I was pleased to open a rare Green/Independent MSP debate on in-work poverty yesterday.
The Scottish Green Party is campaigning for a £10 minimum wage for all by 2020, because no one should be expected to work for a wage that keeps them in poverty. That is the point of the debate; that is why we are campaigning.
During the referendum, we had plans for a more equal, jobs-rich and locally based economy, where work paid well. That principle is not divisive. I know that all MSPs agree that poverty is a bad thing, but do their parties’ plans add up to putting an end to in-work poverty?
The Greens’ £10 minimum wage will ensure that no one works for a wage that keeps them in poverty. We have for too long subsidised employers that pay poverty wages. Many of those employers are large multinationals that earn millions for shareholders, while their staff are paid poverty wages and kept off the breadline by public money. That corporate welfare must stop.
While the majority of children and working-age adults in relative poverty live in working households, at the other end of the pay scale, there are people earning millions of pounds. Chief executive officers in the FTSE 100 earn 400 times the average wage. Are those executives 400 times more entitled than the average worker? I do not think so. That inequality is profoundly damaging for society and wellbeing.
Ending poverty is inextricably linked to ending the vast gulf of inequality. Political scientist Susan George tells us to “Study the rich … not the poor”.
The Greens’ plans will link CEOs’ pay to the wellbeing of their lowest-paid employees. A maximum wage ratio for companies would mean that any rise in CEO pay required a rise for people on the lowest pay. That is only fair.
The Greens will introduce a wealth tax on the wealthiest 1 per cent—in other words, people who are worth more than £2.5 million.
Wage ratios and progressive taxation will tackle pay inequality, but vast differences in wealth need to be tackled, too. Recent Office for National Statistics data tells us that the richest 1 per cent of British households have the same amount of wealth as the poorest 55 per cent of the population. The amount of wealth that is held by the top 0.1 per cent has risen by 57 per cent over four years, whereas total UK household wealth has risen by only 12 per cent. Our wealth tax will tackle that drastic inequality and pay for public services.
The Green Party’s plan for social security is based on the idea that, as a society, we should treat those who are in need with compassion, rather than sanction and punish the poor. The post-world war two generation who built the welfare state suffered together, fought fascism together and mourned together. Those people’s collective will was that they should enjoy the benefits of peace together, but the welfare cuts have put people deeper into poverty.
It is a gendered austerity, too. Treasury data shows us that women have been hit hardest. Women are much more likely to be lone parents, they are the biggest users of public services and they are more likely to be affected by public sector job losses, pension changes and wage freezes. It is clear that any party that continues to talk about cuts has not been listening to Scotland’s women.
We will make the case for rebuilding a universal system without a poverty trap for people in work. We want to have a welfare system that does not subsidise poverty wages, that removes the stigma of benefits and that promotes equality. Green plans for a citizens income are emblematic of that approach. The Scottish Government’s expert working group on welfare recognised that a citizens income is one of the two main options for the future of welfare; it is the one that takes a universal approach and abandons means testing and complexity.
The introduction of a citizens income is not a change to be made lightly. It will require a reform programme to replace almost all benefits apart from disability payments with a simple, regular payment to everyone—children, adults and pensioners. It will require consensus from a broad coalition of civic society, but it is a transformative idea, and the beginnings of such a system already exist with child benefit and state pensions.
This week, the Scottish Government published analysis of severe and extreme poverty that describes how people in the lowest income bands have been pushed deeper into poverty by coalition cuts. A little over an hour ago, George Osborne sat down after confirming the Tories’ ideological obsession with pursuing their programme of austerity. The UK budget has just been announced. I doubt that many of us will have digested the whole lot, but the austerity ideology is clear.
I am pleased that the issue of apprenticeship wages has been raised. Some young people up to the age of 25 are working 30 hours a week for a monthly wage packet of £327.60. The UK Government plans to raise that hourly wage by 57p, to £3.30. Any rise is welcome, but not all sectors feel that way—even that small rise has disappointed the Confederation of British Industry. I recall that, during the Economy, Energy and Tourism Committee’s inquiry into Scotland’s financial future, the then boss of CBI Scotland said: “Inequality is an abstract term”.
It also suggests that we are on the right track if the free-market think tank the Institute of Economic Affairs says that the Low Pay Commission is being used “as a vehicle to reduce inequality”.
In October, the national minimum wage will be increased by 20p, to £6.70. That, too, is welcome, but is it enough? That increase has already been criticised for not tackling in-work poverty. The minimum income standard aims to define what households need in order to have a “minimum socially acceptable standard of living”.
The reference rate that it suggests for the lowest socially acceptable standard of living is £9.20. The Scottish Government analysis that I mentioned earlier is unequivocal. It says that, although employment remains a protection, it is “no longer a guarantee against poverty”.
Our plans for a £10 minimum wage by 2020 are designed to really make poverty wages history. Small businesses will need support, and all businesses deserve time to plan. The change will be introduced in steps, but the days of big business paying poverty wages with the taxpayer making up the difference must stop.
Another aspect to consider is the picture across Scotland. My city of Edinburgh is at the top for paying at least the living wage but, in rural areas such as Angus and Dumfries and Galloway and in post-industrial areas such as Ayrshire, between a quarter and a third of people earn less than the living wage. We need to spread the creation of jobs throughout Scotland as well as improve public transport and childcare to ensure that people can get to work, education and training.
Of course, low wages are not the whole story, but successive Governments’ actions have allowed—even promoted—the slide into a low-skill, low-wage economy. For example, the Scottish Government gave Amazon a £4.3 million grant, with a further offer of £6.3 million. Last year, Amazon paid just £4.2 million in United Kingdom taxes, despite selling goods worth £4.3 billion. The excuse that ministers have given is that Amazon creates jobs, but let us examine that claim carefully. How many jobs were promised, compared with what has been delivered? Are those jobs well paid, satisfying and secure? Moreover, what jobs have been lost as a result of such a big company being helped to dominate the marketplace, and how comfortable are we that its profits are not recirculating in the local economy? We need investment in sustainable industries that pay decent wages, such as great-quality food producers, clean chemical sciences, the digital and creative industries, medical and life sciences, construction, engineering and the low-carbon energy industry.
We have food banks in a country with no shortage of food and fuel poverty in one of the planet’s most energy-rich countries. Let us take the steps that we need to take to redress the balance, pay all a fair wage and become the kind of Scotland that we aspire to be.