Labour leadership race: Owen Smith promises pay rise for five million workers if he becomes Prime Minister

Labour leadership hopeful proposes to raise minimum wage in ‘biggest boost to living standards for a generation’

Owen smith will pledge to tackle the ‘perfect Tory storm of falling wages, the watering down of workers’ rights and cruel cuts to social security’ (Reuters)

Owen Smith, Jeremy Corbyn’s challenger for the Labour Party leadership, is promising five million workers a pay rise if he becomes Prime Minister, in the “biggest boost to living standards for a generation.”

In a speech today, he will deliver a swipe at his rival, saying that “what's desperately needed is not more slogans, but a clear plan of action which offers solutions.”

Mr Smith is hoping to convince Labour Party members and supporters that he has policies as radical and left wing as Mr Corbyn’s but that he would be better leader of the Labour Party in Parliament.

He proposes to raise the minimum wage from its current level of £7.20 an hour to £8.25, and to compel employers to give it to all employees, not just the over-25s. That would mean a £5,369 pay rise for employees aged between 18 and 20, a £2,821 hike for 21 to 25-year-olds and an extra £1,911 for over-25s, he claims.

He also plans to convert the Low Pay Commission into a Living Wage Delivery Unit, which would close loopholes that allow companies to circumvent minimum pay regulations. A High Pay Commission would compel companies to reveal the ratios between their highest and lowest pay rates. Mr Smith says that he will also consult on whether to introduce maximum pay ratios between the highest pay and average earners in firms such as Capita and G4S, which have major contracts working for the Government.

He also proposes to overhaul employment law, repealing the Trade Unions Act, scrapping employment tribunal fees, and banning zero hours contracts and ‘bogus’ self-employment under which employees are effectively working full time without having an employee’s rights.

He claims that his “revolution in workers’ rights” would make the UK “the envy of the world for employment rights and job security.”

In a speech in Milton Keynes, Mr Smith is expected to say: “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.

“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.”