I’m Peter Webster, chief executive of Corps Security, and this is where I examine the issues affecting the security industry. My thoughts and opinions are intended to generate debate and whether you agree or disagree with them, you’re welcome to post your comments below.
When the Chancellor of the Exchequer, George Osborne, gave his budget to parliament on the 8th July, I’m sure I wasn’t the only one to be caught off-guard by his announcement of a £7.20 an hour National Living Wage for those aged over 25 from next year, rising to £9 by 2020. Although much of the other content was pretty predictable, this pronouncement really did catch people by surprise – something highlighted by the Labour front bench’s collective expressions as the details were given.
This welcome news will give a pay rise to over 1.4 million workers in our country and as regular readers of my blogs will know, the issues surrounding the National Minimum Wage and, more importantly, the need to move towards a Living Wage are close to my heart. Although perhaps not as excited as the Work and Pensions Secretary, Iain Duncan Smith, was at the time of the announcement, broadly speaking I am pleased that the security industry’s lowest paid workers will, at last, get a much deserved pay increase. It is fair to say that wage rates in the manned guarding sector have been a significant cause of concern for many years and have not helped our cause to improve the image of the security industry.
However, while the policy is a good one and should be welcomed, using the National Living Wage brand smacks of a deliberate attempt to cause confusion with the well-established Living Wage Foundation’s (LWF) Living Wage, and steal its thunder. As a point of clarification, the National Living Wage will replace the National Minimum Wage for the over 25s, although it remains in place for those who are younger. The National Minimum Wage is set by the Low Pay Commission. Meanwhile, the Living Wage Foundation will continue to offer its own Living Wage, usually different, figures.
Why are they different? The LWF Living Wage is calculated according to the cost of living, whereas the Low Pay Commission calculates the National Living Wage according to what it thinks the market can withstand. The current LWF Living Wage for London is £9.15 an hour, higher than what the government says its National Living Wage will be by 2020. Elsewhere the LWF rate is £7.85 an hour, 9% more than what has been proposed in the budget.
For what it’s worth, I would like to see more employers pay the rates outlined by the LWF Living Wage, wherever and whenever possible. Although its supporters will claim that the National Living Wage will reduce poverty and increased productivity amongst businesses, the LWF Living Wage could do so much more. I’m not alone in this view, as during 2014 the number of accredited LWF Living Wage employers more than doubled, with over 1,000 employers across the UK having now signed up.
Not surprisingly, the National Living Wage has been met with a certain degree of negativity, not just amongst Labour politicians and their supporters, most of which see it as a red herring. Stephen Nickell, a leading figure at the Office for Budget Responsibility (OBR), the government’s fiscal watchdog, has stated that the number of people in poor households who are likely to benefit from a higher minimum wage is very small. Similarly, the CBI has called the move a ‘gamble’ that risks politicising the process and causing problems for some small businesses.
The repercussions for the security sector will be interesting. At Corps Security, we already pay above the new National Living Wage on most of our contracts, and in the broader commercial environment I think the increase will be generally accepted. This would mirror my experience when the National Minimum Wage was introduced in 1998, although it won’t all be plain sailing. There will certainly be some organisations currently paying the National Minimum Wage that will have to adapt to the new rate by cutting costs and even reducing staffing levels.
Where I expect there will be problems is within the public sector, where there is usually a refusal to adjust prices to meet legislative change. Security services providers operating within these markets will be looking for some government reassurance that they will not be detrimentally affected. It will be up to the government to ensure that public sector organisations meet the cost of their changes in policy which could not possibly be predicted when the original bidding processes took place.
Another question mark surrounds the two million under-25s who are not covered by this announcement. There has been a concern that some employers will look to take on younger people simply so they can pay the lower rate. I hope that employers will take our approach to this, which is that whatever a person’s age, gender, religion or race, the rate for the job is the same. I’m sure that the reality will, however, be different.
Like any new legislation, this initiative will take some getting used to but I am happy that those in positions of power are, at last, taking the issue seriously. It’s just a shame that the name has been used so cynically, and I hope the Living Wage Foundation is able to continue its fantastic work and that we can all move towards a rate of pay that is commensurate with the overall cost of living.