National Living Wage

Debate between Kevin Brennan and Philip Davies

Monday 18th April 2016 Commons Chamber

[Kevin Brennan (Cardiff West) (Lab)]

I pay tribute to my right hon. Friend the Member for Enfield North (Joan Ryan), who has been more than a super-sub for my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) today. We all wish my hon. Friend the Member for Mitcham and Morden a speedy recovery. My right hon. Friend the Member for Enfield North gave the House some good examples of people who could lose out despite the fact that the so-called national living wage was intended to increase pay for those on low incomes. We have heard a lot of very good contributions.

We heard a contribution from the hon. Member for Shipley (Philip Davies), who appears to have read, in his book on microeconomics, of the impact of increasing wages, but not to have got on to the volume on the impact of labour as a derived demand and the impact of higher wages on aggregate demand in the economy. As we discovered when we introduced the national minimum wage, increasing pay for the less well-off can result in a more prosperous economy because of their higher propensity to consume.

[Philip Davies]

I just want to know on what basis the hon. Gentleman feels more qualified than the Office for Budget Responsibility, which made it very clear that 4 million hours and 60,000 jobs would be lost.

[Kevin Brennan]

I will come to my concerns about the way in which this policy is being introduced in due course. There is plenty of evidence from the introduction of the national minimum wage that if it is done correctly, increasing pay for the lowest paid workers can result in an increase in aggregate demand, and in greater productivity and prosperity for the economy.

We have heard contributions from my hon. Friends the Members for Bradford South (Judith Cummins), for Rochdale (Simon Danczuk), and for Burnley (Julie Cooper). We have also heard from the hon. Member for Lanark and Hamilton East (Angela Crawley), my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) and my hon. Friend the Member for Halifax (Holly Lynch), whose reference to Adele and the importance of paying younger people sounded convincing to someone like me.

We also heard from the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry), who talked about his experience as a council leader. We heard from my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), and from the hon. Member for Glasgow Central (Alison Thewliss). My neighbour, my hon. Friend the Member for Cardiff Central (Jo Stevens), made a pertinent point about seafarers. It is important to remember that seafarers are exempt from this legislation, and we need to bring in new protections for them. My hon. Friend the Member for Heywood and Middleton (Liz McInnes) told us about her partner spending a lot of time at B&Q. If her household is anything like mine, that is no doubt a result of his being told that he has to go to B&Q and do certain DIY jobs. This happened to me so much in years gone by that we used to call it “Be in the Queue” because I was down there so much. We also heard from the Scottish National party Front-Bench spokesperson, the hon. Member for Banff and Buchan (Dr Whiteford).

Today’s debate has been rather peculiar. On this side of the House, there has been general support for the idea of the so-called national living wage that the Chancellor announced in his Budget, but there has also been criticism of its implementation and its potential to make some people worse off. That is the purpose of today’s debate. However, the only contribution from a Back-Bench Conservative Member seemed to be against the Government’s policy altogether, so it has been a peculiar debate in that respect.

As has been highlighted, the national minimum wage was introduced by the Labour Government in 1998. It was opposed tooth and nail by the Conservatives, but the Minister for Skills has previously and rather generously acknowledged that they were wrong to do so, just as they were wrong to oppose other progressive achievements of Labour Governments, such as the NHS. He has acknowledged that fact on the record in my presence in this House, and I am grateful for his generosity in doing so.

I referred to the “so-called national living wage” because, as has been pointed out many times today, it really is not a new concept. It is a symptom of the Chancellor’s inability to do anything that might be worth while without trying to extract the maximum political advantage from it. This was highlighted when the former Work and Pensions Secretary resigned, saying that the Chancellor was always seeking to do something that was

“distinctly political rather than in the national economic interest”.

The Chancellor could have said, “I want to increase the national minimum wage for the over-25s”, which is in effect what this policy does. Instead, he chose to pinch the name “living wage” from those who have worked on devising and calculating it, who have brought together the evidence based on need to formulate the concept of a living wage, and who have campaigned for it right across the country with great success. He nicked that name for his policy, which, it has been pointed out, will not introduce a true living wage based on the concept of the evidence of need as developed by the Living Wage Foundation.

Similarly, the Chancellor could have done the thorough preparation that a policy such as this requires. He could have put the policy through a proper stress test, as was done by Ian McCartney and others when the national minimum wage was first introduced. However, that would have spoilt his piece of political theatre in the Budget, and the Great Osborno would not have been able to pull a rabbit out of his hat to the delight of all his misdirected audience on the Conservative Benches. The problem of some workers potentially being worse off could have been avoided if we had a Chancellor who was more interested in the substance of making policy work than in the smoke and mirrors of political presentation.

It is illegal for employers to pay less than the national minimum wage, yet figures provided by the Department for Business, Innovation and Skills show that the numbers of employers being fined for doing so have actually increased in recent years. We would like to know what measures will be put in place to ensure that we do not have a repeat of this deliberate lawbreaking and undermining when the so-called national living wage is more established. Will these companies be named and shamed? Will there be financial penalties?