Businesses in Brent are to be the first in the country to be offered business rates discounts as an incentive to pay the ‘living wage’.
Firms in Brent will be offered discounts of up to £5,000 off their business rates – if they become living wage accredited employers – from April 1, 2015.
It is estimated that around 30% of Brent residents are currently earning less than the living wage. The Living Wage is an informal benchmark based on the amount a person needs to earn to cover the basic costs of living. The new rate of £9.15 an hour in London and £7.85 an hour in the rest of the UK was announced in November last year. The national minimum wage, which is set by the chancellor, is significantly lower at £6.50 an hour for adults, and £5.13 for those aged 18 to 21.
Councillor Roxanne Mashari, Cabinet Member for Employment and Skills at Brent Council, said: “We are committed to championing the living wage and tackling the root causes of poverty in our borough. We know that paying the living wage makes good business sense as it incentivises staff and helps to recruit and retain the best people, whilst reducing absenteeism. Today Brent Council has passed a pro-business policy to make it that much easier for businesses to pay their staff the living wage.”
Brent businesses will be offered a one-off discount on their business rate equivalent to five times the cost of being accredited as a Living Wage Employer by the Living Wage Foundation. The cost of being accredited with the Living Wage Foundation varies depending on the size of workforce and the type of organisation but the maximum discount could be up to £5,000. In addition, living wage accredited businesses will be championed on the council’s website and receive a personal visit from a senior member of the council to officially recognise their accreditation as part of a wider package of incentives.
The cost of awarding any discount would be shared between central government (50%), GLA (20%), and Brent Council (30%).
Whether a one-off discount will be enough to persuade businesses to incur the continuing extra cost remains to be seen. After paying the cost of accreditation, there may not be enough left to pay the additional wage costs in the first year. The prospect of paying increased wage costs every year will not be attractive at a time when business is difficult enough already.