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BCC supports 'living wage'

Published 27th September, 2010 by Neil Nixon

BCC supports 'living wage'

Labour leadership candidate Ed Miliband has promised that, if elected, he will offer substantial tax cuts for any company which commits to guaranteeing a ‘living wage’ of at least £7.60 an hour for their workers. The pledge is designed to build upon Labour’s reputation for tackling low pay, after it introduced the legally binding minimum wage in 1999 which now stands at £5.83 an hour.

The announcement came as research carried out by the Institute for Fiscal Studies revealed that companies paying below the ‘living wage’ cost the taxpayer approximately £6 billion a year. They claim that the government is effectively subsidising companies that offer employees low-pay by paying tax credits and benefits to workers, while the Treasury receives less in revenue from income taxes.

Miliband claimed that the government’s bill of funding low-paid workers could be reduced by up to £4.1 billion a year if every business adopted the ‘living wage’. Under his measures, any firms that refused to offer their workers at least £7.60 would not be eligible for lower levels of corporation tax.

Speaking to the British Cleaning Council, Miliband said: "It's right that government should encourage businesses to pay their employees a living wage. By offering a tax break to those firms who pay a living wage, rather than simply the National Minimum Wage, we can encourage more businesses to choose to pay this higher rate."
Mark Woodhead, chairman of the British Cleaning Council, added: “We support fair pay for workers, and the living wage campaign is a very effective tool for conveying the rewards of remunerating employees fairly. While companies should be encouraged to behave responsibly, these tax incentives will provide even more support to enable them to improve the pay of those who carry out this vital job every day."

Andrew Large, chief executive of the Cleaning and Support Services Association, added: “The CSSA supports all cleaning contractors who pay their workers the living wage.”

Evidence from companies such as Barclays Bank in Canary Wharf, who pay cleaners the ‘living wage’, have shown it helps reduce staff turnover and boost worker productivity, thereby reducing the costs.

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