Owen Smith, the Labour leadership challenger, has laid out what he says is a fully costed plan to reverse Conservative cuts to in-work benefits and give 5 million workers a real living wage.
Smith, who is trying to replace Jeremy Corbyn as Labour leader, said it would be a “triple lock” to boost the living standards of low-paid workers.
Speaking at the Open University in Milton Keynes, he said it would involve:
- Reforming pensions tax relief, introducing a flat rate of between 25% and 30% to boost the pension pots of all basic rate taxpayers.
- Delivering a full reversal of Tory cuts to in-work support that will otherwise see 2.5 million low-paid workers lose more than £2,000 a year.
- Raising the minimum wage to the levels of the real living wage, and extending it to all adults under 25.
Smith, a former shadow work and pensions secretary, argued this would deliver the “biggest boost to living standards in a generation” and address the “perfect Tory storm” of falling wages, the watering down of workers’ rights and cuts to social security.
He said under his leadership Labour would commit to delivering a true living wage as recommended by the Living Wage Foundation, raising the current minimum wage to £8.25, and extending it to all adults.
During his leadership campaign last year, Corbyn argued for a £10 minimum wage and has also floated the idea of barring companies from paying dividends until they pay the real living wage.
Labour under Ed Miliband promised a living wage of £8 an hour by 2020. The rate later introduced by George Osborne, badged as a “national living wage”, is £7.20 an hour for all adults over the age of 25, rising to about £9 an hour by 2020.
A spokesman for Smith said his proposals for the living wage would rise in line with recommendations from the Living Wage Foundation so it would be higher than the Conservative pledge of £9 by 2020.
Corbyn gave a speech to a packed rally in Brighton on Tuesday night, where supporters queued for hours to get a seat at the Hilton Metropole, many wearing “Jeremy for Labour” or “I love Jeremy” T-shirts.
He addressed a crowd of about 500 outside the venue before speaking to 1,000 inside the event, where he was greeted by a standing ovation.
There was rapturous applause as the Labour leader condemned railway operatior Southern, praised the NHS and called for more social housing to be built to help end poverty.
Corbyn is the strong favourite to win the contest, but some of his allies fear that up to 50,000 new sign-ups could be excluded from the ballot by the vetting process. Another 150,000 new members who signed up after early January are also prevented from voting unless they paid £25 to be a supporter.
A legal challenge at the high court is due to be heard on Thursday about whether that decision was valid, as the Labour website at the time suggested all new members would be eligible to vote in the leadership contest.
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