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Living-wage-2007 - epetition reply

3 October 2007

We received a petition asking:

"We the undersigned petition the Prime Minister to take steps to replace the national minimum wage with a living wage based on the level of pay and conditions that enables a full-time worker to make ends meet for themselves and their family. Official regional living wage figures should be announced such as the one given by Mayor Livingstone for London (currently £7.05 an hour)."

Details of petition:

"In the USA since 1994, over 120 city and state governments have passed living wage ordinances following pressure from local campaigners. Living wage campaigns have raised levels of pay and provided benefits like health care for thousands of workers. Studies there have shown that the living wage has had no significant adverse impact on jobs, business or the economy. In the UK 4¼ million adults aged 22 to retirement were paid less than £6.50 per hour in 2006. Two thirds of these were women. London Citizens launched the UK's first Living Wage Campaign in 2001 to put an end to poverty pay in the capital. Targeting big employers, they have brought the Living Wage to many low-paid workers in the health service and in the finance sectors. This needs to be rolled out across the country and across all major workplaces. The government should step up enforcement of the legal minimum wage, prosecuting more firms who fail to comply, and increasing penalties for offenders."

Read the Government's response

The Government has no plans to set different minimum wage rates for different regions. There are often greater variations in pay within regions than between regions, and this would be complex to monitor and enforce. Single national rates are less bureaucratic and more easily understood for all concerned.

The minimum wage is not about setting the average wage instead it is setting a minimum threshold to help our most vulnerable workers.

The minimum wage should also be seen in conjunction with other complementary policy tools. From October 2007, the minimum wage (adult rate) will provide, with Working Tax Credits and other benefits, a guaranteed income of at least £276 per week for families with one child and one full time worker. This equates to an hourly rate of £7.38.

Attempting to use the minimum wage alone to increase in-work income would require setting it at a level that would damage the employment of low-skilled workers. And while wages do not respond to family circumstances such as number of children, tax credits do.

You also call for the Government to step up enforcement of the minimum wage, prosecuting more firms who fail to comply and increasing penalties for offenders. The Government have successfully prosecuted where minimum wage legislation has not been complied with and are investigating further cases right now.

The Government have always made every effort to restore arrears to workers who have been underpaid. Last year alone, the Government helped to restore over £3 million in arrears to over 25,000 workers.

However the best protection we can offer workers and compliant businesses is to strive to ensure that arrears don't arise in the first place. In January 2007 we announced we would be issuing a penalty of a minimum of £224.70 in virtually all cases of non compliance with an enforcement notice.

That was about maximising the potential of the existing legislation - we now want to do more to build an NMW penalty regime which is able to effectively deal with non-compliance in the future. We have consulted on a new penalty regime and awarding fairer arrears to this end. The Government propose that the new penalty will apply to any employer found to be underpaying the NMW.

These efforts, coupled with the announcement Gordon Brown made earlier this year that we are increasing the enforcement budget by 50%, underline our commitment to seeing the fairest outcome for workers who have been underpaid.

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