Uptake of the Living Wage 'could benefit everyone'

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KPMG has highlighted the economic benefits of the Living Wage

A new report published by professional services provider KPMG has highlighted the far-reaching benefits of the voluntary implementation of the Living Wage for the UK as a whole.

Based on the macroeconomic model (NiGEM) that was created by the National Institute of Economics and Social Research, which is used by HM Treasury for its own policy simulation, KPMG has been able to determine that following the recommendations of the Living Wage Foundation to offer a basic salary of no less than £7.85 per hour for staff (£9.15 in London) could lead to additional tax revenues of just over £4.5 billion a year.

The report showed that in order to to achieve this, it would take just a 1.3 per cent increase in the national wage bill, but doing so could have the benefit of raising up to six million people out of poverty.

Marianne Fallon, head of corporate affairs at KPMG, said: "We firmly believe that voluntary adoption of a Living Wage policy by employers, over time, is one of the tools that will help improve social mobility in the UK as well as directly addressing in-work poverty."

She made her comments ahead of this week's publication of the new summer Budget by chancellor George Osborne.

This will be the first time the Conservative minister has had free rein to implement financial policies in a full-Tory government, following the end of the coalition at the last election. There is therefore expected to be a much stronger focus on reduced public spending, especially in areas like the welfare bill.

Delivering a recommendation for the implementation of the Living Wage could now be a key indication of the government's future financial policies for business.