Draft National Minimum Wage (Amendment) Regulations 2023

John Baron Excerpts

Monday 6th March 2023 General Committees

[Mr John Baron (Basildon and Billericay) (Con)]

I will not keep the Committee for long. I congratulate my hon. Friend the Minister, not only on the work that he is doing in his Department but on his part—and the Government’s—in accepting the Low Pay Commission’s recommendation and allowing this change to the two minimum wages. I congratulate the Government on the fact that benefits have been linked with inflation and the triple lock has been maintained. A lot of us from across the House lobbied hard on those issues and I am pleased that the Government listened.

These regulations will ensure that 2.5 million of the poorest paid people will be helped; their pay will be kept in line with inflation, just at the moment when that is most needed because of the cost of living crisis. This will have a multiplier effect on the wider economy, because these people will more likely spend the money because they need to, which can only be a boost to the wider economy.

I will briefly make two further points, one of which the Minister raised—but it deserves emphasising. The regulations are another step towards the achievement of a high-wage, high-tech, high-employment and high-growth economy, which is what we need to achieve, particularly when one considers the low, or lowish, productivity figures in this country. For too long, businesses have relied on cheap labour from Europe as a substitute for investment, and that has impacted on our productivity figures. There is no substitute for investing in research and development, as that helps to drive the productivity figures over the medium to long term—there is no short-term fix—but these increases in the minimum wage will take us a step closer to achieving the high-wage, high-growth, high-tech economy that we all want.

There will of course be a cost to business, but inward investment and jobs are decided by what some economists call comparative advantage. It is about levels of corporation tax, labour market flexibility, R&D in our universities, and the reputation of those universities and high-research institutes. It is also about the English language, the rule of law and all those factors in combination; there is no one single factor that determines whether investment moves in and out of a country. That is one reason that, when one looks at the UK’s comparative advantage and those factors, we see that—despite all the predictions of doom about what would happen were we to leave the EU that were made at the time of the referendum—the litmus test is that inward investment has stayed up. In fact, there have been years when this country has attracted more inward investment than France and Germany together.

For me, one of the key litmus tests of how well an economy is doing is the unemployment rate. We can all make mad predictions about growth. Many international economic organisations, such as the International Monetary Fund, have always got their growth forecasts and so forth wrong. The litmus test of how well an economy is doing—or certainly one of the litmus tests—is the unemployment rate, and we should not forget that our unemployment rate is nearly half that of the EU.

Having said that, I make a final plea to my hon. Friend the Minister. Corporation tax is in the mix; it is not the only determinant of where a business invests and the extent to which it invests but it is an important determinant. At a point where corporation tax will be increased by this Government, I ask him to take this message back to his Department and to the Chancellor—we are all making our own representations independently of this Committee, but every little bit helps—and to ensure that he gets the message across that, with the public finances improving, the rise in corporation tax and the extent of that rise needs to be revisited, because it is an important determinant not just of the extent of inward investment to this country but of how many people are employed. The more profitable businesses are, the more we can pay for our public services and the more people get employed. That is the consideration that I ask the Minister to take from this Committee.

[Patrick Grady (Glasgow North) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. As the hon. Member for Ellesmere Port and Neston said, nobody is going to object to any kind of rise in the minimum wage, especially in these difficult times and given the inflationary pressures being experienced across the economy, which I hope the hon. Member for Basildon and Billericay will recognise are at least in part the result of the extreme hard Brexit forced on this country by the Conservative party, with the acquiescence of the Labour party. He might be right that unemployment is low, but I can show him businesses across the country and in my constituency that are crying out for labour—for staff—because of the labour shortages that have happened as a result of that hard Brexit.

[Mr Baron]

I say this in the spirit in which the hon. Gentleman made his point: he needs to see the bigger picture. It is quite interesting that there is almost a balance between the number of job vacancies and the number of people who are unemployed. That actually suggests that the economy is doing quite well. There may be a mismatch for whatever reason, but those vacancies are there; we just need to ensure that we encourage people into work more.

[Patrick Grady]

Indeed. There are plenty of asylum seekers in my constituency who have a huge amount of skills and talent but are unable to deploy them, because this Government will not give them the right to work, earn a fair wage and pay tax back into the system. Perhaps that is a place where we could start or, if the Government want to make working more attractive, perhaps—getting to the heart of the debate—people should be paid a fair day’s wage for a fair day’s work.