National Minimum Wage

David Anderson Excerpts

Wednesday 15th January 2014 Commons Chamber

[Vince Cable]

In general, that is the case. However, my experience, from talking regularly to trade unions and employers, is that most of our trade unions, certainly in the private sector, are extremely pragmatic and flexible on wages—indeed, that is one of the reasons why we have had relatively low unemployment. They deserve some credit for that.

[Mr David Anderson (Blaydon) (Lab)]

I thank the right hon. Gentleman for giving way; he is being very generous. At whatever level the fines are set, will he look at the possibility of reinvesting the money they raise directly into enforcement, so that the enforcement keeps on going to the point where, hopefully, we do not have to fine anybody, because nobody is breaching the rules?

[Vince Cable]

In line with the commitment to enforcement, I think we have produced more resources for that. My hon. Friend the Economic Secretary to the Treasury, who will be summating, may want to say a little more about that, but we recognise that the enforcement authorities need resources to do their job.

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[Mr Anderson]

My hon. Friend spoke about care workers’ pay before the 1997 election. I was then a negotiator for care workers in the public sector, who were getting at least £5 an hour—twice as much. We introduced this legislation because people were being exploited by private companies. Is that not the same worry that we see today?

[Chris Ruane]

I concur entirely.

When we want to improve the efficiency of businesses, we say that we must pay those at the top as much as we can to reward their energy and enterprise and that we must reduce the pay of those at the bottom because it is in their own best interest. There is one rule for the rich and one for the poor.

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[Mr Newmark]

My hon. Friend is right that there should be more publicity about those who abuse the system. Naming and shaming is a good idea.

To put some numbers on what has been said about penalties, in 2012-13 HMRC identified 736 employers who had failed to pay the national minimum wage, which led to the recovery of £3.9 million in unpaid wages for more than 26,000 workers. This week’s announcement will see the penalty for rogue employers raised to up to £20,000. The Government are taking punitive, robust action.

We should not forget that the last Labour Government left us with the biggest recession in recent history. This Government are helping some of the lowest-paid people in our society by raising the tax threshold and taking more than 2.7 million people out of tax altogether.

[Mr Anderson]

Will the hon. Gentleman give way?

[Mr Newmark]

No, I cannot take any more interventions.

Furthermore, under this Government we have seen a net increase of almost 1 million jobs. That means that a record 30 million people are in work. In other words, more men and more women are in work than ever before. Youth unemployment is falling. In the past three months, it has fallen by 19,000. I warmly welcome the abolition of employer’s national insurance contributions for the under-21s, which is something that I have campaigned for hard over the past year with the Million Jobs campaign. I encourage businesses to take on young people and to give our young men and women their first step on the job ladder.

The cost of living is an issue for the low-paid. Given that the recovery is well under way, I ask the Government at least to consider increasing the minimum wage further. I believe that would be a win-win. It would be a win for the low-paid because it would help with the cost of living issues that have been raised by Opposition and Government Members. It would also be a win for the Exchequer because it would reduce the amount that is paid in tax credits. Notwithstanding that, I support the Chancellor’s position that we should leave the final judgment to the Low Pay Commission, which takes into consideration the impact on overall employment and on businesses.

Although I join Opposition Members in celebrating the 15th anniversary of the introduction of the minimum wage, I believe that the Government are tackling the issues that they have raised. I therefore cannot support the overall motion, but will support the Government amendment.

--- Later in debate ---

[Mr David Anderson (Blaydon) (Lab)]

The hon. Member for Vale of Clwyd (Chris Ruane) reminded us that in 1906 the Labour party was in favour of a national minimum wage. During the 92 years before we got one, the people who kept the light shining for the campaign were members of the trade union movement, although I should add that some union members were not in favour.

Throughout the dark days of the 1980s and 1990s, the person who led the campaign more than anyone else was Rodney Bickerstaffe, the leader of the National Union of Public Employees and Unison. In 1997, I was proud to sit with Rodney at the first Low Pay Commission hearings, where we gave evidence about what should be done about the national minimum wage. The union argued at the time that the level should be set at £4.15 an hour, but unfortunately the Government of the day, although they were doing the right thing in general, decided to press for a level of £3.60.

If the Government had listened to the unions, we would not be having a debate about the living wage, because if the minimum wage had been set at £4.15 then, it would be a living wage now. That would not only have been the right thing to do for people in work, but it would have saved the billions of pounds in benefit that we have been spending over the past 15 years to supplement the wages paid by exploitative employers. We could do a lot worse than listen to what the unions are saying now. Unison’s submission to the Low Pay Commission for this year includes a number of recommendations which I hope will be supported by both Front Benches.

First and foremost, the union makes the point that it is clear that the national minimum wage has slipped behind, and we should move progressively in stages towards having a living wage for all workers. In particular we should make up the ground that has been lost, as the Secretary of State acknowledged, of its being at least 5% behind the retail prices index this year. The Government as well as the trade unions should have that objective going forward.

The subject of breaches of the legislation has been talked about on both sides of the House. The unions are putting forward the case that there should be a new formal complaints mechanism, meaning that if a trade union, law centre or citizens advice bureau puts forward a formal complaint on behalf of workers, that should be treated by HMRC as a formal complaint and must be investigated. That should be supported, because those are the people on the ground with direct contact with workers.

On enforcement, the unions make the case clearly that instead of freezing funding for enforcement, which is what has happened over the last period, it should be dramatically increased for the people on the ground. If that were the case, we would not be seeing the exploitation that was mentioned by my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Corby (Andy Sawford).

On penalties, we welcome the increase and the fact that the penalties will be for each worker not just per company, but I asked the Secretary of State whether he will reinvest the money raised through fines in funding for enforcement. That is where it should go. It should not be a windfall to the Treasury so that the vicious circle is continued.

The right treatment for 18 to 20-year-old apprentices has always been clearly argued for by the trade union movement. The differentiation based on a person’s age is immoral. If somebody is good enough to do the job, they are old enough to do the job and that principle should be enshrined in law. If they are not doing the full job, then differentiation is fair enough, but if they are doing the full job they should be paid the full rate. The Secretary of State mentioned that apprentices were getting a derisory 3p pay increase to £2.68. We cannot buy a pint of beer in this place for £2.68—and before somebody from the TaxPayers Alliance has a go at me about that I will add that we all know that the beer here is subsidised. Apprentice pay should be at least the development or the youth rate. There must also be a discussion about zero-hours contracts and the national minimum wage and exploitation.

The argument put forward about travel time is an absolute disgrace. The care workers who do such important work for people in our communities are not being paid for travelling from house to house. The Secretary of State says that is illegal, so let us make sure everybody in this country gets behind that. It is also clear that we must give the people running care in this country—the councils and private organisations—the necessary funds.

It is also a disgrace that people are being made to lose money because of having to live where they work, as has been mentioned. After all, £4.91 might not be very much to us, but it is a big chunk out of some people’s pay.

Finally, there is another scam: people being made to pay for uniforms and work equipment. That is wrong, it is immoral and it should not happen.