The next item of business is a debate on motion S4M-09740, in the name of James Kelly, on the living wage.
15:51
I welcome the opportunity to open, on behalf of the Labour Party, this afternoon’s debate on the living wage, because it is an important debate that is not about independence. It is about something that this Parliament can do on the living wage right now by taking positive action through the Procurement Reform (Scotland) Bill. As was stated when the bill was debated in Parliament at stage 1, it covers £10 billion-worth of public contracts. Agreement to Labour’s demand for the living wage to apply to all those public contracts would make a real difference now.
Will James Kelly take an intervention?
Let me get started.
The suggestion would make a real difference now to the economy, to jobs and to the pay of working people, and there is no doubt that it would really be a transformational change. If the Scottish National Party Government were to support the suggestion, we would work with it to make that change and to deliver the living wage through the Procurement Reform (Scotland) Bill.
Will Mr Kelly give way?
I will take Chic Brodie first.
I will set all this in context. I understand James Kelly’s rationale and the feelings behind his motion, but how does he react to the fact that yesterday, in a response to a freedom of information request, Labour-controlled Glasgow City Council stated that
“at present the EU regulations do not allow the living wage as a mandatory requirement within our contracts”?
The same applies—
Thank you.
—to Renfrewshire, West Lothian and Inverclyde.
Thank you. That will do.
Well read, Mr Brodie—you got all the way through that. I will deal specifically with the legal points, including that one, later in my speech. Let us not hide behind legal advice and red herrings. Let us have a bill that makes a difference to people in Scotland’s communities, not to the lawyers in St Andrew’s House.
What impact can the living wage have? Currently, 400,000 people in Scotland do not earn the living wage, and 36 per cent of them are under 25. Yet when we tried to make a positive change at stage 2 of the Procurement Reform (Scotland) Bill, the SNP voted down that change. When I look at the SNP’s attitude and what it is doing in the white paper, it strikes me that it is more interested in bringing down corporation tax for businesses such as Brian Souter’s Stagecoach than it is in paying cleaners the living wage.
Payment of the living wage would make a striking difference to women workers, who make up 64 per cent of the 400,000 workers that I mentioned. That is 256,000 women. If we used the £10 billion that we spend to reach out, we could reach out to many of those thousands of women workers.
It is one thing to appoint two new women ministers to the Cabinet, as Parliament agreed to do yesterday, but we have to wonder about voting for pay rises of £32,000 for ministers when cleaners who are working on Scottish Government contracts are not being paid the living wage. That is unacceptable.
There is rank hypocrisy on the issue among elements of the SNP. At the recent SNP conference, MSP after MSP, including the Deputy First Minister, queued up to have their photograph taken pledging their support for paying the living wage to their staff. However, there are workers on Scottish Government contracts who are not being paid the living wage. In the gallery this afternoon, there are staff from the national museum of Scotland shop, who are paid £6.53 per hour. The national museum of Scotland is an iconic institution, but its shop staff, who are working on behalf of the Scottish Government, are not being paid the living wage. For SNP members to pose for photographs with banners that say that they support the living wage is hypocrisy.
Will the member give way?
I will give way to John Mason, who is one of the MSPs who was photographed.
I absolutely was photographed.
Does James Kelly accept that the living wage will not apply to some people in the private sector and that only by raising the statutory minimum wage can we really help people?
What about trying to apply the living wage to the workers in the national museum of Scotland shop? What about trying to apply it to the cleaners in the Scottish Prison Service who are not being paid the living wage?
It is time that we closed the low-pay loophole. That is why there is an onus on all Governments to do what they can do to support action against low pay. In that context, I cannot support the Liberal Democrat amendment, because the Liberal Democrats are part of a Government that has presided over an increase of £974 in the cost of living for average families, while handing out tax cuts for the richest 1 per cent of the population, to the tune of £3 billion. Those are not the actions of a Government that is taking forward an agenda to protect people on low pay.
Does James Kelly agree with our amendment or does he not? I thought that Labour Party policy was to raise tax thresholds.
Mr Rennie needs to look at the Government’s overall programme; the Government of which his party is a member has been more interested in handing out tax cuts to the rich than in protecting the low paid.
Let me deal with the point about legal advice, which is nothing more than a red herring behind which the SNP Government and its back benchers hide. The argument that to require that the living wage be paid would not be legal diminishes day by day. Members should look at the briefing—
Will James Kelly give way?
Let me make the point. I refer members to the briefing that the Scottish living wage campaign provided for the debate, and specifically to what Professor Christopher McCrudden said. He said, as I mentioned during stage 2 of the Procurement Reform (Scotland) Bill, that if we tie payment of the living wage to a specific contract, that can be legal.
Professor McCrudden also made the valid point—this addresses the point that was made about Glasgow City Council—that the approach can be enforced if it is enshrined in procurement legislation. That would allow people who award public contracts to stipulate that the living wage must be paid.
Mr Kelly has talked about legal advice. There is case law on the issue—Rüffert v Land Niedersachsen—which I have mentioned to Mr Kelly before. How does he think we can get over that case law, which is not just “legal advice”?
Never mind the case law—I will give practical examples. What about the care contracts at Renfrewshire Council, which is paying the living wage? What about the contracts in Islington? Even Boris Johnson can ensure that his contracts pay the living wage. Who would have believed that Nicola Sturgeon would be outflanked on the left by Boris Johnson?
It is time that we closed the low-pay loophole and introduced the living wage in all public contracts. The Government should not give us the excuse that we are too weak, too poor or too stupid to introduce the living wage in this Parliament. Are we a proper Parliament or a debating club? This is a chance to send out a powerful signal in support of fairness. It is time for the Parliament to stand up for working people, and it is time for the SNP Government and its back benchers to stand up and be counted.
I move,
That the Parliament acknowledges the support for the living wage from across the political spectrum, civic Scotland and the business community; notes that over 400,000 people in Scotland are working for less than the living wage and that nearly two thirds of these are women; further notes that payment of the living wage would boost the earnings of a full-time minimum wage worker by over £2,600 a year; understands that Scotland’s public sector spends approximately £10 billion on procurement; believes that this spending power could and should be used to build a moral economy, and therefore calls for the Procurement Reform (Scotland) Bill to be amended to extend the payment of the living wage to public contracts.
16:01
I welcome to the gallery members of staff from the national museum of Scotland. I am not going to use them as a political football. However, it will be of interest to Parliament to hear that, following discussions between the Cabinet Secretary for Culture and External Affairs and the chair and director of National Museums Scotland, the organisation is preparing proposals to introduce the Scottish living wage for employees of its trading company. [Applause.]
I thank James Kelly for giving the Government yet another opportunity to record our active support for the living wage and to state our commitment to doing as much as possible to tackle pay inequality, both with the powers that we have now and even more so with the additional powers that we will secure with a yes vote in the referendum later this year.
The Government’s commitment to the living wage goes beyond rhetoric, and is evidenced by the clear and decisive action that we have taken. We are, after all, the first Scottish Government ever to pay the living wage to our own employees and to everyone who works in the national health service, and we are committed to doing so for the entire duration of the Parliament. That is a decisive, long-term commitment to those who are on the lowest incomes.
James Kelly talked about “rank hypocrisy”. That would be an apt term to apply to the speech that he has just made. Let us not forget that Labour was in government in Scotland for eight years and that at no point during those eight years did it come close to adopting the living wage for its own staff or for staff in the NHS. As they say, Presiding Officer, actions speak much louder than words.
Although the Government does not set pay levels for staff in the private sector or, indeed, for staff in those parts of the public sector that are not covered by our pay policies, we nevertheless strongly and actively encourage all public, private and third sector organisations to pay the living wage. We fully support the principles of the wider living wage campaign. That support is illustrated not just through our own pay policy, but through our funding of the Poverty Alliance to pilot a living wage accreditation scheme to increase the number of private sector employers that pay the living wage in Scotland—a campaign that will be rolled out over the course of this year. No one should doubt the Government’s commitment to payment of the living wage.
Labour’s motion covers an issue that we have debated before: whether the Procurement Reform (Scotland) Bill can impose the living wage on contractors. The Government has given serious and careful consideration to how we use the bill to advance the living wage. It has never been a question of doing nothing; instead, the question is how to do as much as we can while staying within the confines of European law.
We sought advice from the European commissioner who is responsible for public procurement. The clear response, which reflects European Union case law, is that we cannot make the living wage a mandatory condition of contract. Glasgow City Council agrees with that. It said, as Chic Brodie mentioned, that EU regulations do not allow a mandatory requirement to pay the living wage in its contracts.
James Kelly mentioned Professor McCrudden’s legal opinion, which in effect says that we should amend regulations in order to set a higher minimum wage, thereby ignoring the fact that this Parliament does not have power over the minimum wage. Professor McCrudden’s legal opinion—I am citing paragraph 16, should James Kelly want to find it—says:
“I have not been instructed to consider whether such an amendment would be ... within the powers of the Scottish Parliament, and have not done so.”
Islington Council was also mentioned; its website says that, where EU law applies, the requirement for the living wage should not be made a precondition at the tender stage. The law is clear. We will continue to lobby for a change in EU law—
Will the Deputy First Minister take an intervention?
I will not, just now.
We cannot ignore the prevailing position simply because we do not agree with it. Equally, we are not prepared to do nothing, so we have in the bill made provision relating to payment of the living wage. What we propose in the bill is significant. It should have the full support of any party that is serious about advancing the cause of the living wage. The bill contains provisions that are designed to ensure that, through statutory guidance, purchasing decisions take account not just of pay and benefits, but of the employer’s general approach to its workforce. In practice, that means that, especially in contracts where low pay is traditionally an issue, companies that wish to bid would have their approach to managing, rewarding and engaging with their workforce fully evaluated as an important part of the procurement process. That would send a very powerful message to businesses.
Will the Deputy First Minister take an intervention?
I will not, just now.
Part of the evaluation would be about pay and benefit. That was made implicit at stage 2. However, to make it more explicit, I confirm that I have lodged a Government stage 3 amendment that will put the reference to remuneration and payment of the living wage on the face of the bill. I also advise Parliament that I have lodged another stage 3 amendment that will require public authorities to set out in their procurement strategies their policy on ensuring that the companies with which they contract pay the living wage.
Will the Deputy First Minister take an intervention?
The Deputy First Minister is in her last minute.
The amendments will strengthen the bill and help to ensure that payment of the living wage gets the priority that it deserves. Crucially, they will do so without breaching European procurement law.
This Government’s commitment to the living wage is beyond doubt. That is evidenced not just by words, but by action. If there is a yes vote in the referendum, we would also win—[Interruption.] Labour Party members may want to listen to this—
Can we have some order, please?
We would also win the powers to ensure that the minimum wage would rise every year at least in line with inflation, and not fall behind the cost of living as it did when Labour was in power and Alistair Darling was Chancellor of the Exchequer, which was a disgrace.
As we debate this issue, I hope that members will recognise the Government’s record and achievements on the living wage and get behind us as we further promote it.
I move amendment S4M-09740.2, to leave from “the support” to end and insert:
“that the Scottish Government is the first to adopt the Scottish living wage for all staff covered by its pay policy and for all staff in the NHS; notes that it is also working to encourage all other employers to pay the living wage; notes that it has introduced the Procurement Reform (Scotland) Bill, which includes provision for statutory guidance to ensure that, whenever relevant, workforce matters, including pay and benefits, are fully evaluated as part of public procurement processes; further notes that it has funded a pilot for the Poverty Alliance to promote living wage accreditation and increase the number of employers paying the living wage in Scotland, and further acknowledges that the Scottish Government has given a commitment that, in an independent Scotland, it would establish a fair work commission to tackle pay inequality and that it has also given a guarantee that, after a Yes vote in the referendum, the Scottish national minimum wage would rise every year at least in line with inflation.”
16:09
The national museum of Scotland staff in the gallery will be pleased with the Deputy First Minister’s announcement. The introduction of the living wage will be a welcome supplement to their weekly income. I suspect that, from now on, the gallery will be full of staff seeking pay rises. I hope that the Deputy First Minister will consider those appeals in future weeks.
We had intended to support James Kelly’s motion, but he has done a pretty good job of putting us off doing so. His “To hell with the law, no matter the consequences” approach is a bizarre approach that I find difficult to accept from a party that seeks to be a party of government here. Nevertheless, we support the ambitions that James Kelly has set out.
Will Willie Rennie give way?
I will not give way just now.
Those ambitions include the ambition to advance the cause of the living wage using the big economic lever of the multibillion pound procurement budget to drive up people’s living standards, and the ambitions to give them a decent standard of living and to recognise the benefit of work and of incentivising it and making it pay. We believe that we should use the Procurement Reform (Scotland) Bill fully to that end, so I welcome the announcements that the Deputy First Minister made about strengthening the bill in that regard.
Mr Rennie said that I dismissed the law, but I made it absolutely clear that it has been stated in answers in the European Parliament that payment of the living wage can be linked to contract performance. I outlined a clear legal basis on which to move forward, and I urged the Government to explore that; I did not ignore the law.
That is not how it came across. If Mr Kelly had made his point as he has just made it, perhaps I would not have reacted as I have.
I think that we should set the issue in context. Economic conditions are improving—130,000 more people are in work than were in work in 2010, and the number of people in work increased by 3,000 in the last quarter. The longer-term trend in unemployment is that it is going down, despite the slight rise in the last quarter, so we are moving in the right direction. Growth is also up.
We can use the proceeds of that growth to help people who are on low wages. In that context, it is important to recognise that the minimum wage has increased. Vince Cable has accepted all the recommendations of the Low Pay Commission and has indicated that he will support the commission’s suggestion that there be increases in the minimum wage in the future, which is a positive step. Someone on the new rate of £6.50 an hour who works 36 hours a week will have an uplift of £355 a year in their income. That is a step in the right direction.
In addition, it has been indicated by Mr Cable’s ministerial colleague, Jo Swinson, who represents Bearsden, that there will be a new approach of publicly naming and shaming companies that do not pay the minimum wage as a way of ensuring that they do so in the future, and of incentivising others to comply with the law. That will be on top of the significant fines that are already available to the authorities. The rise in the minimum wage is a positive step that is a result of the improving conditions in the economy.
The Government has a role to play in ensuring that, through taxation, we relieve the pressures on those who are on low and middle incomes, but especially those who are on low incomes. There has been a further rise in the tax threshold to £10,000, which puts £700 back in the pockets of low-income workers. In Scotland, 224,000 people have been taken out of tax altogether and 2 million people have had a significant cut in their income tax.
That means that the income tax of people across the UK who earn about 30 per cent less than the median wage—those who are skirting the poverty line—has dropped from 10 to 6 per cent, which is a significant benefit to people on low incomes. I hope that Parliament would support that.
Would you draw to a close, please?
I am disappointed with James Kelly’s response. He indicated that he is not prepared to support our amendment, even though the Labour Party indicates that it is in favour of what the amendment says. The Scottish Government should support our amendment, too. It is a test: if the Government is in favour of relieving the pressure on people on low and middle incomes, it should support our amendment.
I move amendment S4M-09740.1, to insert at end:
“; welcomes the UK Government’s decision to increase the national minimum wage (NMW) from October 2014; further welcomes that the UK Government accepted in full the Low Pay Commission’s recommendations, including plans for bigger increases to the NMW in the future than have occurred in recent years; notes that a worker on the adult NMW working a 36-hour week, 52 weeks a year, will receive £355 a year more in their pay packet; welcomes the increase in the income tax personal allowance to £10,000 in 2014-15; notes that the UK Government’s policy on income tax has lifted 224,000 of the lowest earners in Scotland out of income tax altogether, with over two million people benefiting from a tax cut, and supports plans to increase the personal allowance to £12,500 in the next UK parliamentary term.”
16:14
We cannot fail to be moved by the genuine passion of James Kelly in his speech. It is clear that he believes firmly in the principle of the living wage. He asked whether we are
“a proper Parliament or a debating club”.
If we are to be a proper Parliament, careful analysis is required of any proposal that is put forward by any party—Government or Opposition.
The proposal that has been made is that the Procurement Reform (Scotland) Bill be amended, as the Labour Party and others suggested at stage 2, in order to make the living wage mandatory in all public sector procurement contracts. That is where the Labour Party’s analysis is incomplete and partial. It is able to tell us how many people are affected, and to give a pretty accurate breakdown of who is affected and, indeed, the individual benefit for someone who moves from the national minimum wage to the living wage, but it has ignored some pretty important wider questions, such as what the financial cost would be to the public sector at each level in making the living wage mandatory across the entire £10 billion-worth of public procurement. That is an important question that needs to be answered.
Furthermore, what would be the total cost to the private sector? More specifically, what would be the cost to small businesses? I suspect that a greater proportion of those who are not being paid the living wage are in small businesses. Are there any sectors in our economy in which the margins are so tight that it would be particularly difficult to apply the living wage in them across the board?
Does Mr Brown accept that the costs of not paying the living wage are in many cases borne by the state, in particular in increases in housing benefit that are paid to people who are in employment?
I accept that there are different analyses and different parts of the equation to be looked at in their entirety. However, if a proposal is made, we have to look very carefully at the costs and then, having identified the costs, we must—which is more important—assess accurately where the money will come from to pay the additional sums. We must also consider whether there would be any negative economic consequences. We must weigh in the balance the obvious positive consequence of somebody on a low salary being paid more money against the consequences of implementing the approach across the board, as Mr Macintosh and his party have suggested should happen.
One area in which there is an issue to do with margins is social care, in which disgracefully low wages are paid to people who do some of the most important work in our society. That is an issue about the wholesale underfunding of social care.
You should not be giving a speech.
I would welcome a Scottish Government debate on that.
That was more a point than it was a question. We are happy to debate any issue, but we have to look very carefully at the economic consequences. If the approach simply means fewer jobs but people in employment being paid more, does Parliament as a whole believe that that would be to the benefit of the Scottish economy? There are important questions to be asked, and answers are required to all of them in order to take matters forward.
Having asked questions of the Labour Party, it is important that I also ask questions of the SNP. I attempted to do so by intervening, but the cabinet secretary did not give way to anybody in her speech, which is highly unusual for any cabinet secretary.
The Scottish Government commitment is not as clear when it comes to action as it is when it comes to rhetoric. I entirely accept that there are individual MSPs in the SNP group who fervently believe in the living wage, but the Scottish Government’s position is less clear.
James Kelly said that there are cleaners who are working on Scottish Government contracts who are not being paid the living wage. The Scottish Government did not deny that, and there was no question from any SNP member about whether that is true. I do not know whether it is true, but I was surprised that no SNP member challenged or attempted to deny such a statement.
We heard from the Scottish Government that it cannot take forward the procurement proposal because of EU law, but we did not hear from it, and we have not heard from it at any time, a commitment to amend the Procurement Reform (Scotland) Bill should Scotland vote yes in September. We have not heard at any time a commitment to a mandatory living wage, should Scotland become independent after 2014. It is doing nothing that is hugely different from what the current UK Government is doing, although it wants people to believe that it is.
You must close, please.
I challenge the SNP—even one of its members—to give a commitment to a mandatory living wage should Scotland become independent.
16:19
I speak as a former member of the Trades Union Congress national minimum wage enforcement group and director of the Scottish Low Pay Unit. I welcome the debate on the living wage, as it raises important issues that we all have to take on board when we make demands for things such as the living wage. I give Gavin Brown a commitment, as an SNP member, that if we achieve a yes vote in September, I for one will campaign for the living wage to become the minimum wage in Scotland.
I believe that we have to pay people the wages that they are due for the services that they deliver. However, we must be aware that, at present in Scotland, women are still fighting local authorities to achieve equal pay settlements. North Lanarkshire Council is still holding out on making settlements on equal pay and single status. At a time when we are talking about introducing the living wage, which I would welcome, it is deplorable that any authority, particularly a Labour-controlled one, is still holding out on paying equal pay.
The issue with introducing the living wage or including it in the Procurement Reform (Scotland) Bill is that we have to ensure that the people whom we want to be paid the living wage will genuinely benefit from it. At present, any worker who is in receipt of tax credits—or, as Ken Macintosh outlined, housing benefits—and who receives a rise in their earnings will have their tax credits clawed back in the following financial year. Therefore if we are to have a living wage paid to workers who are not currently on the living wage, we need to ensure that Her Majesty’s Revenue and Customs does not claw that money back in the following financial year, as that would place a further financial burden on those families and workers. We have to be careful about what we are arguing for and how we deliver it. We need to ensure that no worker who receives the living wage, through the Scottish Government’s decision or any other Government’s decision, is penalised.
The crucial issue is that the Scottish Government does not control the national minimum wage. The national minimum wage is set based on a recommendation by the Low Pay Commission to the UK Government. It is up to the UK Government to decide whether to accept that recommendation. Willie Rennie is right that we have heard commitments from Liberal Democrat ministers that they will accept the Low Pay Commission’s recommendation on the uprating of the minimum wage. However, we must get guarantees that those uprating figures will not impact severely on the workers who deserve not only the minimum wage but a living wage.
As we go forward as a society, particularly in Scotland, we have an opportunity to raise the living standards of every worker through wages or other employment conditions. Gavin Brown gave the old argument from the Confederation of British Industry that, unfortunately, if we raise the living wage, other workers might be penalised by having their hours cut or by losing their jobs. We have to take on board those other considerations and the wider aspects of the living wage.
I call Cara Hilton. You may have up to four minutes, Ms Hilton, but I must point out that we are very tight for time.
16:24
The biggest concern for families across Scotland is not constitutional change but whether they have enough money in their pockets from one week to the next. For the average family, wages are down, tax credits have been cut and child benefit has been frozen while food prices, fuel bills and childcare costs continue to soar. The cost of living crisis is not a soundbite but a daily reality. For many, the opportunities that they had hoped their children would have seem beyond reach, and for too many workers, young and old, the only jobs on offer are insecure and poorly paid, with few hours guaranteed.
Last week, a constituent told me that, at 40 years old, he had given up hope of finding what he called a proper job, and the only way he could make ends meet and keep a roof over his family’s head was to take agency work. He is just one of the 400,000 workers across Scotland who are earning less than a living wage. To make ends meet, he had to work two jobs and long hours; although he had two young children, he hardly saw them because he was always out working—and he was still struggling to provide for his family, because he was only on the minimum wage.
In the chamber, we recently debated the rise of food banks and child poverty, and we all agree that action needs to be taken. However, the real scandal is that the majority of children in poverty have mums, dads or carers who are in work but who are on poverty pay, and that hard-working families are being pushed further and further into poverty.
One of the founding principles of the Labour movement was a fair day’s pay for a fair day’s work, and that principle is as relevant today as it has ever been. It is a national scandal that, in 21st century Scotland, many workers are working above and beyond the call of duty, often in two or three jobs.
Will the member give way?
I am sorry, but I have no time.
However, those workers are unable to make ends meet because they are not being paid a living wage. It is not enough for the Scottish Government to pay a living wage just to its own employees, welcome as that is; across Scotland, thousands of care workers, cleaners and catering staff, the majority of whom are women, continue to be paid less because they are on contracts instead of being directly employed by councils, the national health service or the Government. None of us should tolerate that low-pay loophole.
The Government invests £10 billion a year in procurement. That is a huge sum of public money, and it is time that the Government used its spending power to ensure that no company that pays its workers less than the living wage is awarded a public sector contract in Scotland. We do not need the powers of independence to make that a reality—we just need the political will.
Yesterday, the First Minister said that we needed to do more about women’s employment—and he was right. Two thirds of those who earn less than the living wage are women. Low pay hits women hardest and equal pay is still a long way off. If inclusion and equality are really, as the First Minister said yesterday, at the heart of everything that the Government does, why does it not act now to transform the lives of hundreds of thousands of workers, the vast majority of whom are women?
The First Minister also said that the glass ceiling has cracked in Scotland, but the reality for thousands of women workers in Dunfermline and across Scotland is of being trapped in a cycle of low-pay, low-skill jobs with few prospects for promotion. They are struggling to get through the week, never mind break through the glass ceiling. Many have no choice but to turn to payday lenders to make their money stretch and, as we heard in the previous debate on fuel poverty, many more are having to choose between heating and eating. Indeed, some are turning in desperation to food banks to feed their children.
We need a change of approach not only at Westminster but at Holyrood. It is time for the Scottish Government to show a real commitment to equality, to use the £10 billion at its disposal to close the pay gap and to ensure that every worker on a public sector contract receives a living wage. If Boris Johnson can do it, surely Alex Salmond can do it, too.
You must close, please.
A living wage would transform family budgets, our economy and people’s lives in Dunfermline and across Scotland. As Nicola Sturgeon has already said, actions speak louder than words. My constituents in Dunfermline want action now, not a promise of action in the future. I hope that the Scottish National Party will see sense and vote now to ensure better wages for workers across Scotland.
We now move to three-minute speeches, and I apologise to those members whom we have had to drop from the debate.
16:28
We should welcome the fact that the two largest parties in the Parliament are both committed to the concept of a living wage. I am not sure that that is the case at Westminster, which surely shows that people in low-paid employment will do better if Holyrood rather than Westminster controls this subject.
Will the member give way?
I have only three minutes.
I very much welcome the statement in the white paper that after independence the minimum wage would rise
“at least in line with inflation”.
That is the minimum, not the maximum, commitment. I am also happy to welcome the fact that Labour at Westminster introduced the statutory minimum wage.
The living wage is welcome and, indeed, makes a huge amount of sense. Surely people should as a norm be paid what they need to live on because otherwise, as has been mentioned, the state ends up subsidising employers through tax credits or similar. That public money could be better spent elsewhere instead of being used to subsidise profitable companies.
I accept that, as Gavin Brown pointed out, some employers could struggle if they had to pay all their staff £7.65 an hour. Such a fear was expressed when the statutory minimum wage was introduced, but it has proved to be largely unfounded. I suggest that many employers could afford to pay the living wage but choose not to do so. We can try to make paying the living wage a bit less voluntary but, at the end of the day, it will remain voluntary for many employers. Only the statutory minimum wage is compulsory.
Will the member take an intervention?
I have only three minutes.
It has been said that, rather than seek new powers, Holyrood should use its present powers better. However, surely the living wage is an example of a key area where the present powers are not working. We do not have the power to increase the legal minimum wage, so we end up arguing about how to work round that. The clear answer is that we should be given the power to change the statutory minimum wage. Is there any logical reason why we should have a voluntary living wage of £7.65 that is separate from the statutory minimum wage of £6.31? If someone needs the living wage to live on, why is any employer allowed to pay less than that?
I have a couple of caveats on that point, though. First, if the living wage would have a big impact on a smaller business, we should tackle that with specific measures, such as a small business bonus or targeted grants. Secondly, we should probably build up to the living wage over an agreed timescale, such as five years, and keep an eye on progress as we go along.
I have two main questions for Labour. First, why restrict the living wage to public contracts? Would that not disadvantage the public sector when trying to compete with the private sector? Does it show that Labour does not care about workers in the private sector? Secondly, assuming that there is a no vote in September and that there is a Labour Government in Westminster in 2015, will Labour make a commitment that the statutory minimum wage will go up to the level of the living wage?
16:31
Last year, the Joseph Rowntree Foundation revealed that, for the first time, more than half of the people living in poverty in Britain came from working households rather than jobless ones. That finding marked a fundamental change in the nature of poverty in this country, but it is a change that public and political opinion has struggled to reflect.
Our previous Labour-led Governments in the UK and Scotland made it a priority to tackle both pensioner and child poverty, and to a great extent we were successful in doing so, as pensioner poverty in Scotland was halved in the decade from 2001 to 2011 and child poverty in Scotland fell from 31 to 21 per cent over the same period. However, just as we finally made inroads into tackling those two social evils, the recession and our response to it created the wholly new social problem of in-work poverty.
Deprivation is not simply a problem that is faced by, or even caused by, a relatively small number of workless households, despite that stereotype still seeming to influence the Tory-led reforms of our welfare system. Far too many households now find themselves among the working poor and moving in and out of poverty and work, and on and off benefits. The whole conditionality regime of welfare reform only adds to the stress and hardship faced by such families. Of course, underpinning the phenomenon of the working poor is the scourge of low pay, which is why the living wage matters so much.
Over the past three years under the SNP Government, wages in Scotland have risen more slowly than inflation. The average Scottish household is now £1,700 a year worse off, but energy bills have risen by 37 per cent. However, in each of the past three years the finance secretary has imposed a wage freeze or a 1 per cent wage limit on public sector pay. These are not someone else’s problems but our problems and we have the power to do something about them. That power is before the Parliament right now in the shape of the Procurement Reform (Scotland) Bill.
What I find most frustrating is that I know that there are those on the SNP benches who share that analysis. However, what is the Scottish Government doing in practice? It is handing out Government grants to companies such as Amazon that have no commitment to Scotland and which offer exploitative employment and poverty wages. Just last month, we heard of the scandal of the new grant that has been offered to Portfolio Recovery Associates, a firm that is paid to chase debts for Wonga but which is getting Scottish Government backing and a £1.2 million helping hand.
During our discussion of the Procurement Reform (Scotland) Bill, the Cabinet Secretary for Infrastructure, Investment and Cities did not say that she disagreed with Labour’s amendments; she said that she sympathised with them, supported them and even “whole-heartedly” endorsed them. However, the SNP voted down every single Labour amendment, voting against the living wage, wage differentials and trade union recognition. The SNP voted against every single proposal that said that we do not want to be a low-wage economy here in Scotland.
I am afraid that you must close.
The Parliament has the power to deliver transformational change. That requires political will.
16:34
As colleagues on the Opposition benches must be aware by now, although they seem confused on several aspects of the debate, it was this SNP Government that introduced the living wage and not Labour, not even while the Labour leader Ms Lamont was a member of that Government. In fact, the last time Labour was in power, it failed even to protect the basic minimum wage from inflation.
This Government recognises that there are still far too many people working for very poor wages, especially the substantial group of women in part-time employment. While I am on the subject of women, I add that the Labour members who are shouting and bawling that the Government should be supporting women should speak to the women in South Lanarkshire who have had to fight a Labour-controlled council for 10 years to get their equal pay status agreed to.
Just in case members’ arithmetic is not up to it, I point out that, going by the new figures today, the £7.65 per hour living wage is £1.15 an hour more than the UK minimum wage. If someone works 40 hours a week, that is £46 a week or almost £2,390 a year more—almost enough to offset some of the benefit losses and slow down business at food banks.
Just a couple of weeks ago—on 20 March, to be precise—Johann Lamont asked the First Minister why working people across Scotland were battling against the scourge of low pay. Truthfully, I was confused since, as I have already said, it was the SNP Government and not Labour that introduced the living wage and applied it throughout our public sector, including in the NHS. It seemed a bit rich that Johann Lamont was condemning us for doing that. An article that was printed today about the Labour Party says “50 years and still waiting”. We cannot have people on poverty pay waiting another 50 years. The Labour Party has led people on with false promises and has never delivered. That is the point.
This Government’s establishment of a fair work commission and a guarantee that the minimum wage will rise at least in line with inflation is the right way to go. The requirement to pay the living wage was introduced by the Government’s pay policy in 2011-12, benefiting approximately 6,000 workers. The £7.45 rate that was introduced a year ago benefits up to 3,300 workers and the new rise to £7.65 will ensure that they do not lose out against inflation, unlike when Labour rejected the idea of the much more basic minimum wage keeping pace with inflation.
I cannot understand where Labour is on procurement. Is it proposing Glasgow’s legal policy or some obscure “Let’s just ignore the law” policy in this place? Honestly, Presiding Officer, the Labour Party needs to get its act and its facts together on this and stop letting people down. We are not allowing it to do so for another 50 years.
We move to the winding-up speeches. Mr Rennie, you have only four minutes.
16:38
To listen to members on the SNP and Labour benches, we would think that they disagreed about the living wage, but the reality is that members across the chamber have an awful lot in common on it. To listen to many members who have spoken this afternoon, we would also think that the United Kingdom Government is doing nothing to help workers, especially low-paid workers, but that is not true either. The minimum wage is up, the economy is improving so that more people are in work, growth is up and unemployment has fallen. That is all based on a plan that many members in this Parliament said would not work, but it is moving in the right direction, if in little steps along that way.
I was deeply disappointed by James Kelly’s approach to our amendment this afternoon. I assume that the Labour Party supports a rise in the minimum wage, which is included in our amendment. I assumed that, after Ed Miliband’s remarks some time ago, Labour supported the rise in the tax thresholds. However, because Labour disagrees with other areas of our policy, it is not prepared to support anything that a Liberal Democrat says ever again. If I was to adopt that approach, because I disagreed with the Labour Party on the Iraq war, I would never listen to anything that it said ever again, but I am not as narrow minded as that. I could take the stance that, because the Labour Party contributed to one of the biggest recessions that the country has seen since the second world war, I would never listen again to anything that it said, but I do not. I am prepared to look at amendments and proposals on their merits, and the Labour Party would be well advised to do the same.
I hope that the SNP will not make that mistake this afternoon and that it will support the Liberal Democrat amendment, because I assume that SNP members, too, support the rise in the minimum wage and the rise in tax thresholds. I heard Nicola Sturgeon say in response to me in this very chamber that she supported the rise in tax thresholds, so I presume that the SNP will be able to support our amendment this afternoon. Otherwise, I will be puzzled and will probably think that the SNP is taking the same approach as James Kelly has taken.
I would also like to hear from the Deputy First Minister when she responds whether she accepts the proposal that was made by John Mason and John Wilson that, in an independent Scotland, the minimum wage will be the living wage. I would like to hear whether that is the proposal that is coming forward, and I would be interested in whether that will be official Government policy in the run-up to the referendum, because that would be an interesting contribution to the debate. I would welcome some reflection from the Deputy First Minister on that point.
We should also recognise that, because of the improving economic conditions and the fact that inflation is under control, average wages in the UK are rising above inflation for the first time in a long time. The Ernst and Young ITEM club has indicated that that will continue to be the case for many years to come. In fact, it estimates that, in 2017, average wages will increase by 3.5 per cent and inflation will be about 2.2 per cent. Overall, that is a benefit to everybody who is in work across the country, and it is something that I hope that members, despite their muttering, will support.
I hope that our amendment’s recognition of the minimum wage rising and the fact that we have the tax threshold rising mean that a cut to income tax is something that everybody in the chamber can support.
16:42
Willie Rennie was right when he said that the Labour Party and the SNP have more in common than they would care to admit, particularly when it comes to the living wage, because neither party has made a firm commitment to a mandatory living wage were they to have the levers of power. The Labour Party was challenged to say whether it would do it, and it has not committed to doing it if it were to win the 2015 general election. The Scottish National Party has been challenged on it too, and has refused to commit to having a mandatory living wage, despite several of its back benchers saying that they would fight for it and others asking why any employer is allowed not to pay the living wage.
From a sedentary position, the Deputy First Minister shouted out, “The answer is in the white paper. Read it.” It is on pages 106 and 107 of the white paper. There are a full two paragraphs out of 700 pages dedicated to the living wage in that document, and nowhere does it give a commitment to a mandatory living wage. At no point since then has there been a commitment from the Scottish Government to a mandatory living wage, and I am pretty sure that in this afternoon’s closing speech we will not hear a commitment from the cabinet secretary to a mandatory living wage. The Government will not even tell us whether its commitment to increasing the national minimum wage by the rate of inflation is based on the retail prices index or the consumer prices index. I have asked that question numerous times in this chamber, and at no point has any minister been able to give the answer. Perhaps we will get the answer in the summation from the cabinet secretary.
John Mason made the fair point that, when arguments were made against a national minimum wage back in the late 1990s, some of the concerns turned out not to be correct in reality. I accept that. However, the same argument was put to Paul Johnson of the Institute for Fiscal Studies about a month ago at the Finance Committee and his answer was quite interesting, because it made it clear that there is a deeper and broader issue when we are referring to a living wage. The reason is this: the national minimum wage affects about 5 or 6 per cent of the workforce—that is an average, as the figure varies from year to year—and the living wage would affect approximately 20 per cent of the workforce, according to statistics from the Institute for Fiscal Studies, with which James Kelly’s figure of 400,000 ties in fairly closely. If a policy affects 20 per cent of the workforce, of course there will be economic consequences. That is why we have argued that the issue must be considered carefully.
In our view, the Low Pay Commission makes a judgment about the point at which we can increase the minimum wage without a negative effect on employment or the labour market. Ultimately, whichever way the policy is implemented, the money has to come from somewhere. It can come from higher prices or it can come from fewer people in work. However, in both of those cases, there are, clearly, negative economic impacts. For those reasons, the challenge for the Labour Party is to say what economic impact its proposal would have and the challenge for the Scottish Government is to say whether it is committed to a mandatory living wage if Scotland votes yes in September.
16:46
I begin by agreeing with John Mason and—at least in respect of some of what he said—Willie Rennie. I think that we should probably spend more time celebrating the fact that, for most of us in this chamber, there is a genuine commitment to the living wage—to paying the living wage and to it being paid routinely by more employers. I agree with Labour’s analysis of the importance of the living wage. I know that Labour is often blinded by its almost tribal dislike of the SNP but I say in all sincerity to Labour members that, given the commitment that the Government and I have to payment of the living wage, if I thought that it was possible to do what Labour is asking us to do through the Procurement Reform (Scotland) Bill, why on earth would I not do that? I agree with the living wage.
This issue is not—and never has been—about whether we use the Procurement Reform (Scotland) Bill to advance the living wage; it is about how we use that bill to advance the living wage.
For most of the afternoon, the Deputy First Minister’s argument has been that EU law prevents the living wage from being delivered in Scotland. How would that change in an independent Scotland?
That is not the argument that I have made. I have made the argument—I think that Gavin Brown has understood it a little bit better than Jenny Marra—that, with the powers of independence, we get the ability to increase the minimum wage, which Labour has allowed to fall behind the rate of inflation.
What Labour is arguing for today would breach EU law. It might not like that—I do not like it—but it is simply the case. I have quoted the commissioner’s letter. It is available to all members of this chamber, and has been for some time. I have referred to case law—Kevin Stewart mentioned the actual case: Rüffert v Land Niedersachsen.
Islington Council has been mentioned. I praise Islington Council for the moves that it has made on the living wage, but its website says that, where contracts have a cross-border interest, the living wage should not be a precondition of the tender. In other words, that is the same position as we are in. Labour councils have been mentioned. Glasgow City Council has already been quoted this afternoon, so I will quote Renfrewshire Council. When asked a specific question about whether it is legally possible to make the living wage a mandatory requirement of all contracts, it answered no. Similarly, Inverclyde Council said that it could not make the living wage a condition of its contracts. The fact that Labour seems to be intent on proposing something that would breach European law is perhaps typical of a party with such a poor record on the living wage.
Cara Hilton said that it is not enough for the Scottish Government to pay the living wage to all of those who are subject to our pay policy. I agree with that. I want the living wage to go much further than that. That is precisely why we are about to pilot an approach whereby we would seek to promote the living wage through the procurement process when we procure contracts. I do not argue that nothing more can or should be done. I am determined to do everything, within the law, that we are able to do. However, it is deeply ironic to be lectured on the issue by a Labour Party that, through eight long years in office in the Parliament, made no commitment to paying the living wage to anybody who was subject to its pay policy.
Will the Deputy First Minister give way on that point?
I have already taken an intervention. If Jenny Marra will give me a second, perhaps she can respond to the point.
It is deeply ironic to be lectured by a Labour Party that, although it introduced the minimum wage—something for which it deserves great credit—allowed it to fall behind the rate of inflation. In the last two years of the Labour Government, when Alistair Darling was Chancellor of the Exchequer, the minimum wage did not even keep pace with the rate of inflation. I do not know how that is a decent record for Labour to defend, but I am happy for Jenny Marra to try.
The Deputy First Minister attacks previous Labour Administrations in the Parliament for not delivering the living wage. The living wage became a concept in August 2007, about four months after the SNP Government was elected. The argument is folly. Will she commit herself?
So—hold on a wee second—low pay did not exist in Scotland before August 2007. For goodness’ sake, what has the Labour Party become? [Interruption.]
Order.
The attitude of this Government is to focus on what we can do. That is what the Procurement Reform (Scotland) Bill does.
Will the Deputy First Minister give way?
I am sorry, but I am in my last minute.
The Procurement Reform (Scotland) Bill makes significant progress—more so as a result of the two significant amendments that I announced today, which I hope will have the full support of Labour members. It provides for statutory guidance that will ensure that, when public authorities procure contracts, they properly evaluate companies’ approaches to managing and paying their workforces. It will allow us to continue the work that we are already doing to promote the living wage in the private sector, the third sector and all the public sector, even where our pay policy does not apply.
Those are real, tangible and meaningful measures and they are also legal measures. Competent Government does what it can within the law. The Government is proud to promote the living wage and will continue to do so.
16:52
Let us clear up a few things. We have been told again and again by the SNP this afternoon that our proposals are against EU law. I will come on to address that, because I do not believe that they are against EU law on advice from the European Commission. I will explore that with the Deputy First Minister.
Let us also clear up a few things as to commitment to the living wage in Scotland. Glasgow City Council was the first employer in Scotland to introduce a living wage for its employees. The FOI response that says that it is not in a position now to introduce the living wage—
Will Jenny Marra give way?
Let me finish the point.
The response says that Glasgow City Council is not in a position to introduce the living wage for workers on its contracts and specifically states that that is
“as per the guidance received from the Scottish Government”,
so it is guidance from the Scottish Government that precludes Glasgow City Council from paying the living wage.
In her closing speech, Nicola Sturgeon said that she would have the power to raise the minimum wage to the living wage in an independent Scotland, despite the fact that she thinks that it is against EU law. However, she fails to commit to that in her amendment to the motion.
I will tell a story about the living wage in Scotland and give an example from Dundee of how the living wage was won for 150 low-paid workers.
In November 2012, students of the University of Dundee started a campaign when they found out that 150 members of staff were earning less than the living wage. Of those 150 workers, 112 were women. Those staff are administrators, office staff and clerical staff—staff who are more likely to work in a second job, to experience stress or illness as the statistics tell us and to spend less time with their families because they have to work longer to put food on the table. They were mainly women. What began as a campaign by a few university students grew into one that was eventually supported by all the unions involved. After months of protesting, marching and arguing on campus, those students won the fight for the living wage to be paid to every member of staff at Dundee university.
The living wage was won in Dundee last year because the political will was there and the fight was there. That is what the SNP Government needs to show. I do not believe for a second that, if the students of Dundee university can win the living wage for 150 staff, the Scottish Government cannot use the power that is in the palm of its hands right at this moment to deliver the living wage for the thousands of workers who are working on its contracts.
I listened carefully to the reasons that the SNP gave this afternoon for rejecting our proposal to deliver the living wage to thousands of low-paid workers across Scotland. The SNP says that that would break EU law. I wish to challenge that assumption on three counts. First, legal advice from Thompsons Solicitors, which has been endorsed by a host of organisations, including the Scottish Trades Union Congress, the Poverty Alliance, Unison, the GMB and others, clearly states that, within the current EU rules, and taking into account European case law, the living wage can be delivered as a performance clause in public procurement contracts in Scotland, provided that certain criteria are met and, if necessary, that justification is given for doing so.
To my mind, any Government that is given such clear advice and that purports to be committed to the living wage would not think twice about using that advice and working with organisations.
It is not clear, but I assume that Jenny Marra is referring to Professor McCrudden’s opinion, which I quoted earlier. I wonder whether she would like to respond to the paragraph that I quoted earlier:
“I have not been instructed to consider whether such an amendment would be ... within the powers of the Scottish Parliament, and have not done so.”
Will the member respond to that particular point?
As a lawyer, the Deputy First Minister knows that law trumps legal advice, so let me tell her what the European Commission is saying on the matter. In a response in January 2013 to a question from David Martin MEP, the Commission said:
“Living wage conditions may be included in the contract performance clauses of a public procurement contract ‘provided they are not directly or indirectly discriminatory and are indicated in the contract notice or in the contract documents’.”
If the Deputy First Minister wishes to take issue with the clear guidance from the European Commission, I would be very interested to hear that.
As Jenny Marra rightly said, the actual law trumps legal opinion. I wonder whether she will comment on the actual case law of Rüffert v Niedersachsen, a case of the Court of Justice of the European Union, which says that it cannot be made a mandatory condition. That is real law. Will Jenny Marra comment on that?
If the Deputy First Minister was so committed to implementing a living wage across Scotland, she would take what I am referring to, from the European Commission, seriously. She would go back to her desk this afternoon, phone the European Commission and find out whether what I am saying is true.
I agree with Jenny Marra that it would be good if that European law would change. The First Minister will be in Brussels on Monday, and he will be raising the issue with the European Commission. Surely Jenny Marra will agree that, while the law is as it is, we cannot simply ignore it. Is it not better for her to get behind us as we do what we can in the Procurement Reform (Scotland) Bill to promote the living wage? She should stop posturing and start backing real progress.
You are in your last minute, Ms Marra.
It is absolutely ludicrous that the Deputy First Minister accuses me of posturing this afternoon, after she was photographed for the living wage and then instructed her members to vote against it in committee.
I very much hope that the First Minister will take David Martin’s question and answer with him to Brussels next week and ask the European Commission whether it is legal for Scotland to implement the living wage. The Deputy First Minister can then instruct her members to vote for the Labour amendment to implement a Scottish living wage across Scotland. It is the fair thing to do, and she knows it.
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