Owen Smith risks business anger with £8.25 per hour 'real' Living Wage promise

Millions of low-paid workers across the UK would benefit from an instant wage increase if Owen Smith became Britain's next prime minister, the Labour leadership challenger will promise.

The former shadow work and pensions secretary is expected to make the major policy commitment when he addresses supporters in Milton Keynes this morning (3 August).

Smith will promise to hike the new Living Wage rate of £7.20 ($9.59) per hour for those aged 25 and over to £8.25. The Pontypridd MP will also pledge to extend the rate to all "adults" so that workers under 25 can benefit from the threshold.

The move would mean employees over 25 on the current Living Wage rate would enjoy an annual pay rise of £1,911, according to Smith's calculations.

"For the last six years British workers have experienced a perfect Tory storm of falling wages, the watering down of workers' rights and cruel cuts to social security. Resulting in the sharpest fall in living standards ever recorded for low-paid British workers," Smith will say.

"In the face of this onslaught, what's desperately needed is not more slogans, but a clear plan of action which offers solutions.

"So as the next Labour prime minister, I would introduce radical plans to deliver the biggest increase in living standards in a generation. I am committed to delivering a real living wage for everyone over the age of 18 – ending the discrimination of those under 25."

The latest commitment from Smith, Jeremy Corbyn's sole rival in the Labour leadership contest, comes after he unveiled a 25-point employment rights manifesto, which included a promise to establish a 'High Pay Commission' designed to force mandatory reporting of company pay ratios.

The National Living Wage (NLW) was introduced by former Conservative chancellor George Osborne to replace the National Minimum Wage, with a promise to raise the rate to £9 by 2020.

A 2015 survey from the Federation of Small Businesses (FSB) found that more than a third (38%) of small employers expect the Living Wage to negatively impact their business, while just 6% of firms thought the policy would have a positive impact for them.

The FSB warned that businesses in the wholesale and retail sector, and those working in accommodation and food services, were most likely to say the NLW will have a negative impact.

Corbyn, who secured almost 60% of the vote in Labour's 2015 leadership election, has previously supported a £10 rate to provide a "genuine living wage". The left-winger has also backed the idea of introducing a Ministry of Labour and scrapping the Trades Union Act.

A poll from YouGov for The Times, of more than 1,000 Labour members between 15 and 18 July, put Corbyn on 56% and Smith on 34% based on first preference votes.