win-win situation for everyone. I commend the council not only on addressing the living wage but on boosting the wages of staff on modest salaries of £21,000 by £250. Around 76 per cent of those staff are women, which shows us that there is a real gender issue.

It is not only about the public sector; we should also encourage the private sector to introduce a living wage. There are companies that have taken the lead and benefited from the living wage. We need to ensure that we get a positive response from the Scottish Government today. I would like to hear more clarity on the support that the Government will give to implementing the living wage. We need clear leadership, a dedicated living wage unit in the Scottish Government and action on procurement to ensure that the living wage is rolled out across the labour market.

Photo of John Scott John Scott Conservative

You should close now, please.

Photo of Sarah Boyack Sarah Boyack Labour

That is why we would support the implementation of the living wage. I hope that the Scottish Government will listen to us today, as we need that political will, a commitment to lead and a commitment to act. I hope that today’s debate will help to secure the determination to ensure that Scottish employees get a living wage.

Photo of Margaret Mitchell Margaret Mitchell Conservative

The committee took evidence from a variety of witnesses, whom I thank for their valuable contribution to the inquiry. I pay tribute to the committee clerks for their work in helping members to produce a balanced report.

The committee agreed that, all things being equal, the living wage is an admirable aspiration that we would all want to achieve. At present, the living wage is paid by the Scottish Government which, in directly attributable costs, spent just over £1.7 million on introducing it. The NHS and—as at the time of the report—seven local authorities in Scotland pay the living wage, and the minister confirmed today that more local authorities have introduced it since then.

In the region that I represent, South Lanarkshire Council spent £3.5 million in 2011-12 on introducing the living wage. From April 2012, a further £2 million was spent on increasing the rate of pay to £7.20. In total, that council will have spent a staggering £5.5 million on introducing the living wage. Ultimately, it is up to each council to decide how to prioritise spending decisions. Some councils have delivered the living wage as part of a broader programme of efficiencies in negotiation with unions, which has resulted in net savings that can then be spent on service provision. That is to be welcomed.

Photo of Kezia Dugdale Kezia Dugdale Labour

I was at the committee when the member argued that that money would be better spent on potholes. Does she regret her comments on the living wage somehow representing gold-plated working conditions for staff?

Photo of Margaret Mitchell Margaret Mitchell Conservative

I regret anything that takes away from service provision. The raison d’être for any local authority is service provision, and that must come first.

The harsh political reality is that, in these challenging economic times, taxpayers’ money is being used to pay public sector workers an hourly rate that most small and medium-sized enterprises and third and voluntary sector organisations have no realistic prospect of affording. That results in an even greater pay premium for public sector employees.

An analysis of the evidence that was presented to the committee revealed that nearly 550,000 people in Scotland earn below the living wage. Some witnesses argued that the introduction of the living wage helps local authorities to retain staff by lowering staff turnover rates, that it reduces sickness absence and that it has helped to alleviate poverty. Others disagreed and stated that there was no evidence that staff retention or improvements in sickness absence were directly attributable to the payment of the living wage rather than to, for example, the current economic circumstances. Furthermore, it was argued that, rather than helping to alleviate in-work poverty for the lowest paid, the introduction of the living wage merely replaced benefits that were previously paid by the UK Treasury.

Business representatives expressed concern about the potential consequences of adopting the living wage. The Federation of Small Businesses said in its submission:

“the uplift from minimum to living wage costs, including employer NIC contributions, represents a 20% increase to the cost of paying any minimum wage employee.”

Furthermore, it said:

“this increase would hit small businesses harder than larger businesses which would be able to offset increases in the wage bill by cross subsidy or savings elsewhere.”

Photo of Margaret Mitchell Margaret Mitchell Conservative

I am sorry, but I have only six minutes, and I have a particular view to put over.

It is more worrying that, in its written submission, CBI Scotland stated that the impact of introducing the living wage

“would fall most heavily on young people, with international evidence showing that they face disproportionate exposure to the negative employment effects of a minimum wage.”

It concluded:

“it is vital that young people are not priced out of jobs.”

With more than 100,000 16 to 24-year-olds currently unemployed in Scotland, that is indeed a worrying consideration.

Concerns were also expressed about the introduction of living wage conditions in public sector procurement contracts. Various questions remain to be answered about the validity of attempting to include such conditions and the consequences of their application, not least within European Union law. Would they apply only to workers who are involved in a particular contract or would they apply to subcontractors as well? Would staff in Scotland alone be affected or would staff UK-wide be affected? We await clarification from the European Commission, which the Cabinet Secretary for Infrastructure and Capital Investment is seeking.

Photo of Margaret Mitchell Margaret Mitchell Conservative

I have already explained that I have only six minutes. I am sorry that I cannot take an intervention; normally, I would do so.

In essence, the Scottish Chambers of Commerce said:

“we have no problem with any local authority, public sector organisation, voluntary organisation or business whose policy is to pay its staff the living wage ... However, a scheme or set of regulations that would force businesses to do that would be counterproductive, especially in today’s economic circumstances.”—[Official Report, Local Government and Regeneration Committee, 18 January 2012; c 511.]

On procurement and the third sector’s role in providing services, the Coalition of Care and Support Providers in Scotland highlighted the inequality and fundamental unfairness of councils paying the living wage to their workers, but setting an amount of money for external contracted services. That means that third and voluntary sector organisations that provide the service cannot afford to pay the living wage to their staff.

In the current economic climate, priority must be given to maximising employment opportunities. If the introduction of the living wage results in a corresponding reduction in local services and job losses, it could, understandably, lead to resentment that public sector workers’ wages are higher than those of many in the private or third sector because taxpayers’ money has been used to make that a priority over service delivery. The decision to pay the living wage as a priority is a political decision for which local authorities will be held accountable at the ballot box.

Photo of John Wilson John Wilson Scottish National Party

I declare an interest. Prior to coming into the Parliament in May 2007, I was the director of the Scottish Low Pay Unit. I also served on the Trades Union Congress national minimum wage enforcement group and was part of the initial Scottish living wage campaign.

I pay tribute to the East London Communities Organisation, which is now part of London Citizens and which, in 2001, started the campaign for the living wage.

I welcome the debate in the name of the Local Government and Regeneration Committee on the living wage in Scotland. In fact, any debate that highlights low pay and its connection with poverty should be of interest to all members and people beyond the Parliament. The consequences of poverty—especially its complexities—still blight many of our communities.

The committee’s report clearly shows the context and scope of the various living wage campaigns, which are somewhat diverse in nature. They have clearly had an impact on the national minimum wage rate, which is set by the Low Pay Commission and is currently £6.08 for workers aged 21 and over. The Scottish living wage is currently calculated at £7.20 per hour.

As I have stated previously in the chamber, 29 organisations in London—including the mayor of London Boris Johnson, the Greater London Assembly and Barclays Bank—have fully embraced the implementation of a living wage. Darren Johnson, a Green Party member in the Greater London Assembly, made a freedom of information request, which was published in March 2009. He found that only four London boroughs out of 32 were incorporating the living wage into their procurement policies. However, with the Olympics approaching, things have moved on and many authorities in London are now adopting the living wage as a formula for calculating contracts.

Although the Scottish Government and other public sector employers, such as many local authorities, have endorsed the living wage, it is not enshrined in statute, unlike the national minimum wage.

The committee spent a considerable period of time in its inquiry on procurement issues. Those are critical to the implementation of the living wage because, if it were to be stipulated in procurement contracts, employers would be contractually obliged to pay their employees at that rate or face action for breach of contract.

That brings us to EU procurement law and, as the committee’s report highlights, possible European restrictions on, and challenges to, stipulating that the living wage be incorporated into all public sector contracts. The relevant law—the public sector, or classic, directive 2004/18/EC—was implemented in Scotland by the Public Contracts (Scotland) Regulations 2006. The key principles behind the directive stipulate that EU member states or “contracting authorities” must award contracts on the basis of commercial, non-discriminatory and objective criteria.

I note that the committee’s report refers to the submission by Mr McGuire—a partner in Thompson Solicitors—that payment of the living wage could be included as a contract performance clause. The report further states that the Scottish Government has written to the European Commission on that, and I await with interest the Commission’s response.

The committee recognised that much more needs to be done, although the living wage is to be welcomed as part of a policy mix for tackling in-work poverty that needs to be flexible but not confused.

Promoting a living wage requires better policy co-ordination. That is highlighted in the recommendation that

“the Committee … calls on the Scottish Government to use its experience, expertise and good relationship with COSLA and with local government generally to seek to encourage the further introduction of the living wage”.

As a society, we have to tackle the problem of poverty—particularly in-work poverty—at source, take every step that is necessary to eradicate that blight on Scotland and urge the UK Government to ameliorate some of its excessive policies when dealing with poverty.

As part of my long-standing contribution to the discussion about having a diverse policy mix, I have stated in the chamber previously that it could be argued that due consideration should be given to the idea of a citizen’s basic income, which would reduce the stigma associated with benefit take-up, for example. Moreover, it could be argued that a living wage may fail to tackle poverty. Under the present system, a living wage and consequent increases in workers’ incomes could lead to a reduction in entitlement to working tax credits, housing benefit and council tax benefit, leaving workers again in a poverty trap.

I welcome today’s debate and its focus on advancing approaches to address poverty, particularly in-work poverty. I look forward not only to a day when all public bodies and authorities adopt the living wage for all employees but to a day when the living wage becomes the standard rate throughout the private sector and when we as a society can eradicate in-work poverty and poverty for all citizens in Scotland. I look forward especially to the debate that will take place in the chamber next Thursday evening on a motion that John Park has lodged, which will allow us to advance further arguments and consider the issues around the private sector’s failure to protect not only the pay of its workforce but its pensions and other benefits.

Photo of John Park John Park Labour

I welcome the committee report and the general level of debate that we have had so far. I am pleased that, under our new arrangements, we will look at the issue and the report and then give the Government an opportunity to respond. With that in mind, I hope that I can make some constructive suggestions about the practical things that I believe we need to do to try to deliver a living wage across Scotland.

I believe that we face two key issues just now, which previous speakers have highlighted. One is procurement, which I will deal with initially. The second is a negotiation framework for collective bargaining in local government to ensure that local government employees are covered by the living wage.

I met Alex Neil last October and spoke to him about my proposed member’s bill on procurement, in preparing which I have had a great deal of help from the non-Executive bills unit. The bill focuses on how we would change legislation and the law in Scotland to ensure that procurement can be used to deliver the living wage. Following that meeting, Alex Neil wrote to the European Commission, as other speakers have indicated. He told me earlier today in response to a question that I asked that he has not yet had a response from the Commission. I have some doubt over whether the clarity of the response that we will get from the Commission will help to move the argument on.

I strongly believe that the key issue in a matter such as this is, as Sarah Boyack said, political will. There have been issues in the Parliament, such as the smoking ban and, at the moment, minimum unit pricing for alcoholic drinks, on which there have been different legal opinions on both sides of the argument. In such cases, we as politicians need to step up to the plate and make decisions that we know will improve the lives of people in Scotland. That is exactly what the living wage is about and it is exactly what we need to do on procurement. I hope that, after I introduce my member’s bill, it will be supported across the chamber when it is debated. Obviously, a sustainable procurement bill will be coming at some point as well. If my proposed bill has to be part of the discussion on that, I am more than happy for it to go forward in that way.

The second area that I want to speak about is how we ensure that the living wage is paid to those who are directly employed in local government just now. I am pleased to hear that a majority of councils are paying the living wage to those who are directly employed by them. I was also pleased to hear in a ministerial answer to a question that I asked last week that a number of councils are considering how they would implement the living wage.

My previous experience includes being a union convener in a shipyard in Rosyth—I am not sure whether I have mentioned that in the chamber before—when a particular situation arose about 20 years ago. In 1992, during the previous recession, there was a move by the Confederation of Shipbuilding and Engineering Unions to reduce the working week from 39 hours to 35 hours. That enabled workforces and unions to enter into sensible discussions about efficiencies and how, by reducing sick levels and becoming more efficient in the workplace, we could move from a 39-hour week to a 37-hour week and perhaps to a 35-hour week. If I am right, that framework has been used in Glasgow with the living wage as a practical way of self-financing such decisions.

I hope that, following the debate, the Scottish Government will think about a collective bargaining framework in local government that will enable and encourage discussions on the living wage, in much the same way as negotiations are held on the concordat, the council tax freeze and everything else that the Scottish Government wants local government to deliver on its behalf. I hope that the debate will lead to the Scottish Government committing to doing that.

The one area of the report that I do not agree with, if we are to move things forward, is the part of it that deals with a living wage unit. Perhaps that is not something that we can establish at the moment, but I think that a living wage unit of some description is essential if we are to deliver the living wage not just in local government but across the private sector through procurement. It is necessary to have in place a structure that enables employers, people who are entitled to a living wage and the Scottish Government to understand what is happening in the workplace. I hope that that is something that we will be able to agree on in the future. It is already in my proposed bill. To make a policy commitment happen, it is necessary to have in place the structure, the resources and the people to ensure that it is delivered.

My final point is about in-work poverty, which John Wilson mentioned. “In-work poverty” is the term that politicians use; outside the Parliament, people talk about trying to make ends meet. It is about the reality of people paying their council tax with their credit card—if they have a credit card, that is—and the issues that they face to do with family budgets. It is a massive problem at the moment. We in the Parliament are in the extremely privileged position of being able to do something about it, and I firmly believe that taking forward the living wage through procurement and directly in local government will make a difference to people’s lives. If we make that happen, it will be something that we can all be proud of.

Photo of Mark McDonald Mark McDonald Scottish National Party

I welcome the committee’s inquiry, its report and today’s debate. The tone of the debate thus far has been broadly consensual, with a notable exception. As I listened to Margaret Mitchell’s speech, I felt as if we had gone into a time warp and that we were back debating the minimum wage all over again. The impacts that she talked about are the very ones that we were warned would follow the introduction of the minimum wage but, lo and behold, the minimum wage was introduced and the sky did not fall in, the lights did not go out and the position of those at the lower end of the pay scale was advanced.

I remember having a part-time job that involved me spending one and a half hours’ worth of pay simply to get the bus to and from my job. Such situations were addressed by the minimum wage, which guaranteed a minimum level of pay for workers. The minimum wage was an idea whose time had come, and that is now the case with the living wage.

I welcome the work that the Scottish Government is doing to show leadership on the issue by implementing a living wage across Scottish Government departments. Obviously, it is not for Government to dictate to local authorities and the private sector how they establish their pay. If we had the ability to set a living wage in the same way that the UK Government has the ability to set a minimum wage, the Parliament could take that approach, but that approach is not open to us at the moment, so we must work with colleagues in the public and private sectors to ensure that a living wage is implemented.

Photo of Mark McDonald Mark McDonald Scottish National Party

Not at the moment.

The inquiry is welcome, because it highlights some of the issues that exist, including the mindset issue and some of the practicalities.

It would be fair to say that a great deal of progress has been made. As the minister highlighted, a majority of councils are actively implementing the living wage or are signed up to delivering it. That includes my council, Aberdeen City Council. As a result of the leadership that was shown by Kevin Stewart, who will sum up in the debate, we moved to a £6.92 wage for the lowest-paid people in the council; the current council leader, Callum McCaig, has indicated that there will be a move to the living wage of £7.20. That is welcome progress for the low paid.

Margaret Mitchell talked about service delivery—I will happily give way if she wants to intervene on this point—forgetting that the services are delivered by the very people whom the living wage is introduced to assist and protect. It is those front-line workers who will benefit as a result of the living wage. I suspect that Margaret Mitchell has forgotten that one of the key costs of service delivery is the wages of the people in the public sector on whom we rely to deliver front-line services.

John Wilson, who has a long track record of campaigning for the lowest paid in society, spoke with great authority on the subject. He was correct when, during an intervention, he highlighted the failure of successive UK Governments from 2001 to take action to implement a living wage, which could have been enshrined in legislation and could have applied across the board. That is something that the Scottish Government does not have the legislative power to do, although it can implement the living wage in its departments and it can encourage others to implement the living wage. The Government’s moves are a clear example of social justice in action, as opposed to inaction on social justice.

Photo of Margaret Mitchell Margaret Mitchell Conservative

Would the member force businesses to pay the living wage? Does he accept that the knock-on effect of an approach that could lead to a 20 per cent increase in costs for some businesses on the margins could be an increase in unemployment? Does he refute the international evidence that payment of the minimum wage, never mind the living wage, has adversely affected employment opportunities for young people?

Photo of Mark McDonald Mark McDonald Scottish National Party

If the living wage is such a bad thing, why is the Conservative mayor of London such a key advocate of it? I do not agree with Boris Johnson on an awful lot, but he is taking the right approach to the living wage. Margaret Mitchell and her colleagues would do well to heed what he said about the matter, as quoted by Joe FitzPatrick. She talks about reductions and so on, but if we put more money into the economy by increasing people’s pay packets, business activity increases, because people are able to afford more goods and services. There is a positive knock-on effect on the economy.

The committee’s convener was right to highlight the scaremongering from CBI Scotland, which did not have a shred of evidence to back up its position—it was simply harking back to the scaremongering that took place during debates about the minimum wage. I welcome the Labour Party’s apparent ability to see through that scaremongering. Would that it could see through the CBI’s scaremongering on other matters, such as the constitution—but we are getting there, and perhaps the Labour Party will join us and complete its journey.

On procurement, I support efforts to address the issue and the work that the minister talked about. At question time, the Cabinet Secretary for Infrastructure and Capital Investment said—if I picked him up correctly—that in discussions with the European Union the UK Government has not been minded to take on board the Scottish Government’s arguments for a living wage and community benefit clauses. That is regrettable and I hope that the UK Government will reflect on the wider benefits of the living wage, not just for local economies but for the national economy.

I welcome the report and look forward to further progress on the living wage.

Photo of Maureen Watt Maureen Watt Scottish National Party

Every day we come across examples of the hardship that these exceptionally difficult times are causing in the budgets of households, and in the public and private sectors. Testament to the strain is the pay freeze that the Scottish Government had to impose on staff salaries above £21,000, which was a tough decision, but one that was necessary in order to avoid job losses. It is perhaps not a universally-held view, but it is a widely-held view, that having a job and a pay freeze is much better than having no job at all.

However, that decision and the straitened times in which we live should not prevent continuing efforts to move towards the adoption of a fair living wage throughout Scotland. Indeed, the current situation makes the policy more essential. Since the start of the downturn, inflation has run well above the Bank of England’s target rate, so households’ purchasing power must be spread even more thinly. It is an inevitable fact—as others have said—that those who are on the lowest wages are most vulnerable to the increased day-to-day costs that inflation brings. With inflation eroding the real value of household incomes, a living wage is the only sensible way of fighting in-work poverty for the lowest-paid people in Scotland. The Scottish Government has been at the forefront of efforts to introduce a living wage, with the policy having been adopted by the Scottish Government and all its agencies as well as the national health service.

The Government cannot realistically dictate the pay policy of local government, although I was surprised to hear Gavin Brown suggest to the minister that he might do that.

Photo of Maureen Watt Maureen Watt Scottish National Party

Wait. That is one of Mr Brown’s arguments; the next day it will be that national Government is interfering too much in local government. He cannot have it both ways. It is up to individual councils to follow the example that is being shown and to adopt the policy for themselves.

Photo of Neil Findlay Neil Findlay Labour

Why is it that the Scottish Government can dictate to local authorities on the council tax, but not on the living wage?

Photo of Maureen Watt Maureen Watt Scottish National Party

The Government is not dictating on the council tax. As Neil Findlay well knows, that is a voluntary agreement.

It is heartening that 17 of Scotland’s 32 local authorities expect to have a living wage in place by April this year. My colleague Mark McDonald mentioned that Aberdeen City Council is one of those authorities, following its recent decision to allocate the necessary funding during the budget process. That is particularly welcome and will benefit a significant number of my constituents. Mark McDonald mentioned Kevin Stewart and Councillor McCaig, but that move is testament to the hard work of all my SNP council colleagues in Aberdeen City Council in the past five years. They inherited a council that was nearly bankrupt, but it is now receiving many plaudits for its significant performance in all areas of local government. If Aberdeen City Council can do it, I am sure that the other councils that still need to come on board can do so.

Although the progress that has been made is welcome, there is still some way to go in the efforts to make the living wage the standard in Scottish society. I am sure that most members who are present sincerely hope, as I do, that the rest of Scotland’s local authorities will follow the example that has been set by the councils that have said that they will adopt the living wage in the near future.

Of course, the real challenge is not just for the living wage to be implemented in the public sector: it is important that the living wage be adopted throughout the economy, including in the private sector. That challenge is even more pronounced in the current job market, as so many people compete for every job. The only way to ensure the roll-out of the living wage across Scotland’s private sector would be through raising the minimum wage. However, as other members have said, the power to do that is reserved to Westminster. Unfortunately, it seems less than likely that the UK Government will take any steps in that direction, particularly when it currently proposes attacks on employment law that would make the situation even worse than it is at present. Interestingly, Germany has the most stringent employment laws and the most negotiation with wage councils, but it still seems to be one of the most prosperous countries in Europe. This is another issue on which, if the Scottish Parliament had the powers to act, we could make Scotland a better place to live.

The proposal to use public sector procurement contracts to specify that companies that provide goods and services to the public sector should operate a living wage policy has the potential to result in progress in the private sector. Other members have asked whether such a move would be compatible with EU law; I look forward to hearing the results from the EU. I welcome the fact that the Scottish Government is working with the European Commission to resolve the uncertainty and I hope that we will get a viable option in the future.

The importance of a living wage policy is growing, as times get tougher for households that are on low incomes. So far, central Government has shown an excellent example in adopting the measure. We should all welcome the fact that many local authorities are following suit. The challenge that we now face is to build on that progress and to give more and more people in Scotland access to a fair living wage.

Photo of Anne McTaggart Anne McTaggart Labour

I begin by declaring an interest as an elected member of Glasgow City Council.

Since joining the Local Government and Regeneration Committee at the beginning of this year, I have had the opportunity to take part in the final stages of the committee’s report on the living wage in Scotland, and I owe recognition to my colleagues, Mark Griffin and Kezia Dugdale, for their efforts and the work that they did in shaping in the report in the committee.

As a member of the first local authority that introduced a living wage in Scotland, I am glad to see a committee report and this subsequent parliamentary debate on the issue. As a long-term supporter of the living wage campaign, I am happy with many of the report’s conclusions and the committee’s broad support for the living wage. I hope that the report and today’s debate will further strengthen the Scottish Government’s support for the move towards greater implementation of the pay rate.

The campaigners for the living wage campaign have long championed the benefits for employees in the private and public sectors as well as the potential boost for the economy and combating poverty. In Glasgow, the local authority now has more than 160 recognised living-wage employers from the public and private sectors. By committing to the living wage, each of those employers has their details included on the dedicated website, Those companies have a combined workforce of more than 50,000 people and, from 1 April this year, those people should earn a minimum of £7.20 per hour.

Some might argue that encouraging the public sector to increase wages, even for the lowest-paid people, is not wise in the current climate, but as the committee report recognises, strong preventative spend benefits are associated with implementation of the living wage. That should be noted, particularly when preventative spending is being encouraged. There are knock-on effects for issues such as fuel poverty. I often hear about the need for greater support for low earners who are suffering from fuel poverty; the living wage can help to tackle that problem.

The link between gender and low pay can also be targeted through the living wage, which in turn can help to tackle child poverty. Figures from the Poverty Alliance Scotland suggest that two thirds of all low-paid workers are women, which increases the number of children who are living in poverty. The living wage has had support from Save the Children as being one tool that can lift families and children out of poverty.

As I said earlier, more than 160 public and private employers in Glasgow are now committed to the living wage for their employees, but none of those employers is in the hospitality industry. The Commonwealth games is coming to the city in 2014 which, it is hoped, will mean a boost for the hospitality economy in the city. We need therefore to ensure that that potential boost is reinvested in the people of Glasgow, especially those who are on low incomes. Also on the hospitality trade, during the games, we must make sure that sessional workers who are employed to accommodate an increase in demand are fairly rewarded. A living wage for what are likely to be young people, for the most part, is essential so that they can build up finances to support themselves when the work is removed.

It is fair to say that, if low-paid workers are paid a bit more, local economies will benefit from the increase in people’s incomes. Spending more in their local communities, and supporting jobs and growth, will clearly bring great benefits and the living wage can help to achieve that.

Although there are success stories across the country for the living wage, there are difficulties with rolling it out further, particularly through procurement processes. In Glasgow, the council asks bidders whether they pay their staff the living wage, but that cannot be a weighted factor at the moment.

Although local authorities such as Glasgow City Council have worked well and hard to increase the number of businesses in their areas that take seriously the responsibility to pay their employees at the living-wage rate, we need more support for greater implementation from the Government. The public sector, along with the trade unions and anti-poverty groups, has been at the forefront of the campaign for a living wage, and the Scottish Government must also become an advocate for changes to legislation, to support the growth of implementation. As the committee report notes, the experience of the London living wage has been that major international companies have signed up, and that needs to happen here, too.

I hope that any future procurement legislation proposals that are brought to the chamber will take note of those issues. It would be the perfect chance to put the living wage at the heart of employment in Scotland. I look forward to the day when everyone in Scotland can engage with a living wage.

Photo of Bill Walker Bill Walker Scottish National Party

As a member of the Local Government and Regeneration Committee, I was pleased to take part in the inquiry into the living wage in December and January. I wholly support the committee report, and I would like to address both the wider economics and the morality of the living-wage argument.

In my youth—which was not yesterday—I flirted with the politics of the command economy. “Wouldn’t it be nice,” I reckoned, “if we could all agree on a system of fair prices for everything, and on equitable distribution of property based on need.” Bigger brains than mine have tried to make such idealism work, and have failed; in my opinion, because practical implementation does not take into account human nature—good and bad. At first hand, I experienced the awfulness of Czechoslovakia after the Dubcek spring of 1968, and the former Soviet Union and East Berlin of the 1970s. The command economy just did not work.

Someone once said that democracy is a lousy system but it is the best invented yet, and the same sort of argument has been used in economics:

“A market economy can be pretty bad but it’s better than anything else so far.”

Supply and demand can drive progress, but there needs to be a manageable system—I emphasise “manageable”—of rules and regulations based on human values. We are not animals in the jungle, driven only by our needs for immediate family survival—for which there is an economic theory—but rather we are, I hope, a civilised society seeking a better world.

Only last week, a previous speaker in the debate, John Wilson, hosted a reception here in the building for the Church of Scotland, and the Right Rev David Arnott, the Moderator of the General Assembly of the Church of Scotland, presented the draft report of its special commission on the purposes of economic activity. It was an enlightening evening for me, the highlight of which was the words from the report that were repeated by Mr Arnott in his press release:

“Economics is not, and can never be, a morally neutral or ethics free zone. Humanity does not exist for the market but the market for humanity. Any morally legitimate vision of economics and economic activity, whether domestic or international, must be a vision of social economics, embedded in a vision of society which respects and values the needs and contributions of all its members”.

Those are wise words, and we should use that kind of thinking when we are considering setting and operating a living wage.

We have a market economy operating within a representative democracy. A decent living wage should be an integral part of the regulated limit at the low end of the income scale, below which no one should fall. This is a matter of human compassion, although we also heard arguments in committee for how it can make good sense economically, especially when it comes to employment stability. That great Fifer—I emphasise “Fifer”—and father of modern economic thinking, Adam Smith, regularly drew attention in his theories to the need to treat people properly.

Our committee was united on the idea that a living wage is a good thing. The question was how to get there affordably, especially for some suppliers to local government, such as smaller businesses and the voluntary sector.

I am in some awe of the researchers at Loughborough University. I will repeat what our convener said—they came up with the level of £7.20 per hour, which is described in one briefing document as

“an estimate of the minimum income that households need in order to afford a minimum acceptable standard of living, as defined by members of the public.”

That must have been some research project.

I certainly do not think that the figure is high, given the levels of income that obtain elsewhere in society, especially in the upper decile of high earners. In a society in which the income gap between the rich and the poor is increasing, I am tempted to say that a very modest amount of income redistribution would easily solve the residual problems in implementing a living wage, but that question is for another day.

I maintain that the living wage is a moral issue, in addition to its being an economic one. I urge Parliament to accept our committee’s report.

Photo of John Pentland John Pentland Labour

When we speak near the end of a debate, we become very aware that most of what we wanted to say has been said. However, hearing comments again in a debate such as this is important.

If we are serious about tackling poverty, we should be equally committed to the living wage, for it is designed and calculated to take people out of poverty. I congratulate all those who have been instrumental in bringing the campaign to the current stage, including the Poverty Alliance Scotland, the Scottish Trades Union Congress, the trade unions and the councils—notably Glasgow City Council. I am pleased that North Lanarkshire Council has now endorsed payment of the living wage to its employees. In the spirit of consensus, I am pleased that even David Cameron has recognised that it is

“an idea whose time has come”.

The living wage is not a new idea. As many members know, we can claim that a Scot had a hand in its evolution more than 200 years ago, when Adam Smith wrote in “The Wealth of Nations” that workers

“should have such a share of the produce of their own labour as to be themselves tolerably well fed, clothed, and lodged.”

Those words are quite close to the modern concept.

For families whose wage earners are paid less than the living wage, it is difficult—if not impossible—to provide basic essentials without working excessively long hours or taking on unsustainable debt. Of course, the justification for the living wage goes beyond basic needs. For example, as Save the Children has pointed out, in-work poverty and low pay, particularly among women, contribute to the high level of child poverty in Scotland.

Those who fear that bringing in the living wage would create unemployment should remember that that argument was also used against the minimum wage, but the relationship between wage levels and income is not so simple. At the bottom end of the wage scale, raising income has many impacts—through factors such as greater work satisfaction, improved quality and productivity, less absenteeism and increased local spending—that can offset the higher wage costs and boost employment.

The old adage that the poor work harder if they are paid less and the rich work harder if they are paid more is clearly a myth that rich people have propagated. We should remember that the warnings of dire consequences and lengthening dole queues proved to be unfounded when the minimum wage was brought in. The opposite was true—employment continued to grow. Many people who understood why that would happen with a minimum wage that was set at the right level were of the opinion that the minimum wage had been set cautiously’ if anything, it was set below the level that would give the economy the optimal benefits.

To those who argue that the living wage distorts the labour market, I say that we need the living wage to protect people from the ravages of a labour market that uses high unemployment to drive wages down to poverty levels.

I hope that, after all the failures of unrestrained markets, we have learned that free markets are not the solution to every problem. The quality of people’s lives should not be at the whim of market forces. Our society recognises that, and the state steps in to support those whom the labour market squeezes and spits out. Is it not better to protect people’s ability to keep themselves out of poverty than to adopt a laissez-faire attitude and have to deal with the consequences? We must take a broader view and consider the wider benefits to the economy and people’s lives. Let’s face it—putting a few extra quid in the pockets of the poorest members of our society is likely to do more for the local economy than boosting the bonuses and offshore bank accounts of the better off.

It is estimated that local businesses will get an extra £1.63 for every £1 that is paid to provide a living wage. Reductions in poverty and inequality also have many longer-term benefits, from better physical and mental health to lower rates of crime and antisocial behaviour.

The living wage is proposed for the public sector, but I hope that it will be taken up more widely. It is indeed an idea whose time has come, as witnessed by cities and countries all over the world that have adopted the idea. It is not the whole answer, however, and the degree of its success will depend on action to address poverty traps in the tax and benefits system.

Like other objectives, such as increased numbers of apprenticeships and the promotion of measures to tackle climate change, payment of the living wage could be incorporated into procurement procedures. As John Park does, I hope that the new Minister for Local Government and Planning and the Scottish Government will support the creation of a Scottish living wage unit, as called for by the Scottish Council for Voluntary Organisations and trade unions, to increase the impetus for wider introduction of the living wage.

Finally, just to make the score one each, I put it on the record that North Lanarkshire Council’s employees would not be receiving the living wage if the SNP’s alternative budget had been successful.

Photo of John Mason John Mason Scottish National Party

It was when I was working in London that I first became aware of the campaign for the living wage. A number of members have mentioned the campaigns in London. At that time, the campaigners were looking for £7.45 as their local living wage, and I believe that they are now aiming for £8.30. They started with the public sector and got both the major mayoral candidates to commit to the living wage. They moved on to put pressure on private companies, which were named and shamed, and I believe that there were demonstrations outside their offices. As has been mentioned, some of those companies were embarrassed because they had portrayed themselves as having corporate social responsibility while their cleaners were not getting a living wage.

We have had some good briefings for today’s debate, particularly from Save the Children, which makes the point that women and children particularly benefit from the living wage. It states:

“As an example, research by the Scottish Government has shown that implementing the living wage would increase the net income for a single parent with one child by 5 per cent, while a married couple with one child would see their income increase by 11 per cent.”

Photo of John Wilson John Wilson Scottish National Party

Before he was elected to the Scottish Parliament, Mr Mason was a member of Glasgow City Council. In his experience, what would have been the impact if Glasgow City Council and other local authorities had introduced equal pay in 1999? What would that have done for the wages of those low-paid women who were denied equal pay? I note that, in some local authorities, such as North Lanarkshire Council, such women are still being denied equal pay.

Photo of John Mason John Mason Scottish National Party

The issue of equal pay was avoided by most local authorities for quite a number of years when it should have been addressed. That stored up a huge number of the problems that Glasgow City Council and other local authorities have had. If we had seriously believed in equal pay, it should have been addressed sooner, so it is disappointing that it took legal action to get it sorted out. I will come back to another point on that in a minute.

Save the Children’s briefing for the debate continues:

“Moreover, the financial benefits of wage increases will tend to be greater under universal credit because this will withdraw benefits at a flatter and usually slower rate. This should have positive implications for child poverty.”

That gives added impetus, despite all the problems with the Welfare Reform Bill.

On local government, I believe strongly in the concordat, which has been a huge advantage for local government and gives local authorities the freedom to make their own decisions. Previously, we had a centralist, top-down approach that was resented by councillors of all political parties. The reality is that councils can and should make their own decisions. I welcome the minister’s commitment to work with local authorities, but I strongly defend local authorities’ rights as well.

Going back to John Wilson’s point, a problem in Glasgow was the arm’s-length external organisations. As a councillor at the time, I strongly opposed that. I and members of other parties opposed those organisations because of the fear that terms and conditions would be undermined and that women in one arm’s-length organisation would be more poorly paid than people doing an equivalent job in another organisation. Although there are good things happening in Glasgow, I remain to be reassured that that has not been a problem.

The statutory minimum wage has been mentioned several times. The problem with the living wage is that it would still be only for the public sector and, potentially, for those with contracts surrounding the public sector. That would leave the private sector to continue largely unaffected.

Photo of Sarah Boyack Sarah Boyack Labour

Surely, one of the lessons from London is that when the living wage is implemented, it begins to influence the labour market and to drive up opportunities for staff in other companies. Private companies must be competitive, so it would have a ripple effect. The key thing is to get the critical mass that we are all campaigning for.

Photo of John Mason John Mason Scottish National Party

The living wage could have a ripple effect, but there are still examples of areas in London where that is not happening and it is a long way away from happening. I welcome the fact that the Labour Party introduced a statutory minimum wage. That was not happening, so it needed statute; I argue that we need statute for the living wage.

Labour has asked whether we would have a higher minimum wage in Scotland if we were independent. That question applies to all the parties—all the parties must say what their policy on a statutory minimum wage would be if Scotland were independent. I assume that, occasionally, the Labour Party might get elected after independence and that, therefore, its view on a minimum wage would be important.

I am running out of time, but I will touch on the nonsense that Margaret Mitchell talked. Her argument that we should push wages down until we have all the people working—filling potholes—that we possibly can is basically an argument for slavery. By that argument, employers should pay only enough food for their workers to live on and no wage whatever. She also used the word “subsidy”, which is ridiculous. One of the arguments for the living wage is that, currently, we are having to subsidise private companies with tax credits. I welcome tax credits—which were also introduced by the Labour Party—but tax credits for a profitable company are a subsidy and that should not be acceptable.

Photo of Alison Johnstone Alison Johnstone Green

I welcome the debate and the committee’s inquiry into the living wage. Arguments for a living wage have been well expressed by many colleagues, and I agree with almost every colleague who has spoken. I was pleased to hear John Wilson raise the issue of the citizen’s income and Sarah Boyack’s comments on the benefits of the living wage for local areas. I congratulate all those who have campaigned for the living wage and the councils who have implemented it.

In the climate justice debate this morning, we talked about gender inequality; in this debate, the issue is still key. As the inquiry heard, 76 per cent of the employees who were affected by the introduction of the living wage in East Renfrewshire were women. In the Scottish Government and its agencies, women represented 71 per cent of the people whose wages were improved.

A vital group to consider in this debate is children. UNICEF’s “Report Card 7” found that the United Kingdom was at the bottom of the league table for child wellbeing, beneath 20 other Organisation for Economic Co-operation and Development countries—including some that are substantially poorer than the UK. UNICEF identified two key things that are important to a child’s wellbeing: quality time and relationships with family and friends, and a range of engaging activities. However, UNICEF’s central and priority 1 recommendation to improve the quality time that parents are able to give to their children was the living wage. The living wage is that important. UNICEF recommended that Governments work with organisations such as the CBI to encourage them to adopt the living wage. Like others, I was disappointed that CBI Scotland did not attend the inquiry’s oral evidence sessions to speak to its written submission.

We have debated the need to tackle in-work poverty, which is a massively important task. However, we must also aim to combat inequality and to acknowledge how wage differentials between the lowest paid and the highest paid in society matter too. In the previous session of Parliament, my colleague Patrick Harvie brought to the chamber a debate on the living wage. I will quote a point that he made, because it is clear and it remains relevant:

“We must not be distracted from dealing with the underlying structural causes of poverty in the way that we run our economy. We must go beyond that and recognise not only that poverty matters but that inequality matters. It is about not only the level of wealth that people have, but their relative wealth. It is about how well we share wealth in society, not just how much economic growth we achieve as a whole.”—[Official Report, 29 April 2010; c 25815.]

It is as unjust to pay somebody a pittance for valuable work as it is to pay millions to a company chief executive officer. Reams of reports track poverty in Scotland and abroad, but we spend far less effort reporting on the rich and the super-rich. A maximum wage, or a limit on differentials within an organisation, may seem like a sledgehammer solution, but there are ways in which to celebrate good practice. The London Green Party is currently running a campaign for a fair pay kitemark for companies that pay the London living wage and have no employees earning more than 10 times that rate.

In many councils, work continues. Unison figures show that 1,800 council workers are paid less than £7.20 an hour, here in Edinburgh. However, as Sarah Boyack said, councils that implement the living wage will see benefits, because people on low incomes spend most of what they earn in the local economy, supporting local businesses and services. I agree with the Scottish living wage campaign that a clause should be included in public sector contracts to ensure that the benefits of the living wage are extended to voluntary sector and private sector workers who deliver services that are paid for from the public purse. I welcome the minister’s assurance that his Government will continue to pursue that issue.

We must not forget the people who work in the retail and hospitality sectors, which traditionally are in the private sector. Embedding a living wage across the public sector shows that Government, at national and local level, regards the issue as a priority.

The debate has been fairly consensual so far, but I may be about to break that consensus a little. The minister suggested that councils are autonomous, independent bodies, which are responsible for their own decisions. However, as Neil Findlay suggested, they are less autonomous than they used to be when it comes to setting the council tax. Local authorities have been hamstrung by a council tax freeze. I look forward to discussing the issue when we get into the debate for the independence referendum. I would like us to consider greater devolution—

Photo of Colin Keir Colin Keir Scottish National Party

You have just mentioned Edinburgh, and somebody said earlier that local authorities differed in their abilities to get to where we want to be with a living wage. You have criticised City of Edinburgh Council—and I should mention that we are both members of the council. The Green group in the council did not present a budget, so perhaps the member could explain to the people who are in the chamber now how the Green group in Edinburgh would propose to pay for the living wage, given the difficulties that Edinburgh faces.

Photo of Elaine Smith Elaine Smith Labour

I remind members that they must speak through the chair when they make interventions.

The Deputy Presiding Officer:

Ms Johnstone, you have 30 seconds left.

Photo of Alison Johnstone Alison Johnstone Green

The Green group does not take part in the council’s budget-setting process, because—as we have documented many times—it is a complete and utter waste of time. If every party in here set a budget, most of the work would go nowhere.

I look forward to discussing the need for meaningful tax-raising powers—at both local authority and local community level—when we get into the independence debate.

Photo of Richard Lyle Richard Lyle Scottish National Party

Since its introduction in 2011-12, the living wage has assisted about 6,000 staff. Moreover, people who earn less than £21,000 have received an annual minimum increase of £250, which benefits 76,000 public sector workers. Those are all positive steps, but low pay remains an issue and I agree that this SNP Government is doing what it can, within its powers, to address it.

The issue is made more prominent by the fact that we are approaching the end of Unison week. Unison Scotland has long campaigned for a living wage that will provide a level of pay that allows workers to provide adequately for themselves and their families.

I am still a North Lanarkshire councillor—perhaps Gavin Brown will have another pop at me for that later—and in my experience most local authority workers remain poorly paid. I agree with Unison that local authorities, when placing their contracts, should encourage contractors to pay a living wage.

I do not agree with Margaret Mitchell’s earlier comments—I am glad that she has returned to the chamber—about council workers. They are of great benefit to councils, and I would like them to be paid a decent wage.

The UK living wage outside London for 2011 should be £7.20 an hour.

Photo of Neil Findlay Neil Findlay Labour

I am glad that the member thinks that North Lanarkshire Council employees make a great contribution. Will he, therefore, criticise his colleague Alex Neil, who slated North Lanarkshire Council workers only a few weeks ago?

Photo of Richard Lyle Richard Lyle Scottish National Party

Alex Neil did not slate any worker from North Lanarkshire Council. He slated officials and councillors. If I have time later, I will address comments that were made by my colleague John Pentland.

I refer Margaret Mitchell to a report by the Association for Public Service Excellence—I might send her a copy later—which has proved that, for every pound spent by a council, £1.60 is generated into the local economy.

The national minimum wage is set by the UK Government, which is Tory at present, and it stands at £6.08 an hour for a person over the age of 21. That is £1.12 below the given living wage. For those aged 18 to 20, the national minimum wage stands at £4.98 an hour. Competition to get into universities has increased and many people who can go into work after leaving school want to become independent from their parents, but they are not able to do so. Moreover, £6.08 an hour for a person over the age of 21 is not sufficient for those who want to start a life with a family.

The majority of councils are now paying their staff the living wage. Six further councils have confirmed that they will pay it from April, and another two have said that they intend to introduce it.

The Government supports the principle of the living wage and the public sector pay policy for staff for 2012-13 requires employers covered by it to pay their employees a Scottish living wage of £7.20 an hour. The public sector pay policy covers employees from central Government, Government agencies and the national health service, but not the wider public sector. Although many local authorities are implementing the living wage, others are not, which means that local authority workers are not safeguarded by that incentive. I believe that they should be.

The SNP is dedicated to the welfare and wellbeing of its citizens and is working with the European Commission on the issue, because it is estimated that about 550,000 employees on adult rates in Scotland are paid below the living wage.

In the private sector, pay is a matter for individual companies, and including conditions for procurement processes could amount to a restriction of the freedom to provide services that is guaranteed by article 56 of the treaty on the functioning of the European Union. The Commission is currently reviewing the issue so that it can examine procurement rules.

The Scottish Government recognises that local authorities are not safeguarded by a living wage and the public sector pay policy, but it encourages all employers to implement it so that we can help to ensure that everyone can afford to meet their basic needs. We should recognise the need to safeguard those who are employed by contractors and those who are not directly employed, so that they too can receive a living wage. We are striving to resolve a large poverty gap, so the living wage should be implemented where possible to secure good living standards for the Scottish population.

UK regulations on minimum wages leave people with not enough money to support a family. That is closely related to poverty, which in turn is a social problem, disadvantaging those who cannot afford to improve their circumstances. That still occurs, even though the Scottish Government has produced data that allow us to see that the minimum wage, as it stands, simply does not provide a basic living for a worker and their family.

Over the years, Mr Pentland and I have continually battled over budgets in North Lanarkshire Council. In the seconds that I have left, I remind him that his party’s budget last year made more than 600 workers redundant, while our budget made only six workers redundant.

The Deputy Presiding Officer:

We move to closing speeches. I remind members who have participated in the debate that they should be in the chamber for the closing speeches.

Photo of Gavin Brown Gavin Brown Conservative

The report that the committee produced was excellent, and this has been a good debate. I echo the comments of Joe FitzPatrick, the convener of the committee, and of John Park that it is good that the debate is taking place within weeks of the publication of the report, instead of after there has been a full response, which would cause a delay.

The report, fairly and rightly, acknowledges the work that has been done by the Scottish Government, along with campaign groups and others, to advance the living wage in Scotland. However, I part company with the Government and some SNP members who have suggested today that the Scottish Government’s powers are so limited that it can do no more than it is currently doing. In the private sector, that is absolutely correct. The national minimum wage is set by the UK Government, and there is little that the Scottish Government can do in that regard. However, in the public sector that simply is not correct. To clear up what Maureen Watt was saying, I was not advocating that the Government should do that—that is certainly not Conservative Party policy—but I was making the point that it could, if there was the political will to do so.

Photo of John Wilson John Wilson Scottish National Party

Is Mr Brown arguing that the Scottish Government should take the powers to force the living wage on local authorities, which would leave it open to criticism from the private sector—particularly CBI Scotland—that public sector wages are way above those in the private sector? Is he seriously arguing for that? If he is, I welcome it.

Photo of Gavin Brown Gavin Brown Conservative

About 10 seconds before John Wilson intervened, I said fairly clearly that I am not arguing that the Government should do that. I am arguing that, if the political will was there—if the Scottish Government had the passion of John Wilson on this issue—perhaps it could do that.

Photo of Gavin Brown Gavin Brown Conservative

In a moment.

The point that I alluded to, and which Neil Findlay made, is that the Government has a ring-fenced fund for those councils that decide to have a council tax freeze, from which it gives those councils additional funds. If the Government wanted to—if the issue was the political priority that it says it is—it could create a similar fund and therefore subsidise the councils to pay a living wage.

Photo of Derek Mackay Derek Mackay Scottish National Party

Does the member accept that with regard to that which is in our control in terms of our legal competence, our finance and the areas about which there is clarity, we have acted to deliver a pay policy that, in a de facto sense, delivers the living wage?

Photo of Gavin Brown Gavin Brown Conservative

In terms of pure legalities, yes. I think that I acknowledged that at the start of my speech. However, in terms of political abilities, the Government cannot force councils to accept a council tax freeze but, politically, it has managed to do so, and it has not taken the same approach in relation to the living wage, in terms of funding. As I said, I am not arguing that the Scottish Government should do that; I am arguing that it could.

Photo of Joe FitzPatrick Joe FitzPatrick Scottish National Party

Mr Brown spoke about the need for funding. If he reads the committee’s report, he will see that a number of councils have introduced a living wage as part of a package, negotiated with trade unions and staff, that has delivered a saving.

Photo of Gavin Brown Gavin Brown Conservative

In some cases that is true—I know from reading the report that Scottish Borders Council made that point. However, it has certainly not been true for every organisation.

The debate has been framed in terms of absolutes. Some members have argued that there are no flaws at all in the policy—indeed, John Wilson stated that it would eradicate poverty. They say that anyone who raises any concern or caution about the policy is somehow arguing for slavery—John Mason curiously made that argument regarding Margaret Mitchell—and that CBI Scotland believes that the sky would fall in if the living wage was introduced.

To be clear, there are positives to the policy. I do not doubt that there are some economic benefits if the money is spent locally, or that it would have an impact on morale. However, by the same token, if a council spent £3.5 million not on the living wage but on, for example, employing more teachers, there would be an economic benefit from that, and that money could also be spent locally.

Photo of Gavin Brown Gavin Brown Conservative

I will not take any more interventions. I have taken four in six minutes, which is fairly generous—there is only a minute to go.

There would be an economic benefit from using that money to employ more teachers: it would create jobs and improve front-line services. There would be positives from putting the policy in place, but there are also opportunity costs in putting the money in one direction as opposed to another. That is the point that Margaret Mitchell was making, and which the CBI has argued: in effect, by putting money into the living wage, employers are not putting money into other jobs.

That was accepted by Maureen Watt in relation to a pay freeze. A pay freeze is critical to protect jobs, but when it comes to the living wage, protecting jobs or creating more jobs seems a lot less critical to the Government. That is the argument that we advanced this afternoon, and I am happy to close there.

Photo of Kezia Dugdale Kezia Dugdale Labour

I am pleased to participate in today’s debate. As Joe FitzPatrick mentioned, I was a member of the committee for all but one of the evidence sessions, when I moved on to pastures new. In some ways, participating in today’s debate brings a degree of closure. As a long-standing supporter of and activist for the living wage, it is a very welcome—

The Deputy Presiding Officer:

Ms Dugdale, could you move your microphone round slightly? Thank you.

Photo of Kezia Dugdale Kezia Dugdale Labour

Sorry, Presiding Officer.

I commend the work of the convener and his assiduous deputy, all members of the committee, the clerks and those who gave evidence in producing what I believe is a good report that states broad support for the living wage.

I will talk about three Ps: poverty pay, procurement and political will. I will say a little bit about each in turn but, before I do so, I will make some remarks about Margaret Mitchell. I disagree with a number of elements in her speech on ideological grounds. I do not have the time to go into those, but I also disagree with her on an element of fact.

Margaret Mitchell quoted CBI Scotland’s written evidence to the committee that the impact of the living wage

“would fall most heavily on young people, with international evidence showing that they face disproportionate exposure to the negative employment effects of a minimum wage.”

That evidence was supplemented by footnote 2, which referenced a Low Pay Commission report that says something completely different. That report says:

“The evidence suggested that minimum wages were more likely to have a negative effect on the youth labour market where there were no separate rates for younger workers.”

Ms Mitchell and others will realise that there are differential rates for the national minimum wage in our country, so the point does not apply. That is a fact. The Low Pay Commission goes on to state:

“Further, the impact could be positive if youth rates were set at an appropriate level, and any adverse effect could disappear or become less negative if there were strong labour market interventions by governments to support” young people into work.

I am afraid that I find CBI Scotland’s written evidence disingenuous. I appreciate that some members of the committee raised that point at an earlier stage, so I am a little sorry to see CBI Scotland’s evidence referenced at paragraph 131 of the committee report, because it is, to a degree, misleading.

Photo of Gavin Brown Gavin Brown Conservative

By the same token, at page 4 of the committee report, the Low Pay Commission report from 2011 is quoted as stating that

“it did find some evidence to suggest that young people may have been adversely affected by the minimum wage, especially in a recession”.

That is directly from the committee report.

Photo of Kezia Dugdale Kezia Dugdale Labour

The member’s Government is having a far greater impact than that on the incomes of young people at the moment.

I return to the three Ps. In her speech, my colleague Sarah Boyack talked about poverty pay, the experience of people in these tough economic times, the squeeze on family budgets, the pressures of rising costs, and the increasing number of people who are finding themselves living in poverty, despite the fact that they work. For someone who believes that work is the best way out of poverty, that is extremely worrying. John Pentland made those points best in a particularly powerful speech.

In his speech, the minister talked about the fact that half of the 32 local authorities in Scotland now pay the living wage. I am sorry to disappoint him, but, sadly, the Scottish National Party-led council in Edinburgh is not one of those local authorities, so it was a little bit cheeky of Colin Keir to have a go at Alison Johnstone in that regard. I assure members that, when Edinburgh Labour wins in May, the position will be rectified, as we have a clear commitment to the living wage in our manifesto.

My colleague John Park spoke at length about procurement. I know that he is well-versed in that issue and that he will talk about it more in the chamber in the future. I recently visited the Commonwealth games organisation in Glasgow to see how it was getting along with creating jobs for young people through procurement processes. It is worth remembering that the Commonwealth games are a living wage games. I think that that will address many of the issues around hospitality, which my colleague Anne McTaggart dealt with. I also welcome John Wilson’s remarks in that regard.

I will speak briefly about political will and the living wage unit, which the committee report addresses in great detail. When he gave evidence to the committee, John Swinney talked about the number of Government departments that consider pay issues. He talked about procurement, the employability directorate, the pay policy directorate, the finance directorate and all the people in the Government who deal with the third sector and pay issues on a day-to-day basis. He thought that, because so many parts of the Government were involved, it would be bad to compartmentalise the solution in one Government department. I am afraid that that completely misses the point. That is exactly why we need a living wage unit. So many different parts of the Government are talking about the living wage without there being the necessary co-ordination to go forward with it.

Photo of Kezia Dugdale Kezia Dugdale Labour

I am sorry, but I am in my final minute.

We would like to see more political will from the SNP. We agree with the rhetoric: there is more to be done.

My final plea to the minister is to recognise that his work will not be done even when 32 of the 32 local authorities deliver the living wage, because this is also about uprating and a year-on-year commitment to ensure that the value of the living wage is always with us. I hope that he will comment on that in his closing speech.

Photo of Derek Mackay Derek Mackay Scottish National Party

I will begin with the final point that was made, on trying to get 32 of the 32 local authorities to deliver the living wage. I make no apology for trying to get 100 per cent compliance with the policy, and I will certainly continue to do that, although I will try to deliver it in a partnership process, of course. John Pentland is quite right to recognise that his administration back at the ranch is moving towards the living wage. I know that that was a matter of negotiation with the local trade unions. It would have been wrong of the Government to step in and ride a coach and horses right through negotiations with a local authority. That is why a nationally imposed approach is not relevant to the living wage. A partnership approach in which local democracy is recognised is far more important.

I want to be generous. North Lanarkshire Council agreed to introduce the living wage only after my ministerial visit, of course, but who is more responsible for that agreement—Jim McCabe or me? In fairness, the answer is Jim McCabe, as the leader of the council, although perhaps not all SNP members appreciate that. That agreement was, of course, set against the backdrop of a very good financial deal for local government, which made the policy possible in North Lanarkshire and in many other parts of Scotland. I am happy that, as a parting gift, Renfrewshire Council, which I was a member of, has also implemented the living wage.

I do not think that party politics is the reason why some parties are choosing to implement the living wage and others are not, as some people have suggested. Even the Conservatives in South Ayrshire are implementing it. That just goes to show that, while the forces of conservatism are alive in the chamber, there are more moderate forces out there on the ground.

The debate has been constructive and helpful. I agree with Gavin Brown that this new process or journey is particularly welcome, because it allows the Government the time and the opportunity to reflect on what is said and to take the issue forward in future debates, such as the one that we will have next week.

There is a clear relationship between the living wage and the minimum wage. More people in the private sector will benefit from the living wage through procurement than would benefit if it were simply implemented in the public sector, even where that is the aspiration.

Many members contributed positively to the debate. I thank Bill Walker for the philosophical journey that we enjoyed; John Park for his consistency and challenging approach; Kezia Dugdale and Sarah Boyack for their suggestions—I am not sure that Kezia Dugdale’s approach to the debate brings closure to the subject, as I suspect that we have only just begun—and John Wilson for his work on low pay.

I also thank Mark McDonald, Maureen Watt and John Mason for their valid and pertinent points on the need to recognise local democracy. That point is frequently made to me by the Convention of Scottish Local Authorities in discussions on achieving partnership principles.

I welcome Margaret Mitchell’s speech. It reflects the forces of conservatism, but it is important that that voice is heard so that, having debated it, we can at least pretend that those views do not exist.

However, I must say that we got a wee bit lost on some of the benefits of the living wage and increasing pay. Let us reflect on some of them again.

Some of the evidence that we have discovered demonstrates that higher wages increase productivity because an increase in the cost of losing the job creates an incentive to work harder, and positive psychological benefits may arise if a greater proportion of an individual’s income is earned rather than coming from benefits. The evidence also indicates that the living wage helps to reduce staff turnover and increases incentives for firms to train low-paid workers. If the living wage lifts people out of poverty, there are also health benefits. That is surely good for the private sector as well as for the individuals themselves.

I disagree with some of what Sarah Boyack said. She challenged us to lead by example. I say to her that the SNP Government has led by example in its public pay policy. I ask her to reflect on the fact that the Government has frozen ministerial pay and that, although there is a pay freeze to protect employment numbers, it has ensured that those who earn less than £21,000 received an annual minimum increase of £250.

Photo of Sarah Boyack Sarah Boyack Labour

Will the minister clarify whether the companies that work for the Scottish Executive—for example, the cleaning contractors—provide a living wage for their staff?

Photo of Derek Mackay Derek Mackay Scottish National Party

I understand that there are some outstanding categories in which there are still legal issues to be resolved, but the Government’s clear pay policy is that its staff will achieve the living wage.

The living wage under an SNP Government is £7.20 but the minimum wage under the Labour Party was £5.63. That shows that we have progressed the issue.

Photo of Derek Mackay Derek Mackay Scottish National Party

No, I need to make more progress to cover some of the questions that were raised about the proposed sustainable procurement bill.

There will be an opportunity to consider social benefit clauses and the living wage in that bill. We cannot prejudge it, because there must be a consultation, but there is a clear aspiration pretty much across the parties to consider the living wage in the bill. That opportunity must be set within the context of having the legal comfort of clarity on EU procurement laws and directives. We cannot take the immense risk to us and all other parts of the public sector of legal challenge if we do not get the bill right.

Photo of Gavin Brown Gavin Brown Conservative

I accept that Alex Neil is awaiting a response from the EU, but has the Scottish Government taken legal advice on the issue?

Photo of Derek Mackay Derek Mackay Scottish National Party

The legal advice includes the position that, unless we have clarity about what Europe is saying—including the court ruling that was mentioned in the report—we cannot progress the policy properly because there will be a risk of legal challenge. We must have the position clarified before we progress the policy. We will have time to consider that through the bill process.

Photo of John Wilson John Wilson Scottish National Party

Will the minister give an assurance that he will look at the 2006 procurement regulations to see whether the Scottish Government can amend them to ensure that procurement policies are in line with the promotion of the living wage?

The Deputy Presiding Officer:

I would be grateful if you could come to a conclusion, minister.

Photo of Derek Mackay Derek Mackay Scottish National Party

I am conscious that I am past my time, Presiding Officer.

I am happy to raise John Wilson’s point with the cabinet secretary, who will lead on the sustainable procurement bill.

The final point that I want to make is that the bill will influence the £9 billion-worth of public sector spend in Scotland. Surely we can use the bill to ensure that we maximise our contribution to the environment, with sustainable economic development, socially responsible policies, ethical policies and further innovation to meet many of the aspirations that have been expressed in today’s debate.

The Deputy Presiding Officer:

I call Kevin Stewart to wind up the debate on behalf of the committee. Mr Stewart, you have until five o’clock.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

First, I thank the committee clerks, those who gave evidence to the committee and the committee members, including the convener and former members Kezia Dugdale and Mark Griffin, whom I know gave a lot to the inquiry. I am glad that most of today’s debate has been consensual.

Something that has not been talked about at all today is evidence that the committee took at the beginning of the inquiry that blew away the myth that implementing the living wage would have a detrimental effect on equal pay and single status. The blowing away of that myth and the fact that people were talking about the living wage led to a situation in which more councils felt confident about implementing the living wage. I think that that is why we have seen other councils around the country moving forward on the living wage, and I hope that more will follow.

I will not touch on many of the issues that the convener addressed in his speech, but I will follow up on some issues around procurement. The convener said, as have many others, that the cabinet secretary, Alex Neil, has written to the European Commission on procurement. I will not bore members by going into any depth on the on-going case of R?ffert v Niedersachsen. I think that it may be a while before we get a reply from the European Commission on procurement. However, it would be wise to wait for that reply; I am sure that no member would want to breach European law.

Sarah Boyack said in her speech that there should be a living wage unit in the Government. I refer members to paragraph 135 of the report, which states:

The Committee notes the Cabinet Secretary for Finance, Employment and Sustainable Growth’s view that there is no need for the establishment of a living wage unit within the Scottish Government. The Committee took the view that the co-ordination and mainstreaming of work on the living wage across different strands of government was more important than there being a dedicated unit.”

I do not want to get my colleagues John Pentland and Anne McTaggart into trouble, but that view was agreed unanimously by the committee on the basis of the evidence that we heard. I was interested to note that John Pentland seems to have changed his mind today about that.

Margaret Mitchell was part of the unanimous agreement to the report, but she, too, seems to have changed tack today. I will not consider in any depth the comments that she made, but I disagreed with a lot of what she said.

Kezia Dugdale rightly pointed out the issue around CBI Scotland’s written evidence, which in one instance quoted only half the evidence to which it referred. In addition, the committee was most disappointed to hear the suggestion that CBI Scotland’s written evidence to the inquiry was drafted in London, and it was equally disappointed that CBI Scotland said that nobody was available to come to give oral evidence. That tells me that the folk from CBI Scotland were not going to be able to defend the written evidence that was submitted on their behalf. It is really disappointing when an organisation submits written evidence but is—I think—afraid to come to the committee to defend it. I hope that that does not happen again.

I pay tribute to John Wilson, who, over the years, has made a big contribution to the debate, as director of the Scottish Low Pay Unit and in various other capacities. He rightly pointed out that major companies in London back the living wage, including Barclays Bank. Let us be honest—in some regards, banks do not have a good record of late but, in this case, they have a very good record. That shows that there is in London a coalition of views that to pay the living wage is a good thing.

We know that John Park, too, has a very good record in the matter. I hope that we will be able to move forward on procurement, but we need some positive words from the EU. I would suggest that Mr Park read the case of Rüffert v Niedersachsen, but I am sure that he has better things to do with his time.

Photo of John Park John Park Labour

I might read it if I am struggling to sleep tonight.

There are things that previous Governments have done, including the smoking ban, on which there have been differing legal opinions. The same is true of the present Government’s desire to bring in minimum unit pricing. Does the member agree that on such matters, it is a question of political will, and that action on the living wage as regards procurement is a matter of political will?

Photo of Kevin Stewart Kevin Stewart Scottish National Party

I agree that, in some regards, it is easy to do things if the political will exists, but in this case the evidence that the committee got was so complex that we would be wise to wait and see what the European Commission says in its response to Alex Neil.

Maureen Watt talked about the purchasing power of households being spread more thinly. That is a good reason why the living wage should be implemented, where possible. She also gave the example of Germany and its wage councils; I think that we could learn a number of lessons from other places.

Anne McTaggart mentioned the hospitality industry. I hope that people in that industry were listening to her speech.

I have to say to Bill Wilson that I dinna remember Dubcek in 1968, because that was the year in which I was born. Mr Wilson contributed greatly to the debate.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

I beg your pardon—I meant Mr Walker. [Interruption.]

The Deputy Presiding Officer:

I ask members to calm down, please.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

John Pentland is right that fairer wages can lead to better physical and mental health—there is evidence on that—but I again point out that his position on a living wage unit represents a change of heart, as it is different from the position that he agreed to sign up to as a member of the committee.

John Mason mentioned his time in London—[Interruption.]

The Deputy Presiding Officer:

I ask members to be quiet as they enter the chamber.

Photo of Kevin Stewart Kevin Stewart Scottish National Party

I am amazed that people in London are trying to raise the living wage to £8.30. I also agree with Mr Mason that tax credits are sometimes a subsidy for private companies that could afford to pay their staff more.

I have missed out a number of members, and I apologise for doing so. All the speeches have been quite positive, apart from the Tory ones—but there is no surprise there. Gavin Brown talked about wasted money, on which he refused to take an intervention from my colleague Mark McDonald. Does Gavin Brown believe that the money that was spent on implementing equal pay and modernisation was wasted money? If he does, then I do not know—the Tories here get more right wing by the day.

Comment has been made on evidence to the committee that, when the living wage has been implemented, there has been greater productivity, less absenteeism and lower staff turnover. Those are three very good reasons why we should do everything possible to implement the living wage. I hope that more local authorities will take that on board and that we will make progress on procurement.

It is not often that I agree with Boris Johnson, but he is right—the living wage is morally right. It is just a pity that some of his colleagues in this place do not think the same way.