National Living Wage

Eilidh Whiteford Excerpts

Monday 18th April 2016 Commons Chamber

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I, too, pay tribute to the hon. Member for Mitcham and Morden (Siobhain McDonagh), not just for her efforts to secure today’s debate but for the work that she has done in recent months, fairly consistently, on this issue. I am sorry to hear that she is not very well, and I wish her a swift recovery and return to the House. However, the right hon. Member for Enfield North (Joan Ryan) stepped up to lead the debate with aplomb.

I think that Members throughout the House should be disturbed about the fact that some companies are seeking to undermine the legislative provisions of the minimum wage increase by cutting other employee benefits, such as additional premiums for Sunday working, antisocial hours or working on bank holidays. I am glad that some of those firms have been named and shamed this afternoon, because there is no excuse for poverty pay, and trying to offset business costs on the backs of the very lowest paid workers is unacceptable. However, reputational damage has been shown in the past to have a fairly limited impact on such firms. I hope the Government will take the opportunity to set out the action that they intend to take to ensure that employers meet their obligations and do not erode the terms and conditions of those on the lowest pay and in the most insecure jobs. I ask them to look at the variation-of-contract procedures to see what can be done to ensure that companies do not try to get round what is, I believe, a well intentioned increase in the pay of those on the lowest wages.

Many people over 25 who are working hard in minimum wage jobs will have been pleased to learn that they would receive at least a modest pay increase, but that will have turned rather sour for those who have learned that they will be losing out. A number of Members have highlighted cases from their constituencies, many of them in the retail sector, but others in the social care sector and the hospitality industry. My hon. Friend the Member for Glasgow Central (Alison Thewliss), and the hon. Members for Halifax (Holly Lynch) and for Ellesmere Port and Neston (Justin Madders), made the key point that people under 25 were in a particularly vulnerable position when they reached that magic age, and suddenly became less attractive to their current employers because they would have to be paid more. It strikes me as an arbitrary age, because it does not seem to be based on anything more tangible than when people’s birthdays are. At 25, young adults are probably at the peak of their labour abilities and cognitive functions. Surely that should be recognised, and they should receive a fair day’s pay for a fair day’s work like every other employee.

We must not lose sight of the fact that the setting of a floor on wages has had enormous benefits for those working in low-paid sectors of the economy, the vast majority of whom are women. When we think back to the introduction of the minimum wage some years ago—and, indeed, to every occasion on which minimum pay has been introduced—we recall that a wide range of corporate interests lined up to warn that it would lead to higher unemployment, firms going out of business, and the economy going to hell in a handcart. The reality, however, has been quite the opposite. When people on low wages have had money in their pockets, they have tended to spend it, usually in their own communities, thus boosting their local economies. Not so much of it has ended up stashed in offshore bank accounts.

[Richard Fuller]

A number of other Members have referred to what has happened when the national minimum wage has been increased in the past, but does the hon. Lady accept that this is a different approach? In the past, increases in the minimum wage resulted from discussions and decisions on the part of the Low Pay Commission, in conjunction with business, whereas the introduction of the national living wage constitutes a Government-imposed increase.

[Dr Whiteford]

I certainly acknowledge that the approach is different, but I think that we should all appreciate the work done by the Low Pay Commission in assessing the levels of pay increase that our economy can sustain without pushing up unemployment, and the possibility of gaining that optimal balance between the two. However, I fear that the commission’s role has been rather undermined by this process, although a significant pay increase is long overdue. I think that we need to recognise the benefits that the minimum wage has brought, and the need to bring wages into closer alignment with the real cost of living in the longer term.

I echo the point that was made so forcefully by my hon. Friend the Member for Lanark and Hamilton East (Angela Crawley), who welcomed the increase in the minimum wage for those over 25, but said that rebranding it as a national living wage did not make it an actual living wage. The so-called national living wage is significantly lower than the real living wage, which is calculated by the Living Wage Foundation on the basis of the cost of living. A national living wage of £7.20 an hour is well below the real living wage, which is £8.25 an hour, and more in London. That is what it actually costs to have an acceptable minimal standard of living in this day and age.

That issue becomes much more acute in the context of the shift away from tax credit towards the new universal credit, which was touched on earlier in the debate. For many low-paid workers, especially parents, the increases in the minimum wage and the personal allowance will not offset the reduction in income that will result from universal credit. Moreover, the real living wage has been calculated on the assumption that families will be receiving their full entitlement of tax credit. The cuts in tax credit, work allowances, housing benefit, and other benefits that help to make work pay for low-income families will not be replaced by the increase in the hourly rate of minimum pay, and thousands of families will be worse off overall. The hon. Member for Belfast East (Gavin Robinson), who is not in the Chamber at present, gave the example of a constituent who had found himself in exactly that position.

It is estimated that the total wage gain for low-paid workers resulting from the increase in the minimum wage will reach about £4 billion by 2020, whereas the estimated reduction in tax credit and other allowances over the same period is three times that amount. The notion that this will have a significant positive effect on the living standards of low-income households is misplaced. The fact that businesses will now be paying more of the real costs of labour will not be much help or consolation to the low-paid workers whose incomes will fall.

We have heard today that some low-income working families will indeed be badly hit. The TUC calculates that those who are set to lose out financially include families consisting of three children and two parents working on the minimum wage, one full time and the other part time. According to the Equality Trust, a single parent with two children, already working full time, would also lose out, and would have to find an extra 16 hours of work a month just to plug the gap. Meanwhile, the tax changes that were announced in the Budget mean that the wealthiest 15% of earners will be hundreds of pounds better off every year.

One issue on which I have pressed the Government in the past, and on which I have been given a less than satisfactory answer, is the question of whether the increase in the minimum wage should trigger a commensurate increase in the carer’s allowance earning limit. That is not uprated through the benefits uprating order, although I fail to see why it should not be. Instead, it is raised on an ad hoc basis. For those carers who are able to work, it is often important to keep in contact with the labour market, and for those in low-paid jobs, the increase to the minimum wage could have significant implications. Some might consider reducing their working hours, but that could cause problems for their employer and also create problems with their entitlement to tax credits. The net result would be a reduction in a carers’ incomes, which are already very low. I would be grateful if the Minister could address that point today, look at it more seriously and work out how he might ensure that carers’ incomes are not inadvertently squeezed by these increases.

I hope we all recognise the value of reducing wage inequality and ensuring that everyone gets a fair day’s wage for a fair day’s work. We can make a start in the public sector. As my hon. Friends the Members for Lanark and Hamilton East and for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) pointed out, back in 2011 the Scottish Government introduced the requirement to pay the living wage as an integral part of public sector pay policy, and in 2015 they became an accredited living wage employer. That means that all employees on Scottish Government-controlled payrolls receive the real living wage, which is already well above the new minimum wage being talked about today.

The Scottish Government have also established an independent fair work convention and introduced the Scottish business pledge, as my hon. Friend the Member for Glasgow Central explained. Becoming a living wage employer is only one part of the process, however, and there are already ambitious plans for expanding those commitments. The Scottish Government are also working closely with local authorities and private sector care providers to fund improvements in pay in the social care sector. This has been mentioned frequently in the debate today, and it is pertinent to my own constituency, where a care home has closed as a result of staff recruitment and retention problems. Social care sector wages have traditionally been very low, and recruitment has been difficult because of the nature of the work, yet care assistants do an enormously responsible job. They look after people who can no longer fully attend to their own needs, often going into people’s homes. If we are moving towards fairer pay, this is a great place to start, and it will benefit not only the employees but the whole community as well as delivering better and more consistent care.

It is in everyone’s interest to move to a higher wage economy. It is quite right that the minimum wage has been raised to bring it closer to the cost of living, but this Government need to make it enforceable and to enforce it, as well as taking action to stop companies sidestepping their obligations. They could lead by example by seeking to become a living wage employer and ensuring that all Government employees earn the living wage. They could also do much more to encourage private sector firms to become living wage employers.

Budget Resolutions and Economic Situation

Eilidh Whiteford Excerpts

Thursday 17th March 2016 Commons Chamber

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Yesterday, the Chancellor highlighted the huge uncertainties and risks facing the global economy, and he painted a fairly bleak picture of what might lie just around the corner. These have been very tough years for a lot of people, characterised by financial insecurity and drops in living standards, which have started to recover only in very recent times.

One response, as advocated by the IMF and the OECD, would be to boost public investment as a means of pushing up productivity and growth. Instead, yesterday’s Budget confirmed a decade of austerity—austerity of choice, not of necessity; austerity that is falling on the shoulders of those least able to carry the burden; and austerity that is harming our public services. There are £3.5 billion of new cuts in this Budget. Even if we exclude cuts to capital spending and social security, the Office for Budget Responsibility estimates that funding for day-to-day public services is forecast to fall by the equivalent of £1,000 per head over the course of this Parliament.

Yet all this pain has failed to deliver the economic benefits that we were promised. As the shadow Chancellor said earlier, the Government have failed to meet their own targets on debt, borrowing and bringing down the deficit. They have missed every key economic target they have set themselves. Another target that the Chancellor quickly glossed over yesterday was the fact that the Government are once again set to miss their own self-imposed limit on welfare spending. In fact, the OBR predicts that the Government will breach their welfare cap by £4.6 billion in the coming financial year, and will miss their own target in the next four years as well.

The quagmire that is the implementation of the new universal credit is right at the heart of the Chancellor’s problems. The difficulties with universal credit are not new. However, the OBR has said that universal credit is

“one of the largest sources of uncertainty”

in forecasting spending on social security, and that it has identified

“new sources of significant concern”

in trying to assess the impact of universal credit on spending. I think we all appreciate that predicting spend on universal credit presents some inherent challenges and that certain aspects of universal credit spend will be driven less by policy than by the economic cycle and the state of the labour market, but given the OECD and others’ sobering account of the turbulent global economic outlook, the problems with universal credit are likely to become much more acute.

In that context, I am not convinced that the Government’s arbitrary welfare cap is helpful. The reality is that the austerity cuts of recent years have fallen heavily on budgets for social protection. The £12 billion of cuts already identified in the autumn statement will largely come out of the pockets of low-income households with children and of those who need support to cope with illness or disability. The cuts to work allowances and other changes to the tax credit system, which are due to come into effect from April, will significantly reduce the support to parents working in low-paid jobs, some of whom are going to be thousands of pounds worse off, even when we take into account the increase to the minimum wage, the increase to the personal allowance and other changes confirmed or announced yesterday.

The research published in recent days by the Women’s Budget Group has shown how austerity cuts have fallen disproportionately on women—that point was well made earlier—and points out that women face “triple jeopardy” because they are more likely to be in low-paid work, more likely to work in the public sector and more likely to be in receipt of tax credits or other benefits subject to cuts or freezes. Its research suggests that as many as one in four women are earning less than the living wage.

I want to pick up that point about wage levels and say a wee bit about terminology. It is very important that we distinguish between the minimum wage, which is now being rebranded as the national living wage, and the real living wage, which is calculated on the basis of the actual cost of living and is significantly higher. I of course welcome the increase in the minimum wage to £7.20 an hour for those over 25, but let us not pretend that it is a living wage. Let us also not forget that those under 25 are not so fortunate. For the life of me, I can see no rationale for such a significant differential in pay as the one experienced by younger workers.

The real living wage is currently £8.25 an hour, although we should bear in mind that that calculation was based on the assumption that low-paid workers would be claiming their full entitlement to tax credits at the present rate, not the new reduced rates. In Scotland, we have a higher proportion of workers paid the real living wage than in any other part of the UK, and there are ambitious plans to increase further the number of accredited living wage employers. However, I think we all recognise that there is a long way to go if we are to tackle low pay.

One of the questions I want to ask Ministers today on the subject of the minimum wage is whether and when they plan to raise the carer’s allowance earnings threshold. They seem to be ficherin’ about with their papers, so I do not know whether they have even heard that question. There is no automatic link between the level of the national minimum wage and the carer’s allowance earnings limit. In the past, the limit has just been raised on a very ad hoc basis as something of an afterthought. The limit has huge implications for carers who might be working part time and receiving tax credits, so I hope Ministers will confirm that they plan to increase the carer’s allowance earnings limit in line with the increase in the minimum wage and to do so at the same time. I put it to Ministers that it might make more sense for this to be included in the annual benefits uprating order in future.

I want to return to the guddle of the Government’s social security spending and their cack-handed attempts to save money. The Chancellor confirmed yesterday that the Government intend to take a further £1.2 billion from sick and disabled people through changes to the assessment points awarded to sick and disabled claimants for personal independence payments on the basis of the aids and appliances that they need to carry out daily living activities. PIP is in the process of replacing disability living allowance. This is yet another transition process in the Department for Work and Pensions that has been fraught with problems and lengthy delays.

Jonathan Portes, principal research fellow at the National Institute of Economic and Social Research, has pointed out that

“delivery and implementation failures related to welfare changes, particularly related to disability benefits, continue to push up OBR forecasts of welfare spend”.

In his view, the £1.2 billion cut in support for aids and appliances within PIP is being done partly to offset such failures. Personal independence payments are, however, really important. They are the means through which those with very substantial disabilities and long-term health conditions receive extra support to help them to meet the extra costs they incur because of their disability. For many, DLA or PIP is what enables them to work and live independently, and what allows them to participate in their community.

These further cuts come hard on the heels of a raft of measures that have reduced the incomes of sick and disabled people since the start of the Government’s austerity drive. The Welfare Reform Act 2012 has already cut the budget for PIP by £1.5 billion and raised the bar on eligibility for the new benefit. The Government’s forecasting has consistently underestimated the cost of the policy, which is why—once again—disabled people are in the front line.

The transition from DLA to PIP has been blown far off course. By making it more difficult to qualify for PIP, the Government thought that they could save money, and they expected 20% fewer claimants to be eligible for the new benefit. However, they grossly underestimated how many, and how badly disabled, those claimants were. Making disability benefits harder to claim does not change the health or support needs of claimants. In practice, cuts in support have meant that many sick and disabled people have been pushed further into poverty, and some into destitution or worse.

Around 370,000 people in the UK are likely to be affected by this new cut, including around 40,000 in Scotland. That comes on the back of a string of austerity measures that adversely affect disabled people, from the bedroom tax—eight out of 10 households affected in Scotland were the home of a disabled adult—to cuts to the independent living fund, the loss of eligibility for Motability vehicles, and the most recent changes to ESA that we debated the other week, which will reduce support to some disabled people by £30 a week.

[Nigel Huddleston (Mid Worcestershire) (Con)]

I have heard what the hon. Lady is saying, but does she recognise and accept that disability spending is going up, and that there will be more than £1 billion of spending on disability? Is it not appropriate for welfare spending to go to those in most need?

[Dr Whiteford]

I am grateful to the hon. Gentleman for raising that issue because those figures deserve much greater scrutiny. The rise in the overall budget for disability spending to 2020 is easily explained by the fact that as the baby-boomer generation start to lose their health, and as life expectancy increases but healthy life expectancy does not increase at the same rate, there is more demand for disability support.

I accept that those with the most extreme disabilities need more support—that is definitely the case—but those who are losing out from PIP are probably those who are closest to the labour market, and their PIP, or DLA, enables them to participate in that market and support themselves. Those people have ongoing additional extra costs, whether for aids and adaptations, transport, or because they do not have sight and need support to get to and from their place of work. Such people need and deserve support, so why should they be put on the frontline when many other able-bodied people are not being asked to bear the same level and proportion of that burden? I hope I have addressed the hon. Gentleman’s point, and I am grateful for the opportunity to unpack those top-line figures that sound so generous to disabled people, but mask systematic cuts to the support that individuals who need help can expect to receive.

In response to the Budget yesterday, Citizens Advice Scotland said that

“the confirmation of changes to the Personal Independence Payment will mean that disabled people are set to lose entitlement of up to £3,000 per year to support them to live an independent life.”

Liz Sayce of Disability Rights UK said that the cuts to aids and appliances

“will impact on people’s ability to work, enjoy family life and take part in the communities they live in.”

Before I conclude, let me address the Chancellor’s announcements on savings. In the weeks leading up to the Budget, it was widely reported that he was planning to reform pension tax relief, to rebalance the pension system and make it fairer for basic rate taxpayers and other modest earners. That opportunity was missed yesterday, and instead we got measures that will further widen the gulf between the haves and have-nots, and which lay bare the stark priority that this Government seem to attach to maintaining, and even celebrating, the gross income inequalities that characterise modern British society.

There were some great wheezes for very high earners, not least the increase to the personal allowance. Although everyone can potentially benefit from that, those set to benefit the most are higher rate taxpayers like ourselves. The Resolution Foundation estimates that a third of the benefit of that change will accrue to the top 20% of earners. Meanwhile, a lot of low-paid and part-time workers—most of them women—will not even earn enough this year to take them over the threshold.

Similarly, raising the ISA limit to £20,000 will benefit only those who happen to have a spare twenty grand lying around. To take full advantage of that tax break, someone would need to save more than £1,666 pounds a month, which is a lot more than many people’s take-home pay. The same applies to the new lifetime ISA, because a young person would need to save £333 pounds a month to take full advantage of it. For a 20-year-old working full time on the minimum wage, that represents 38% of their gross salary. It is not realistic. Even among better paid young people, many of those eligible for the scheme are likely to struggle to pay grossly inflated rents in the private sector, and many will be servicing substantial student debts and be unable to take full advantage of the scheme.

[Mr Kevan Jones]

The hon. Lady raises an interesting point, because the assumption is that people have spare money sloshing around to put into a lifetime ISA. Does she agree that even if someone saved the maximum amount every year over the period allowed, they would not be allowed to buy a pension at the end of that, and in many cases—especially in London—they would not even be able to buy a house?

[Dr Whiteford]

The hon. Gentleman makes an important point and highlights the fact that young people’s housing problems are caused by undersupply of affordable housing. With the best will in the world, people on normal wages will never be able to buy a house in an urban area such as London, or in places such as Aberdeen and Edinburgh where the housing market is inflated.

[Michelle Donelan (Chippenham) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

I will make some progress.

The lifetime ISA is a nice little bung for trustafarians and others with munificent parents or grandparents. An 18-year-old whose wealthy parents put £4,000 into a lifetime ISA every year until he or she is 40 will get a tidy wee £22,000 handout from the Government. That stands in sharp contrast to the Help to Save scheme under which people on breadline incomes—if, by some miracle, they manage to save £600 pounds a year—will get £300 from the Government. In other words, they receive less than a third of the annual benefit available to those who are already wealthy and privileged.

[Michelle Donelan]

Will the hon. Lady give way?

[Dr Whiteford]

I will not give way at the moment. No wonder that the Chancellor did not have much to say about the Help to Save scheme yesterday. It is a sham opportunity that is being dangled in front of people who can never hope to insulate themselves properly against financial shocks, whose financial security is increasingly precarious, and who are most exposed to the risks of global economic instability. Some people have already started calling the lifetime ISA the LISA, but out of deference to my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Dr Lisa Cameron) I will resist that temptation. Instead, we might consider calling it the PIERS— for People Inherently Entitled to Rich Savings.

However, this is a serious point because we all recognise the need to encourage people to save more for later life, and for almost all of us the best way to do that will be through a workplace pension to which an employer can contribute. At best, the lifetime ISA is a fairly gimmicky sideshow, and at worst there is a danger that it could undermine auto-enrolment, which is the key vehicle for incentivising savings and promoting fairer universal pensions. We must shore-up confidence in auto-enrolment and not distract focus from it. The pensions industry and sector has suffered a real crisis of confidence over recent decades because people have not seen adequate rewards from the process and do not believe that that is the best way to protect themselves for the future.

This morning the Resolution Foundation published a graph that shows how the Government’s income tax cuts will benefit people across the income distribution. It shows that the lowest 20% of incomes will gain a miserly £10 on average, while the wealthiest 20% will gain an average of £225 each. For me, that encapsulates in a nutshell this Government’s warped priorities and the unfairness at the heart of this Budget. There is an alternative to austerity, and I am sorry that the Government have chosen not to take it.

[Several hon. Members rose—]

Equal Pay

Eilidh Whiteford Excerpts

Wednesday 18th March 2015 Westminster Hall

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a particular pleasure to serve under your chairmanship, Mr Weir. I congratulate the hon. Member for Islington South and Finsbury (Emily Thornberry) not only on securing the debate but on setting out the case so clearly and persuasively for reform of the Equal Pay Act 1970. I support, in principle, the call for the 1970 Act to be brought up to date and into line with the needs of our society, our economy and our labour market in the 21st century. I am disappointed that only women MPs have shown up for today’s debate. Is it not shocking that there is not a single Government Back Bencher here for such an economically and structurally important debate? The subject of our debate impacts on all our lives and on the lives of men, because they also have to deal with the consequences of unequal pay.

The Equal Pay Act 1970 was introduced the year after I was born. Although women’s participation in the labour market has been transformed in the intervening 45 years, the pay gap remains stubbornly entrenched. Progress has been painfully slow, and even women of my generation, who expected to be the second generation of women to experience equal pay, still find that, on average, our pay falls significantly behind that of our male counterparts.

I want to say a few words about Scotland. Although compared with other parts of the UK, we have had higher rates of women’s participation in the labour market, consistently lower women’s unemployment and higher women’s employment over the past few years, our pay gap appears to be slightly wider. There are different ways of measuring that gap, but according to the Close the Gap campaign, provisional figures for 2014 indicate an 11.5% pay gap in the hourly rate for full-time workers, and a massive 32.4% pay gap between the hourly rate of women working part time and men working full time. Women working part time are earning almost a third less. Given that 78% of part-time workers in Scotland are women, the gap will have a long-term impact on women during their working lives and in retirement, when they are likely to have far lower pensions than men and to be far more susceptible to poverty in old age.

I take this opportunity to pay tribute to the Close the Gap campaign, which is doing much to lobby on equal pay in Scotland. I also pay tribute to Engender and the Scottish Women’s Budget Group, which provide a lot of research and analysis that informs not only the raising of awareness but action to tackle the problems caused by unequal pay. At the moment, on average, a woman in 21st-century Scotland earns £95.60 a week less than a man. As we know, a significant part of the problem is occupational segregation. Women are over-represented in jobs that tend to be low paid, as the hon. Lady has said, such as cleaning, caring, clerical work, catering and retail jobs. It is also significant that in Scotland, according to Close the Gap, 48% of women work in public administration, education and health.

Women represent more than half of workers in only six of the 20 standardised industry classifications, whereas men tend to be more evenly spread across industry groups. Some 80% of administrative and secretarial workers and those in personal service jobs are women. Women are more likely to work in the public sector: 67% of local government workers and 81% of NHS workers, but only a third of chief executives, are women. We know that 97% of child care and early years education staff are women, and 98% of classroom assistants. By contrast, less than 3% of chartered civil engineers in Scotland are women. I have been working hard with my local college and schools to try to change that, and some of the local companies that recruit people with STEM qualifications are keen to encourage such change. We are making progress with getting girls into engineering, but it is a long-term challenge.

The hon. Lady has alluded to the fact that the vertical distribution of pay in organisations often betrays a gendered division of labour. Higher-paid jobs are predominantly done by men, and lower-paid ones tend to be done by women. It is disappointing that efforts to encourage companies voluntarily to audit their pay structures by gender have had such derisorily poor uptake, especially when companies that have done so have changed their policies and practices as a result and become a lot more aware of their own institutional biases.

The hon. Lady made the point at length that it has become much more difficult for women to seek redress if they believe that they are being discriminated against in the workplace. A core underlying factor in the pay gap is the fact that caring for young children and frail, elderly, sick or disabled relatives still falls predominantly to women. It is often perceived to be a woman’s duty to step up at times of family crisis or illness. Consequently, too many women—mothers and unpaid carers—take jobs that they can juggle around their caring responsibilities. Too often, that means part-time, low-paid, insecure and low-skilled work, sometimes on zero-hours contracts, even when those women have the skills, experience and qualifications to take on much higher levels of responsibility. That is a huge waste of human and economic potential, and it costs our economy dear.

I do not mean in any way to undervalue the choices that people make to prioritise their family; I am merely reflecting the lack of choice and flexibility that women have when they are trying to establish a balance between their working lives and their home lives. Our workplaces and our legislation—indeed, our legislative system, although I will not say too much about the House of Commons today—have not kept up with changes in our society and with the aspirations of both women and men to earn a living and have a life. We need to take much more account of the impact of care in our economic models.

A step change in access to child care is as important as other legislative measures to tackle unequal pay. The cost of child care is simply prohibitive for far too many people, especially when it is combined with the cost of commuting to and from work. It acts as a huge disincentive to mothers who are keen to be in the workplace, and who want to work and use their skills and qualifications, but who cannot do so because they cannot earn enough to pay for child care and commuting. That problem gets even worse during school holidays, when many parents find that they are effectively working for nothing because they have to pay for very expensive child care over the holiday period. Sometimes, they have difficulty arranging any suitable child care at all during the summer months. That is helping to entrench occupational segregation, and it is driving the casualisation of employment.

Many things can be said about this issue, and I do not intend to make a long contribution, but introducing free access to child care and increasing the hours of child care to which parents are entitled goes much further than simply introducing tax breaks on child care, which tend to help women in higher-paid occupations, but which do nothing for the millions of women who top up their low pay with tax credits and who are already struggling to make ends meet.

In recent times, we have seen evidence that the pay gap is closing for younger women. Obviously, that is to be welcomed, but we should not be too congratulatory or pretend that the problem has been solved, because such developments are not really a sustainable solution. We need to think much more long term about how those women will fare in later years. If the only way for women to close the gender pay gap is not to have, or to delay having, children, that is simply not sustainable in terms of our demographics.

We therefore need to look at flexible working and at protecting women’s rights in the workplace. I absolutely agree with the hon. Lady that we need to bring the Equal Pay Act 1970 into the 21st century.

[Emily Thornberry]

Has the hon. Lady, like me, met young women beginning their careers who believe they will always be paid equally with men? When I point out that they would face an increasing gap with their contemporaries if they had children and tried to go back into work, they look at me as if I had two heads. They simply do not believe that that can happen, but we all know it does.

[Dr Whiteford]

It is interesting, and I have seen it in my own generation. When I was young and fresh-faced, I came out of university keen to build a career. If anybody had told me then that I would be disadvantaged in the labour market, I would probably have laughed at them. However, women find out the truth very quickly; indeed, that happens when they are first appointed to their jobs—in my day, there was still a big gap in starting salaries. There is also the issue of how they negotiate pay increases as they go through their careers. It is therefore difficult for young women to keep pace with their peer group.

It does not matter how hard they work, how committed they are or whether they have children; the pay gap persists for women who do not have children, as well as for those who do. This is not just as simple as whether a woman has a family. The layers of discrimination are often very subtle, and they have to do with the cultural dynamics in organisations and the vertical integration the hon. Lady and I have talked about.

Audits within organisations are therefore important, because they can expose to personnel departments their unconscious biases in offering different starting salaries to men and women and in looking at people’s investment in their careers and career progression. The hon. Lady therefore makes a good point, and I would absolutely encourage young women to be assertive in the workplace and to chase the careers they want. As a society, however, we cannot let that happen at the expense of the work-life balance, and it must be possible for women to pursue careers in a sustainable way, without burning the candle at both ends, and then some. At the same time, it cannot just be women who take responsibility for work-life balance. However, I was just winding up when the hon. Lady intervened, so I will do so now and hand the floor to other contributors.

--- Later in debate ---

[Jo Swinson]

I certainly hope that that will be the case.

The hon. Lady also asked how far back the backdating goes, as the six years is quite a perverse disincentive to companies to get on and deal with this matter. As she rightly said, the potential issue is about a legal issue, in terms of the European Court of Justice ruling. However, it is worth exploring this matter in the review process to see whether anything can be done on it.

As for bogus self-employment, clearly the employment status review that is under way at the moment will look at a range of issues, because bogus self-employment is a problem not only in terms of equal pay but much more widely.

Regarding the pay audits that are in place where a tribunal has found that companies have been found not to have paid men and women correctly, there is redress. The order that was passed in Parliament provides for a £5,000 fine to be imposed for failure to produce an audit, and the audit must be published. The Equality and Human Rights Commission is in a position to monitor these cases and therefore it can pursue an employer further if it suspects that it has not complied properly with what is required of them.

On the particular issue about the exemption if the disadvantages of pay audits would outweigh the advantages, I understand the concern that the hon. Lady raised. Perhaps, however, I can provide some reassurance about the intention behind it. It was primarily put in to avoid the risk that would arise if an employer was close to insolvency, and was told that it had to undertake an audit, the cost of which would tip it into receivership and therefore end up jeopardising the jobs of employees. So it was there for very specific circumstances and not for general circumstances. I hope that she agrees that in the kind of specific circumstance I have just described, the overriding responsibility is to try to safeguard jobs in a business that could still be rescued and that could continue as a going concern. There may be some limited circumstances where that would be the case, but the exemption was certainly not envisaged as a wide exemption.

Pay transparency is hugely important. The hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) raised it, as did others. As for section 78 of the Equality Act 2010, I will put something straight about its chronology, because I fear that history is being slightly rewritten in this debate. In the debates in 2010 during the passage of the Act, it was my right hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) who made the case for pay transparency. The Labour Government at the time were ultimately forced to take a power in the Act to be able to introduce that. However, the Labour Government at the time said very clearly that they wanted to adopt the voluntary approach first; in fact, they gave an undertaking that they would do so for at least three years before bringing anything else forward. In negotiations within government subsequently, that made it much harder to win an argument to go for pay transparency at an earlier stage. I want that to be clearly on the record and I am absolutely delighted that we are bringing forward the proposal to activate section 78 of the Act, because it is a vital tool to shine a light on the problem.

One reason why some people have not liked that idea is that it will make quite uncomfortable reading for some organisations. That is a very good thing, because they should be uncomfortable about a pay gap, and all credit to the five companies that have gone forward and already published information about their pay gaps. However, when I spoke to some of the people who argued for that action within those organisations, they told me how difficult it was to get it through their own legal departments because they were so worried about the outcome.

One important thing to bear in mind is that a difference in pay does not automatically mean that an employer is discriminating, because there are a range of reasons why that difference could exist. Nevertheless, the point is that having that transparency means that questions can be asked, and that if there are particular reasons why there is a difference in pay they can be set out by the employer. It also means that the employer has to ask questions of itself, so that it can provide answers to those questions, whether to employees, to the media or to customers who may be interested. That consciousness about what is going on is hugely important.

Think, Act, Report is the Government’s initiative, and 2.5 million employees are covered by the 270 companies that have signed up to it. It is worth putting on the record that while it has not delivered significant pay transparency, about half the companies who have signed up are conducting pay audits, and so on; they were just not publishing those audits. Also, the initiative was very much designed to be about things wider than pay. Pay is a hugely important issue, but the initiative is also about recruitment of women, retention and promotion within the workplace—all those different strands of gender equality. While legislation has been needed to force the issue of pay transparency, none the less the initiative is valuable, because companies can share best practice and learn from one another about how to promote gender equality.

All those other elements are important if we are going to solve the issue about the executive pipeline—how we get women into more senior roles and how we address these different issues. Organisations may have problems at the recruitment stage. For some sectors and some companies, that is exactly where their problem lies; their intake of new staff out of education is not equal. However, other companies have an entirely different set of issues. They may have a 50:50 gender divide of their intake, but they suddenly lose lots of women part way through their careers. Last night, I was at the everywoman in Technology awards, where a scary statistic that was given was that 41% of the women who go into work in technology leave after 10 years. So, not enough women are going into that industry—only about 15% of jobs in technology are held by women—and there is also a real problem in retaining women. We need to look at all those different elements of gender equality.

Other issues have been raised today. The hon. Member for Banff and Buchan (Dr Whiteford) rightly identified the cost of child care as a key issue. This Government have taken steps to help to address that issue, which I am very proud of. In particular, we have extended free early years education to 15 hours a week for three and four-year-olds, and indeed to 260,000 of the most disadvantaged two-year-olds, which is 40% of two-year-olds. That is really positive, although I hope we can go further in future; that is certainly what I want to see. I also hope that the Scottish Government can be encouraged to follow suit, because their extension of free early years education to two-year-olds currently reaches only 15% of two-year-olds, so there is a more lot more that we can do on both sides of the border.

[Dr Whiteford]

Of course, the Scottish Government have not over-promised more than we can deliver. That is why we have set those targets. Other parts of the UK have set very ambitious targets but have not been able to meet them. Surely, however, the bigger ambition is to get all children under the age of five into as much child care as their parents need to be able to do a job and fulfil their economic aspirations as well as their child care responsibilities.

[Jo Swinson]

There are two reasons why early-years education is important. One of them is that, regardless of whether parents are working, once children are over the age of two, and certainly once they are over the age of three, there are real developmental advantages to them having some quality early-years education. The second is related to the point that the hon. Lady raises about the child care element; child care can make the difference to whether it works economically for a family for the parents to be in work, and it is important to provide that choice. One of the big issues is the gap that exists at the moment, because if someone has to wait until their child is two before it makes economic sense to go back to work, and if they are going to have more than one child, that situation can suddenly lead to there being four, five, six years out of the labour market, which can have a really negative impact on someone’s career. If someone had wanted to go back to work, perhaps in between having their children, it is a shame if they are not being enabled to do so. That is another issue that the future Government should look at.

The hon. Member for Bolton South East (Yasmin Qureshi) raised a particular issue about employment tribunal fees, and other Members raised it, too. We are absolutely aware of the drop in equal pay claims. In my role as both a Minister at the Department for Business, Innovation and Skills, and the Minister for Women and Equalities, I absolutely understand the concerns that have been expressed. The Government are committed to a review, including on the equality impacts of this policy of having fees and the level of those fees, and on the impact that those factors have on access to justice.

As Members will know, that policy sits with the Ministry of Justice, which has full access to all the data. I am looking forward to that review. From a BIS perspective, we are very keen to be helpful and BIS officials are already looking at the evidence that is available, which has been published by a range of bodies; those officials are analysing the data they can analyse. Of course, when the MOJ launches its review, at least some of the necessary analysis and work will already have been done. As I say, I understand the concerns that have been raised about this issue.

In conclusion, we have had a positive debate this afternoon. Equal pay is an important issue for us to make progress on, and to continue to make progress on. There is a whole lot of food for thought, in terms of how the shape of equal pay law might be fit for the next 45 years.

Living Wage

Eilidh Whiteford Excerpts

Thursday 6th November 2014 Commons Chamber

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a pleasure to follow the thoughtful contribution from the hon. Member for Newark (Robert Jenrick).

I congratulate the hon. Member for Warwick and Leamington (Chris White) on securing the debate. Like other Members, I am pleased that we are able to engage in it during national living wage week. I also welcome research findings that were published earlier this week by KPMG, documenting the extent and scale of poverty pay across the United Kingdom. In-work poverty is one of the biggest challenges that we face, and the knock-on impacts of low pay are a major factor in rising levels of child poverty and growing inequality. A large number of people in my constituency work in low-paid jobs, so I read KPMG’s report with great interest. It states that about 414,000 workers in Scotland are currently paid less than the living wage—about 19% of the work force.

Just under two thirds of those people are women—an issue that needs to be much further to the fore in this debate. We cannot tackle the problem of low pay without understanding the reasons why women are significantly more likely than men to be earning less than the living wage. The report contains a paragraph that notes the gender differentials in relation to low pay, but it does not offer any detailed analysis. We know that there is still a substantial pay gap between women and men throughout the labour market, not just in low-paid occupations. Arguably, however, the consequences are more acute at the low-paid end of the income spectrum, and have more detrimental knock-on social impacts.

In my view, the disproportionate number of women who earn less than a living wage is only partly attributable to the greater number of women who work part time. It is also due to persistent tendencies towards occupational segregation in certain job sectors. Lower-paid jobs in, for instance, catering, cleaning and cashiering are disproportionately taken by women. Some of those jobs are also in sectors in which there has been a huge drift towards zero-hours contracts in recent years. It tends to be women who take on responsibility as primary carers for dependants, which can also limit their availability, mobility and flexibility at work. All that is before we even think about the under-employment of women in the work place. Obviously, the issue of gender inequality is much wider than the scope of today's debate, but it is clearly both a driver and a consequence of low pay, and we need to take it much more seriously.

Many low-paid workers are in the service sector, and the vast majority are in private sector jobs. Left to its own devices, the market tends not to ensure that those workers receive adequate wages. If the Government are really serious about ending poverty pay, they need to consider how they can move the minimum wage towards a living wage. Legislating for a minimum wage that actually reflects the cost of living, and actually makes work pay, is the single most important thing they could do to tackle the problems associated with low pay.

The truth is that the minimum wage has not risen in real terms in nearly a decade, and every year since 2008 it has failed to keep pace with the cost of living. Had it done so, those in minimum wage jobs would have been more than £600 a year better off. If the living wage rises in line with projected rises in the consumer prices index, it will reach £8.57 an hour by 2019. We need to be realistic about that and more ambitious in ensuring that the minimum wage genuinely makes work pay for people. Let us make no mistake: we have heard proposals in recent weeks from the Labour party about raising the minimum wage to £8 an hour by 2020, but that is a pretty feeble increase, which will leave millions of people in poverty pay, below the living wage.

I would like to see responsibility for employment policy, including the minimum wage, devolved to the Scottish Parliament as part of the Smith commission process. I therefore ask the Minister to outline the Government’s view on that in his response to the debate. The Scottish Government are the only Government in the UK who have made a living wage an integral part of their public sector pay policy. They have ensured a living wage of £7.65 an hour for all direct employees across all Departments, and during the recent years of pay restraint they have ensured a minimum pay rise of £300 for those earning less than £21,000 per annum. I welcome the news that this will rise to £7.85 an hour in next year’s pay awards, in line with this week’s announcement.

There was some discussion earlier about challenges in respect of contracts that Governments issue to other suppliers, and there are constraints from existing legislation in other areas, including EU law.

[Mark Lazarowicz]

I respect what the hon. Lady’s party has done on this issue. In my local council, the Labour-Scottish National party administration together have adopted a living wage in Edinburgh. There are obviously legal arguments about what can be done, but the Scottish Government should do more on the issue of workers employed on contracts for which they are responsible. We have done something, but so far only 50 have actually improved. We must try to get agreement across the parties. A lot more needs to be done for these people, many of whom are among the lowest paid in the country.

[Dr Whiteford]

I thank the hon. Gentleman for his intervention. Steps have been taken, and the launch of a fair work convention in Scotland in the last few weeks shows one way forward. On contracts, the Scottish Government have also at an early stage been encouraging procurement to take account not just of pay, but of other conditions. Councils that have faced the same legal constraints have been working to try to ensure this is built into contracts, and I believe some UK Government Departments, including the Department of Energy and Climate Change, have taken a similar approach in the absence of a mandatory process, trying to encourage suppliers to meet living wages for those workers.

Given that 93% of low paid workers are working for private sector employers, it is heartening to see increased numbers of employers signing up to the living wage accreditation scheme. In Scotland, the Poverty Alliance has been promoting take-up of the scheme and has succeeded in trebling the number of accredited employers over the last six months. However, there is scope for a lot more action on that front.

As has been said, there is a strong business case for private sector employers paying a living wage. As the authors of the KPMG report point out, the improvement in staff retention and morale associated with decent wages can easily outweigh any increase in the wage bill, and consequently can have a positive impact on productivity and help reduce business costs.

There is a fundamental dignity in having the living wage—a fair day’s pay for a fair day’s work. Conversely, something has gone very wrong in our economy when people who are working long hours in sometimes physically demanding jobs are simply not earning enough to support themselves or their children. The Government must explore how they can bring the minimum wage up to a more realistic level—towards a living wage—and we also need to tackle the underlying inequalities that perpetuate poverty pay.

National Minimum Wage

Eilidh Whiteford Excerpts

Wednesday 15th October 2014 Commons Chamber

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

It is a pleasure to follow the hon. Member for South Derbyshire (Heather Wheeler), who is, dare I say, one of the jovial characters in this place. She speaks much sense. She speaks about doom and gloom among Labour Members, and I try as best I can to be upbeat, but I am sure that she would recognise that the economic recovery that Government Members talk about is not being seen across the country. I have said it time and again, and I hate to say it, but I will not let people forget that 13 or 14 months ago the average wage in my constituency in rural south-west Scotland was 24% beneath the UK average. Thankfully, that has improved and it is now at about 17% or 18%, but people are struggling.

Across the country, working people have seen their wages fall by an average of £1,600 a year, because under what I—and my colleagues, I am sure—see as the Government’s failing plan, the recovery is benefiting a privileged few and most families are not seeing the green shoots of any kind of economic recovery. The real value of the national minimum wage has fallen and one in five employees are low paid. That impacts not only on low-paid workers but on their families, their communities and the local economy. It piles up across the country as more people in work have to rely, as has been said this afternoon, on the social security system to make ends meet.

My hon. Friend the Member for Westminster North (Ms Buck) mentioned the Campaign to End Child Poverty and the work done by the centre for research and social policy at Loughborough university. The figures out today for my area are soul destroying. The figure for the number of children living in poverty is now 23.2%. Those figures include more than 3,000 children affected by in-work poverty, whereas 1,200 are affected by out-of-work poverty. A massive shift is going on and we are seeing more and more families affected—families with children. We should all be saying that we are going to do something about that together to get children out of poverty. The situation is pretty desperate in some areas, and I recognise that my hon. Friend cited even higher figures from her London constituency.

The hon. Member for South Derbyshire mentioned colleges. I have to tell her that the college system and the further and higher education systems are different north of the border. I have a new college in my constituency that is only two or three years old, but the budget has been cut by the Scottish Government. Over the years, about 30% of the young students going into that college have had no formal qualifications whatsoever. The formal education system has failed them, but the college offers them a second chance that many of them have seized. However, the budget for our further education colleges is being cut—that is not the fault of Government Members, because it is a devolved issue—and so courses are being cut. That means that young people who need that second chance are being deprived of the opportunity.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Does the hon. Gentleman accept that the number of apprenticeships in Scotland is at a record level and that targeting funding at policies that will get young people into work, rather than at an endless cycle of college courses that do not lead to work, is a better use of scarce public money at a time when the block grant has been cut and when public finances are under immense pressure?

[Mr Brown]

I recognise that finances are under pressure, but I would say the same to the hon. Lady as I said to the hon. Member for South Derbyshire. The situation is not the same across the entire country. Youth unemployment in my area sits at some 5.3% whereas the Scottish average is 4.8% and the UK average is 3.8%, as there are so few job opportunities. When young academically inclined people in my area manage to get off to college or university, 90% never come back because the quality jobs that the hon. Member for South Derbyshire has spoken about are simply not there. It is a rural economy—tourism is the other major employer—but the growing job market is in the care sector as people come to the area to retire. We have a vastly different economy to other places, although similar economies exist.

I want to move on to the issue of the national minimum wage. I said in an intervention on my hon. Friend the Member for Streatham (Mr Umunna), the shadow Secretary of State, that I served on the Committee for the National Minimum Wage Bill. As I said at the time, the only other person who served on the Committee who was in the Chamber at the time at which I made the intervention was Mr Speaker. There were some long nights. Indeed, I remember two particularly lengthy sittings: one that started at 4.30 on a Tuesday afternoon and ended at 1 o’clock the following afternoon, and another that started at 4.30 on a Thursday afternoon and finished at 6.30 the following morning. But it was really worth it. I remember campaigning in Lockerbie when the figure of £3.60 an hour was announced, and one guy I met on the doorstep asked, “Is this figure of £3.60 right?” I said yes and asked whether it would affect him. “Of course it will,” he said. He was working the best part of 50 hours a week in the forests—heavy, dirty and dangerous work—but taking home only about £112 a week.

--- Later in debate ---

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I very much welcome today’s debate on the minimum wage, because it affects millions of people across the UK, including thousands in my own rural constituency, and I think that it, more than any other policy, has the potential to tackle poverty.

In-work poverty is perhaps the most stark symptom of the deep income inequality that is increasingly the hallmark of British society, but people in low-paid jobs have been badly let down by successive Governments, who have failed to ensure that the minimum wage keeps pace with the cost of living. We need to recognise that that failure has had a huge impact on people in low-wage jobs and ask ourselves how we can change the minimum wage into a living wage.

If the minimum wage had kept pace with inflation, those in low-paid jobs would be more than £600 a year better off now: they would be earning £7.48 an hour. That is still short of the living wage, which is currently calculated at £7.65 an hour, but it is a lot closer and makes the gap between a minimum wage and a living wage a lot more bridgeable.

I intend to support the Labour motion because any commitment to increase the minimum wage is a step in the right direction, but it is important to put the proposal in perspective and acknowledge that it will not be a living wage. If we use existing forecasts of inflation, we will see that the living wage is projected to rise to £8.57 an hour by 2020, so what is being proposed today falls well short of a wage that someone can actually live on. I would also urge a note of caution: we have no means at all of knowing whether those forecasts are right. They might be higher or lower—the Office for Budget Responsibility does not have much of a track record in accurate forecasting to date—so we have absolutely no way of knowing what a phased increase of the minimum wage to £8 an hour by 2020 will mean in real terms.

[Ian Swales]

Does the hon. Lady recognise that the living wage is based on a net figure, because it is a net figure that people actually spend, and will she join the Living Wage Foundation in welcoming what this Government have done with regard to the tax threshold, which has helped to narrow the gap between the minimum wage and the living wage?

[Dr Whiteford]

The hon. Gentleman makes an important point, but in fact the Government have not gone nearly far enough, because inequality in this country is growing, not reducing. There have been vast increases in income at the top end of the income spectrum, while increasing pressure is being put on people at the lower and middle parts of the spectrum. The gap between the richest and poorest in our society is widening and that is not in any way sustainable.

It is important to understand that if the minimum wage were linked to inflation, it would have a much better chance of keeping pace with the actual cost of living. That would help avoid the current situation, whereby the minimum wage is well below the cost of living and forces people to be dependent on in-work benefits. It would also help address Labour’s prescriptive proposal, which limits us to the increases on the table without knowing what the economy is going to do between now and 2020. Anyone with a crystal ball would be well advised to be cautious in their predictions.

Yesterday and earlier today the House discussed the promise of extensive new powers for the Scottish Parliament, which are now being considered by the Smith commission. The minimum wage is a prime example of a policy that I would like to see devolved, and I am pleased that the Scottish National party’s submission to the Smith commission has set out the benefits of that, particularly the ability to link the minimum wage to inflation, which would immediately improve the position of low-paid workers and, over time, reduce reliance on in-work benefits.

The Scottish Government’s expert group on welfare reform has also considered the issue and recommended that the minimum wage should begin to rise, in phased stages, to the level of the living wage. Like others who have spoken, however, I do not think it is possible to divorce the issue of the minimum wage from the wider tax and benefits system.

Given that a very high proportion of people in low-paid work are in receipt of in-work benefits, we need to look at the design of the welfare system. One of the greatest failures of the UK’s welfare model has been the disincentives it has created for part-time workers in particular to increase their working hours, because of clear financial disadvantages and risks associated with doing so. For instance, for a couple with children and one parent in work, increasing working hours from 50% to full-time work results in 82% of the extra earned income being lost through tax and loss of benefits, which radically undermines the perception of work as a route out of poverty. A redesigned model would have the potential to address those high withdrawal rates and tackle the existing disincentives so that lower-income households could keep a greater proportion of the increases in earned income.

I echo the point made by the hon. Member for Dumfries and Galloway (Mr Brown). The people who are getting the biggest and fullest benefit from changes to the tax system and the lowest rate of tax are those on the highest incomes. The changes are benefiting those at the top end of the income spectrum and having a fairly marginal impact on those at the lower end, because what they gain in tax they lose in benefit. The net impact in many cases has been to reduce their income, particularly in relation to average income in the country as a whole.

A redesigned model would be especially important for families and those with dependent children. In a week when we have seen very sharp increases in child poverty—this has been referred to by the hon. Member for Dumfries and Galloway—it is really important to make the point that most of the children in poverty in Scotland are children in working families. They are the children of working parents, and the changes to the tax and benefits system have pushed them into an even harder position than they were in previously. They have been hitting the headlines for all the wrong reasons. I want to challenge the view that having one in five children living in poverty is inevitable, because that is simply not acceptable. We could change that if we put our minds to it. We need to get our priorities straight.

When the minimum wage was introduced in the 1990s, I remember fears of Armageddon being expressed from some quarters and apocalyptic warnings that jobs would be lost and that the economy would go to hell in a handcart. Of course, that is not what happened, because when people had a bit more money in their pockets they spent it. The higher costs to businesses, which we all take seriously, were more than outweighed in economic terms by the benefits to businesses, including job creation, and in social terms by the huge benefits and improvements to the standard of living for people in low-income households.

There are also potential fiscal benefits from an improved minimum wage in savings to the benefits bill, and potential for increased tax receipts. We need to recognise that and not pretend that it is simply a cost. It is actually a way of getting people into work and improving the standard of living for many people throughout our society—not just the people in those jobs, but those who depend on them, such as their children and other dependants.

[Mr MacNeil]

My hon. Friend is making a fine speech. What she is saying could be summed up by the economists Krugman and Stieglitz, who say that one person’s spending is another person’s earning. When we put money in people’s pockets, it has a very good economic effect all around.

[Dr Whiteford]

My hon. Friend makes a valuable point.

I want to touch on another issue that has been mentioned by others, namely the disproportionate number of disabled workers and minority ethnic workers in minimum wage jobs. We have already heard about Lord Freud’s disgraceful comments and I hope the Government will step back from what was an outrageous thing to say about people who are already disadvantaged in the labour market.

[Mrs Main]

I am sure the hon. Lady will also condemn the slur against my hon. Friend the Member for Harlow (Robert Halfon) by an Opposition spokesman, who said it was he who made those remarks.

[Dr Whiteford]

Absolutely.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. For the sake of accuracy, the hon. Member for St Albans (Mrs Main) made that point earlier and it has been dealt with. The hon. Member for Harlow (Robert Halfon) certainly did not say that.

[Dr Whiteford]

Thank you for that clarification, Mr Deputy Speaker. The first I heard of those outrageous slurs on the hon. Member for Harlow was today, but I hope that the record has been put straight and that he will continue to put it straight. I would feel much happier, however, if Government Members would dissociate themselves more firmly from what Lord Freud has said.

[Richard Fuller]

On a point of order, Mr Deputy Speaker. This is my first point of order so please give me some forbearance. At what point is it orderly to refer to comments that have not been made in this House and at what point is it not orderly to do so? Comments have been made about one Minister in one location, and other comments have been made about a Member of Parliament in another location. Which is orderly and which is disorderly to refer to here?

[Mr Deputy Speaker]

First, we are not going to worry about the Chair’s decision. My decision—I will be quite clear—is that a peer from another place has been mentioned, but I do not want to get into a debate about something that has been over the airwaves relating to two Members. That issue has been clarified in this Chamber and by another Member. I do not want the debate to centre on that. This is a debate, as we know, about the minimum wage and support for people.

[Dr Whiteford]

I want to dwell on equality, because we must remember that the vast majority of people in minimum wage jobs are women. Issues of ethnicity and disability often compound those of gender inequality. Minimum wage jobs are overwhelmingly done by women who are in part-time positions because of their caring responsibilities. Such women are often in sectors with far too much gender occupational segregation, such as cleaning, catering and cashiering. They often have temporary and insecure jobs, and they often work antisocial hours. Other Members have mentioned the problems of exploitative zero-hours contracts.

We cannot separate from this debate the huge impact of gender inequality on wages in this country or dissociate it from child poverty and its long-term impact on our society, which was discussed earlier. We know that children who grow up in deprivation are likely to need the heath service more, to have lower educational attainment and to have much worse job prospects in the long term. Unless we are prepared to recognise that people deserve a living wage to support their families, we cannot begin to tackle the inequality that so dogs our society.

I want to touch on the difficulties of enforcing the minimum wage, which other Members have mentioned. This year, the Low Pay Commission has taken evidence in my constituency, where a significant number of people are in low-paid jobs. Although unemployment is very low in Banff and Buchan—about 1%—a very high proportion of people earn less than the living wage. The vast majority of employers respect employment law and pay at least the minimum wage, but people have nevertheless brought me reports of being paid less than the minimum wage. That issue is extremely difficult to address.

I have been made aware of cases of people involved in the so-called informal economy, as well as in the service sector. They may not have a contract and may not have received pay slips. They know that they are being short-changed and that, in relation to national insurance, they could be losing out on their pensions in the longer term. They are also short-changing Her Majesty’s Revenue and Customs and the rest of us. However, they are reluctant to put their heads above the parapet because they need their job and do not want to jeopardise what little income they have. In a close-knit rural community, they also do not want to be labelled a troublemaker.

Beefing up local authorities’ powers might help, but that is not a real solution. In theory, employees who are being paid less than the minimum wage can pursue legal action against their employer or take them to a tribunal with every likelihood of success, but the reality is that somebody paid less than £6.50 an hour is very unlikely to have the financial means to access the tribunal service or take on the associated legal costs. That is wholly unrealistic, and I hope that the Minister will address that issue and suggest ways round it when she responds, particularly given the changes that the Government have introduced.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I just want to say that any constituent of the hon. Lady, or indeed of any other Member, who finds themselves in such a situation should ring the pay and work rights helpline on 0800 917 2368. They do not need to access the tribunal system; HMRC enforces the national minimum wage on behalf of workers.

[Dr Whiteford]

I am grateful to the Minister—it is very helpful to have that phone number on the record—but my experience, having helped constituents in such a way, is that nothing changes. The Government need to do more on this to make people feel confident about asserting their rights.

I want to wind up quickly by saying that we have reached a situation in the UK where people in low-paid work—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. May I just help the hon. Lady? I have been very patient. She has now spoken for 14 minutes. To be serious, I do not think that that is doing justice to other Members. I am very patient, but she needs to get to the end.

[Dr Whiteford]

I was just bringing my remarks to a close, Mr Deputy Speaker, but it is important to say that the minimum wage has the potential to lift people out of poverty. I hope that this Government and whoever the next Government are will take such an opportunity.

Higher Education Policy

Eilidh Whiteford Excerpts

Wednesday 27th April 2011 Commons Chamber

[Mr Willetts]

That was an excellent intervention. After this debate, I hope that Members on both sides will agree to commit ourselves to visit, between now and the summer, the secondary schools and colleges in our constituencies and explain to them that not a single young person is going to have to pay up front for their higher education. They will repay only if they are earning more than £21,000 a year and that means that their monthly repayments under our proposals will be lower than under the system we inherited from the previous Government.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

rose—

[Mr Willetts]

I will accept the hon. Lady’s intervention, especially if she makes that commitment.

[Dr Whiteford]

Last month, the BBC published figures from the accountants Baker Tilly. They suggested that a student who borrowed £39,000 to complete their higher education would end up paying back something in the region of £83,000. What does the right hon. Gentleman make of those figures?

[Mr Willetts]

I am afraid that I do not recognise those specific figures. We are talking about a system whose powerful logic is simple—no student pays up front, a point that my hon. Friend the Member for Beverley and Holderness correctly made.

--- Later in debate ---

[Roberta Blackman-Woods (City of Durham) (Lab)]

The Government are purposefully and quite unprecedentedly shifting the burden of the costs of university tuition from the public purse on to the shoulders of individual graduates, moving away from the assumption that both society and the student should bear the costs of university education. It is notable that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), who is not in his place, simply refused to engage with that point when he spoke earlier.

The Business Secretary announced to Members in Parliament that a fee cap of somewhere between £6,000 and £9,000 would be introduced, and that fees would be £9,000 only in exceptional circumstances—that £9,000 would be an exception, not the rule. The announcement was much repeated elsewhere, but we know that, of those universities that had made their plans public by last week, the average fees will be £8,678.36—so just marginally less than that £9,000 figure.

We also have to bury the myth that students will pay less under the Government’s proposals. It is true that monthly outgoings, in some circumstances and for some students, might be less, but graduates will pay back their loans for much longer and at an interest rate that has not been fully determined. This is despite the fact that the independent Office for Budget Responsibility said in November and reiterated more recently that increasing tuition fees and funding student loans in 2015-16 will require the Government to borrow £10.7 billion, compared with the £4.1 billion that they borrowed in 2010-11, a point that was excellently made by my right hon. Friend the Member for Oxford East (Mr Smith).

In the context of such sharply rising fees, it is worth looking at some international comparisons. What is happening elsewhere in higher education? A recent article in The Economist on American fees reported that annual tuition and fees averaged £1,639 at two-year colleges, £4,595 at public four-year colleges for in-state students and £7,246 at public four-year schools for out-of-state students—all substantially less than the fees proposed for students in this country.

The situation gets worse if we look at Canada.

[Dr Whiteford]

I remind the hon. Lady that she does not have to look so far from home to find students who do not have to pay fees, because education is an investment in their future.

[Roberta Blackman-Woods]

Indeed. The hon. Lady makes an excellent point; we should always refer to what is happening in the devolved Administrations as well.

In 2007-08, the fees in the Canadian system were £2,866 and in Australia they were £2,600. What has been proposed for this country is absolutely out of line with our competitor countries across the board. According to quite a conservative estimate, the debt that a student will accrue, if they have to pay the £9,000 maximum and then accommodation and living expenses, could amount to about £48,000. If they then went on to do a master’s and a PhD, the student could come out with a debt of £70,000-plus. That is extraordinary.