Boris Johnson has clashed with Downing Street after government lawyers warned his initiative to pay workers a “living wage” could break European laws.
By Tim Ross, Political Correspondent
5:34PM GMT 05 Nov 2012
Ministers commissioned two separate legal opinions on the London Mayor’s scheme in the last two years and both found “risks” that it breached rules on procurement, the Telegraph has learnt.
Mr Johnson is understood to reject the assessment. The Mayor’s office said thousands of people working on the capital’s transport network, policing and fire authorities had already benefited from his policy.
They will be entitled to at least £8.55 per hour this year, the minimum judged by the “living wage” campaign to be necessary for a decent standard of life.
Mr Johnson called for the rate to be paid by all local authorities in London, as well as across Whitehall departments. “By building motivated, dedicated workforces, the Living Wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London’s success can enjoy a decent standard of living.”
The Greater London Authority group, including the Mayor’s policing, fire, and transport departments, includes the living wage “as a requirement” when contracts are let or renewed.
“The vast majority of workers in the Olympic Park were paid at least the Living Wage,” a spokesman said.
However, Mr Johnson’s drive to require companies to pay their workers the living wage as part of their formal contracts with the capital was called into question by Downing Street.
David Cameron’s official spokesman said it “could be illegal” to include the living wage as a condition of public sector contracts under European procurement law.
The spokesman said: “There are EU procurement laws, and forcing companies to pay a particular wage wouldn’t necessarily be consistent with those procurement laws.”
The government legal advice, seen by The Telegraph, directly dismisses Mr Johnson’s call for Whitehall contracts to include the London Living Wage (LLW).
“We believe that imposing a requirement by contract on Whitehall suppliers to pay the LLW to their staff is likely to be viewed as a restriction on the freedom to provide services under EU law,” the advice states.
A European Court of Justice case in 2008 ruled that a minimum wage, “which was similar to the LLW” because it only applied to a particular region in Germany was a “prima facie breach” of the “freedom to provide services”, it says.
This was because “it rendered contracting opportunities less attractive for companies in member states where the minimum wage is lower”.
“Special contract conditions, such as a requirement to pay a minimum wage, can only be imposed in public contracts if they relate to the performance of the contract,” the advice states.
“In order for the LLW to be imposed as a contract condition, it would have to be made a legal requirement for all workers in London.”
Ed Miliband, the Labour leader, also dismissed the government’s criticism of the legality of the living wage.
He promised to address Britain’s “living standards crisis” as he met the leaders of Labour local authorities across the UK who are already implementing the pay structure and promised to find ways to help other businesses become living-wage employers.
“There are almost five million people in Britain who aren’t earning the living wage: people who got up early this morning, spent hours getting to work – who are putting in all the effort they can – but who often don’t get paid enough to look after their families, to heat their homes, feed their kids, care for elderly relatives and plan for the future.
“Too many people in Britain are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren’t sharing fairly in the rewards.”