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London Needs Its Own Minimum Wage

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The introduction of national minimum wage is without doubt one of Labour's most momentous achievements. Contrary to what many predicted, its introduction did not lead to a rise in unemployment, nor did it reduce competitiveness.

However, when it comes to London, the national minimum wage, arguably one of the most effective tools in reducing working poverty in modern times, is not fulfilling its potential. It is time that we readdress the aims and achievements of minimum wage policy.

London is a city of exceptions and superlatives, especially when it comes to the economy. Low pay London remains a reality for 600,000 of its inhabitants. The majority of individuals and families living in poverty are in work. The national minimum wage is too low to make an impact on the lives of working Londoners, and as a recent Unison report highlighted, the value of the national minimum wage has been eroded as living costs have risen. Those on low pay living in London may receive more than their peers in the rest of the country, but their wages must stretch much further.

It is this continuous stretching of wages that sees an increasing number of constituents coming to my advice surgeries who are, for want of a better term, unable to make ends meet. This innocuous sounding phrase masks a myriad of challenges that families face. Cleaners, carers, caterers - individuals working either full or part time continue to struggle to meet basic living standards. The people who come to see me have left it too late and have fallen into debt to landlords or mortgage lenders. A London minimum wage may not be a panacea for all poverty in the capital, but it will provide a number of families with increased financial stability, and it will do so without jeopardising London's job market.

Monday's report, authored by Kitty Usher and published by Centre for London and Trust for London makes for compelling reading. Compelling, not just in its timeliness, but on the basis of making the case for what could and should be done. The case for the living wage is predicated on the escalated cost of living in the capital - what the working family should be able to afford.

A London minimum wage starts from the premise of what the economy can afford, without compromising job numbers. The report concludes that the London economy could support an adult minimum wage today of around £6.75 per hour, 7% higher than the national minimum wage rate of £6.31 per hour. This could rise over time to a differential of 20%, at a rate which would reflect the response of London's low pay sectors.

The logic behind a London minimum wage is clear. London's economy is exceptional and it can support an exceptional minimum wage. This is the same logic behind London weightings. It is the same logic behind America adopting regional minimum wages as well as a federal one. As backing for the report from leading economists demonstrates, it is an approach that factors in the needs of businesses as much as it does employees. It is time that we act on the logic behind a London minimum wage and build on the success of the national minimum wage.

Coming at a time where rhetoric surrounding London's economy is pitched between 'hard-working families', a squeezed middle, struggling small businesses and financial sector 'fatcats', a London minimum wage is a policy that can navigate between the extremes of charity and competitiveness. This is an achievement in itself, that cannot, and should not, be ignored.

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