London councils to reduce business rates for businesses paying “living wage”

Brent and Greenwich Councils have become the first in the country to announce that they will offer discounted business rates to local employers who sign up to the Living Wage scheme.

In London, the Living Wage – which is the amount calculated to be needed to meet the basic cost of living – is £9.15 per hour. In the rest of the country it is £7.85 per hour as living costs are lower. This is compared to the National Minimum Wage of £6.50, which is the amount employers have to pay to over 21s as a matter of law. 

The Living Wage is a voluntary scheme to which employers can sign up, although it is supported by the main political parties and there have been increasing calls for it to be made mandatory. Supporters of the scheme argue that it will benefit employers as well as workers, as workforces become more productive and absenteeism and staff turnover fall.

On 26 January, Brent Council announced that it would offer businesses up to £5,000 off their business rates if they became an accredited “Living Wage Employer” and would also “champion” these businesses on its website. The Royal Borough of Greenwich followed suit two days later by confirming that it would offer the first 100 local businesses to sign up in 2015-16 a rebate.

The costs of the discounts will be shared between central government, the Greater London Authority and the councils themselves.

At present, 1,157 employers across the UK are Living Wage accredited, over a third of whom are located in London. Just 38 Welsh employers are signed up; Caerphilly County Borough Council is the only Welsh council to be a Living Wage Employer. It seems likely then that it will be some time before the increasing momentum of the scheme spreads beyond London.