Labour will offer people a new deal: work hard for a fair day’s pay

If you work hard, you get a fair day’s pay. Not an unreasonable thing to believe in is it? That’s the deal people expect from a job in Britain. But for millions of people that deal has been broken.

In 2010, there were 3.4 million workers paid less than the Living Wage. By 2014 , that had risen to 4.9 million people.

That staggering figure should shame this government into action. But David Cameron and George Osborne’s aren’t shamed by low pay. They spend more time thinking about the privileged few rather than thinking about the lives of millions of working people.

In September Ed Miliband laid out six goals for the next Labour government. Goal number one: halve the number of people in low paid jobs by 2025.

Why? Because one in five people who work doesn’t earn enough to live on in Britain. And low pay comes at a huge cost – to workers, to taxpayers and to the economy.

Working in a job that pays low wages is forcing millions of people to make impossible choices such as between buying food and heating their home or between paying the rent and paying the gas or electricity bill. Surely in the 21st century it can’t be acceptable that people who do the right thing and work hard are facing such choices, with many relying on food banks to survive.

David Cameron’s low-wage economy comes at a huge cost to taxpayers as well, driving up in-work benefit bill. The government has spent £1.4 billion more than planned over the parliament on Housing Benefit for people in work because of low pay.

That the Tories have broken their promise to balance the books by 2015 is fundamentally linked to their failure to deal with low pay and tackle the cost-of-living crisis. Low pay has weakened the public finances because of lower tax receipts. Startlingly, income tax receipts are set to fall short by over £60 billion in this parliament. So David Cameron’s low-wage economy is acting as a huge drag on the government’s ability to cut the deficit and build a strong economy.

Labour will take a different approach. Our plan to halve the number of people in low -paid jobs by 2025 will be achieved by building an economy that works for working people.

That means more people paid a Living Wage. We’ll give incentives to businesses across the country to pay the Living Wage to their workers. Firms which sign up to Make Work Pay contracts will get a 12-month tax rebate of up to £1,000 per worker, and a pay rise for every low-paid worker who gets a pay rise.

It also means raising the minimum wage. After years of the minimum wage falling behind the rising cost of living we will put it up to at least £8 an hour by 2020. An increase of £1.50 an hour compared to an increase of just 70p since 2010, and an annual pay rise of £3,000 for someone working full time on the minimum wage. We will also clamp down on employers who don’t pay their workers a minimum wage.

Labour councils such as Brent in North London are showing what can be done to pay more workers a Living Wage. They are set to become the first council in the country to  offer business rate discounts for companies who pay a Living Wage. More than 25 Labour councils are now accredited Living Wage employers, with many more paying the Living Wage. But brilliant councils like Brent, York, and Birmingham doing great things despite big cuts are being let down by David Cameron’s refusal to tackle the national scandal of low pay.

Our plan to tackle low pay benefits everyone. Workers get a pay rise. Businesses will be more productive and will benefit from a more motivated staff. And it’s a good deal for taxpayers because of the lower social security spending and higher tax revenues enable us to deliver a stronger economy and balance the books.

So Labour government led by Ed Miliband will offer people a new deal: Work hard for a fair day’s pay.

Rachel Reeves MP is Shadow Secretary of State for Work and Pensions