Benefit savings from the living wage

MQT on 2013-05-22
Session date: 
May 22, 2013
Question By: 
Jenny Jones
City Hall Greens
Asked Of: 
The Mayor


Do you agree that the benefits bill would be lower in London if everybody was paid at least the London Living Wage?


Answer for Benefit savings from the living wage

Answer for Benefit savings from the living wage

Answered By: 
The Mayor

Boris Johnson (Mayor of London): Yes, Jenny, thanks very much. The answer to your question, which is a good one, is obviously yes because if the 10% of full-time workers and 44% of part-time workers in London who earn less than the London Living Wage were paid that wage, then there clearly would be a reduction in the in-work benefits that they receive. That is why I think you are on the right track and that is why this body has so supported London citizens over the years in their campaign for a London Living Wage and we want to see more. We have 121 firms already in London that have adopted it. That is obviously nothing like enough. Kit [Malthouse, AM, Deputy Mayor for Business and Enterprise] is leading on that now for us in City Hall and we want to increase as fast as we possibly can. Not just the corporations that are paying the Living Wage but obviously to get parts of the public sector that are currently not picking it up to do so as well. Some London boroughs do. Most London boroughs at the moment do not and we want to see faster progress, not just of course in the boroughs but across Whitehall as well.

Jenny Jones (AM): It is to your credit that you have kept up this concept of the London Living Wage because it has always been true that the national minimum wage

Boris Johnson (Mayor of London): Accelerated.

Jenny Jones (AM): -- has never been enough for people to live on in London. Now what is happening is that the London Living Wage and the national minimum wage, there is a gap opening up between them. It means that in effect taxpayers are subsidising big businesses who will not pay the London Living Wage. Would you agree on that?

Boris Johnson (Mayor of London): I do agree with that, effectively, Jenny. I do agree with that and I think the answer is to expand the London Living Wage. Clearly at the moment there is and there has been for the last ten to 20 years a widening gap in incomes in London. The cost of wages has stagnated over the last four or five years if not depreciated in real terms. People face huge pressure on their incomes. Energy costs continue to rise. The London Living Wage actually represents a very sensible way forward, economically speaking. It is not that expensive for companies to implement. I do think it represents a great campaign. Kit [Malthouse] may want to ask a question about this or somehow make his views known, but one of the things that we are now looking at is whether you could expand the London Living Wage faster by creating particular zones where it is agreed amongst all the companies there that they will pay it. That might be one way of getting a bit of a tiger in the tank.

Jenny Jones (AM): You have a target at the moment of 250 companies by 2015 or something. The problem is that will still leave 1,000 big companies in London not paying it. It seems to me that that is actually not fair on the taxpayer. So do you think there is something you could do, apart from these zones, just to put pressure on through all your government contacts?

Boris Johnson (Mayor of London): Yes. The challenge is London's citizens who started all this and who I think have the right idea have always fought shy of having a compulsory approach.

Jenny Jones (AM): That is not in your remit, you could not do that.

Boris Johnson (Mayor of London): We could not do that anyway. So we do not want to go down that route, even if we could. I would accept your criticism. I do think that the target of 250 is possibly capable of being improved and we could do better than that.

Jenny Jones (AM): Will you?

Boris Johnson (Mayor of London): I would like to see a lot more political awareness of the benefits of this policy. It does not really hurt corporations that much in their bottom line. It does engender a great deal of loyalty in staff. It helps reduce staff turnover. It increases productivity. I think companies in London should go for it and I would exhort them to do so.

Jenny Jones (AM): Will you in fact then put up your target? Could you do something a little more proactive and make a more ambitious target to draw in some more of these companies that we are paying

Boris Johnson (Mayor of London): Our target is obviously 100%. That is what I want to achieve.

Jenny Jones (AM): I will have a word with Kit [Malthouse].

Boris Johnson (Mayor of London): To be fair to this administration, I think people looking back at the growth curve of firms paying the London Living Wage has gone up faster under this mayoralty than previously. That shows the seriousness with which we take it. If you are saying that we could do better and we could go faster, then, yes, I would agree with you, Jenny.

Jenny Jones (AM): Thank you.