Draft Trade Union Act 2016 (Political Funds) (Transition Period) Regulations 2017

Chris Stephens Excerpts

Wednesday 25th January 2017 General Committees

[Margot James]

We conducted a consultation and took it seriously. We listened to people’s views and arrived at a judgment. I remind the hon. Gentleman and other hon. Members that this is not news to the trade unions concerned. It passed into law last May, following intensive debate on the Floor of the House and a great deal of publicity. In effect, the unions have had more than 12 months to introduce the necessary changes to their systems.

[Chris Stephens (Glasgow South West) (SNP)]

I, too, declare my membership of Unison and refer to the Register of Members’ Financial Interests and my post as chair of the Public and Commercial Services Union parliamentary group. Why was 1 March 2018 chosen as the specific date, when we know from trade union feedback that that will cause considerable problems? Trade unions discuss rule changes at their conferences, but many of them are held biannually.

[Margot James]

If trade unions hold conferences biannually, they will surely have at least one conference opportunity between now and March 2018. As the hon. Gentleman probably knows, under the Trade Union and Labour Relations (Consolidation) Act 1992, it is not necessary for unions to amend their rules in this regard at a conference. They can apply to the certification officer for the acceptance of any form of union ballot on such a change of rules. Although many unions would prefer to give effect to the changes at a conference, there is no obligation on them to hold a conference to achieve that.

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[Margot James]

I have not finished responding to the hon. Lady. She correctly referred to a reliance on rules to provide proper accountability to members, and we respect that. However, the hon. Member for Glasgow South West said in an earlier intervention that many unions hold biannual conferences. There is therefore an opportunity between now and March 2018 for the vast majority of those unions with political funds to agree the rule changes at a conference. As I have said, if they cannot meet at a conference to introduce the new rules, they can at least ballot their members in consultation with a certification officer.

I am sorry that the hon. Member for Wallasey is frustrated and disappointed by my response, but I think that it is reasonable. The Government believe that a 12-month transition period is adequate for unions to ensure that they comply with the statutory requirement under the Trade Union Act. That balances the need to provide unions with sufficient time to implement the changes with the Government’s view that the measures are delivered promptly.

Once the regulations have received parliamentary approval, they will come into force on 1 March 2017 and the formal 12-month transition period will run from that date. The Government’s view is that unions have known about these changes for some time and it is not unreasonable to expect them to have already done some planning to meet the requirement. We are also grateful to the certification officer, who has consulted unions and issued model rules and guidance, which should assist them in complying with the new requirements.

[Chris Stephens]

I am grateful to the Minister for giving way again. It is important to note that the certification officer has indicated that there will be a period of at least five weeks for him to sign off the changes to a trade union’s rule book. Does the Minister agree that that means that, in effect, trade unions have only 11 months?

[Margot James]

The hon. Gentleman quibbles about weeks and months. We are approaching the end of January and the measure will not come into force until 1 March, from which point the unions will have 12 months in which to comply.

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[Gill Furniss]

My hon. Friend is absolutely right.

Several unions, including USDAW, have set out their response to the BEIS consultation, conducted in August 2016, and to the certification officer’s consultation on the new models, conducted on 22 November 2016. The latest they needed to receive the final model rules from the certification officer in time to make a rule change in a 2017 conference was by 6 January 2017. Those rules were not received from the certification officer until Monday 16 January, and therefore it is not possible for the unions to make the rule changes until April or May 2018.

The Government’s summary of unions’ responses to the August consultation even states:

“A number of Unions said they have conferences scheduled for April/May 2018.”

That is where rule changes can be made, which is a different procedure, so why are the Government rushing to implement the legislation on 1 March 2018, just weeks before unions are due to hold their conferences to change their rules to comply?

[Chris Stephens]

Is there not another practical application? Under the proposed changes to the check-off arrangements, trade unions will have to discuss with employers an increase in subscriptions to comply with the terms of legislation, but the required statutory instrument has still not come before the House.

[Gill Furniss]

The hon. Gentleman makes a very good point. As a result of that legislation, unions will need to renegotiate check-off arrangements with hundreds, and in some cases thousands, of employers across the public and private sector. According to the recently issued model rules, securing approval from the certification officer alone could take up to five weeks.

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[Chris Stephens]

It is a pleasure to serve under your chairmanship, Mr Stringer. I wish everyone a happy Burns day, in memory of Robert Burns, a man who incidentally argued for workers to be represented in Parliament 100 years before the formation of the Labour party and argued for women to be represented in Parliament 150 years before the suffragette movement began. It is frankly an affront that the Government are seeking to restrict the activities of trade unions on this day of all days.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

I have listened with great interest: every Member on the other side of the Committee has declared being a member of a trade union—

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[The Chair]

That is a matter for individual Members, not the Chair. I call Chris Stephens.

[Chris Stephens]

The hon. Member for Shrewsbury and Atcham can check my register of interests—it makes it quite clear what that means for me. I would say to him that I am a proud member of the trade union movement. I became a steward in 1996 and for 20 years, before coming to this place, represented workers on a daily basis. I have to say to him that I am not ashamed that I did that. I am not ashamed of providing welfare help for people who needed it. I am not ashamed to have represented members to make sure that they got pay, many of them women who got equal pay.

[Daniel Kawczynski]

I know it is registered in the Register of Members’ Financial Interests. It is just interesting that this is the first time I have been in a debate in which everyone has declared a certain type of interest, which is obvious in the context of the matter we are discussing. In the hon. Gentleman’s case, how much is it worth?

[Chris Stephens]

The hon. Gentleman is more than welcome to read my entry in the Register of Members’ Financial Interests, and he will then have that information. All hon. Members of this House can see by looking at my entry what that interest means and how much it is worth.

[Stephen Doughty]

Does the hon. Gentleman agree that one of the reasons why we are all pleased to declare our membership of a trade union is that we are proud of it and proud of our association with the trade union movement? We are entirely transparent regarding donations and other matters. If the hon. Member for Shrewsbury and Atcham wants to go down that route, I am sure we would be interested to hear about all the donations and declarations of interest of Government Members, including him.

[Chris Stephens]

It comes as no surprise to me when we are discussing a piece of legislation that has an impact on trade unions that Members declare their membership of a trade union, and that they are all proud to do that. I notice that not one Government Member has yet declared that they are a member of a trade union, which I think is quite interesting.

I have a sense of déjà vu as I stand in this room, as I served on the Trade Union Bill Committee with Conservative Members including the hon. Member for North East Cambridgeshire, who I see in his usual place, and the hon. Member for Cardiff South and Penarth. The then Minister for Skills, the hon. Member for Grantham and Stamford (Nick Boles), who I hope is recovering well, said that the purpose of this part of the Bill was not to punish trade unions in terms of costs, nor was it designed to trip people up. Unfortunately, that is exactly what the proposal before us is designed to do. The Government appear to be ignoring the quite reasonable submissions by trade unions regarding the practical difficulties, some of which have been mentioned. I am aware that Unison traditionally has its annual conference by June. It is not really good enough to say that trade unions should be preparing when they submitted to a Government period on how to implement the measures. The answer on that point is not good enough.

This is not just a Labour party issue. It is about political funds, which have funded some great campaigning work on equal pay, health and safety, anti-racism and anti-austerity, as the hon. Member for City of Chester pointed out.

[Stephen Doughty]

The hon. Gentleman is listing the important types of campaign that have been funded. We were talking earlier about the campaign by USDAW—the Union of Shop, Distributive and Allied Workers—against violence against shop workers, which I have been proud to promote in shops in my constituency. Does he agree that such campaigns are vital?

[Chris Stephens]

They are vital. The political funds help trade unions to raise public awareness, and stopping violence against shop workers is an important issue. That does not just affect trade unions; there is a wider society awareness role for that sort of campaign, which is welcome.

Another practical question is: why are we discussing this now, when the check-off arrangement statutory instrument has still to come before us? The two are related. Trade union branches will have to discuss with employers how to facilitate the changes to subscription rates that this legislation will require. It seems to me rather foolish of the Government to introduce the SI before us today but not the associated check-off arrangements SI. It seems to me that the date of 1 March 2018 has been set deliberately either to trip up the trade unions, or to burden them with additional costs.

The Government are all for deregulation in every other part of the economy, but not in relation to the trade union and labour movement. Mr Stringer, I too will seek to divide the Committee. I urge all hon. Members to vote against the statutory instrument.

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[Christian Matheson]

I am grateful for your guidance, Mr Stringer. Forgive me if my concern about the ignorance of Government Members prompted me to go a little beyond the instrument.

Let me talk instead about my own experience of having to implement procedures of the sort set out in the instrument. I used to work for a trade union—it was called Manufacturing, Science and Finance, then Amicus, and then it became Unite—and rose to a position where, as well as industrial responsibilities, I had to manage, for example, trade union ballots when we had ballots every 10 years—the Better Regulation Task Force at the time said such ballots were onerous and unnecessary—in which 80% to 90% of members, right across the trade unions, always voted in favour of having a political fund. The Minister talked about online membership, and I believe that more members join online now, but in my time on our membership forms there was a clear tick-box to allow the individual to opt in to or out of the political fund. The idea that we sneaked those things through is incorrect.

[Chris Stephens]

Will the hon. Gentleman confirm that some trade unions, such as Unison, have two sections of the one political fund, and that members therefore have a choice as to whether they want to give to an affiliated political fund or a general one?

[Christian Matheson]

Unison’s affiliated political fund is an important part of its union operations, but so is its non-affiliated fund to which members can choose to contribute. Later in my time at Unite, I was asked to manage its complaints process, because we received complaints from time to time. In the two and a half years I managed that complaints process, I received not one complaint about the management of either the political fund or the opt-out process. There was not one complaint, so quite why the Government went down this line in the first place I do not know.

The Minister made a point about conferences that are coming up this year. She again misunderstands the nature of those; different unions operate in different ways, but conferences tend to be constituted differently for different purposes. Some unions—Unite is one—have a rules conference every four years and a policy conference every couple of years. Those conferences are constituted differently according to the union’s rules. Unfortunately, if the Minister expects unions to convene special conferences, she perhaps might consider whether there will be Government compensation for the huge costs of having to convene those additional conferences—or maybe that is the point.

My hon. Friend the Member for Cardiff South and Penarth made the point earlier that this is about piling further regulatory burdens and financial costs on unions, so that they cannot do their essential work of campaigning and representing working people everywhere. The original Bill is shabby; the terms of the statutory instrument are mean-minded and, I believe, politically motivated. In common with other Opposition Members, I will certainly be voting against it.

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[Stephen Doughty]

It is a pleasure to serve under your chairmanship, Mr Stringer. I joked with the hon. Member for Glasgow South West that this has been almost like getting the band back together, to quote “The Blues Brothers”. We have been joined, thankfully, by hon. Friends who have made excellent contributions, including of course the shadow Minister, who has clearly set out the unreasonableness of the statutory instrument and some of the wider issues around it. Unfortunately, as has been said, it reflects the pattern of the Government’s shabby behaviour to not only trade unions but civil society and alternative voices more generally. We saw what the Government attempted to do during the progress of the gagging Act, and their attempt to shut down the arguments of charities and lobbying organisations. We have seen attempts to reduce judicial reviews and many attempts to diminish the reasonable work of trade unions, which act as a voice for many millions of working people up and down the country.

This is not just about unions that have a close relationship with the Labour party. This is about the TUC expressing serious concerns about this statutory instrument and about the Trade Union Act more generally, yet those very reasonable concerns have been ignored, as have the voices of devolved Administrations. I am pleased that the Welsh Labour Government have introduced the Trade Union (Wales) Bill to repeal the parts of the Trade Union Act that they believe go far too far and cross into the devolution settlement and their rights as a devolved Administration. I am proud that we have a Government in Wales who are standing up for trade unions and working people.

As I have said, there is a pattern of behaviour here. Yesterday, we saw an attempt by Conservative Members to restrict the rights of workers massively. The attempt was defeated, but the measure was supported by many Government Members, including some who have in the past burnished their alleged working-class credentials. I am very pleased that the measure was defeated.

We can talk about the politics, and the ideological games that the Government are playing—that would underline the intent behind this statutory instrument and other legislation that they have introduced—but in the end, this comes down to reasonableness. The question is whether it is reasonable for trade unions to comply with a law that has been passed, whether I agree with that law or not—and it is very clear that I do not. We were told all the way through the passage of the Trade Union Bill and in many other discussions around it that it was all about listening and improving democracy and transparency, yet the Government have made attempts to ignore the democratic structures in trade unions and frustrate their operation.

[Chris Stephens]

The hon. Gentleman was on the Trade Union Bill Committee and would have heard the then Minister for Skills, the hon. Member for Grantham and Stamford, saying that the measures were not about passing on additional costs to trade unions. Does he think that claim is fulfilled in this statutory instrument?

[Stephen Doughty]

No, I do not. Indeed, I fear that costs are a consequence of many other parts of the legislation. Fines can be introduced for non-compliance, and there are many other restrictions. Many of the unions we have talked about, particularly USDAW, have been clear that they are trying to comply with the legislation within a reasonable time, yet the Government are not listening to their very reasonable concerns. The unions are suggesting that this be delayed not by years or decades, but by months, given their pre-existing and very reasonable democratic structures and processes.

I go back to the TUC’s key concerns about this statutory instrument. It has been clear that it believes that the proposed 12-month transition period is inadequate and fails to take into account the complexity involved. As I have said, a financial penalty of up to £20,000 can be imposed by a certification officer.

On revising the rulebooks, the changes need to be agreed through union democratic structures—a lengthy process that differs greatly from union to union. They need to consult branches, as has been mentioned several times, and there are rule-making conferences where union democracy can be conducted, with full transparency for the public and members. Why would we want to undermine that by suggesting that unions could go through a secondary process and have a little meeting of the executive committee under the Trade Union and Labour Relations (Consolidation) Act 1992?

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[Margot James]

I will not give way for a little while. I want to go back to our purpose, and remind Opposition Members that when we concluded the Act’s Public Bill Committee sittings, the shadow spokesperson, the hon. Member for Cardiff West (Kevin Brennan), said on the record:

“we recognise that the Government’s new proposal”—

that is, that only new members should be required to opt into the political funds—

“is a substantial improvement ?on the original Bill, which would have required all members to opt in within three months and to renew that opt-in within five years.”––[Official Report, Trade Union Public Bill Committee, 27 April 2016; c. 1510.]

Hon. Members are making a great deal of something that really ought to be happening already, and is a modest advance.

[Chris Stephens]

I thank the Minister for giving way; she has been most generous. As the right hon. Member for West Dorset pointed out, there is a real problem with the date given in the statutory instrument—1 March 2018. Is the Minister indicating that she is amenable to moving that date by a couple of months, as the right hon. Gentleman suggested?

[Margot James]

I am not going to proceed down that path at this point. As required by the Act, we have consulted and sought views on the length of the transition period.

Exiting the EU and Workers’ Rights

Chris Stephens Excerpts

Monday 7th November 2016 Commons Chamber

[John Redwood]

There is absolutely no point in having a referendum on the exit package. By the time we get to that point, we will already be leaving. The people have decided to leave. If we had a vote on the exit package and decided that we did not like it, the rest of the European Union would not say, “Oh, we’re very sorry, United Kingdom. We’ll improve your exit package.” Absolutely no way! They would say, “We are absolutely fed up with you, United Kingdom. You can’t make up your mind, you mess us around and you dominate the agenda with things we don’t want to talk about. You are out!” We have to understand that some of our partners have only a limited amount of patience. Some of them do not have very much patience already.

I regard my views and my vote as being those of a good European. I have always understood the full nature of the European project. It is a noble ideal to unite countries around a united currency, a political union and much more collaborative working. I also know that the British people, including myself, do not wish to do that. It is too close for us. That is why the British people have made the bold, heroic and sensible decision, as good Europeans, to say, “We don’t want to join the currency. We don’t want to join Schengen. We don’t want to join the next bit, which will be the political union.” So is it not good that Britain has honestly said—

[Chris Stephens (Glasgow South West) (SNP)]

On a point of order, Madam Deputy Speaker. As much as I am enjoying the right hon. Gentleman’s dissertation on the Brexit vote, it has been some time since we have spoken about workers’ rights. Is there anything that we can do about that?

[Madam Deputy Speaker (Mrs Eleanor Laing)]

I am grateful to the hon. Gentleman for drawing that to my attention. I am listening carefully to the speech of the right hon. Member for Wokingham (John Redwood) and he began by speaking about workers’ rights. The title of this debate is “Exiting the EU and Workers’ Rights” and I know that the right hon. Gentleman will strike a balance between the two parts of the motion. I am quite sure that he will remain in order, but I am grateful to the hon. Member for Glasgow South West (Chris Stephens) for ensuring that I am paying attention.

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[Chris Stephens (Glasgow South West) (SNP)]

Does the right hon. Lady not appreciate that many of us had to argue that case because trade unions used EU law to get victories for their workers in court?

[Anna Soubry]

Yes, but the unions did not need to use EU law—that was the point. This country has rights through common law and in statute; it was just not a problem. I am somewhat concerned and slightly agitated about this matter. The very firm words from our excellent Secretary of State—I was delighted when he was appointed to his job—could not have been clearer. He said that all the rights that we have by virtue of our membership of the EU will be transferred into substantive British law. Which part of that do Opposition Members not understand? My right hon. Friend could not have been clearer. I absolutely do take his word, and indeed the Government’s word, on this. In many ways, this is a bit of an otiose debate—if I can put it in those terms—because I have no fear that any of the rights that have been accrued over decades by virtue of our membership of the EU will be diminished.

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[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to follow the hon. Member for Great Grimsby (Melanie Onn), a Unison colleague.

I have to say from listening to some of the Government Members that the debate so far has been a bizarre, surreal and Orwellian experience—or should I say a Dickensian experience, given that reference has been made to the Conservative party’s glory days in 1802? Let us remind ourselves that Ebenezer Scrooge was a boy and children were sent up chimneys in 1802, the Conservative party’s glory days. As for the Conservatives being the workers’ party, I can only assume that Comical Ali is working in Conservative central office.

On the real issue about workers’ rights, I disagree with the right hon. Member for Broxtowe (Anna Soubry), because I do not think we emphasised workers’ rights enough during the EU referendum. I say that because of the legal advice issued by Michael Ford QC to the TUC, which states that

“employment rights in the UK are guaranteed by EU law. These rights include: protection against discrimination…; protections of workers on transfers of undertakings and in insolvency; health and safety…; rights to collective information and consultations on transfers and redundancies; working time rights; protection against discrimination of fixed-term…workers”—

I have had to use that very key EU law as a trade union representative before I came to this place—and, indeed, “data protection rights.”

Workers’ rights need to be protected if the UK—or even part of the UK—leaves the European Union. As others have said, those of us on the Opposition Benches have every reason to fear for workers’ rights if the Government are freed from the constraints of the EU. Our real fear is that there would be a war on workers’ rights from this Government. As others have noted, the Secretary of State for International Development said in a speech to that advocate of workers’ rights, the Institute of Directors:

“If we could just halve the burdens of the EU social and employment legislation we could deliver a £4.3 billion boost to our economy and 60,000 new jobs.”

I do not accept that economic illiteracy. It is a bit like the claim that the national minimum wage would cost £1 billion a year, when in actual fact it did the opposite. Who argued that position? It was the so-called workers’ party, the Conservatives. Viewed from working people’s end of the telescope, those so-called burdens are protections that we should be very keen on.

Which rights coming from the EU must be protected? The first is surely the EU equal treatment directive, which underpins equal pay legislation and has secured equal and improved pay for millions of women across the public services. Improvements do not rely only on directives; common law decisions of the domestic courts rely heavily on EU law. That has had the positive effect of women not needing to find a male comparator where they have suffered pregnancy discrimination.

The part-time workers directive has resulted in thousands of part-time workers gaining access to public sector pensions when previously they had been prevented from joining a pension scheme. The agency workers directive has resulted in UK agency workers gaining access to pay and leave improvements, and in many agency workers gaining permanent employment.

The much maligned working time directive has resulted in increases in holiday pay so that it includes regular allowances and so that pay is not reduced during holiday periods. It has allowed care workers on sleepover shifts in care homes to have their working time recognised when they are woken in the middle of the night to help the elderly. It has ensured safe shift patterns, reducing accidents and critical incidents, and pro rata annual leave for zero-hours contract workers for the hours that they have worked. The EU collective redundancy regulations have kept thousands of workers in work, rather than on the dole, by ensuring meaningful alternative redeployment or retraining are considered first before a final decision on employment is made.

Those are not burdens but real protections and have provided fair rights at work. Those workers’ rights must be protected. If the UK, in whole or in part, leaves the EU, we must ensure that those protections stay, and are not under attack from the zealots and fanatics who believe nothing good has ever come from the European Union.

Living Wage

Chris Stephens Excerpts

Thursday 3rd November 2016 Commons Chamber

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to take part in this debate. I congratulate the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing the debate. I know that she has been a tenacious campaigner on the issue and has contacted many MPs about it. I am pleased to support the motion in her name.

It has been an excellent debate. I look forward to the hon. Member for Bishop Auckland (Helen Goodman) telling us on a future occasion what the pay rates of the butlers and housekeepers are in Mr Morrison’s castle. I want to pick up on some of the themes in the speeches of the hon. Members for Halifax (Holly Lynch) and for Oldham West and Royton (Jim McMahon) in particular.

As others have said, the UK Government’s national living wage is not a living wage, but an additional tier of the national minimum wage. The national living wage does not benefit those under 25, who still face the lower rates of the national minimum wage. I view that as direct discrimination against young people. Differential pay for young workers is not acceptable and our long-term aspiration should be that the living wage becomes the norm across the board. There is no justification for paying people in their early 20s 25p an hour less than those who are younger.

Let us take the example of two workers in a fast food outlet, one aged 17 and the other aged 37. If they are both flipping hamburgers in that fast food outlet, surely they should be paid the same, but they are not. One is paid £4 an hour and the other is paid £7.20 an hour. Because of the way the Government have done the calculation and added the living wage to the national minimum wage, for someone who enters employment at 16 or 17 and stays with that employer, it will take eight or nine years to qualify for the highest minimum wage rate. No employer in the UK would keep a worker on a grade for that length of time before they reached the top of their pay scale. This is clearly discrimination against young workers, and it is one of the reasons why today’s young generation is likely to be poorer than generations before them.

There has been no adequate explanation in this debate of why the living wage applies only to those aged 25 or more. More importantly, as the hon. Member for Mitcham and Morden pointed out, the real issue is the enforcement of minimum wage rates. The National Audit Office confirmed last year that 209,000 workers were not paid the national minimum wage. That is a scandalous figure, and the pernicious practices of rogue employers who are trying other means to get round paying the living wage should be investigated. These are multinational companies that should be paying their tax and are not doing so. That should be addressed.

I support the comments of the right hon. Member for Orkney and Shetland (Mr Carmichael), who made the very serious point that somehow seafarers are exempt from the living wage and the national minimum wage. I hope Members will consider signing early-day motions 231 and 516 on this subject. The information that I have from the RMT is that seafarers are paid less than £2 an hour, which starkly illustrates the issue.

The so-called national living wage relates to average earnings, not living costs, and therefore cannot be a living wage. It is calculated according to the adequacy of household incomes for achieving an acceptable minimum living standard.

In Scotland the SNP continues to set the bar on fair work. On Monday 31 October the First Minister welcomed the new rate of the real living wage of £8.45 an hour, which will benefit thousands of workers in Scotland, and urged more Scottish organisations to sign up as accredited living wage employers. Peter Kelly, director of the Poverty Alliance, said on Monday:

“Today’s announcement of the new, increased, Living Wage rates of £8.45 brings a welcome pay rise to thousands of workers across Scotland. 430,000 people in Scotland still earn less than the wage they need to get by. This is an increase on the number of people struggling since last year’s figures. That’s why it’s more important than ever for leading employers to join the growing movement of businesses and organisations that are going further than the government minimum and making sure their employees earn enough to cover the real cost of living.”

The knowledge exchange project, carried out by the University of Strathclyde and the Living Wage Foundation, has found that implementing the real living wage encourages businesses to re-evaluate their approaches to staffing and payment, leading to more effective and efficient working patterns. Implementing the real living wage encourages businesses to re-evaluate their business model and increases skills development, staff performance, job satisfaction and staff retention.

According to the New Economics Foundation, one study found that when employers transitioned to paying staff at least the real living wage, they experienced significantly lower rates of staff turnover, reputational benefits, a reduction in sick leave, better motivated staff and an increase in productivity. A massive 80% of employers felt that their staff delivered better quality work after paying them the real living wage, with 75% of employees agreeing that their work was improved. One major UK firm found that paying contractor staff the real living wage cut staff turnover by half, saving it £75,000 on the value of a single contract.

There are now more than 624 Scots-based living wage accredited employers paying the real living wage, and the SNP Government have set a target of 1,000 by autumn 2017. I want to thank those living wage employers in Glasgow South West, including housing associations, Money Matters, Ypeople, Lifelink and Agripa, which is a local printing company.

Draft National Minimum Wage (Amendment) (No. 2) Regulations 2016

Chris Stephens Excerpts

Thursday 8th September 2016 General Committees

[Margot James]

I thank the hon. Lady for her intervention. I propose meeting Marks and Spencer to discuss a range of matters, including some of the points that she makes. It is important to remember that, by law, as long as companies pay the national minimum wage and, in future, pay those over 25 the national living wage, there will be a limit to what the Government can do, apart from expressing a keen concern that employers should operate within the spirit, as well as the letter, of the law.

[Chris Stephens (Glasgow South West) (SNP)]

There is a real issue with enforcement. The National Audit Office said that, last year, 209,000 workers in the UK were not being paid the national minimum wage and that 56,000 were owed arrears. Will the Minister outline the Government’s plans to enforce the national minimum wage better throughout the UK?

[Margot James]

We are doing a great deal to improve enforcement. Sadly, there will always be cases of employers who have the very immoral intent of getting round this law, but the powers of investigation of Her Majesty’s Revenue and Customs are increasing, and we are increasing the expenditure on HMRC’s enforcement team. I will come on to make other points about enforcement; there are various other things that we are doing to increase it. Every single complaint made by an employee is automatically investigated by HMRC’s enforcement team. This year, we have increased the budget from between £13 million and £14 million to £20 million. We are serious about cracking down on employers that try to flout the law. I shall return to enforcement in due course, because I agree with the hon. Gentleman that it is crucial.

The Low Pay Commission has proved that a rising minimum wage can go hand in hand with rising employment. However, the carefully considered independent advice from the commission is central to this. The Government’s 2016 remit for the commission asked it to make recommendations for the new rates, based on maximising the wages of the low-paid without damaging their employment opportunities. The commission has made its recommendations following thorough consultation with business, workers, and their representatives, and extensive research and analysis.

The Low Pay Commission’s remit is clear: when considering the pace of increases to minimum wage rates, it should take into account the state of the economy. The commission has stated:

“the labour market had continued to perform well, with robust employment growth in low-paying sectors”.

Although the referendum result may have cast some uncertainty over forecasts and assessments made before June this year, we should remember that the labour market performed robustly during the worst recession in living memory.

The increases to the minimum wage rates are, of course, in addition to the national living wage for those aged over 25, which we implemented in April. It is the Government’s ambition for a national living wage to reach 60% of median earnings by 2020. In addition, the national minimum wage cycle will be aligned with the national living wage cycle from April 2017. That will reduce the burden on businesses of having to update their workforce’s pay more than once a year and will mean that the statutory pay floor for all ages is uprated simultaneously.

[Margot James]

I thank my hon. Friend for his informative intervention. The fact that it is more or less dollar for pound indicates that we in Britain are doing as much as we possibly can to protect the interests of low-paid workers, and to pay them the maximum that the economy can afford without damaging their employment prospects.

[Chris Stephens]

Since the Government announced their version of a living wage for those over 25, there has been no explanation of why the age of 25 was chosen. Will the Minister outline why that age was set for a living wage, rather than 21?

[Margot James]

The wages of young adults between the ages of 21 and 25 are protected by the minimum wage regulations, which will continue to apply. It is felt that prior to the age of 25, people in employment are gaining experience, and that the most important thing for them is to be in work and looking at their prospects in the workplace. I am sure that is felt by the Low Pay Commission, which advises the Government on such matters, while having a remit of having regard to the state of the economy as a whole and a mission to not damage people’s employment prospects. Those factors informed the Government’s decision to pick the age of 25 for the national living wage.

I point out to the hon. Gentleman that a lot of employers—particularly in the retail sector, for which I am responsible—are finding the prospect of a national living wage a huge challenge. If we lowered the age or dramatically increased the rate, there would be a grave danger to young people’s employment prospects, which it is the Government’s duty absolutely to protect.

If I may make some progress, I will come on to the issue of enforcement, which I know is of interest to the hon. Gentleman. We are absolutely clear that anyone entitled to the national minimum wage or the national living wage should receive it. The enforcement of the minimum wage is essential to its success, and we are committed to cracking down on employers who break minimum wage law in all sectors across the economy. That is why we have increased HMRC’s enforcement budget, as I was saying earlier, to £20 million from £13 million last year. This will bolster HMRC’s resources and ensure that it continues to respond to every worker complaint.

The Government will continue to take a tough approach to employers that break minimum wage law, and will continue to name eligible employers in the vast majority of cases. From April this year, the Government have also significantly increased the national minimum wage penalty, taking it from 100% to 200% of the arrears owed to the worker, up to a maximum of £20,000 per worker. HMRC will continue to refer the most serious cases of wilful non-compliance for criminal investigation.

In conclusion, the Government believe that the rate set out in the regulations will increase the wages of the lowest-paid while being affordable for business.

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[Michael Fabricant]

I have not even mentioned the national living wage; the hon. Gentleman was not listening to what I was saying. I am talking about the national minimum wage. Whether we are talking about the national living wage or the minimum wage, it has to be set at a rate that people can be employed at. Otherwise, why not set the national minimum wage at £50 an hour? That sounds a good figure. Why not make it £100 an hour? The hon. Gentleman knows as well as I do that that would be ridiculously stupid, because it would price people out of the market. It is always a question of balance. He may or may not be a great economist—I do not know his background; forgive me, but I have not read his biog—but he would know that.

It is all too easy to score cheap political points and say, “Let’s make the rate higher,” and “Aren’t the Tories wicked and mean for not having it higher?” [Hon. Members: “Yes!”] Listen to them now, Mr Wilson. They are saying, “Yes, the Tories are wicked and mean.” Well, I am not a wicked Tory, and I am not mean. [Hon. Members: “Hear, hear!”] Thank you. I supported the minimum wage at the time. However, it has to be at the correct rate, and I think that on balance, this is the correct rate. All I agree with the hon. Gentleman on is that the rates must be enforced, as I said earlier.

[Chris Stephens]

rose—

[Michael Fabricant]

I will give way. I like SNP Members, because at least they are hard-working.

[Chris Stephens]

I thank the hon. Gentleman, although I think I have been damned with faint praise. He is talking about the right rate. What is his view on having different rates for different age groups? That is an issue on which there is real debate, and I would like to hear his view.

[Michael Fabricant]

I thank the hon. Gentleman for that question. The analysis done by the Low Pay Commission and others suggests that unless we have different wage rates by age, people under the age of 24 or 25 will be unemployable. That is the problem. For example, if we set the rate too high, it would be a disincentive for companies to engage people in apprenticeships.

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[Chris Stephens]

It is a pleasure to serve under your chairmanship, Mr Wilson. There are two main themes that I will touch on. The first is enforcement. We heard about some sort of strategy to address that, but I have questions for the Minister similar to those that the hon. Member for Sefton Central asked. What impact does the HMRC office closure programme have on enforcement of the minimum wage? Have any of the compulsory redundancies made by HMRC affected any minimum wage enforcement staff? It is important to get enforcement right. If 290,000 workers in the UK last year were not paid the national minimum wage, it seems that there is a real problem with enforcement, and we need to do it better. How many people are employed to deal with minimum wage enforcement? Are there any plans to increase that number?

The Minister mentioned the alignment between the living wage and national minimum wage rates. When will that alignment take place? It is important to look at the whole picture. The criticism of the UK Government’s so-called living wage is that it is actually just an additional tier of the national minimum wage. She and the hon. Member for Lichfield have argued that the rates change at 25, then 21, and then at other age bands. I think that that is wrong. I do not accept the arguments, well put though they were, that young workers should be discriminated against in terms of wages. I have never agreed with that analysis.

I say that for a couple of reasons. First, young workers have the same costs. A 21-year-old or a 19-year-old has the same costs as a fellow worker aged 25. I have never accepted the view that we should have different age bands. Another way of looking at it is that if there are two workers flipping hamburgers in a fast food restaurant, one aged 17 or 18 and the other aged 37, and both are doing the same work and producing the same output, they should be paid the same rate. Under the Government’s proposals, one would be paid £4 an hour and the other would be paid £7.20 an hour, which is a difference of £3.20 an hour between two workers working alongside each other and doing the same job. Employers address training and experience by inventing a pay grade containing different bands.

Well put though the arguments are, I am afraid that I want the Government to reconsider this and to direct the Low Pay Commission to look at the various age bands of the national minimum wage, because young workers have the same costs. When young workers go into the labour market, they should not be treated any differently from others. They should not be used as cheap labour, as some employers use them. I ask the Government to consider young workers, and I look forward to the Minister’s response to those questions.

--- Later in debate ---

[Margot James]

I thank hon. Members for the interesting points they have made. I will take the issues turn by turn, starting with the valid points raised by the hon. Member for Sefton Central about the national living wage. He quoted the other organisation for a real living wage, whose deliberations I follow. However, the Government follow the recommendations of the Low Pay Commission, rather than those of the other organisation. The Low Pay Commission is independent of the Government and, as I said, it makes its recommendations on the basis of what the economy can afford without damage to the employment prospects of young people.

I also mentioned the increase represented by the national living wage, which will rise over the next few years, as we all know. We on this side of the House think that is a very good thing. A lot of employers, particularly in the retail sector, are seriously concerned about their future viability with this new cost; for example, we have already identified that people in the social care sector, which several hon. Members mentioned, are very concerned. The Government are right to follow the recommendations of the Low Pay Commission, for those good reasons.

[Chris Stephens]

Will the Minister give way?

[Margot James]

I am going to make some progress, but if I do not cover the point the hon. Gentleman wants to make, he can intervene later.

I will say a little about enforcement, which was mentioned by the hon. Member for Llanelli; I very much agree with where she is coming from, and I thank her for her comments. As I said earlier, the Government are absolutely committed to cracking down on employers who break the national minimum wage law. I mentioned the budget increase for HMRC’s enforcement team; we have also increased the minimum wage underpayment penalties from 100% to 200% of the arrears owing to workers.

Employers who have underpaid their workers by more than £100 are eligible to be named. We name the vast majority of those employers: 700 have been named to date. I will make sure that that operation continues and is put on an expected footing of quarterly naming and shaming. I assure hon. Members that naming impacts on firms’ reputations, especially locally, because the local media always pick these stories up. It is a serious deterrent.

We are also creating a statutory director of labour market enforcement—I hope to have the individual in place by the end of the year—who will establish a single set of priorities for all enforcement bodies, and will back up the work of the HMRC enforcement team. The increased budget for HMRC will enable it not just to continue to investigate every single employee complaint, but to carry out more targeted inspections that do not depend on employee complaints.

I recognise that some employees, particularly in small firms, are worried about their future employment security if they make a complaint. There is the facility to make confidential complaints—people can complain directly to HMRC or they can call the free helpline that ACAS operates—but there is still that worry and fear at the back of people’s minds. I had someone come to my constituency surgery about it; they were so worried, and I took the matter up on their behalf. To ensure that that worry is not a barrier to enforcement, HMRC will carry out targeted inspections across various sectors of the economy.

That point leads me on to the care sector, which several hon. Members mentioned and which is a priority for the Government. HMRC is already undertaking targeted inspections: so far, it has made inquiries into almost 500 social care companies operating in the sector. It is worth pointing out that many of those inquiries result from targeted inspections; they are not dependent on employees making complaints. We have also enabled local authorities to charge a precept of up to 2.5% on council tax to provide considerably more funding for the social care sector, because we are concerned by what we have heard from companies operating in that space.

Hon. Members mentioned prosecutions—an issue that causes me concern. So far, HMRC has brought just 12 successful criminal prosecutions. I think we would all agree that that is a small number, but there is a good reason why HMRC prefers the civil remedy. It is far quicker; it is also cheaper, and we must have an eye on cost. Each criminal prosecution costs, on average, £50,000, and some cost considerably more. We need to make sure that criminal prosecution is in the armamentarium of HMRC, for the serious repeat offenders and employers who go out of their way to break the law. They should be the subject of criminal prosecution, but there is much more we can do, and hon. Members should not forget that when a civil remedy is pursued, the employees get their arrears immediately, whereas with a criminal prosecution they have to wait—and, of course, if it is not successful, they receive nothing.

I think I have dealt with most of the matters that the hon. Member for Sefton Central raised, including the Low Pay Commission. On the point about the disparity between people aged under 25 and those aged over 25, I listened attentively to the hon. Member for Llanelli, who obviously has expertise on the issue, and I accept that there is a difficulty in terms of strict equality between someone aged 18 and someone aged 37. I do not accept that they necessarily have the same costs, but there is an issue.

Let us not forget that the figure is a floor—a minimum. A lot of good employers who can afford it pay younger and older workers equally, and I think we would all like that to happen; but we must accept that the position of younger people in the labour market is different, and among the differences is the fact that sometimes they are training, or they need experience. I have already pointed out the significant difference in the unemployment rate.

I do not think that the provisions are a licence for exploitation. I think it is a realistic acknowledgement of the different position of different age groups, and the need to incentivise employers to employ younger people who do not have experience. Employers must have some kind of benefit from doing that. If they are in highly competitive and low-paid sectors that are under threat, such as the retail sector, which as I have mentioned is under severe threat for all sorts of reasons, they need that cushion, and that is what the Low Pay Commission recommends.

[Chris Stephens]

Some of those companies in the retail sector are multinationals making millions of pounds of profits. Is the Minister also looking at some of the companies that are changing contracts and taking away other premium payments to enforce the living wage? In debates in the House, evidence has been given of companies taking away other payments and changing hours and shifts to try to get round the living wage. Is the Minister looking at that issue?