National living wage could save public purse billions

As the number of employers signed up to the Living Wage campaign reaches 160, a new report says that the government could save £2.2bn if the initiative was implemented nationwide

The study, Beyond the Bottom Line, by the Resolution Foundation and the Institute for Public Policy Research (IPPR), states that if all employers paid the living wage of £7.45 an hour outside London and £8.55 in London, billions could be saved through paying less benefit and receiving more tax.

The latest employers to sign up to the Living Wage campaign are the Ethical Property Company and Barking and Dagenham Council.

Around five million people in the UK currently receive less than the living wage; three million of those are women.

The thinktanks are encouraging government to promote the scheme by setting up ‘living wage cities’ whereby money from the £2.2bn savings would be recycled to areas that take a lead on tackling low pay.

Local authorities in these areas would receive funding to pass on to local businesses adopting the living wage.

A report by the Greater London Authority found that more than 80% of employers adopting the living wage in London believed it had enhanced the quality of work of their staff, while absenteeism had fallen by approximately 25%.