Good morning. The first item of business is a debate on motion S3M-6216, in the name of Patrick Harvie, on a living wage.
09:15
I begin by recalling a hustings organised by the Poverty Alliance that I attended earlier this week, and in particular the Conservative candidate, who was a good, fun, feisty debater. He was very right wing but fun to debate with and keen to persuade the audience that Conservatives care about poverty. I believe him, and I begin the debate by acknowledging, and by asking the whole chamber to acknowledge, that none of us in the Parliament is secretly twirling our moustache and thinking what a great thing poverty is. We all care about it. We have different policies to try to address it, but the concern and anger that exist about the level of poverty in Scotland today should be, and rightly are, shared across the political spectrum.
However, caring is not enough. Even just finding policies to deal with poverty and people in poverty is not enough. If all that we do is ameliorate the effects of poverty, generation after generation will face the self-same problem. We will allow the same problem to continue to be created year after year, generation after generation, and successive generations of politicians will continue to have to come up with new policies to deal with poverty.
We must not be distracted from dealing with the underlying structural causes of poverty in the way that we run our economy. We must go beyond that and recognise not only that poverty matters but that inequality matters. It is about not only the level of wealth that people have, but their relative wealth. It is about how well we share wealth in society, not just how much economic growth we achieve as a whole.
I refer members to the Poverty Alliance briefing that has been circulated. It explains, to those who might not be aware—some people in Scotland and the United Kingdom who do not personally experience poverty do not always understand or acknowledge it and think that it is perhaps a thing of the past—that almost 70 per cent of workers in, for example, the hotel and restaurant sector earn less than £7 an hour. As the Poverty Alliance points out, three fifths of those workers are women; it also points out the gender inequality that exists in low pay in the retail and wholesale sector and the public sector. What we do not know about is what happens in the contracts that the public sector lets. What happens to the workers who are in the private sector but fulfilling public sector contracts? We do not have enough information about how many of them are low paid.
There are different ways of calculating a living wage. The Scottish living wage, campaigned on by the Poverty Alliance, trade unions and other organisations, is based on the Joseph Rowntree Foundation minimum income standard. A living wage of £7 an hour would bring 70 per cent of single adults who are currently living below that level up to that standard. There are other options. If the principle of a living wage can be agreed, we will need to look at the level at which it is set, how we increase it in line with rising living standards or inflation, how we uprate it and whether we should change it to a proportion of the average income. There are a number of models, but I hope that we can agree on the principle.
We are clearly failing to reduce inequality in society. I am sure that members of all political parties will be aware of the arguments made in the book “The Spirit Level”, which explains why a more equal society is better for everyone—raising some people up to a safety net at the bottom is not enough; we must have a fundamentally more equal society.
Our motion recognises a number of things that we have to do to achieve that. We need to return to progressive taxation and end the scandalous situation in which people on very high incomes pay a lower proportion of their income in tax than people on low incomes. We need to tackle high pay as well as low pay if we are going to become a more equal society: one that will increase health and happiness, reduce social problems—there are too many to list—and reduce in-work poverty.
As I said, the organisations involved in the campaign include a number of non-governmental organisations and trade unions, but political support has been expressed in the Parliament and elsewhere. I acknowledge the members’ business debate that Frank McAveety led in the chamber not so long ago. The motion was supported by 22 members of political parties—that support represents a clear majority in the chamber. Some of the quotations from that debate are telling. Frank McAveety recognised that
“we will have ... heated debates”
in the coming months and years about the difficult economic circumstances to come and the choices that may have to be made. However, he argued that
“the fundamental point is that we should ensure that folk are not left behind, particularly those on the lowest rung of our community.”—[Official Report, 17 September 2009; c 19806.]
That is crucial—it is the nub of the issue. We must move beyond the idea of a safety net at the bottom and stop thinking that, as long as people get on to that lower rung and do not fall off it, that is okay. We need to have a society that fundamentally respects the equal dignity of all people. That must be expressed in material as well as non-material terms.
Fairness is a concept that I think is in every political party’s manifesto for the UK election: fairness, fairness, fairness. However, it is a concept that is open to interpretation—it means different things to different people. We need to be moving towards greater equality. It has never been more objectively clear that the more equal societies around the world are
“happier, healthier, safer and greener”.
If we want to achieve those social goods, instead of simply hitting the reset button on the failed economic model, we must ensure that what comes out of recovery is fundamentally better than what went before. That means having a more equal society.
There are many things that the Scottish Government, the UK Government and local government should do—indeed, some local authorities are doing them, and I am sure that that point will come out later in the debate. The Parliament should endorse the principle that a living wage for all is the least that a rich society such as ours can afford.
I move,
That the Parliament recognises that unacceptable levels of poverty and income inequality continue to blight Scotland; notes that the income of the richest 10% of people in Scotland is approximately the same as the total income of the poorest 50%; further notes that, among working-age adults, in-work poverty is still on the increase; believes that a more equal society would be a happier, healthier, safer and greener society and that this must become a core objective of government at all levels, and therefore calls on the UK Government to commit to the immediate introduction of a living wage for all, set at £7 per hour, and on Scottish ministers to bring in this living wage for all public sector workers and employees of public sector contractors and for this change to be funded by tackling high pay in the public sector and by fairer taxation on both high pay and financial transactions.
09:22
I thank Patrick Harvie for bringing the subject to the attention of the chamber and for the tone that he adopted, which I hope we will all adopt throughout the debate.
The Scottish Government’s position is very clear. We believe that a more equal society—I emphasise “more equal”—would be a
“happier, healthier, safer and greener society”.
That is why we have made it such a priority.
We agree with Patrick Harvie that the levels of poverty and income inequality in Scotland are unacceptable. We firmly believe that a fairer distribution of income and wealth is key to tackling poverty. Our overall approach is to try to create a more successful country with opportunities for all. One of the great prerequisites for the abolition of poverty and for more equality in our society is full employment, and we regard the drive towards full and fuller employment as a key priority in tackling poverty and inequality.
With regard to the Government’s stated policy of redistribution, will the minister do one thing? Will he carry out an equality assessment of the £420 million cost of the council tax freeze—that is how much the Government has said it has cost—to establish who it has benefited most: those on the lowest incomes, or those in the highest income households?
In actual fact, we have commissioned more general work on the council tax and, in particular, on its impact on those at the lower end of the income scale, which in relative terms is very unfair compared with its impact on those at the higher end. For us, the key driver for abolishing the council tax is its unfairness. It is related neither to income nor to wealth but to residency alone, which is not even a proxy for income or wealth levels.
If the minister is arguing that people on low incomes are suffering particularly and that there should be greater equality, does he therefore agree that the council tax freeze has exacerbated inequality? Given that it does not benefit anyone who qualifies for council tax benefit, a disproportionate amount of the money that the Government has put into the freeze must, by definition, be going to people who are better off.
No. In fact, the council tax freeze has benefited many people who do not qualify for council tax benefit but who are nevertheless on a relatively low income. To qualify for that benefit, a person must be earning less than about £6,000 a year, and I would not call anyone who earns just over £6,000 a year particularly well off. The group of people, many of them pensioners, whose income is just above the threshold to qualify for benefit or rebate are spending a proportionately higher level of their income on council tax than they would pay under a local income tax. That is one of the reasons why we have been so insistent about the need to relate local government finance and revenue raising to the ability to pay.
Indeed, that would all be part of a wider reform that we would carry out if we had the powers to do so in this Parliament. In the meantime, however, I hope that whoever wins the election at Westminster—
Will the minister give way?
I will give way in a minute.
I hope that whoever wins the Westminster election looks at the fundamental issue of the interrelationship between taxation and benefits. Many of our taxes redistribute things the wrong way. For example, people who earn £150,000 a year pay far less, as a proportion of their income, in national insurance contributions than people who earn, say, £10,000 or £11,000 a year.
Will the minister give way?
Will the minister give way?
I give way to Patrick Harvie.
I am grateful. Although I agree with some of the minister’s points about tax and disagree with others, I am sure that he will move on to talk about the living wage and, principally, public sector workers for whom the Scottish Government is responsible.
I will indeed continue in that vein if I can get a chance to do so and if there are no further interruptions.
The Scottish Government’s targets are very much focused on solidarity and reducing income inequality. Indeed, our primary target, which is to increase the proportion of income received by the poorest 30 per cent of households in Scotland by 2017, was chosen specifically to ensure that we focus on the working poor as a priority group. Our response to the challenge of low pay is being driven forward through “Achieving Our Potential”, our flagship policy on poverty and income inequality, and we share the commitment to eradicate child poverty by 2020.
Because I want to comment further on the issue of low pay, I will not have time to comment on the amendments that have been lodged.
On the Scottish Government’s public sector pay policy, I must first of all emphasise that the Scottish Government is not responsible for all Scottish public sector workers, many of whom are still under the aegis of either the UK Government or local government. Moreover, many of those who work for the Scottish Government and its agencies are subject to UK national pay bargaining procedures instead of having their pay set at the Scottish Government’s discretion.
That said, addressing low pay is one of the Scottish Government’s four key pay policy priorities in its 2009-10 public sector pay policy. The policy itself encourages public bodies specifically to consider their lowest paid staffing groups and makes it clear that policies should take into account delivery of the solidarity target that I have just mentioned. The most recent pay deal for Scottish Government staff had a particular emphasis on assisting our lowest paid staff, and the rise is a reflection of our commitment to recruitment and retention. Moreover, everyone in the national health service in Scotland, which is by far our largest group of employees, is on the living wage.
Unfortunately I do not have time to say much more. I will try to make further points in my closing speech.
I move amendment S3M-6216.2, to leave out from “therefore” to end and insert:
“welcomes the action that the Scottish Government has taken to freeze pay for government employees on higher salaries and the progress that the Scottish Government is making toward achieving a living wage of £7 per hour for government employees and employees of the NHS in Scotland.”
09:30
I thank the Greens for bringing this motion to Parliament. I know that the issue is set out in their general election manifesto, and I wish them good luck in drawing attention to it through this debate.
However, I am happy to say that the debate allows me to draw attention to Labour’s own general election manifesto, which, in the “Living Standards” chapter, says, under the heading “Making work pay”:
“The National Minimum Wage is one of our proudest achievements. It protects and sustains millions of low paid workers. To ensure that the lowest paid share fairly in rising prosperity, the Low Pay Commission’s remit will have the goal of the National Minimum Wage rising at least in line with average earnings over the period to 2015.
To underline our commitment to helping the lowest paid we will ask all Whitehall Departments, within their allocated budgets, to”
consider how they can
“follow the lead of those who already pay the Living Wage. This will be supported by measures to address high pay in the public sector—reducing pay-bill pressure in the years ahead.”
Does Mr Whitton agree that, had the national minimum wage been introduced in 1999 at the £5 an hour rate that the unions and others asked for, it would now be more than £7 an hour and we would not be having this debate? In Ireland, for example, the national minimum wage is equivalent to £7.50 an hour.
I thank Mr Wilson for his intervention, but the fact is that he and other members of the Scottish National Party seem to have some difficulty with the national minimum wage. History records that when the Tories tried to talk out the National Minimum Wage Bill in 1998 the SNP MPs, including our own First Minister, were in their beds asleep. It was left to Labour MPs to vote through the legislation. The SNP’s current Westminster leader, Angus Robertson, was also asleep when he was unable to say in an interview what the minimum wage rates were. That is not a mistake that I think Mr Wilson would make. I remind Mr Robertson and any others who do not know that, from October, the minimum hourly rate will rise from £5.80 to £5.93 for those over 21; from £4.83 to £4.92 for those aged 18 to 20; and from £3.57 to £3.64 for those aged 16 and 17. There will also be a new minimum of £2.50 an hour for apprentices.
The SNP is not the only party that seems to have a problem with the national minimum wage; the Tories, too, have form with the policy. As we know, they were deeply hostile to it from the start, saying that it was the end of the world and would cost thousands of jobs. Where have we heard that recently? Our proposed increase in national insurance from next April has brought similar cries of doom and gloom and comments about “the jobs tax”.
I accept that our amendment does not go as far as the Greens would like, but it recognises that it was a Labour Government that moved to tackle inequality in pay and to legislate for employers who refused to give their workers a decent hourly rate. No doubt many of those employers are signing up to the Tory campaign against the proposed national insurance increase. It is interesting to note that the measure, which would cost Marks and Spencer, for example, around £10 million a year, is opposed by its chief executive Sir Stuart Rose, whose salary is £15 million a year. Many of his workers would not have to pay the increase in national insurance and, in any case, one way for the company to get over its difficulty is to cut its chief executive’s salary by two thirds. I also point out that a Labour London mayor introduced the London living allowance and a Labour administration at Glasgow City Council introduced the living wage rate of £7 an hour for all its workers.
As we have heard, low pay remains a real issue for almost 700,000 Scottish workers, the majority of whom, as Mr Harvie mentioned, are women, who face particular problems in the hotel, restaurant and retail sectors. In local authorities throughout Scotland, 20 per cent of the workforce—again, the majority are women—earn less than £7 an hour. We on this side of the chamber believe that progress towards the introduction of living wage rates should be maintained where possible, and I commend our amendment to Parliament.
I move amendment S3M-6216.4, to leave out from “recognises” to end and insert:
“believes that the National Minimum Wage Act 1998 was one of the most seminal pieces of the legislation of the twentieth century in terms of promoting dignity at work but regrets that it was finally passed without the votes of any Conservative or SNP MPs; welcomes the commitment in Labour’s 2010 manifesto to further increase the minimum wage at least in line with earnings over the next five years and the further extension of the living wage in government departments; notes the example set by Glasgow City Council in introducing a living wage for its employees, and supports the further extension of the living wage, working in conjunction with the tax credit system, to ensure that work always pays.”
09:34
I thank Patrick Harvie for raising the issue and for the tone in which he did so. That is important, because none of us should doubt the good intentions of all of us in Parliament, whether or not we take a different perspective on how we reach the aim. Patrick Harvie showed remarkable political maturity in accepting that similar aims might be achieved in different ways.
The Greens’ motion acknowledges the difference between what the Scottish Government can do and what the UK Government can do. That takes us into what is perhaps the core of the issue when we first consider the concept of a living wage—the question why the minimum wage, which applies nationally, is not simply used.
David Whitton reminded us of the minimum wage level. A single adult with no children who works full time for the minimum wage is eligible for tax credits. That is support from the Government so, on the face of it, there is an argument about why that support is not simply provided through a different minimum wage level. Mr Whitton also described the proposed minimum wage increase in October. After that increase, the same adult with no children who works full time and who is currently eligible for tax credits will see that eligibility cease.
That situation reflects the margins at which the minimum wage is set. Someone who works 40 hours a week for the minimum wage is eligible for about £10 a week in tax credits. That sum of money is not significant, but it makes a difference for people who receive that wage level.
It is worth noting that, according to the Institute for Fiscal Studies, income inequality is greater now than at any time since the 1950s. The IFS says:
“it is fair to say that youth unemployment and income inequality have risen under Labour, and that ... the incomes of households with the lowest incomes are now lower than they were in 1996-97.”
The key question to ask is why. If we are interested in tackling that, we must understand the consequences.
In another report, the IFS says that factors that we might consider to be drivers of inequality, such as the ageing population and the north-south divide, explain little of the change in inequality in the past 40 years. It says:
“More surprisingly still, the earnings gap between men and women has actually acted to reduce inequality, as the relative earnings of women have ‘caught up’ with those of men.”
The IFS says that the most important drivers of increased inequality are occupation—the earnings gap between unskilled workers and professional or managerial workers has widened—and education, as relative wages among better-educated members of the workforce increased throughout the 1980s. The IFS says that that is consistent with the idea that skills-biased technological change was responsible for much of the increase in inequality, as new technologies have complemented the work of skilled and educated workers but substituted for the work of lower-skilled workers.
The IFS also says:
“households headed by an individual with a degree are ... four times wealthier than households headed by an individual with no qualifications”
and that inequalities in wealth are much greater than inequalities in income.
If we want to tackle inequality, it is clear that the best way to do so is through a thriving economy, a more skilled workforce and levelling up rather than trading down.
I understand the argument, but it is curious that Derek Brownlee acknowledges that inequality in society increased all through the period of economic growth that we had before the recent recession. Why did economic growth over all those years not achieve what he says that it would achieve now? Is not progressive taxation the only way to reduce inequality?
We have a progressive tax system—
No.
The system might not be as progressive as Mr Harvie would like it to be, but it is undoubtedly progressive.
The point is that different models of economic growth exist. If we have a more skilled workforce and a higher economic growth rate, inequality will be tackled. That is the best way of dealing with inequality. It is much more important to focus on creating new skilled jobs and on growing the economy to tackle inequality and poverty.
I move amendment S3M-6216.1, to leave out from “a more equal” to end and insert:
“economic growth is the best means of tackling poverty and inequality, and therefore calls on the Scottish Government to pursue measures to boost the economy, create jobs and improve the standard of living for all.”
09:38
Like other members, I commend the Greens for initiating the debate.
I strongly disagree with the Conservatives’ approach. Our taxation system in the United Kingdom is not progressive. How can a taxation system be progressive when the lowest quartile of taxpayers pay six times as much in tax as a proportion of their income as do those who are in the highest quartile? The gap between the richest and the poorest has widened under Labour, from not a bad start when it took over.
The taxation system is not progressive and is incredibly complex. The United Kingdom’s tax code is the largest in the world at more than 1,000 pages; it overtook that of India when Gordon Brown was the chancellor. That does not necessarily cause problems for the very wealthy, who can hire expensive tax advisers and lawyers, but the constituents and people in Scotland whom we are talking about do not have the benefit of being able to recruit accountants or tax advisers and are faring worse.
Simply relying on a trickle-down approach is not right—we need to take a radical look at our taxation system. The Scottish Parliament and the Scottish Government can also change direction and must do so. The minister said that no equality assessment of the council tax freeze policy had been conducted. In the four years from 2008 to 2012, the council tax freeze will cost £700 million. Movement towards free prescriptions will cost a further £130 million and free school meals will cost £50 million. That £880 million package disproportionately helps high-income families rather than low-income families. That is a fact.
Mr Brownlee quoted the Institute for Fiscal Studies. Its assessment of a council tax freeze in England and Wales, which would be comparable to the freeze policy in Scotland, is that “the largest cash gains” would go to the richest households, as they tend to live in larger properties with the largest council tax liabilities.
That is precisely why council tax has a link with income, although Mr Purvis and the SNP always argue that it does not. If he argues that people who live in larger houses benefit more and are richer, and therefore that that is unequal, council tax must by definition be more progressive than he has spent however long in the past 10 years complaining that it is.
If Mr Brownlee wants to argue that council tax is progressive, that is a whole other debate. He would lose that argument with the low-income pensioners and other individuals who come to my advice surgeries, who would say, “The only way that the system can be progressive is if I move house.” How on earth is that fair or progressive?
The Government’s approach, which is costing £880 million, benefits high-income families that earn more than £100,000 a year more than it benefits low-income families.
What would make the biggest impact on inequality? One proposal, which is in our manifesto, is that of lifting the income tax threshold.
Will Jeremy Purvis take an intervention?
Jeremy Purvis does not have time for an intervention.
Given the difficult economic situations for the budget, it is not fair that the Government’s pay policy puts more cash in the pocket of someone who earns higher wages than it puts in the pocket of someone who earns lower wages. That happens because of a simple percentage increase in wages. The Government’s policy is to have a 1 per cent uplift, which would mean that the 5,300 people who work in the public service in Scotland who earn more than £80,000 would have considerably more money in their pockets than would someone who earns £15,000. One of the best ways of achieving the aim on which I think we all agree is to change radically the Government’s pay policy. It is regrettable that the Government has not said that it will do that.
I move amendment S3M-6216.3, to leave out from “therefore” to end and insert:
“believes that, during the tight financial climate, public sector pay policy should be structured to ensure that those on lower incomes benefit more than those on higher incomes from pay changes.”
We come to the open debate. I have no spare time, so I ask members to keep speeches tight, please.
09:43
The debate is important. It is not just about the mechanics of the living wage in isolation but about the bigger picture of social justice, fighting inequality, tackling low pay and the basic concept of liberty that is embedded in the Beveridge report and the Attlee Government’s creation of the welfare state.
Of course, no one suggests that the living wage is a magical golden bullet that will solve all Scotland’s most intractable social inequalities at a stroke, but I strongly support the work of the Scottish living wage campaign and of organisations such as the Poverty Alliance.
Some might say, “Doesn’t the minimum wage already look after low-paid workers?” The minimum wage was a major achievement by the Labour Government in 1998 and of course it addressed extreme low pay. I remember leaving the Commons bleary-eyed at 9 am after 28 divisions in an all-night sitting before the National Minimum Wage Bill was finally passed. I felt proud—not in a self-serving sense—that politics could make a difference for the thousands of low-paid staff in the Highlands and Islands and throughout the UK who received an immediate boost, such as bar staff in Aviemore, catering workers in Fort William and shop assistants in Inverness.
The minimum wage worked for extreme low pay, but a living wage is another tool to tackle the plight of low-waged workers in Scotland. We do not need a crystal ball or to search for the ancient predictions of the Brahan seer to work out whether the living wage will work. We have only to examine the experience in London, Oxford and Glasgow or, on the international stage, in Calgary, Los Angeles, Maryland, San Francisco or the 120 other cities throughout the United States and Canada that have a living wage policy.
In Calgary, economic analysis after the introduction of the living wage reported increased income for lower-paid staff; improved health and quality of life; and reduced dependency on Government assistance. The study showed that Calgary was able to attract better workers and improve productivity. The results were consistent with many of the other living wage cities in the US and Canada.
To come back to the Scottish context, where did the £7 an hour figure come from? Patrick Harvie covered that. Work by the Joseph Rowntree Foundation found that a single adult working full time needs more than £7 an hour to reach a minimum socially accepted quality of life.
What is the scale of the problem? Frank McAveety referred to that in our previous debate on the matter, but the figures vary according to which survey is used. The Scottish living wage campaign quotes the figure of 700,000 low-paid workers in Scotland, based on labour force survey data. The Scottish Government—as I hope the minister will testify later—uses the annual survey of hours and earnings, and the most up-to-date figure from that survey that I could find from the Scottish Parliament information centre yesterday was 386,000 low-paid workers. Let us consider snapshots in other sectors: there are about 5,000 low-paid workers in the NHS. Figures that I got from written answers show that, in my region, there are 869 in the Highland Council area, 407 in Moray, 631 in Argyll and Bute, 360 in Orkney and, interestingly, none in Shetland.
What about the effect on business? Private sector suppliers to local government, the NHS and the Scottish Government should be encouraged to build a living wage into contracts. A Scottish living wage employer award should be developed to encourage uptake by employers in the public, private and voluntary sectors. Guy Stallard, a director from KPMG Europe, is quoted by the Fair Pay Network as saying:
“We have found that paying the Living Wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism has subsequently increased.”
A number of organisations have incorporated that into their procurement policies.
Poverty wages are bad for business and communities and have no place in Scottish society, which is part of the sixth-biggest economy in the world. Making work pay is the route out of poverty. My experience on the doorsteps is that people want a hand up not a handout. It is about fairness and equality. More than 60 per cent of low wage workers in Scotland are women.
Finally, Presiding Officer, as I am running out of time—
Very briefly, please.
The living wage provides a virtuous circle, using the multiplier effect. We estimate that between—
I am sorry, but I have to move on. I gave you fair warning.
09:48
Patrick Harvie’s motion is timely, but it is in two parts. The living wage is one part, but the last lines in his motion—those about the gap between the richest and poorest in the public and private sectors, and about fairer taxation and financial transactions—must be part of the debate because, if we want to help our people who suffer from poverty and low wages, we must have an economy that is gearing up to give them work. We will do that partly by encouraging business and by ensuring that tax avoidance is taken into account.
The way in which the public sector attracts leaders to its ranks has to be competitive. At the top, that is the case, but it is also the case at the bottom because, although 9 per cent of people in the public sector are on lower pay, 29 per cent of people in the private sector earn less than £7 an hour. The public sector has set a lead and it is important for us to remember that the Scottish Government has attempted, through the solidarity approach, to get the emphasis on to taking people in lower pay out of the danger area.
In 2008, 454,000 people in Scotland were earning less than £7 an hour and 63 per cent of them were women. That is one of the major issues that the minister and others have raised: we must regard it as a central part of the argument about low pay and a living wage. Figures show that 70 per cent of people who work in hotels and restaurants and 51 per cent of people who work in the retail and wholesale sector earn less than £7 an hour. Those are large parts of the private sector. The Scottish Government would like to have the powers to deal with that, but there is no proposal in the Calman commission’s recommendations for the Scottish Government to deal with private sector pay.
Will the member give way?
I am sorry, but I do not have time.
Other countries that had heavy industry but have had to modernise their economies have found models with which to move forward and reduce the gap between those who are at the top of the tree and those who are at the bottom. That has been done by fairer, progressive taxation. If we are to have the money to support the development of the economy that will allow people in the private sector to get better pay because it is expanding, we must tax things such as international financial dealings. The SNP believes in such transaction taxes—the Tobin tax—and is looking to the G20 to find agreement on that. We must not punish countries that have been financially prudent, such as Canada and Australia, but we must agree to make that tax money available to help to tackle poverty not only here, but in the developing world.
Greece’s failure to capture tax from avoiders and the rich is part of the source of its debt—as well as its speculation in collateralised debt obligations. The point is that we must have a tax system that allows us to provide meaningful support to the people who need to get a living wage. David Stewart gave us the example that points the way: Calgary has a booming economy and that is why it has been possible to attract people to that area. We must have a developing economy in Scotland so that the private sector starts to catch up with the public sector.
09:52
I congratulate all those who were involved in the living wage campaign throughout the United Kingdom—I think that it started in London—and those in Scotland who have pursued it. They have played an important role in addressing and in asking us to challenge poverty and low pay.
Tackling low pay has not always been an area of consensus. Indeed, even inside the Labour and trade union movement, there was a long argument about the extent to which free collective bargaining would ensure that low-paid workers would be properly remunerated. There came a time when we considered the fact that there was a disproportionate number of women among the low paid and we recognised that the trade unions in themselves could not protect low-paid workers. Therefore, our movement came to the view that Government intervention was necessary to protect people’s entitlement to a basic level of pay to save them from the exploitation that some of us remember all too well, such as security guards being on £1.50 or £2 an hour.
Such exploitation was justified in the name of the economic growth and prosperity that are mentioned in the Tory amendment. It is significant that, when the economic crisis emerged, the first solution that some people within the business community proposed was that the national minimum wage was a problem, so perhaps we should get rid of it. We should commend the businesses that are responsible and that recognise that part of good business and their being in partnership with our communities is that they ought not to exploit people.
The briefing from the Poverty Alliance recognises that, in the debate, the living wage is not the same as the safeguards that have been put in place through the national minimum wage and the tax credit system. One is not a substitute for the other, but they reinforce our commitment to ensuring that people do not languish in low pay.
We have to consider whether any measure will make a difference to the people about whom we purport to care. The Tory amendment talks about economic growth as being the best way out of our difficulties but, beside that, we must have shared prosperity, which will not happen by accident. Government must introduce measures that will make that difference. The national minimum wage presents such an example, and the living wage creates such a challenge for us all, wherever we are.
Rob Gibson talks about the big picture—the huge issues—but that cannot be an alibi for not doing what we can, where we are. The Scottish Government must be challenged on its priorities. It usually describes its anti-poverty strategy in terms of three issues: the council tax freeze, the extension of free school meals, and free prescriptions. Any equality assessment of that strategy will tell us that those do not benefit the poorest people in our communities.
Jeremy Purvis’s party talks about exempting from paying tax anyone who earns less than £10,000 a year, but the Institute of Fiscal Studies tells us that the beneficiaries of that policy would be three of the four wealthiest groups in the income table. I wonder what equality assessment has been done on that. We need an honest and focused approach, and we need tough targets and monitoring. I regret that the Scottish Government has not continued the challenge of producing an annual report on whether it is meeting its targets on poverty, because such reports can be a spur to action.
I would like the minister to clarify what has been done by the Scottish Government. I understand that although Nicola Sturgeon costed a package for introducing the living wage to the NHS, it was vetoed by John Swinney. Is that true? Has the Government considered how it can use procurement policy not just in its powers to address the needs of public sector workers but to challenge the private sector to improve the scandal of private sector low pay? Will the minister support Glasgow’s approach? Will he acknowledge housing associations that are implementing the minimum wage? Will he, when he sums up, identify not just the principle that he believes in, but the areas in which he has control and power in terms of that principle’s being implemented?
09:56
This is not the first time that the Parliament has debated a living wage and poverty, and it is not the first time that I have spoken on the issue. So important is the subject, however, that I congratulate the Scottish Green Party on bringing it back to Parliament for debate.
The health of society is inextricably linked to inequality. It is worth reminding ourselves of some of the basic facts. In a nutshell, the United Kingdom is one of the most unequal of the world’s developed countries. That inequality has widened considerably in the past couple of decades and, most important, has grave consequences for crime, health and educational attainment—in fact, for any parameter related to individual and societal wellbeing that we care to mention. The elimination of inequality, therefore, should not be an optional add-on to a party’s policies. Parties that do not put it at the top of their agenda do not deserve anyone’s vote—not even the votes of the superwealthy. Research shows that even the superwealthy are not immune to the ill-effects of the social malaise known as inequality.
Let us look at some of the figures. One in five people in the UK lives in poverty. Since 2002, the poorest tenth have become £9 a week poorer and the richest tenth have become £94 a week better off. According to the Office for National Statistics, the poorest fifth pay more tax as a proportion of their income than the richest fifth and there is overwhelming evidence that socioeconomic mobility in the UK is a myth. UK Government figures that were released this year show that in England, the lives of children from families of low socioeconomic status, who have the same high IQ as children from families of high socioeconomic status, start to diverge at the age of only 22 months. That is socioeconomic determinism.
According to Ben Morgan of Oxfam, even if we add up the value of everything people at the bottom of society own, we will still find them deep in debt. They do not just have next to nothing; they have less than nothing. They are people who play by the rules, he says, but who still need to borrow to stay afloat, however hard they work. It is impossible to live like that endlessly. The mortality figures bear Mr Morgan out: the poor die young. According to the United Nations Children’s Fund, the life expectancy of a child born in Calton in Glasgow is 28 years less than that of a child born just a few miles away in Lenzie. In short, inequality kills.
So, what are we going to do about it? We cannot raise everyone to the wealth of the super-rich. The planet does not have the resources, and emphasising individual greed does not benefit society. By all means raise tax on the superwealthy and institute a Robin Hood tax, but before that we should clamp down on tax evasion and avoidance. If one totals estimated evasion, avoidance and otherwise uncollected tax, tax dodging in the UK is estimated at £130 billion annually. There is no need for cuts in public expenditure; just deal with the tax evaders.
If we want to encourage people to pay tax, we should stop turning our money into nuclear weapons, profits for arms manufacturers, and the deaths of hundreds of thousands of civilians and hundreds of service personnel. There should be no more weapons of mass destruction, no more illegal wars and no more lies.
We could set maximum wage ratios in public bodies. With the huge amount of evidence to show that inequality is a cancer, the various Governments in the UK can and should lead the way by setting maximum wage ratios for public bodies. We should set a decent minimum income for all, funded by redistributive—not regressive—taxation, by savings on military expenditure, and by scrapping identity-card schemes.
Furthermore, if we institute a living wage, we can give people the dignity of living on their earnings, instead of their suffering the humiliation of working while still being unable to support their families. They will be happier and healthier, and they will undoubtedly live longer. “A living wage” is well named.
10:00
I am pleased to contribute to a debate on such an important subject. The living wage is not a new idea and the achievement of a living wage has been a campaign in the Labour movement for nearly 100 years. The Independent Labour Party first debated the living wage programme in 1924, and adopted it two years later at its annual conference. Even so, there was considerable debate about it among socialists at the time. One major argument in the ILP was that a living wage was unachievable in a capitalist society. James Maxton made the point that while the ILP wanted socialism, the workers wanted a living wage, and the fact that capitalism could not provide it was a big propaganda point against capitalism. As Johann Lamont said, the trade unions inside the Labour Party were concerned that it might interfere with free collective bargaining. However, an accommodation was reached. The ILP’s living wage policy applied to Government employees first, followed by workers in firms receiving Government money—another point that was made by Johann Lamont—and then, after two years, to all other industries.
That is happening at the moment. In March last year, following London’s action five years ago, Glasgow City Council adopted the living wage model for its staff. It is especially pertinent that we are debating the issue between international workers memorial day yesterday and May day at the weekend—a holiday that was given to workers by the late Michael Foot. Yesterday, I spoke at the third international workers memorial day service at Summerlee heritage park, a museum in my constituency, which was organised by North Lanarkshire Trades Union Council. There was also an event there in February to launch the NLTUC’s campaign for a living wage of £7 an hour in Lanarkshire.
Since then, I have been trying to engage my constituents in supporting the campaign because it is important that they do so. To inform them about it, I included an article on the campaign in my most recent newsletter. However, I was badly let down by a company called Mailbox Nationwide Ltd, and my newsletters have not been delivered to the vast majority of my constituents, which is extremely disappointing. The company has been blasé about it. Unfortunately, it means that my constituents do not have the appropriate information to help in the campaign to press the council on that important policy.
The living wage campaign is about securing a decent pay packet that allows workers to access housing, pay their bills, feed and clothe their families, and have disposable income to spend on activities that better-off people take for granted. In February, Richard Leonard, writing in the Morning Star, pointed out that a wage that was set at the London rate of £7.60 an hour would lift 25 per cent of the entire workforce in North Lanarkshire above the breadline. Even if North Lanarkshire adopted the Glasgow rate of £7 an hour, the lowest paid fifth of all women workers would benefit. In a news release from the GMB union, Richard Leonard also made the point that part-time women workers living in the Coatbridge, Chryston and Bellshill UK Parliament constituency receive the poorest pay in Lanarkshire, with more than 60 per cent—nearly 5,000 women—on less than £8 an hour. It is a major equality issue; a living wage would have a dramatic impact on low-paid part-time women workers, and would help in the quest to close the unacceptable gender pay gap.
There can be no doubt that Labour’s minimum wage was a radical step in supporting workers. When it was introduced it raised the floor for the lowest paid 20th percentile in North Lanarkshire. Unfortunately, many employers simply use it as the rate for the job, and there are still too many working poor people in our society. I hope that North Lanarkshire Council heeds the call for the policy, as it would be fitting for the council to become one of the first to implement a living wage. The ILP championed the policy in the 1920s, and three of its socialist members were linked to Lanarkshire. Bargeddie was the childhood home of John Wheatley, Jennie Lee was first elected to Parliament as a Lanarkshire representative at the age of 24 and, of course, Keir Hardie was born in Lanarkshire. In Parliament in 1912—almost 100 years ago—Keir Hardie called for basic workers’ rights, such as a maximum eight-hour working day and a minimum living wage that matched the cost of living. That is what we should now be pursuing.
We move to the wind-up speeches.
10:04
The debate started with Patrick Harvie saying that it is not sufficient for parties simply to care about the issue, because sentiment will not make the difference that we need. I agree. We need to look at actions, both those that the parties promise in their different approaches and those that they have taken in government, whether at UK or Scotland level.
Johann Lamont quoted the Institute for Fiscal Studies review of the tax policies of all the parties. It is fair for her to quote that report, but let me quote in full what it said about our proposal to lift the tax threshold
:
“In isolation, this giveaway could not be described as progressive, but to consider the distributional impact of the Liberal Democrats’ package as a whole we must also consider who would lose from the tax rises they would introduce to pay for this tax cut”.
What makes the policy progressive is not the proposal in isolation, but the fact that we would pay for it by a mansion tax on properties that are valued at more than £2 million and, as I said in my opening speech, by closing the loopholes for those who can afford tax advisers and who thereby contribute to the £40 billion of tax avoidance that has continued during the many years in which Johann Lamont’s party has been in UK government.
How many properties in Scotland are valued at more than £2 million and would therefore qualify for the mansion tax?
For band G and band H properties, the minister will know the figure. He will also know that taxing properties in that way would allow us to lift 533,000 people in Scotland out of paying income tax. He has the figures, so I am sure that he will be supportive of the policy when he has regard to them. Indeed, that shows one of the benefits of being part of the United Kingdom. If we have a United Kingdom policy that recognises that Scotland has more people on lower wages and fewer £2 million properties, perhaps we can be more progressive across the UK so that the south-east of England, which the minister is forever condemning and criticising, becomes a little bit more redistributive within the United Kingdom.
Let those who seek to raise such issues be clear about the effect of their own policies. As I pointed out, for the period 2008-12 the Scottish Government will have provided a £700 million tax cut through the council tax freeze. We know that the 130,000 properties in band A and households with less than £16,000 will not gain from the council tax freeze. We need openness from the Government on that.
Finally, the SNP’s Rob Gibson said that low pay occurs particularly in the hotels and restaurants sector, but he suggested that the Scottish Government can do nothing about that because it has no levers over the economy. I gently point out to him that hotels and restaurants—in his area and in my constituency—are now facing increases in their tax bills, for a tax that is fully devolved to his Government, of up to and over 100 per cent. Last week, John Swinney finally wrote to me to confirm that a number of options for transitional relief are available to hotels and restaurant businesses. However, as Rob Gibson knows, the SNP voted against any such support. Does he think that such increases in devolved taxation, which have been introduced while his party is in government, will have no impact on jobs and wages? I hope that he will reflect on that policy, as I suspect that the scale of the increase will have an impact.
10:09
In the main, the debate has been very good and has had the appropriate tone, which Patrick Harvie set in his opening speech. With levels of poverty in Scotland that are unacceptable and with in-work poverty on the increase, the Conservative response is that we need to boost the economy so that jobs can be created. As a policy response, our priority is to keep people in work and to try to create new jobs to help more people to get into work.
The debate takes place at a time when unemployment has again been on the increase. The most recent figures, which were published last week, show that the number of unemployed people in the United Kingdom has increased by 43,000 to 2.5 million people. In Scotland, the figure increased by 6,000 to a total of 208,000. Combined with the inevitable fiscal squeeze on the Scottish budget, those figures suggest that we face a serious issue.
However, the debate so far has not explored the potential impact of Mr Harvie’s proposals on the private sector and, from a money point of view, on the public sector. The private sector is currently struggling. Businesses are trying to keep their heads above water and are struggling for survival. My slight concern about the motion and about the implication of what many contributors to the debate have suggested is that the proposals could cost jobs. The Poverty Alliance’s very helpful briefing suggests that its proposals would benefit 60 per cent of employees in the retail sector. If the retail sector was forced to increase the wages of 60 per cent of its employees, that would inevitably cost jobs and make it extremely difficult to create new jobs in that sector. For the hospitality sector, the figure was put at 70 per cent.
Does Gavin Brown accept that, even for the private sector, a question of will is involved? Any private sector business that was willing to have a maximum wage ratio of 10:1 would be able to afford the policy.
However, Mr Harvie must accept that most, if not all, private sector companies are bound by contractual entitlements at every level of the organisation. Whether at the lowest level, in the middle or at the level of senior management, there are contractual entitlements that companies cannot simply ignore. Ultimately, if companies did that, they would end up before an employment tribunal and would have to pay the money anyway, in addition to the legal costs.
As regards the impact on the public sector, budgets have already been squeezed this year. According to the Centre for Public Policy for Regions and according to the Scottish Government’s chief economic adviser, the outlook for the next five years is extremely worrying. My concern is that, given that there will be a fixed amount of money coming in, an increase in the wage bill now will inevitably lead to jobs being lost and jobs not being created.
For those reasons, the Conservative party will vote for the amendment in the name of Derek Brownlee.
10:13
I thank Patrick Harvie for bringing the debate to Parliament. From different angles, we have expressed our shared values about the desire for a more equal society. Members have highlighted how low pay has an impact on certain sectors within our communities, in particular on women. We have heard about the social justice dimension and the impact on families. We have also heard about the benefit that a living wage can bring to society. I welcome the minister’s desire for full employment, which is an objective that we share.
I want to spend a couple of moments on the business case for a living wage. Many of the research documents that are available to us, including a study of the living wage in London, identify that the benefits of the living wage include easier recruitment and retention, reduced recruitment costs, higher-quality staff, better attendance at work, better productivity, motivation and loyalty, and better-quality service. My colleague David Whitton was about to mention the Staffordshire University business school study on the economic impact of the living wage in Stoke-on-Trent, where the economic multiplier effect—that is, the impact of the living wage on the economy—has been very positive. The study concluded that, for every £1 an hour more that was paid to a public sector care worker, £1.63 was injected into the local economy. That suggests that, combined with the social values that we have already expressed, a living wage would be “a smart business move”, in the words of Guy Stallard, who is the director of KPMG Europe. Fair Pay Network quotes Guy Stallard as saying
:
“We have found that paying the Living Wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism has subsequently increased.”
Therefore, a strong business case can be argued in favour of the living wage.
The debate has raised some interesting subjects, including the council tax freeze. I recollect the interesting work that the Glasgow Herald carried out in relation to Scottish Government ministers and the benefit that they have gained from the council tax freeze. We should reflect on the points that Mr Purvis made on that issue.
Local income tax is not often mentioned, but we did hear a mention today of that unworkable tax, which was condemned by most of Scotland. Perhaps we will hear about it again in the near future.
Ironically, Mr John Wilson challenged my colleague David Whitton on the subject of the national minimum wage. The SNP slogan was “Stand up for Scotland”, but SNP members were not able to get out of bed for the low-paid people of Scotland.
We should acknowledge the good work that was done by the Labour mayor of London, who introduced the living wage, and by the Labour-led Glasgow City Council. We need to provide good examples of the social impact and benefit of a living wage, as well as the economic impact, which I have sought to argue for this morning.
Johann Lamont asked some key questions, which I will repeat to the minister, in relation to the powers that are available to him. The SNP often talks about the powers that it does not have, but the Scottish Government does have powers in this regard, which it should be using. The point that was made about the debate between the health secretary and the finance secretary over the NHS and the living wage was particularly interesting. It would be nice to hear an answer on that, and on the procurement strategy and policies of the Scottish Government, and the impact of that on advocating the living wage and making it a reality. There is also the impact on Government departments and pay policy to consider.
The living wage provides a virtuous circle of spending in local communities, with the economic multiplier that it brings to the local economy. It is fairness in action for both the employer and the employee. It is a good marriage between economic efficiency and social justice. I seek members’ support for the amendment in my name.
10:17
I agree with Gavin Brown and Andy Kerr: this has been a fairly civilised and good debate. It is perhaps a shame that it is restricted to just over an hour, as the subject is very important. I will try to answer the points that have been put to the Government as far as I can within my time, and to explode some myths that have been perpetuated yet again.
The Labour Party’s commitment to a living wage would be more credible if it had done anything in its past 13 years in power to implement it, which it has not done. As Elaine Smith articulately pointed out, it has been Labour Party policy to have a living wage since 1924, 86 years ago. During the interim, there have been six Labour Governments, yet we still do not have a living wage. The Labour Party has a record of failure and incredibility on the issue.
Will the minister take an intervention?
The Liberal Democrats talk about a mansion tax. To impose a mansion tax in Scotland would require them to undermine the Scotland Act 1998 totally and to override the powers of this Parliament and the rights of local authorities.
Will the minister give way on that point?
No, I will not. They cannot even tell us how much money the mansion tax would raise—and they talk about prudence.
Well, if the minister would—
The member could not answer the question when I asked him it, so he should sit down.
As far as myth is concerned—
Will the minister give way?
The minister is not giving way, Mr Purvis.
On the myth about the National Minimum Wage Bill, let me point out that there were 33 Scottish Labour MPs in bed at the time, too. Indeed, Tony Blair was in bed at the time of the division that Mr Whitton referred to. Facts are chiels that winna ding—that is the reality.
The other myth, which Johann Lamont articulated, is that the Cabinet Secretary for Finance and Sustainable Growth tried to veto a plan to implement the living wage in the national health service that the Cabinet Secretary for Health and Wellbeing proposed.
Will the minister take an intervention?
That is a lot of nonsense. As Andy Kerr should know, being a former health minister and finance minister, we have actually implemented that plan from 1 April.
The minister is feart.
If we have implemented it, how can it have been vetoed?
Feart!
Ah’m no feart o you, Duncan.
On the wider issue, the current lowest rate of pay in Scottish Government core activity is £6.53 per hour. Under this Government, that will increase to £7.23 an hour from 1 August. Unlike the Labour Government in London, the SNP Government in Scotland is implementing the living wage.
Will the minister take an intervention?
The minister is not taking an intervention, Mr McNeil.
Labour has had 13 wasted years; we have had three productive years, in which we are implementing the policy that Labour failed to deliver for 86 years.
Of course I pay tribute to Glasgow City Council and to the leadership of Steven Purcell—we have done so publicly. Elaine Smith has referred to North Lanarkshire Council. It is the only other Labour-controlled council in Scotland, and it has had to be brought screaming and kicking to implement the equal pay and single status strategy, which—
Will the minister take an intervention on that?
No—the member did not sit in on the debate.
Only now is North Lanarkshire Council being brought screaming and kicking to implement that pay strategy, at a very late hour. We will take no lessons from the Labour Party on the living wage. It is to the eternal shame of the Labour Party that over the past 13 years the level of income inequality in the United Kingdom—under Gordon Brown’s stewardship—is now the worst that it has been in decades. That is Labour’s record. We are proud of our record. We are delivering the living wage, not just throughout the national health service in Scotland but throughout every area of government for which we are responsible. We can be proud—but not Labour.
10:22
I thank Alex Neil for his kind remarks about my constructive tone. Oh, the tragic irony.
Seriously, I recognise that Alex Neil and members of other parties have acknowledged that the debate is not just about poverty; it is also about income inequality. In his opening remarks, the minister was challenged by members such as Johann Lamont and Jeremy Purvis on the impact of the decision to freeze the council tax. There is an entirely valid debate there, which I will address in a few minutes, in responding to Jeremy Purvis’s points.
Does Patrick Harvie regret that the SNP whips prevented someone with a great record on this issue from participating in the debate? John Wilson has been involved in the campaign for a living wage for many years. Does Patrick Harvie agree that it is a disgrace that the SNP whips prevented that man from speaking in this debate?
I would very much have welcomed his contribution to the debate.
Let me move on. There are measures that the Scottish Government can take. Alex Neil said that the debate is not all about the Scottish Government, and that we should consider local government, too. The Scottish Government has the power to use the historic concordat, single outcome agreements and so on to ensure that local government is delivering in this respect. The minister said that the Scottish Government cannot control or regulate the private sector. Yes, it can, through procurement—as Johann Lamont mentioned—and also through the various agencies.
Let us consider, for example, the tourism sector and the support that Government agencies give to it. That support could be contingent on the adoption of a living wage. We cannot directly control what the UK Government does but, in many subject areas, we have shown that, when Scotland takes a bold stand, it has an impact across the political culture and among all political parties throughout the rest of the UK. We can give leadership.
David Whitton asked us to recognise Labour’s record on the issue. I entirely do so. I agree with aspects of Andy Kerr’s amendment. I entirely agree that
“the National Minimum Wage Act 1998 was one of the most seminal pieces of the legislation of the twentieth century in terms of promoting dignity at work”.
I hope that David Whitton agrees that the 1998 act in itself is not enough but needs to be built on and developed. An uprated minimum wage of £3.64 per hour is unacceptable. We must acknowledge the age inequality in the minimum wage system.
Jeremy Purvis’s comments were important. He made a case against the council tax freeze. There is a case for and a case against the freeze, and we can have that debate. I might have much sympathy with the argument that Jeremy Purvis made; other members might have less sympathy with it. However, his comments were important for another reason. We must acknowledge that a difficulty that we have arrived at across the political culture is that all political parties, whether they are in government or in opposition, have found themselves painted into a corner. Throughout my life I have heard ministers from the four other political parties that are represented in the chamber today allowing tax to be portrayed ever more starkly as a political villain. We are told that public services are good but tax is bad. That just does not add up. We have had promise after promise of Swedish levels of public spending and public services, with American levels of tax. That cannot work and we should not be in the least surprised that after decades of such talk we have become an ever more unequal society.
If we are to turn that round and reduce inequality, we need our whole political culture to change. We need greater recognition that tax—paying collectively for public goods—is a positive thing in society. On the day when I see a Government-sponsored television campaign that urges people to shop tax avoiders that is backed by as much money as are the campaigns that ask people to inform on benefits cheats, I will know that we have made progress. Far, far more money is lost to the Exchequer through tax avoidance than through people in poverty trying to play the system instead of sitting back and letting the system play them.
Derek Brownlee acknowledged that inequality is important. However, we must recognise the need for progressive taxation instead of the current system in which vast salaries are paid on the false premise that a tiny group in society have some kind of magical powers and we must not lose the best of the best—that is a lie and a con and we have to throw it out. If we want a more progressive taxation system, we need to challenge those values.
Johann Lamont reminded us that there are people in the business community who will take any opportunity to challenge or criticise the minimum wage.
Political parties, instead of using the UK election campaign to compete on policies to crack down on tax avoiders and bonus junkies, are courting the tax avoiders and the companies that they run, as leaders of the business community. The parties are even seeking those people’s advice on the tax and national insurance decisions that face us. That is the political culture that we need to throw out if we are to become the more equal society that all members have said on paper that they support.
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