The Archbishop of York Dr John Sentamu this morning delivered his keynote address at the Great Business Debate at the CBI 2014 Conference 'Growth For All'. His speech follows in full:
Good morning. It is a delight and an honour for me to be here with you this morning and to have the opportunity of setting the scene for the Great Business Debate.
I hope I will not confirm the prejudices some of you may have about clergy – that we are 6 days invisible and, when we appear on the seventh day, we are totally Incomprehensible!
In recent years, Britain’s economy has struggled through very challenging times. I hope that the work that is being done by government, business and the people of the United Kingdom, will enable us to take a huge step forward. (Though not like a Chairman of a huge multi-national corporation, who said to the Shareholders, at an Annual Meeting: “Friends, last year we stood at the brink, looking into a precipice. I am delighted to announce this year we have taken a giant leap forward!”).
I imagine that most of us here, especially those who were at the President’s Breakfast, have already eaten well this morning. If not, I’m guessing that it was probably a matter of choice rather than necessity.
Sadly even with the current improvement in the economy, we cannot say the same about all our fellow citizens.
Over recent years there has been ample evidence that there are flaws in the practice of free market economies. While the system gives individuals the power of choice and allows for the stimulus of innovation, and experimentation, a major limitation of free market economy is that it has no mechanism to reduce the disparities between the haves and have nots. Indeed, because of the imperfection in market mechanism, free economy tends further to increase the disparities between people.
Economic and financial models are often based on idealism or dogma and describe the future in terms of probability. In real life however, the future is actually largely unknown, so moral integrity must provide the compass for our actions. And for me, the plight of those millions of our brothers and sisters in this country, caught in poverty and without hope, must provide the moral impetus for our decisions. That is, the impetus to find a system which contains the virtues of fairness and equity and which serves the Common Good.
A little over a century ago and just a across the Park from here, Winston Churchill gave a speech, as President of the Board of Trade, saying,
"It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions"
(Speech to the House of Commons, 28 April 1909).
Much has changed since then, but the principle that Churchill spoke to remains as strong as ever in our national life.
Work must pay.
The Minimum Wage, introduced fifteen years ago, was a small step in the right direction, but it has been clear for some time that this is inadequate, and many people in work are experiencing increasing poverty.
That is why I am committed to urging all those who can to pay their workers a Living Wage. When I launched the Living Wage Commission on 19th July last year, I said that we would be speaking to people in low pay, to businesses and to experts to establish the scale of the problem of low pay in the UK.
Our research revealed the dire state of affairs of low pay in the UK, and this has been confirmed in a recent report form KPMG.
- 5.28 million people are still paid less than a Living Wage - the basic but socially acceptable level of income that allows people in work to meet the rising cost of living. This is particularly noticeable amongst part time workers, where 43% earn less than the Living Wage.
- For the first time, the majority of people in poverty in the UK live in a working household.
- There is a double squeeze on working households as wages stagnate and living costs rise.
We heard from a great many low paid workers who made submissions to us.
One low-paid worker, Paul, a care worker in the North West of England, spoke of his experience and his wife’s:
"We have no luxuries, we have not been on holiday and we do not socialise. We work, eat and sleep...We often spend days apart...We can only communicate through rushed text messages and leaving voicemails for each other.
Our sixteen year old daughter misses us both greatly. We did not even have a day out together as a family in 2013."
We heard from a great many others who were struggling to make ends meet, unable to replace basic household goods after they break, or to pay utility bills; parents who had to tell their children that they weren't allowed to go to their friend's birthday party because they could not afford it.
It is not just Paul and the millions of other workers in low pay that pay the price for this.
The truth is we all lose out from the inequity of low pay. Billions of pounds are spent each year on topping up the incomes of low paid workers at a time when public finances are very tight. Demand is sucked out of the economy by the lack of spending power of a fifth of the workforce. And where inequality grows, we all become diminished. It makes us all poorer.
But amidst this darkness, some light has begun to shine through, and many of you are part of that light, as you have embraced the principle of paying a Living Wage. Over 1,000 employers – from Local Councils, to small and large private businesses, are now accredited by the Living Wage Foundation. The number of Living Wage Employers in the FTSE 100 has risen from four to 18.
I would like to thank you, and the other organisations here that not only support work on the Living Wage but are also accredited themselves. You are leading the way for responsible employers.
The other good news we heard recently is that the Living Wage has now been increased by 2.6%, in line with the actual cost of living.
But there is still a long way to go
Recent research shows that there are a number of groups who are suffering disproportionately:-
- More than 40 years after the first Sex Discrimination Act, the research shows that 25% of women earn less than the benchmark, compared with 16% of men.
- The group most likely to be caught in the poverty trap are younger workers – with 72% earning less than the Living Wage.
- There has been a rise in the demand for unsecured credit, with many people reporting an increase in their need to borrow. This is only likely to get worse in the winter months.
- A recent report from UNICEF suggested that a quarter of children in Britain are living in poverty.
Britain is at risk of becoming a place where the ‘haves’ and the ‘have nots’ live in separate parallel worlds; where the ‘Common Good’ has become a pious platitude rather than a genuine believable aspiration. We must find both the political and economic will to create a society which is fair for all rather than fair for a small few. Income inequality is a stain on all our consciences.
There is a strong role for government and business to support the Living Wage.
UK Government is a major employer, and just as importantly, they can take leadership on low pay. Businesses can also demonstrate the benefits of paying their employees justly.
The evidence of the Commission pointed to the Living Wage being good for employees, good for business, good for the economy and good for society.
Employers adopting a Living Wage policy had lifted thousands of people out of working poverty; the Exchequer could gain up to £4.2 billion a year in increased tax revenues and reduced expenditure on tax credits; and businesses were reporting productivity increases and improved morale in the workplace.
The economic recovery provides the perfect opportunity for us to ensure many more people are paid a Living Wage.
The Commission recognised that not everybody may be able to pay the Living Wage right now. Many small businesses, and some businesses in certain industries - such as retail and hospitality - may find it difficult to afford to pay a Living Wage.
So we did not recommend compulsion. But it is encouraging to see that a number of small independent businesses have been able to take it on.
While the Federation of Small Businesses have said that the rate must remain an aspirational goal, nevertheless it was heartening to read the national chairman, John Allan’s statement that “More than half (53%) of small businesses already pay the living wage or above and are recognising the benefits to their business in terms of staff morale, performance and recruitment.” Government can help more small businesses pay a Living Wage, by reducing business costs, such as Employers’ National Insurance, especially when they take on apprentices and unemployed young people – say, for two years.
This is why I would urge you today, as this country’s Business Leaders to support the Living Wage Foundation’s target for lifting one million people out of low pay, and up to a Living Wage, by 2020. You are all Gatekeepers of Opportunity.
Let us make the paying of the Living Wage the litmus test for a fair recovery and let us help our country become a place where the wellsprings of solidarity, of a new, undivided society, can begin to spring up. Income inequality is the giant of our time, which we must slay. In the words of Ralph Waldo Emerson, “Don’t go where the path may lead; go where there is no path and blaze a trail.”
Thank you for listening. And may God prosper the work of your hands, and of the CBI.”