Speech to Resolution Foundation

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Firstly, I’d like to start by thanking the Resolution Foundation for organising today’s event.

Conor’s excellent presentation has set the scene for a few of the things I want to talk about today.

But I’m going to start by telling you something that you may not have heard before.

I grew up, in South London, the son of a bus driver…

But I make no apologies because while some of you cynics may mistakenly think this is some kind of base political strategy to differentiate myself from my Conservative opponent, my experience of our city provides the foundation of my ambitions for it.

A modest household income was a surmountable obstacle, not a barrier, to my parents’ dream of buying their own home. 

And with the support of a strong family, a good education, a secure home, I was able to aspire to a well-paid career and a higher standard of living.

Today the experience of the bus driver, the retail assistant, the waiter or waitress is very different.

And for their children, the opportunity to share in London’s prosperity is barely perceptible.

Even the trainee accountant, programmer or, as I once was, solicitor can’t be confident of a high standard of living.

I want to live in a city, and see my daughters grow up in a city in which everyone gets a fair shot at life and the opportunity to succeed in the economy of tomorrow.

Of course there are many factors at play here – a web as complex as London’s economy.

I want to talk – as you’d expect in a speech at the Resolution Foundation – about low pay.

I also want to talk about the housing crisis – which is so profound that its impact on poverty in London should not be talked of separately from that of low pay.

And I want to talk about achieving the higher productivity necessary to inclusive prosperity. 

Low pay background

The return to pay growth in most parts of Britain, after a period of squeeze worse than anyone expected, has not reached ordinary working Londoners.

The new National Living Wage may help to close the gap on in-work poverty –

but with the new mandatory rate only benefiting over 25s, and falling well short of the real London Living Wage, at best it’s going to bring more low-paid workers closer to the threshold.

To make a real difference to low pay and in-work poverty in London, we need to retain focus on reducing the number of Londoners paid below the London Living Wage.

Currently, that’s up to 700,000 Londoners. And the number of low paid jobs is increasing - particularly among full time men.

In the absence of any will on the part of Government to address the particular problems that London faces, encouraging more employers to pay a London Living Wage remains the strongest mechanism we have for challenging poverty pay,

particularly in the hospitality and retail industries in which it is most prevalent.

My aim as Mayor will be to make London the world’s first ‘Living Wage City’, in which paying everyone who works enough to afford them a decent standard of living is a badge of pride for the business community.

I’ll work towards that goal through partnering with employers, using carrots not sticks.

While I’m on the subject I want to welcome the new Living Wage Commission and congratulate Gavin Kelly on his new role.

The work it does in identifying a more consistent, fair formula will be important.

In particular, and of principal importance for Londoners, will be the inclusion of a real reflection of the cost of housing and the extent of its impact on in work poverty, and I hope that’s something that features strongly in the Commission’s work. 

Living Standards background

But low pay is only one part of the living standards challenge that faces London.

In-work poverty, and falling living standards for middle earners, are both being driven harder by rapidly rising living costs than the squeeze on pay growth.

Before housing costs are taken into account, London has an equivalent – even lower – rate of in-work poverty than other regions. When you factor housing costs in, London has a far bigger problem.

And that’s before you consider the impact of the costs of childcare, and transport.

So alongside making London a Living Wage City, my drive towards a fairer economy will be built around action to tackle London’s housing crisis, to reduce the cost of transport, and to better support Londoners’ need for childcare.

Business, productivity and pay

Ultimately, the cornerstone of higher pay and living standards across the board is increased productivity, in a high-skill, sustainable and resilient city economy.

In London, that won’t be achieved by a Mayor who doesn’t get how to work with business.

A successful approach to creating inclusive prosperity must be rooted in partnership between the Mayor, business and civil society.

The best Mayors from around the world are active Mayors.

They show that by using their influence locally, nationally and internationally, not least as a lever for partnerships, city leadership is as much about how you use the influence and status of the office as which policy levers you pull.

So as the most pro-business Mayor yet, working with business to increase productivity will be a hallmark of my time in office.

That agenda will be supported by several key initiatives, all rooted in partnership.

For example, I will set up Skills for Londoners – a new partnership between business, the Mayor, educators and boroughs.

Skills for Londoners will map the skills gaps that exist across all of our industrial, and public service sectors, drawing together the agencies, strands of work, and streams of funding already in place across various sectors to ensure that our efforts are strategic and complementary, not disparate and replicated.

It will support business, responding to the needs of industry and putting productivity at the forefront of the skills agenda.

We need to understand what skills businesses need - not just for today, but for the future.

Many tell me that means coding and maths.  But it also means softer skills like punctuality and reliability. 

Alongside this it will have another mission – to identify the communities and groups of young people who currently lack opportunities to learn the skills London needs,

and ensure that in future that they have access to training in the skills that will enable them to share in London’s growth.

The approach owes something to Jobs for New Yorkers, a similar partnership across the pond, and the Tech Talent Pipeline it is creating.

In return for my support and efforts, I’ll expect London’s business to set the highest standards of any global city for pay and working conditions.

I’ll also set up an economic fairness team at city hall. This will oversee progress towards those standards and a well-paying, high skilled economy.

I’ll maintain a strict procurement code which recognises living wage employers along with high employment standards and the provision of quality apprenticeships.

I’ll offer our big businesses a new compact which recognises the driving contribution they make to our prosperity, and supports them in building productivity, while promoting the principles of inclusivity and fairness.

SMEs

London’s small businesses and start-ups face particular challenges and as Mayor I want to create an environment in which they can flourish.

There’s no point in pretending that paying a Living Wage is simply a value judgement for SMEs.

I’ll do what I can to make the case for the London Living Wage, but I’ll also seek to make it a far easier choice to take.

With the right financial devolution package, the Mayor will be in a stronger position both to raise finance and to offer incentives for businesses to take choices that support the fairer sharing of the rewards of growth.

So first and foremost, I’ll seek to offer SMEs business rate incentives for becoming Living Wage employers.

If the chancellor won’t give me that power – though I hope he will – then I’ll work with local authorities to spread the example already set by Brent and Lewisham Councils. 

The Federation of Small Businesses say cost and availability of business premises are a major problem for their members.

That’s why I’ll ensure that spaces for small businesses are protected in the London Plan and new ones created, for example with the provision of start-up space as part of new mixed and even residential developments, including looking at how we might factor live-work units into the affordable housing mix.

 Housing

There are so many ways in which the cost of housing in London is damaging our city that it’s a no brainer to make this the central issue of the election.

It’s not simply a drag on living standards, but on productivity.

During the campaign so far I’ve listened extensively to business, small and large.

Their biggest complaint – almost universally – is the cost of housing for their workforces.

For the low paid it’s the difference between poverty and a decent standard of living, for talented young people a massive disincentive to stay in London when they could exchange their skills for a better quality of life elsewhere.

Fixing it means building more homes that are genuinely affordable to buy and rent – across all tenures – with new rules to ensure that Londoners get first dibs on a significant proportion of new properties for sale.

I’m going to establish Homes for Londoners, an expert team based in City Hall focused on bringing forward public sector land, identifying and cultivating funding streams, unblocking development, and where appropriate acting as a developer itself.

It also means reforming the private rented sector – with a City-wide not for profit lettings agency providing a benchmark for standards, security and stable rents, providing a valuable service for single property landlords and the option of long term tenancies for families.

It means increased delivery of affordable housing from council homes through to shared ownership, alongside my proposed London Living Rent, a new intermediate tenure at a third of local average incomes.

There is no shortage of spare publicly owned land in London.

The principal challenge will be bringing in the funding to build the kind of homes we need –

homes for people who will live and work in London, not investment opportunities for overseas investors, destined to stay empty for much or all of the year.

We’ll need to be creative about how we identify and secure that finance – for example with bonds and pension fund investment opportunities, underpinned by financial devolution.

That is an exciting possibility – the opportunity to invest in our city’s future while saving for our own, the money being put to work building homes for the next generation.

And given that business recognises the extent of the problem, and is impacted by it, there’s no reason why an active Mayor shouldn’t be finding ways to transform that interest into investment.

So we should look at whether businesses could be invited to make a contribution to a new homes fund – contributing towards the start-up capital for new developments under the Homes for Londoners building programme.

Homes for Londoners can assemble the land, raise additional finance with the security of the business investment in place, and work with boroughs and developers to get new homes built on public land.

A proportion could be allocated to employees of those firms who contribute to the Homes for Londoners funding package, possibly as London Living Rent or to buy through shared ownership, along with other new affordable and open market properties, while Homes for Londoners retains the freehold on the land – a long term source of income against which further development can be financed.

Childcare

While the housing crisis is far and away the biggest drag on living standards and on productivity, the cost of childcare too has a damaging impact.

It’s a matter of both social injustice, and economic failure, that so many skilled people, and usually women, are unable or disincentivised to re-enter the workforce at a time of their choosing after starting a family.

This is an area again where an active Mayor can make a difference by bringing together efforts to greater cumulative effect.

We all know the problem: the average cost of full time nursery care for an under 2 year old in London is £283 per week. There are parts of London which are childcare provision deserts.

Under such circumstances it’s tough enough to afford care for one child on a modest income – with two children under school age it becomes impossible.

I’ll establish a London Childcare Commission to map provision and identify gaps across the city, involving employers, providers and local authorities. 

I’ll also ensure that for the purposes of affordable housing in London, childcare workers are defined as key workers – providing access to homes and helping with the shortage of provision.

And, again depending on whether the Chancellor chooses to devolve powers to the Mayor’s office relating to business rates, I’ll investigate giving business rate relief to childcare providers, or urge local authorities to consider doing so. 

Closing

I’m going to come to a close at this point as I’m keen to hear what the panel, and indeed you [audience] have to say.

I hope I’ve given you a good sense of my plan for action on low pay and living standards, but of course this has only been a very brief look at some of the ideas I’m working on.

What I’d like to leave you with is the message that ultimately, with a Mayor who chooses to be an active leader and partner to industry and communities – not just pursue pet projects and attend ribbon cuttings – London can be a greater, fairer city.

We can build a more productive and a fairer city economy.

And we can be a city which recognises that our shared interests lie in building more homes, and providing our homegrown workforce with the skills to fill the high paid jobs in the economy of tomorrow.

To achieve this will take leadership with a greater sense of purpose than is being offered by the current Mayor or my Conservative opponent.

It’ll take an unrelenting focus on building a coalition for shared prosperity – between business, boroughs and communities, acting in their shared interests – alongside a policy framework clear in direction.

And it will take a Mayor who understands that a fair shot at a higher standard of living for everyone in our city is key to its future prosperity.


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