At the Confederation of British Industry annual conference, CBI Chief Executive John Cridland has launched a new report entitled ‘A Better Off Britain’. In a nutshell, Cridland and the employer’s organisation are asking for a £7bn increase in the benefits budget to “ease the pressure on families and people on low incomes.”

As to the costs of such a move, the CBI – not exactly a hot bed of left wing rhetoric – recognises that “We need to be more ambitious about the ways we tackle the deficit. Deficit reduction doesn’t have to be cut and slash.” See Report here.

Let me put my view on this very clearly.  This may be dressed up as support for people with finances which are still hard pressed as a result of the financial crisis, the recession and the coalition government’s austerity measures.  But that’s not what it is. This is a request from an employer’s organisation for additional financial support to business.  The changes requested are about subsidising the poverty wages paid by employers. 

When asked whether the CBI would be encouraging employers to pay the Living Wage of £7.85 per hour outside London and £9.15 in London, Cridland said: “The Living Wage is what people need to earn. Should companies pay the Living Wage if they are able to? Yes. I would encourage them to. Can it ever be more than an encouragement? No.”

So, despite acknowledging that people cannot live on the wages being paid by many employers – including major businesses who are members of the CBI - Cridland is happy to ask for an additional £7bn from the treasury, but unwilling to do any more than ‘encourage’ employers to pay a wage rate consistent with enabling people to house, clothe and feed themselves and their families. 

That’s OK then.

Here’s an idea (and the training bit for those of you who may have concluded that I was just indiscriminately airing my left wing opinions). It imposes a duty on employers in return for being able to employ workers on low wages.

If an employer wants to pay less than the living wage they should apply to the relevant government department for clearance to pay a lower hourly rate.  The government will approve this payment -and release the relevant tax credits and other in work benefits – only if:

1.       There is a training programme in place which will ensure that the employee will increase their productivity to enable them to command the living wage, and

2.       There is a time limit by which the living wage rate will be paid.

In this way the tax subsidy which the business receives for employing people below the living wage will be used for stimulating in work training and development programmes – whether apprenticeships, on the job programmes or other training designed to increase the capability of those being paid the lowest rates. 

A full time worker on minimum wage earns just over £12,500 per year.  The full time equivalent (outside London) on the living wage is just £15,300 per annum.  In other words, every time an employer employs someone on minimum wage, they are receiving a subsidy – often provided in the form of tax credits and other benefits - of £2,800 per year.  Think about what difference we could make if we insisted that to qualify for that subsidy a proportion of that money was spent on training and development for those seeking to work their way out of poverty? 

Robin Hoyle is a consultant and author.  His book Complete Training: from recruitment to retirement is published by Kogan Page.  He will be discussing the guiding principles behind Complete Training on Learning Now TV on Thursday 27th November at 8pm.