Progress | Centre-left Labour politics

The national living wage: a smokescreen for cuts?

The vote to leave the European Union a few weeks ago is a great indication that there are millions of people in our country who feel that they are being left behind, not sharing in the growing prosperity of others.

And they are right.

Unemployment may be down according to certain definitions, but poverty certainly is not.

For one of the first times in UK history, low wages mean most of Britain’s poor families are in working households. The Institute for Fiscal Studies has found that two-thirds of children living in absolute poverty have at least one parent in work.

Meanwhile, the Joseph Rowntree Foundation has found that two parents in full time work, earning the new minimum wage earn £2600 less than what the public feels is a minimum standard.

The Child Poverty Action Group has found that child poverty reduced dramatically between the years of the Labour government under Tony Blair and Gordon Brown – but the number of children in absolute poverty has increased since 2010 by half a million.

Finally, the number of people living in poverty in the private rental sector has almost doubled to over 4 million over the last decade – more than 2 million of whom are in working families.

Even the introduction of the new national living wage, intended, in the words of the former chancellor, to ‘give Britain a pay rise’, has become a vehicle for reducing the take-home pay of thousands of long-standing, loyal employees in the retail, hospitality and care sectors.

Back in February of this year, I was approached by an employee of B&Q, who had been given proposed new terms and conditions, and thought he might be worse off as a result of them. In these new contract terms, the employee’s basic per hour pay was going to be increased (as a result of the national living wage) – but his overall pay would be reduced by £2,600 per year.

This is because B&Q planned to cut Sunday and bank holiday pay, as well as other discretionary bonuses – in short, everything that made B&Q an attractive employer, and allowed it to retain its staff.

I was pleased that after a great deal of lobbying, and a meeting with the B&Q chief executive, the company extended its period of compensation for employees for two years – promising that no one would lose out for the next 24 months.

But B&Q was just one of many. Over the course of my campaign, I was approached by employees from around the country, and from all sorts of different companies doing exactly the same thing.

There were the factory employees working for subsidiaries of Samworth Brothers in Lincolnshire, who are facing cuts to their overnight pay.

There were young baristas at Caffe Nero and EAT whose free lunches have been scrapped.

And, most recently, there are 7,000 staff at Marks & Spencer who will be losing out by thousands of pounds each year because the company is cutting overall pay, to fund an increase in basic pay.

I have had well over 100 M&S employees from around the country coming forward to me with M&S’s new proposals, with staff terrified for their futures. M&S are cutting Sunday and bank holiday pay, redefining unsocial hours and scrapping its pension scheme – leaving staff with over 20 years of experience at M&S significantly worse off.

In a meeting with its head of retail, M&S confirmed that 2,700 M&S employees will lose over £1,000 per year, and 700 will lose over £2,000 a year. Some of the employees who have got in touch with me are going to lose up to £6,000. To be clear, that is after their basic pay is increased.

M&S maintain that this is just a proposal. They cite their ‘compensation package’ (which compensates staff members for 30 per cent of their projected losses, not including how much they will lose in terms of pension cuts).

From the paperwork I have seen, and the experience at B&Q, I think M&S’s plans are a foregone conclusion.

And the recent discovery of Hermes using self-employed workers and paying them less than the legal minimum wage, alongside HMRC’s investigation into Sports Direct’s working practices, are just more examples of UK industrial policies which are letting down hard-working loyal employees – not least by undermining the integrity of government policy.

These are huge institutions we are talking about, not small local businesses. Their profits are in the millions, and they employ thousands of people.

The Labour movement can make a huge difference by targeted campaigning on this issue.

Given the present polling of the Labour party, we must figure out how to make a difference to working people while in opposition.

People who work hard and play by the rules need a defender in national politics. The Labour party has a duty to be that champion – as its name suggests.


Siobhain McDonagh is member of parliament for Mitcham and Morden. To find out more about Siobhain’s campaign, please visit her website here.

You can follow her on Twitter for most recent updates: @Siobhain_MP



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Siobhain McDonagh MP

is MP for Mitcham and Morden

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