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Birmingham City Council – a beacon (yes, you read that correctly)

Birmingham City Council – a beacon (yes, you read that correctly)

🕔05.Mar 2019

They’re a tricky business, industrial relations, and I normally steer well clear.  However, when the PM had the nerve, or desperation, at last week’s parliamentary Question Time to attack my own city council for failing to ‘get a grip’ over bin strikes – yes, that PM, who can’t ‘get a grip’ on her own Cabinet members, her MPs, her party, or even her own Brexit policy from one day to the next – well, that was way out of line, writes Chris Game

This from someone for whom ‘workers’ rights’ are but a useful campaign slogan and subsequent irritation – good in speeches and to be paid lip service, but then forgotten until they can be wheeled out as a bribe to get Labour MPs’ backing for her latest Brexit wheeze.

But no, I’m absolutely not weighing in to the ‘who paid what for what to whom in the 2017 bin strike?’ business. Nor whether Birmingham City Council is ‘hard left’ (May) or ‘not left-wing enough’ (Unite, and possibly Selly Oak MP Steve McCabe).

My concern is another of last week’s stories, covered as extensively as anywhere by Big Issue – the shameful news that:

The “new research” was funded by the Living Wage Foundation and undertaken by the Smith Institute – the left-of-centre think tank, founded to commemorate the former Labour Leader, John Smith, and absolutely not to be confused with the neo-liberal Adam Smith Institute.

And, to clarify terminology at an early stage, and risking this blog taking on the early appearance of an undergraduate seminar, I’m going to chance an early diagram setting out just what the ‘Real Living Wage’ (initialised from now on) is and isn’t.

In summary, the National Living Wage (NLW) is statutory, calculated by the Government, and based on a target to reach 60% of median earnings by 2020 – which means it will still be under £9 an hour.

But forget the math – there’s no test, and it’s what the NLW is NOT that’s important, for it could have come straight out of George Orwell’s 1984 Ministry of Truth.  In addition to its not being – as is the RLW – independently calculated, it doesn’t even purport to be a Living Wage in the sense of bearing any direct relationship to what people actually need to get by.

The LW Foundation reckon that, now in its 18th year, the RLW is voluntarily paid by some 4,700 UK businesses “who believe their staff deserve a fair day’s pay for a hard day’s work”. We’ll come back to who some of them are and aren’t later.

Last September, this same LWF/Smith team produced what for us in the West Mids, among others, was another fascinating study: The Local Living Wage Dividend: An analysis of the impact of the Living Wage on ten city regions by Paul Hunter.

It was an ambitious attempt to move the RLW debate on from assessing its obviously beneficial impact on recipients and their families to the spatial level, testing particularly its potential to boost city regional economies – like those that now have Combined Authorities and their own directly elected mayors.

Specifically, could increasing the wages of low-income workers genuinely boost productivity, or would the additional costs simply be passed on to others locally, with no significant net economic benefit?

The methodology and assumptions were quite complex, but the initial findings seemed to show impressive economic and productivity benefits.

If a quarter of currently low paid workers in each region were moved up to the RLW, representing an average annual pay rise of over £1,700, the combination of additional annual economic growth (£560m.; £51m in the West Mids) and increased tax receipts and benefit savings for the Treasury (£350 mill.) would amount to over £900 million.

Furthermore, if just half the Treasury’s share were returned to the city regions in some kind of devolution deal, the annual local economic benefit – with the multiplier effects of increased local spending plus additional investment from government driving further economic activity – would increase to £1.1 billion.

And the moral of the exercise: value and invest in employees, rather than treating them as a cost to be minimised, and there are wins for both the individuals and the local/regional economy – a potential £95 million dividend in the West Midlands.

The LWF/Smith exercise was consciously focused on Combined Authorities and their elected mayors, and readers may recall how candidates were quizzed on their positions on the RLW during the 2016/17 mayoral election campaign.

Labour’s Andy Burnham in Greater Manchester went so far as to pledge to “launch a drive to make Greater Manchester a living wage region”.  The other eventual winning Andy didn’t.

Back in October 2016, West Midlands Conservative candidate Andy Street had been asked the question, and, in contrast to his Labour, Lib Dem, and Green Party rivals, declined to back the RLW.  He would have liked to back it, he explained, but it was obviously a very complicated matter, and he wanted “to look at the situation next year” – by when, who knows, everyone might be on RLW rates anyway.

Next year (2017) came and Street was visibly embarrassed at a West Midlands Citizens’ Mayoral Assembly – though whether he actually opposed the RLW or hadn’t yet got around to looking at it I must admit I don’t precisely recall.  Nor do I recall a Mayoral response to last autumn’s LWF/Smith report, despite its being quite explicitly aimed at the Combined Authority elected mayors, and I apologise, of course, if I missed it.

Which brings us back to last week’s report.  Of the roughly six million UK jobs currently paying below the RLW, more than 20% are in the public sector.  To use the LWF’s metaphor, that’s “more than a million public sector workers struggling to keep their heads above water”, regularly skipping meals through lack of money, falling behind on household bills, etc.


The details are summarised in the LWF’s table in its Lilliputian-scale script of choice – rather than an eye-assaulting violet, Brobdingnagian-scale font appropriate for a national total of two in every 11 employed adults being paid a wage that the state itself acknowledges, through Tax Credits and other support measures, simply doesn’t meet basic living costs.

If anything, though, that sub-RLW six million disguises the worst bits of the picture, including the two with which I am personally most familiar: universities, where the sub-RLW proportion is nearer 1 in 4, and local government, where, with direct employment having fallen by approaching a million since 2010, it’s now nearer 1 in 3.

Headline-making though they ought be in their own right, it is not these stats that most concern LWF.  For again, as with the spatial focus of last September’s report, this one emphasises the broader economic and social benefits of bringing a higher proportion of workers on to the RLW, as well as the moral, personal and familial.

35p in every £1 would go back to the Treasury in increased tax receipts, to which can be added, as in the previous calculation, the benefit savings.

The trouble, of course, with all the plus points of the RLW is that none of them are instant for the employer: the wage increase has to come before even the increased staff motivation, let alone the improved retention rate, the multiplier effects, the possible Treasury devolution deal, etc.

All the more credit, then, to those organisations, the minority in most of their fields, that have gone ahead, done what they know to be right, and launched an RLW policy, notwithstanding its immediate net costs.  And one of the biggest and most creditable of those, Mrs. May, is the council whose employee relations you were cheaply slagging off at Question Time the other day: Birmingham City Council.

BCC’s policy is now in its seventh year, having been introduced in 2012 for all directly employed staff – now, of course, barely half the number there were then – and subsequently extended to those working within its supply chain.

Even back then, though, it felt like an important act of principle and sectoral leadership by the Council.  And, successor Councils having maintained it over the ensuing years of relentlessly slashed Government grant funding, it seems to me they deserve every credit – and undoubtedly better than being cheaply insulted by a desperate PM who almost certainly has no idea of what she was attempting to talk about.

The big disappointment must be the very limited extent to which Birmingham’s lead has been followed, even by other Labour councils.  Even today, there are only about 180 RWL employers in the whole West Midlands region, some inevitably pretty small.

With due acknowledgement to Coleshill Town Council, the only other principal council on the regional list is Newcastle-under-Lyme BC, though they’re joined by both West Midlands Police and the Police and Crime Commissioner.  Similarly, there’s just the one university, Wolverhampton, and in the whole of Birmingham’s higher and further education sector, just Fircroft College.

And what about the PM’s own local Windsor & Maidenhead Borough Council, I wondered not terribly curiously.  Surprise, surprise!  Across the entire SE region there are just six RWL councils, constituting by my reckoning a Labour clean sweep – Brighton & Hove, Crawley, Milton Keynes, Oxford City, Reading – punctuated only by the at least currently Conservative Winchester City.  Congratulations to them all.

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