Call to raise Living Wage rate in London

Living costs in London have "dramatically" increased because of the housing crisis, leading to calls for the capital's Living Wage to be increased, says a report.

The Resolution Foundation said the voluntary rate of £9.40 an hour in London, and £8.25 across the UK, has been a success, paid by 2,600 employers, including almost 900 in the capital.

The number of firms signing has increased despite confusion caused by the Government's National Living Wage of £7.20 an hour for over 25-year-olds, said the think-tank.

The report called for improvements in how the voluntary rate is worked out, which would result in the London figure increasing in the future.

The cost of renting private accommodation in London has increased more than twice as fast as the rest of the country over the last five years, said the report.

Just 13% of people in London under the age of 34, on modest incomes, own a home, while 70% rent privately.

Conor D'Arcy, policy analyst at the Resolution Foundation, said: "The Living Wage has enjoyed remarkable success over the last decade. With the introduction of the National Living Wage, now is the perfect time to reflect on the current calculation and ensure the campaign has the best possible foundation going forward.

"The reason why people still want the real Living Wage is that it is firmly rooted in the cost of living that families experience. Strengthening this real world link should be a priority. For many Londoners in particular, that means the higher costs associated with living in private rented accommodation rather owning their own home."

Katherine Chapman, director of the Living Wage Foundation, commented: "In these uncertain times, the Living Wage is a plank of stability for low paid workers and the stamp of a responsible employer that goes beyond the legal minimum."