Cornwall, the Council and the Living Wage
Both nationally and locally in Cornwall there has been a lot of talk on the Living Wage. This is a wage rate set by The Centre for Social Policy at Loughborough University to ensure a basic by acceptable standard of living. It is currently set at £8.55 in London and £7.45 for the rest of the UK. This would pay someone working a 37 hour week a gross annual income of approximately £14,372.
The Living Wage is increasingly seen as an important policy tool in addressing the issue of low pay. In local government of over 400 councils in England and Wales, 82 are already paying or have committed to pay their employees the Living Wage. In addition all 32 councils in Scotland pay their employees the Living Wage. The question for the Council, is should Cornwall Council be a Living Wage employer? The short answer is yes; with the long answer more complex, as introducing the Living Wage will have an impact on other areas within the Council.
Currently, approximately 25% of the Council’s workforce is paid less than the Living Wage, the majority in schools. Or to put it more positively 75% are paid the Living Wage. I will give greater detail later.
First let’s look at Cornwall’s average earnings. This has increased from a little over £13,000 a year in 2004 to just over £17,000 in 2012. However, it would be a mistake to think that the whole of the Cornwall economy is low waged. Estimated analysis of 2010 Eurostat indicators show a wide divergence of average earnings linked to sector: from around £5800 p.a in ‘legal and accounting activities’ to £97,000 p.a in ‘scientific research and development’. Note that Eurostat data does not include Public Sector pay.
The Council has a good understanding of these pressures on individuals although they will inevitably vary in terms of household formation and pressures. Analysis by the Council’s Community Intelligence team indicates that average (band D) Council Tax costs, together with mortgage housing and utilities would require an annual income of £18,141 (not including food and clothing).
If we look at the wider Cornish Community, the figures on wages are far more worrying, as 20% of full-time resident workers earn less than £7.53 per hour (gross) and for part-time workers this is nearer 50%. This has an impact on welfare claims as 14.9% of the working age population in Cornwall receives DWP administered benefits (a ballpark cost of around £4m with Cornwall accounting for c1% of the national population) and 26.1% of households claim council tax or housing benefits (2012).
Getting back to Cornwall Council and the Living Wage; the council has 3131 contracts on the Council’s main pay structure paid less than the Living Wage. 2866 of these contracts are in Cornwall Council maintained schools (where the Council is the employer and has equal pay responsibilities). 265 of the contracts are non schools. 3131 represents approximately 25% of the work force. For me, as the Portfolio Holder for Children and Young People it is worrying that my portfolio is one of the biggest non-payers of the Living Wage. If there was a Living Wage the increase would have to be found from the Dedicated Schools Grant (DSG). However, I will be asking senior officers as to what can realistically be done to address the issue of low pay.
If Cornwall Council did decide to introduce the Living Wage, it would cost the Council £1.04m per year. This extra money would have to be found either by reductions in services, staffing levels or by Council Tax. Roughly raising Council Tax by 1% results in an extra £2m. The Government has capped Council Tax increases by 2% before a referendum is required. And as we all know, the Council is under extreme pressure with its budget with having to find £196m in saving in the next five years. So by introducing the Living Wage at the Council, it could have a far greater impact on the services the Council provides.
I will leave you with a question. If Cornwall Council were to introduce the Living Wage, should the Council insist that all contract with outside organisation and providers pay the Living Wage too? Note, that the RCHT not intending to implement the living wage and there has been no consultation with industry leaders in Cornwall.
*credit to Dawn and her team for much of the detailed information.