Businesses could save up to £5,000 by paying their employees more
London’s Labour-run Brent Council has become the first in the country to give discounted business rates to companies that pay employees the living wage.
Companies in the borough could save as much as £5,000 if they pay all workers £9.15 per hour, the living wage rate for London, instead of simply adhering to the national minimum wage of £6.50 per hour for adults.
Brent Council will only have to fund 30% of these costs itself as government policy means that central government will pay half, and the Greater London Authority will pay the remaining 20%.
Around 200 employers are expected to sign up to the scheme.
“Paying the living wage is not only good for business, as it incentivises staff and helps to recruit and retain the best people”
Rachel Reeves, shadow work and pensions secretary, praised the initiative as “a brilliant idea to tackle low pay which is good for everyone – workers, employers and taxpayers”.
It is estimated that around 30% of Brent residents currently earn less that the living wage, and could get pay rises of up to £2.50 an hour under the deal.
Councillor Roxanne Mashari, lead member for employment and skills at Brent Council, which is itself a living wage employer, said: “Paying the living wage is not only good for business, as it incentivises staff and helps to recruit and retain the best people, but it is also good for the individual and for society.”
Labour is encouraging councils around the country to adopt the scheme, with Labour-run Greenwich Council looking to be the next to do so.
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Rhys Moore, director of the Living Wage Foundation, told The Independent: “Brent Council is really pioneering with this idea. If the policy is implemented, it will be the first local authority in the country to financially incentivise businesses to become a living wage employer. I hope Brent can set the standard and other authorities will follow their excellent example in implementing policy initiatives to show their commitment to the living wage.”
If the party wins power in May, Labour’s so-called Make Work Pay contracts would also give firms who agree to pay the living wage a 12-month tax rebate of £1,000, or £445 for every worker who gets a pay rise.