It’s time to end poverty pay

Ed Miliband will today announce a policy that will significantly improve the lives of millions of working people. 5.2 million people are trapped in low paid jobs – often insecure and part-time work too – and have seen the value of the minimum wage fall as prices remain stubbornly high. By promising to increase the minimum wage faster than the average median income, Miliband is taking poverty pay head on. Tackling low pay, sharing the proceeds of growth with those who work hard and – eventually – ending poverty pay.

The last week has been tough. The next week may be tougher – but this kind of announcement is why I’m Labour. It’s the kind of plan that Labour supporters can be proud of, and can take enthusiastically onto the doorstep.

Of course, if you propose a radical policy that will make millions of people better off, the defenders of the status quo and the vested interests who employ people on poverty wages are going to kick back. Predictably this morning the CBI have been wheeled out to criticise Miliband’s proposals and the right are practising their “anti-business” attacks before the planned rise even has a number to its name. Yet CBI Chief John Cridland was saying as recently as December that “there are still far too many people stuck in Minimum Wage jobs”. I agree with Cridland. So does Miliband. Yet the CBI’s acton on poverty pay has thus far amounted to fine words and contrary action.

I also agree with Antony Jenkins, the Barclays Chief Executive, who told the Buckle review that “paying the Living Wage makes good business sense. It improves staff recruitment, retention and productivity and consequently helps us provide the best possible service to our customers and clients. Furthermore, as a progressive response to tackling poverty in the UK, the wider benefits for society are clear. For instance, parents on a Living Wage have more time to spend with their children and more money to invest in their future, while employees earning the Living Wage are more likely to spend, save and have greater faith in the economy”.

Labour is so “anti-business”, it has the support of Barclays. Work that one out.

The Tories too will doubtless attack Miliband’s plans to put millions on a stronger financial footing. Ken Clarke, Iain Duncan Smith and William Hague all attacked the minimun wage when it was first introduced. The backwoodsmen of the Tory Party would get rid of the minimum wage tomorrow if they thought they could. And yet it’s only a matter of months ago that George Osborne talked of raising the minimum wage to £7 an hour – only to embarrassingly fail to do so. At the time, Charlie Mullins of Pimlico Plumbers – a man who is seldom ashamed to be a Tory mouthpiece – said:

“What kind of idiot would put the national minimum wage up by 69p an hour? A very smart one I’d say, and one who has an eye on the future of the United Kingdom’s economy. In fact, maybe if we really grasped the nettle and put it up by even more the results might be truly spectacular.”

Again, I agree with George Osborne and Charlie Mullins. The minimum wage should be far higher – it’s a disgrace that it isn’t. So I await their full throated support for Miliband’s proposals today.

Of course, it would be churlish to argue that what’s proposed is without flaws – but not because paying people better is bad for the economy or would cost jobs as the defenders of poverty pay on the right will claim, but because it doesn’t quite go far enough. My preference would still be for Miliband to say unequivocally that Labour would end poverty wages by setting the minimum wage at the same level as the living wage – but those close to the leader argue if they did so they’d be slammed for setting an arbitrary figure. They need to be seen to consult, and so progress will perhaps be slower – but also more sustainable and durable. Whilst I’d prefer to have a powerful headline figure, that must come over time – Labour people will accept that.

This is a hugely positive move from Miliband. Alongside his pledge on rents from earlier this month, Miliband is seeking to tackle both wages and prices. It’s entirely consistent with the somewhat lofty and wonkish rhetoric that has marked his leadership. People laughed at “predistribution” – even Miliband laughs at it – but put simply, it meant acting to put more pounds in your pocket, rather than the government handing you a cheque. Before it was adopted by nearly everyone else, the “squeezed middle” was mocked, but cutting the cost of rents, improving wages for the lowest paid and getting people into more secure homes and jobs is the right way to end that squeeze.

But it’s also the right thing to do for those of us who are lucky enough to have avoided the low pay trap. I don’t want to live in an “I’m alright Jack” Britain where millions fall into poverty despite being in work. I want to live in a Britain that is proud to have ended poverty pay. That builds homes for our families that we can all be proud of. Britain – to coin a phrase – is better than this.