BRITAIN’S economy would benefit from a £1.5 billion boost if just one in four low-paid workers received the voluntary real living wage, a new study suggests.

Increasing pay to £10.85 an hour in London and £9.50 outside the capital would boost productivity and spending, according to research by the Living Wage Foundation and the Smith Institute think tank.

The study also found that an increase in living wage jobs could provide huge benefits to local economies, especially in big cities.

More than 1.5 million people would benefit if a quarter of low-paid workers were lifted to the living wage, giving an average annual pay rise of £520 outside London and £950 in the capital, it found.

Despite the impact of Covid-19, employers have continued to commit to paying the real living wage, with more than 2,900 more employers signing up since March 2020, the foundation said. 

But more than five million people are still employed in jobs paying less than the real living wage.

Living Wage Foundation director Graham Griffiths said: “Workers and families need jobs that meet their everyday needs and allow them to thrive. Businesses need healthy and motivated workers unburdened by the stress of low pay. Cities and towns need local consumers with sufficient wages to stimulate economic growth.”

London Mayor Sadiq Khan praised the research and said that paying the London living wage was the right thing to do and made good economic sense, while Greater Manchester Mayor Andy Burnham said: “Beyond the pandemic, we want to build an economy that works for everyone.

“Ensuring everyone in Greater Manchester is paid a real living wage for real living hours is the first step.”

The official minimum wage rate for adults is just £8.91.