Why I am supporting @TonyRobinsonOBE’s petition for a #LivingWage and fair payment terms

Two simple ways for national and local government to boost the UK economy.

If you were at the East Anglia SME Business Forum (#EASMEBF) in Dunston Hall on Thursday 7 Nov (or at similar events earlier this year), you might well have heard me sounding off (to those who would listen) about how the UK government should boost the economy with two simple (and ultimately self-funding) measures: prompt payment of invoices and a Living Wage. Thankfully I am not the only one making these suggestions – and the calls are coming from across the political spectrum, including from many supporters of the free market (like me).

Pay up on time

The first was to ensure that all government departments and government supported organisations (Quangos and such), whether local or national, paid all their suppliers’ invoices within 72 hours.  There are two reasons for this – one moral and the other economic.

The moral case is that these suppliers have provided the goods and services as agreed and should not be left waiting for payment. Government (unlike private enterprise) does not have to worry about cash flow – it can always fund its payments out of borrowing or revenue. Society (all of us) should not be riding on the backs of people who supply it with goods and services (many of us).

The economic case is that cash flow is the big killer of businesses – particularly micro-businesses and Small and Medium Sized Enterprises (SMEs). So by paying all suppliers faster, the government makes it less likely that those companies (or their suppliers) will have cash flow problems. This would mean fewer companies going into administration, which leaves creditors out of pocket and employees out of work. A more reliable cash flow might also make it easier for some companies to borrow to fund expansion – so boosting growth.

Fair pay for a fair days work

My second point was that all levels of government should ensure that everyone working for the state (whether directly or on contract) is paid a Living Wage (currently put at £7.65 an hour by the Living Wage Foundation) rather than just a subsistence minimum wage (of just £6.31 an hour). Again, there are good moral and economic grounds for this.

The moral justification is that we all benefit from the work of these people and they are often among the most vulnerable in society (many a product of shortcomings in our state education system). We should at least treat them with the decency and respect we’d want for ourselves. We (society) should not be riding on the backs of the weakest, simply because they lack the means to negotiate more equitable rates of pay for themselves.

It also makes good economic sense to pay the lowest paid a Living Wage (which, let’s face it, is still pitifully low). For a start, it would reduce the amount they have to claim in working tax credits and other complex benefits that are costly to administer. People would also be able to plan their lives more effectively, including spending more time with their children, which would mean fewer chaotic and failing families (with all their associated social costs).

According to KPMG, which supports the Living Wage, some 21% of Britain’s 25m workers are paid less than the Living Wage. Of these, some 891,000 would are on the minimum wage. Increasing their pay to £7.65 an hour would make them some £2,500 a year better off.

KPMG UK (which has paid the Living Wage, as a minimum, to all directly employed staff and those employed by its sub-contractors and suppliers since 2006) reports that employee turnover among its contracted cleaning staff has “more than halved since paying the Living Wage.” There is also good evidence to show that paying the Living Wage increases productivity by boosting morale and reducing levels of employee sickness caused by the stress of working multiple jobs just to make ends meet. “Paying the Living Wage is not only morally right,” says Boris Johnson (Mayor of London), “but makes good business sense too.”

Currently, QE is supporting the economy but, in the words of a leading hedge fund manager, it is the “biggest redistribution of wealth from the middle class and the poor to the rich ever.” Paying the poorest workers a Living Wage would help (in a very small way) to redress this. It would also enable them both to save and to spend more, both of which would help boost the economy (since saving is used to fund investment elsewhere) and increase tax revenues.

The government (local and national) should require these things of its suppliers – as part of those suppliers Corporate Social Responsibility (#CSR) commitments – something that many companies seem to go on about, without really understanding what social responsibility means. Apparently the European Commission has clearly stated that applying such socially responsible conditions to public sector contracts, particularly relating to paying the Living Wage, is fine provided they are not discriminatory – so there is nothing stopping this, except a lack of political will.

Now there’s a petition

So I was delighted on Saturday 9 November to see, on twitter, that @TonyRobinsonOBE has started a petition urging the UK government to pay its bills on time and pay the Living Wage as a minimum. But he went further, he urged the government to use its powers of negotiation (rather than legislation) to persuade all government suppliers to commit to paying all invoices within 30 days and all employees the Living Wage as a minimum, if they want to win government contracts in future. In other words, make those bidding for such lucrative contracts “an offer they cannot refuse.”

This approach appeals to me because it is using government as a force for good – setting the agenda/leading by example whatever you like to call it – without going down the complex (and anti-free market) route of legislation. It also doesn’t force an increase in costs on the very smallest companies, which sometimes struggle to employ people on the minimum wage as they start to expand. And it doesn’t deter companies from doing business in the UK (since they don’t have to apply for government contracts if they don’t want to or can’t make them pay on these terms).

Socially Responsible Investment (#SRI)

I am also pleased to see that Socially Responsible Investors, such as CCLA, are now considering a Living Wage as an important factor for their ethical investments.  The more private investors who can put pressure on their SRI fund managers to do this the better. In time, we might hope to see paying a Living Wage as an integral part of all Corporate Social Responsibility (#CSR) policies. So please sign Tony’s petition today and help improve the lives of millions of people.

@HuwSayer

@Business_Write

What to do with the Lords?

If we must have a second chamber then it must have democratic legitimacy if it is to act as a check (though not a block) on the Commons and initiate some laws. Since people complain about the lack of proportional representation when voting for MPs, the second chamber should rectify this deficiency. However, since using direct elections to select representatives for a second chamber would undermine the primacy of MPs, we need a system that is both indirect and proportional.

The second chamber should have just 300 members (half the number of the, to be reformed, Commons). We would only select these after each general election from those candidates who failed to win election to the Commons (this would prevent the list from becoming just another patronage tool for party leaders – since local constituency parties select most candidates).

We would divide the seats between all the parties contesting the general election based on their total share of the national vote. Parties with less the 1% of the national vote would not get a seat. In the interests of fairness, Independents would count as one party.

We would rank all the losing candidates for the Commons by the total number of votes they won in their local election. This would favour candidates who nearly won in constituencies where more people voted. This should encourage people to vote for a good candidate who is unlikely to win because they might still get a seat in the second chamber.

Example
Say the Conservative Party wins 33% of the national vote – we therefore allocate it 99 seats in the second chamber. Ms Blueeyes is their losing candidate with the most votes so she gets the first seat. Mr Bluenose also got more votes than most other Conservative losers – so he gets the second seat, and so on until we have allocated all the party’s seats to its top 99 losers, (the remaining losers don’t get a second chance).

If Independents got 5% of the national vote – they would get 15 seats in the second chamber. Again, the losing Independent candidate with the most votes in their local election would get the first seat.

We would not allow parties to replace candidates with other nominations – if a candidate dropped out then the seat would go to the next losing candidate down the list. This way, every person in the second chamber is a named individual who has at least stood in a general election and gained a reasonable number of votes. The overall makeup of the second chamber would be proportional but since none of the members would represent a constituency, they could not usurp the role of the MP.

Second chamber representatives could naturally stand for the Commons in future elections – their role in the second chamber might help them build (or destroy) their political reputation with the electorate – somewhat reducing the advantage usually held by incumbent MPs and so making for fairer elections.

@HuwSayer

Closing twitter would not protect tarnished reputations

Interesting suggestion – but I would suggest that, from a reputation management point of view, it would be a disaster. I can see it now, “The Footballer who Killed Twitter” – “The Banker who stopped you having Facebook Friends.” Those names would not remain secret for long – and the individuals would probably be pilloried wherever they went (no matter what the law says, you can’t silence the football terraces).

A judge might even rule that it is in the public interest to know who is taking out injunctions to close down popular (and dare I say it, useful) internet services. While voters would probably chase out of office any politician supporting such measures, assuming we are still allowed elections.

That said, it’s puzzling that anyone can get an injunction to protect their family from public humiliation brought on by their own behaviour. If someone honestly wants to protect their children from shame, they will not behave in a shameful way. It seems a bit rich for those who behave in a sleazy, unthinking and selfish manner to then plead with a judge that they are now thinking about their children’s or wife’s feelings. “You should have thought about that first.”

Various judges have ruled that such revelations are not in the public interest. One recently concluded that publication would not “prevent the public from being seriously misled.” This seems perverse. Consider a famous person who uses their reputation to promote high value products (for a very large fee). The public, to some extent, judges the value of those products on their impression of that famous person. So isn’t that famous person (and possibly the brand they represent) misleading the public if the image they promote does not reflect their true character?

The so called “great and the good” seem quite happy to wallow in public exposure when it suits them, picking up titles and sponsorship contracts as they go, but get all coy when that exposure turns critical and the adulation turns to ridicule.

Perhaps a better way to solve this problem would be to ban ALL mention of these famous people in any publication; to ban the use of any photograph of them anywhere; to ban them from all public appearances and pronouncements. In effect, to confine them to their own little world where people still pretend that they have a reputation and family life worth speaking of – and leave the rest of us in peace to enjoy twitter and facebook as we please.

PS: Failing an outright ban – perhaps the press could help protect the privacy of the rich and famous by blacking out ALL references (names and images) to any anyone with an #injunction. That’s right – black out their names in any reports and black out their (red) faces in any pictures. Or judges could simply give anyone seeking an injunction a black balaclava.