It is time for Ed Miliband to spend a week working in Weston’s Laundry. My father regularly consigned members of the royal family to once renown north London sweatshop to understand what working life was all about. It might not do the Labour leader any harm either.
In most respects Edward is coming along well; making inspiring speeches, matching David in the opinion polls and showing the mettle of a future leader. But he has got carried away recently on the subject of the living wage.
I am sorry to cast aspersions on the idea of the living wage which is a commendable attempt to deal with the problem of low pay dished out to 22% of the working population in the North East in shops, hotels, care homes and laundries. But I fear it has been taken up as a motherhood and apple pie idea by politicians as a way of avoiding their responsibilities.
What would Mr Miliband find out from his weeks operating a mangle? My guess is that most of his fellow workers would say they would like a pay rise but that they receive the going rate for a day’s work and that they would not get paid better in any other comparable job. They know the value of a job and they don’t want the laundry to go out of business.
Mr Weston would say that he gives the highest priority to looking after the staff but that it is cloud cuckoo land to increase wages by about 20%. His business could not bear the extra expense and that if he passed the increase on his customers, they would take their shirts down the road to Birds Laundry instead.
Mr Miliband would point out that living wage employers have better motivated staff, higher quality work, reduced absenteeism and lower turnover. He would quietly add the Exchequer would benefit by saving £46m in welfare benefits and gaining a useful £92m in extra tax and national insurance contributions. He would argue persuasively that the living wage is on the yellow brick road to a high pay, high skill economy which is the only way forward for an advanced economy.
It sounds a great idea for a socialist leader as it deals with the so called cost of living crisis and revives the economy at the same time. It sounds too good to be true.
Despite the inducements that a future Labour government might provide by way of tax relief to get small employers to sign up, I cannot see small charities like the one I run or many small businesses being anywhere near able to afford it. And this grieves me as charities have always placed great value on paying their staff fairly.
The influential Cambridge economist, Ha-Joon Chang points out that large swathes of the U K economy are no longer subject to the push pull of market economics that still operates in the laundry business. The banks, utilities and railway companies have ‘market power’ and can raise their prices because we have no choice but to purchase their services. They could introduce the living wage but sadly they seldom seem to use their profits to increase wages.
When Mr Milband has completed his week in the laundry, I will commend to him Anthony King and Ivor Crewe’s wonderful new book, ‘The Blunders of Government’, which I am giving everyone for Christmas.
King and Crewe make the point that bright policy initiatives need to tested far more widely by those who know a thing or two about how they play out in the real world. The Child Benefit Agency, for example, might not have been set up in quite the same way if single parents had been involved. Labour’s idea of tampering with tax regimes and micro managing the pay packet to get us all on to a living wage is a nightmare that has all the makings of another blunder.
The trouble is that we are moving into a politics of hints and nudges to put the world to rights. Putting green taxes on our energy bills must have seemed a painless way of subsidizing the badly needed alternative forms of energy. But the policy has rebounded and is likely to be abandoned any day now. If government believed in green energy , why didn’t it fund home insulation and wind farms directly in the first place?
Although Newcastle City Council has taken a brave lead in adopting the living wage, it is unlikely to achieved elsewhere by exhortation. It will only work if employers adopt the scheme across the board and, as we know, Mr Weston is reluctant to do so.
Why doesn’t Mr Miliband look back on the great achievement of his predecessor, Mr Blair ( who also shortened his first name to appear to be a man of the people), in introducing the national minimum wage. It was achieved by legislation that was controversial at the time but accepted by all parties today.
The minimum wage ( £6.31 an hour) is now considered to fall short of what is required by the proponents of the living wage ( £7.65 ) so one obvious way forward would be to hike up the statutory minimum wage. This could be a more effective way of reviving the economy than giving the money to banks through quantitative easing.
If Mr Miliband is in charge after the next election, then I hope he will have the courage to make the living wage, or whatever terminology might then be used, mandatory. If it really does have the benefits he sees in it, it will be worth the pain. That really would be leadership.
Whilst I am giving advice, as a father to an Edward who is invariably called Ed by his friends, I also urge Mr Miliband to use his full name which conveys authority . He need not worry about what the workers in Westons Laundry will make of his name as the laundry went out of business many years ago.
George Hepburn is Warden of Shepherds Dene http://www.shepherdsdene.co.uk