"My flourishing is fundamentally bound up with yours" - first thoughts from the independent chair of the Tower Hamlets Fairness Commission

For the last five months or so I've been responsible for making sure the independent Tower Hamlets Fairness Commission actually happens. Chaired by Rev Dr Giles Fraser and supported by 13 Commissioners, the Commission met for the first time this week, following it's launch at Toynbee hall on the 5th November.

The Commission has been asked to consider some of the big issues facing the borough and its residents in light of the country’s current social and economic challenges - or as the Chair puts it, what 'principles of fairness can be applied to help triage limited resources in periods of economic hardship?'

Between November 2012 and March 2013 the Commissioners will gather evidence based on research and conversations with residents, businesses and voluntary and community groups. They will hold several public meetings focussing on the themes of communities and housing (the focus of this week's meeting); income and employment inequalities; and safety nets and mutual responsibility. Commissioners, residents, interested others are also encouraged to blog here. There is, of course, a twitter feed - @THFairness. The Fairness Commission will report on its findings in spring 2013 and make recommendations designed to promote equality and fairness in Tower Hamlets.

The Borough is not the first to launch a Commission of this nature - see here for a summary of the other Commissions. Conclusions from across the Country have varied. Some have focused on the determination of high level principles. Others have recommended specific public policy interventions - such as the adoption of the Living Wage.  In summary, the desire to achieve fairer outcomes has followed well trodden debates regarding ethics, moral purpose and the appropriate balance of obligations between the individual; civil society; state; and business. What differs is the blend and emphasis of these perspectives. It's early days for the Tower Hamlets Commission but a flavour of the Chair's thinking was revealed in his contribution to the "thought for the day" slot on Radio 4's Today programme on Monday 26th November. A transcript of which is below:


A report just out by the TUC argues that Britain’s poorest families
are facing further hardship as public services are cut back in
order to meet the Government’s spending targets. Such cutbacks
obviously impact the poor more than the wealthy simply because the
poor rely a great deal more on public services. Some argue that these
cuts, along with those to the welfare budget, are an essential route
to overall fiscal responsibility. Others insist that because they fall
disproportionately upon the vulnerable they are fundamentally unfair.

So what then do we mean by fairness? This is a question with which I
have become increasingly engaged since I recently took up the Chair of
the Tower Hamlets Fairness Commission. Our job is the unenviable one
of trying to describe how a community like Tower Hamlets - already
vastly unequal - can best navigate a fair path through a future of
increasing austerity. What principles of fairness can be applied to
help triage limited resources in periods of economic hardship?  These
are not, of course, theological questions. And yet they are ones on
which pretty much all religious traditions have something indirectly
to contribute. Yes, as one of the most diverse boroughs in London, the
commission necessarily reflects a wide variety of religious and indeed
non-religious perspectives. And looking for what we all have in common
can easily lead to some anaemic lowest common denominator.
Nonetheless, what all monotheistic faiths do seem to share is the idea
that, as John Donne once put it, “No man is an island” - that is: we
all have some fundamental responsibility for each other. This idea is,
I suspect, historically connected with the development of monotheism
and with the belief that because reality has some unified origin then,
however diverse we may be as a society, we are nonetheless
fundamentally connected. In contrast to, say, Greek polytheism that
imagined a world where the gods were forever at war with each other,
it is no co-incidence that the world’s first great monotheistic faith
- Judaism - was also the first faith to develop an ethics of equality.

Still, this only takes us so far developing a response to the question
of fairness. Theology does not neatly hand out policy proposals or any
detailed programme of action. And it’s here that religion can have
nothing to do with politics. Nonetheless, politics works on many
different levels. Those who speak on both the left and the right about
the idea of One Nation Britain are emphasising the need for a society
in which we are all called to bear one other’s burdens. I know this
can easily sound like some call for generalized benevolence. But it’s
more than that. It’s a sense that my own flourishing is fundamentally
bound up with yours. That rich and poor and not forever locked in some
desperate zero sum competition over resources. And indeed, without
some sense of underlying connectedness – from individuals, from
business, from government -  it’s actually hard to imagine that any
form of politics will ever be able to make things right or fair.

The Living Wage: we all like it, so what does it mean in practice?

Almost everyone, it seems, thinks that paying people a living wage is a good idea.

The latest to say so are the brothers Miliband who have joined forces publicly for the first time today since that awkward leadership election to present the living wage as a key Labour party strategy: an economic necessity that saves the Treasury money in benefits and should be adopted by the public sector in its dealings with private contractors. Dave Prentice, the head of Unison, has thrown his weight behind the idea. It’s not just an idea beloved of the left, either. David Cameron has also previously said the living wage is an “idea whose time has come”. Back in August 2010 Boris Johnson said: “paying the (London) living wage is not only morally right, but makes good business sense too.”

Ta-dah! Agreement that the living wage is a sensible strategy: a fair idea that makes fiscal sense and appeals to politicians across the spectrum.

So why are so few people actually doing it?

Because nobody is asking the question: what actually happens when you do pay people the living wage?

Tower Hamlets Council has been a living wage employer since 2008: one of only five councils in London to implement it. Tower Hamlet’s experience can answer some of the issues at the heart of the idea: what are the costs and the policy implications and what are the legal barriers to making it work?

The first stage to becoming a living wage employer is fairly basic: thinking about who will be affected. There are three categories of worker: direct employees, agency workers and staff working for third party contractors. For the first two categories of worker it’s a simple matter of cost – though, in Tower Hamlets that has been marginal at 0.067% of our total payroll bill for directly employed staff and 0.16% for agency staff, which we then absorbed through a simultaneous re-negotiation of agency contract margins. I’ll leave it for others to judge whether this has been affordable additional burden.

Implementing and enforcing the living wage for staff employed by third parties has, however, proved challenging. Not least amongst these challenges are the legal complications relating to non-commercial considerations (Section17 LG Act 1988) and best value obligations (Section 3 of the LG act 1999) which mean that organisations are constrained in specifying terms of employment to contractors. Now, there are two aspects to best value obligations: cost and quality. We’ve circumnavigated the former problem – what it means for cost – by pursuing the latter and implementing a quality-seeking strategy that seeks in each tender to demonstrate to contractors that staff will be more capable and motivated if paid the living wage. See here for more details. We’ve not taken a blanket approach – we believe it would be unlawful – but by adopting this policy tender by tender we’ve had a 100% success rate in achieving living wage commitments in contracts. More than 150 million pounds of our spending on third party contracts ensures their staff are paid the living wage.

Determining which contracted workers fall within our policy to implement a living wage is further complicated by the ambiguity of whom the policy will actually affect. While it might be reasonable to expect people providing a direct service (e.g. cleaners, repairs contractors etc.) to be easily identifiable, it is less clear for those contracts providing supplies such as energy, stationary and building materials. It is for this reason that the Living Wage Foundation defines contractor’s staff as qualifying, or being “in-scope”, if the worker in question is on the employer’s premises for two or more hours per week, for eight or more consecutive weeks in a year. In Tower Hamlets we have adopted a slightly broader definition: “Contracts…which are to be performed either on Tower Hamlets premises, or in the Greater London area will ensure payment of the living wage”. With the exception of a small number of contracts due for re-tender this coming year, we think the vast majority of workers who would qualify to receive the living wage are now being paid it.

For reasons of commercial confidentiality I cannot comment specifically on the cost implications of specifying the living wage in third party contracts. But I can make the following general observations. First – costs have been absorbed in existing budgets and contract savings have been delivered. It is possible that higher savings could have been achieved without stipulating the living wage, but we have no substantive benchmarking evidence to test one way or another. Second - the pattern of prevailing living wage payment by third party contractors was not as we might have first have imagined. Within the same categories of expenditure (think, for example, domiciliary care) we found private sector suppliers paying well above the living wage and local Third Sector organisations paying substantially below. Nor did we find an obvious correlation between payment of the living wage and substantially higher or lower profit margins or surpluses. My conclusion: the commercial impact of paying the living wage isn’t as straightforward as you might think. Nor does it follow that the private sector is always the lowest payer. In our experience the opposite was often the case.

Over the last six years the experience of Tower Hamlets has demonstrated that a sustained commitment coupled with innovative policies can deliver substantially more employees and contracted workers being paid the living wage. The costs to date have been marginal.

One of the big questions for the future is of course whether we can continue to commit to this policy if our spending power continues to fall. Ultimately this will be a political judgement, but what is clear from our experience to date is that we’re unlikely to make substantial savings on our pay bill if we revoke our living wage policy. (It may contribute a bit – but wont be the answer.) Another key issue is that the living wage won’t just be a question for large employers for much longer. As more users of adult social care services choose to take their personal budget - rather than leaving the council to procure services on their behalf - decisions about whether to pay the living wage will filter down to individuals. Ultimately this campaign, moral, economic and political, will also become a matter for personal conscience and action and will need to evolve accordingly.