Councils across the UK have been urged to follow Brent’s lead by cutting business rates for companies paying the living wage.

Local firms in the London borough will be offered discounts of up to £5,000 from their business rates from 1 April if they pay staff £9.15 an hour.

Labour’s shadow work and pensions secretary, Rachel Reeves, labelled Brent’s move ‘brilliant’ and called on town halls from across the country to follow the borough’s example.

The living wage is a benchmark based on the amount a person needs to cover daily costs and currently stands at £9.15 and hour in London and £7.85 across the rest of the UK. It is far higher than the national minimum wage, which is £6.50 an hour for adults, and £5.13 for those aged 18 to 21.

While it is thought almost a third of Brent residents are currently earning less than the living wage, the Labour controlled council anticipates its policy will make it easier for local firms to adopt higher salaries.

Reeves said: ‘I want councils across the country to follow Brent’s lead by cutting business rates for companies who pay their staff a living wage. It’s a brilliant idea to tackle low pay which is good for everyone - workers, employers and taxpayers.

‘A Labour government will tackle low pay by raising the minimum wage to at least £8 hour before 2020, bringing in Make Work Pay contracts to get more workers paid a living wage and banning exploitative zero-hours contracts.’

Cllr Roxanne Mashari, cabinet member for employment and skills at Brent Council, said: ‘We are committed to championing the living wage and tackling the root causes of poverty in our borough. We know that paying the living wage makes good business sense as it incentivises staff and helps to recruit and retain the best people, whilst reducing absenteeism. Today Brent Council has passed a pro-business policy to make it that much easier for businesses to pay their staff the living wage.’

Rhys Moore, director of the Living Wage Foundation, said: ‘Brent Council is showing great leadership on the Living Wage. Local government has an important role in supporting businesses to do the right thing and help low paid employees out of in-work poverty.’