England & Wales Economy and regeneration, Education and children's services, Welfare and equalities

Viewpoint: Local authorities getting Living Wage accreditation encourages local employers to do the same


A recent guide to the London Living wage highlights the link between local authorities with Living Wage accreditation and a greater number of local employers paying the London Living Wage, Alice Woudhuysen explains. 

“I think there is a very clear business case for paying the London Living Wage: not just in terms of lower staff turnover and higher productivity, but across the whole of the borough, because if all our businesses are paying the Living Wage that puts more money into our local economy and supports the rest of the business community. So working together and paying the Living Wage is good for all of us in Croydon.”
(Councillor Mark Watson, Cabinet Member for Economy and Jobs, London Borough of Croydon)

According to analysis in a new guide from Child Poverty Action Group (CPAG)and the Living Wage Foundation, those London local authorities with Living Wage accreditation also have significantly more local employers paying the London Living Wage than non-accredited authorities. The charities say that local authority leadership may have a ‘ripple effect’ in encouraging other organisations to become Living Wage employers.

For example, among the 10 London local authorities with the highest number of local Living Wage employers, only one local authority (Westminster) is not accredited. Meanwhile, among accredited local authorities, Islington, Camden, Southwark, Greenwich and the City of London have the highest number of Living Wage employers.

Unlike the National Living Wage, the real Living Wage covers all workers over the age of 18 and includes a separate rate to reflect the higher living costs in London. Current Living Wage rates are £8.45 across the UK and £9.75 in London.

UK employment may be at a record high, but shockingly, there are still four million children living in poverty in the UK today and more than two-thirds of these children are in working families. In London, the problem is particularly acute: 37 per cent of all children in the capital live in poverty and one in five jobs is paid below the London Living Wage. Sadly then, work isn’t always a guaranteed route out of poverty.

With lower wages and higher consumer prices forecast, the introduction of universal credit and the four-year freeze on working-age benefits, you could say that families need all the help they can get. This is where local authorities can come in. One of the ways they can significantly improve the lives of people who live and work in the local area is by paying their employees the ‘real’ Living Wage, which is a voluntary wage that is based on what people need to earn to meet the cost of living.

So, how does it work? When local authorities become accredited Living Wage employers, they sign a licence agreement with the Living Wage Foundation to confirm they pay the Living Wage rate to all directly employed staff and, over time, regular on-site third-party contractors. This is important, as it’s not only directly employed staff who benefit from the Living Wage, but employees in the supply chain too – such as those working in cleaning, care, security and food and beverage services – who are more often than not low paid.

Of course, the Living Wage is not the only solution to child poverty. The causes of poverty are complex and in order to improve lives, there should be a package of solutions across policy areas, including help with the cost of children through children’s benefits such as child benefit. The Living Wage is, however, an important part of that package.

“Paying the Living Wage is not only the right thing to do; it also makes sense for all parties involved. It’s good for employees and their families, and for employers who gain a more financially secure and productive workforce. Local authorities have a key role to play in promoting the Living Wage by becoming accredited themselves, and by going even further by incentivising local employers to do the same, through business rate relief. The Living Wage Incentive Scheme that we have set up in Greenwich, with cross-party support, has already led to a pay-rise for hundreds of workers. I would urge councillors of all parties and none to work together to replicate this success in other local authorities across the country.”
(Councillor Matt Hartley, Leader of the Conservative Group, Royal Borough of Greenwich)

An explanation of the process and benefits of accreditation, best practice advice for encouraging take-up of the Living Wage among local employers, including top tips and case studies, can all be found in the new CPAG and Living Wage Foundation guide, Moving to The London Living Wage: A Guide for Local Authorities in London.

Alice Woudhuysen is London Campaign Manager at the Child Poverty Action Group.