Christopher Chope
Main Page: Christopher Chope (Conservative - Christchurch)Living Wage
Christopher Chope Excerpts(11 years, 4 months ago)
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Mr Christopher Chope (Christchurch) (Con)
It is a pleasure to participate in this debate. I congratulate the hon. Member for Erith and Thamesmead (Teresa Pearce) on securing it. I am delighted that the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), is responding, because he and I belong—or belonged—to the school that believes that it is much better to leave such issues to the market than allow Government intervention, let alone legislation or regulation.
The starting point is that, if people want to prescribe a living wage and some employers wish to pay what they describe as a living wage, they should be free to do so in a free market. There is no issue. The agenda that underlies the hon. Lady bringing forward the debate is that she would like the Government to specify and introduce what has been set out as a living wage.
Mr Chope
I have consistently articulated the same arguments on the minimum wage. I had the pleasure of introducing the Employment Opportunities Bill, fundamental to which was the principle that people should be able to opt out of the minimum wage, thereby increasing the number of employment opportunities. I have been consistent. In fact, I argue that I have probably been more consistent than my party in saying that in this area we should allow individuals and the marketplace to do what they wish to do and we should not intervene.
I make only one concession. The argument about the living wage in a sense embraces one of my criticisms of the minimum wage. The living wage is supposedly £1 or £1.50 higher in London than it is outside London, and yet people, and the party of the right hon. Member for Tottenham (Mr Lammy) in particular, espouse the idea that a national minimum wage needs to be the same across the country. It is recognised that the living wage is different in London. The costs of living in London are higher, so the living wage in London is higher than the living wage outside London. In a sense, the argument opens up the debate about whether to have national regulation or, if there is to be regulation at all, allow regional variation. I am pleased to see some recognition on the part of the Labour party that regional variations are important.
Whether a wage is a living wage depends on who receives the wage. I would like to draw Members’ attention to Donald Hirsch’s “Working paper: uprating the out of London Living Wage in 2012”, which updates the Centre for Research in Social Policy calculations on the living wage outside London. It uses the basis first set out in 2011, produced at the request of the Living Wage Foundation, and draws on the minimum income standard for the United Kingdom. It explains the basis for the outside London living wage level announced by the Living Wage Foundation on 5 November 2012, coinciding with the updating of the London living wage as calculated by GLA Economics.
I will not take Members through all the calculations, which start by calculating minimum living costs in 2012, translate that into a wage requirement, and consider the application of a cap limiting the increase in an applied living wage in any one year. When one looks in detail at the calculations, one sees the fallacy in the hon. Lady’s argument. After carrying out all the calculations for the different types of family, living in different types of accommodation, with differing child care needs, it concludes:
“The following summarises the composition of the costs as set out above, and how this translates into wage requirements”—
in other words, what the hon. Lady would describe as a “living wage”. The hourly wage requirement is £8.38 for a single person and £6 for a couple without children or dependants—significantly below the national minimum wage.
Mrs Anne Main (in the Chair)
Order. Will the right hon. Gentleman sit down?
Mr Chope
As soon as we look at the figures, we can extrapolate that an individual needs a wage at a particular level in order to live. That may be so, but a wage is determined in the marketplace, which is why single parents in this country have very low—relatively speaking —labour market participation. It is not worth their while to go out to work, because their wages will not be greater than their living costs or the benefits they receive. One good thing that the Government have done is adopt a policy designed to ensure that work pays and is worth while. If we take two equivalent families—one in work and the other not—the one in work will receive more than the family not in work.
Mr Chope
I will not give way to the right hon. Gentleman again, because lots of people want to participate in the debate.
Even the figures produced by supporters of the concept of a London living wage demonstrate the variation in living wage—£6 an hour each for members of a couple with no dependants, rising to £18.57 for a single parent with three dependant children. That is an annual wage requirement of £36,319 a year—pretty close to the level at which they would have to pay higher rate tax and lose their child benefit under the wholly misguided benefit arrangements the Government have introduced. That is a side story to what we are discussing.
If an individual wishes to employ someone, they offer a wage for the job and it is up to individuals applying for the job to decide whether it is worth while to undertake it at the wage offered. I hope the Minister will endorse that in his summing up. If employers just offer wages in line with the national minimum wage, they cannot differentiate between the person one might describe as the “honest plodder” and the person with a little more enterprise, flair and, potentially, loyalty to the organisation. That is why it is often in the best interests of a company to offer higher wages, and indeed why I offer gap-year students in my office significantly more than the minimum wage. I recognise that in that way I am more likely to get gap-year students who will stay the course, be conscientious and turn up for work on time than if I offer either zero wages or an internship rate.
I operate in a marketplace myself, and all I am suggesting is that other employers should be encouraged to operate in the marketplace. We should not sleepwalk into having a system of nationally set minimum wages that supposedly amount to a living wage.
Ian Lavery
The hon. Gentleman peddled a lot of information about the national minimum wage that was completely unfounded, and he appears to be doing exactly the same now. Does he not agree that the living wage is good for business, society and people in the workplace?
Mr Chope
The living wage may, in certain circumstances, be good for employers—I have just conceded that—and for employees, because they will receive more money than from another employer. I am much less certain about the overall benefits for society as a whole. Dramatic statements have been made about how, if everybody had the living wage, it would increase the amount paid to the Exchequer and therefore increase the amount of money available to fund public expenditure, but that analysis does not bear detailed scrutiny.
My point is that wages should be left to the marketplace. It is for an individual to present himself, and if he wishes to take a job for £4 an hour—[Interruption.] The hon. Member for Wansbeck (Ian Lavery) shows his scepticism, but a large number of graduates, who are out in the marketplace, are being presented with a stark choice: they either work for nothing—as an intern, basically—or do not receive the minimum wage because that is regarded by employers as unaffordable. Therefore, if an individual said to a potential employer, “I’m prepared to work for £4 an hour,” it would create an illegal situation. The purpose of my Employment Opportunities Bill was to enable people voluntarily to opt out of the requirements of the minimum wage should they so wish. I would have thought that that was pretty fundamental in an open, democratic society, but obviously the control freaks in the socialist party do not like giving people the freedom to do that. [Interruption.]
Mrs Anne Main (in the Chair)
Order. There is too much chatter on the Back Benches.
Ian Lavery
I thank the hon. Gentleman for giving way a second time. Is he really suggesting that the marketplace should determine wages? Would he accept people working for £1 an hour?
Mr Chope
In countries overseas, many people work for less than £1 an hour, and some of them have taken jobs that would have been available to people in this country, because those jobs have been outsourced overseas. Some of the work done shows that companies based in, say, London may want to pay all their staff high salaries, which is fine, but often outsource more menial jobs to overseas locations where people are paid much less than the minimum wage operating in this country. That is an area where the market should operate.
The market for labour in Cornwall or north-east England is different from that operating in London. The market for a young single person is different from that for someone with a lot of dependants. I have constituents, as I am sure does the hon. Gentleman, who have recently been made redundant but have so many commitments that they cannot afford to take a job at a significantly reduced salary, because they would be unable to meet all those commitments. That is part of what I describe as the operation of the marketplace.
I do not feel that I am out on my own on the living wage, but we should not lose sight of the importance of allowing the market to operate in this area. Whether we call it a moral case or whatever, I do not think that someone employed at £6 an hour—taking the figures I gave earlier—should be prevented from being employed because somebody comes along and says that there shall be a national living wage in excess of £6 an hour, with employers shedding employment as a result.
Hundreds of thousands of people are self-employed. They work for far less than the minimum wage or what people might describe as a living wage, but they work hard and for long hours as self-employed people. Why should we condemn what they do, if they are operating in their own marketplace? Why should we base a living wage on a week of 37 and a half hours when, to increase their wages and standard of living, many people choose to work more hours than that? Why arbitrarily choose that number of hours as the basis for assessing a living wage, because a living income may be based on people working a lot more than 37 and a half hours?
This debate has the potential to be quite interesting. I am grateful to the hon. Member for Erith and Thamesmead for introducing it. I hope that, in summing up, my right hon. Friend the Minister will leave no room for doubt that the coalition Government are absolutely opposed to the living wage and more regulation.