Philip Davies
Main Page: Philip Davies (Conservative - Shipley)Employment Opportunities Bill
Philip Davies Excerpts
Mr Chope
I doubt it, frankly. I am delighted to see the Minister of State on the Front Bench, but we do not have a Conservative Government, we have a coalition Government, and that is the Achilles heel. In due course we will see that my hon. Friend speaks not from a Conservative party brief but from a coalition Government brief. None the less, I and, I hope, some of my colleagues will be able to speak freely on behalf of the Conservative party.
The hon. Member for Harrow West (Mr Thomas) will recall that back in 1997-98, when his party introduced the minimum wage legislation, the Conservative party strongly opposed it on principle and on the basis that it would prove to be counter-productive and not in the long-term interests of Britain’s competitiveness or, indeed, of people wanting to get into work.
The initial level at which the minimum wage was brought in was so relatively low that it did not bite as acutely as some people had feared it might, but since then the level has risen by the best part of 70%, far ahead of average earnings and of inflation, and as a result it bites a lot more than it used to. That is why I hope that my hon. Friend the Minister and, certainly, my party will look again at the issue and see what is happening in the real world as a result of the minimum wage legislation that we have.
Philip Davies (Shipley) (Con)
Does my hon. Friend also recall that it was not only the Conservative party that opposed the minimum wage when it was first introduced, but the Liberal Democrats?
Philip Davies
As my hon. Friend knows, he and I agree on virtually everything. However, as I reflect on the delicious irony of the Labour party stacking up to oppose a Bill that would allow asylum seekers to work, I wonder whether he thinks that his measure would be a further magnet for vexatious attempts to claim asylum in this country.
Mr Chope
If it would be, I certainly would not put it forward. In fact, I want it to be the complete reverse. I want the Bill to put pressure on the Home Office to deal with asylum applications a lot more quickly than it does. If asylum applications were regularly dealt with within a few weeks, the issue of asylum seekers being unable to work and support themselves would not be as serious. However, I have had constituents come to me—I am sure my hon. Friend has had similar experiences—and say that they have been waiting for seven or eight years to have their asylum cases dealt with. That goes back to the days when the Government of the hon. Member for Harrow West were trying to run the country. That puts asylum seekers in an impossible position. They want to work, but they are prevented from doing so by the law of the land.
Mr Chope
I did come across a document that seemed to say just that, but I am not sure whether it was the one to which the hon. Gentleman refers. I read it, but I was not convinced. Indeed, I shall refer in due course to an article that I believe is much more in tune with my views on this matter. It is interesting that he refers to documents from that body, which includes in its title the words “social research”. If anybody should examine this issue, I would have thought it should be the Low Pay Commission and objective, independent commentators.
Philip Davies
On that point, is it not bizarre that the previous Labour Government used to believe that if we put the price of something up, we would get less of it? Hence they fervently increased the price of tobacco, because they thought that would mean that fewer people would smoke, and increased the price of alcohol on the basis that fewer would drink. Surely by the same logic, if we increase the cost of employment, there will be less employment.
Mr Chope
My hon. Friend is absolutely right. It is certainly true that we would get less official employment, which goes back to the point made by my hon. Friend the Member for Northampton South (Mr Binley) on the black economy. If the minimum wage results in higher numbers of people in work, why are more than 1 million people working in the black economy below the minimum wage, as the Low Pay Commission assesses?
Tony Lloyd (Manchester Central) (Lab)
The hon. Member for Christchurch (Mr Chope) has an almost unique parliamentary role. I am never quite sure whether he is like an interesting piece of baroque architecture—delightful to look at, although I am not absolutely certain what the real purpose is—or whether he is at the dangerous end of the Conservative party, dragging it back to where it feels most comfortable. I feel sometimes that he is the latter. I know that he will be disappointed by the Minister’s indication of opposition to the Bill, but I hope that the Minister will indeed oppose it, because although I would support parts of it, this Bill is essentially a retrograde, unfortunate and, in the end, quite dangerous little piece of social legislation.
Nevertheless, there is a real debate to be had on these issues. It is a debate that ought to take place from time to time, if only to remind people of two things: first, why we need the national minimum wage; and secondly, just how unsympathetic and unreconstructed parts of the parties of Government are on such issues. The hon. Member for Christchurch and one or two of his hon. Friends who are going to speak later represent a significant body of opinion, not in the nation generally, but in the Conservative party. That ought regularly to be put on record to remind my own constituents and, for example, those of the hon. Member for Shipley (Philip Davies) just what a rotten, nasty party the Conservative party can be.
Philip Davies
I would be grateful if the hon. Gentleman could get away from the insults and on to the issues. Given that the national minimum wage has clearly been such a triumph, will he tell us what the adult and youth unemployment figures in this country were when the minimum wage was introduced, and what they are now?
Tony Lloyd
Those were not insults; they were matters of fact. We can debate facts, but we should not trade insults; that would not be reasonable. Mr Deputy Speaker, I am sure that you would deplore my insulting hon. Members, and the fact that you did not call me to order suggests that the basic fact that I have just described has now been established and placed on the public record.
Let us talk about the real impact of the minimum wage—
Tony Lloyd
Will the hon. Gentleman please be patient?
I shall begin by examining the Bill sequentially. I want to talk first about the part of it that I agree with. The hon. Member for Christchurch began his speech by talking about the impact of clause 1, and I had a lot of sympathy with what he said. We really ought to have a serious debate about this in the House, and I have urged the previous Government and this one to take the issue seriously. It makes no sense in a country such as ours to force into unemployment those asylum seekers who are willing to work and to make a contribution to their families, the wider community and the taxpayer. Sometimes, they are forced into worse than unemployment. As we know, the fact that we push asylum seekers into destitution is one of the drivers of prostitution and some types of crime. The hon. Member for Wellingborough (Mr Bone) made a valid point about women who are being trafficked into our society, and we ought to take that issue seriously.
Governments classically respond to the argument in favour of allowing asylum seekers to work by pointing out the danger of creating a magnet that will attract further waves of asylum seekers. The hon. Member for Christchurch was absolutely right to say, in response to the hon. Member for Shipley, that the problem with our asylum system is not that it operates as a magnet, but that we deal so slowly and incompetently with the processing of asylum cases. This was the case all through the years of the Labour Government, and, sadly, it is still the case now. We need rapid resolution of those cases.
Let us take the example of a woman who is legitimately claiming asylum because she has been forcibly trafficked from the far parts of eastern Europe, or wherever, and forced into prostitution in our society. She has no capacity to return home and genuinely fears for her life and for her family back home. We need to be able to say to that woman, “Yes, you are a genuine asylum seeker and you can play a constructive role in our society.” We also need to say to the illegitimate, bogus asylum seeker, “Please return quickly to where you came from.”
There is real merit in having this debate. Even though I disagree fundamentally with everything else in the Bill, I profoundly agree with the hon. Member for Christchurch that we need to have a debate on this subject. We need to debate not only what a civilised society ought to be, but what is practical and proper for our society. In fact, I would go further and suggest that there should be an expectation on legitimate asylum seekers to begin a process of finding work, because that shows commitment to the values and the ethos of our society. That would create a good two-way set of responsibilities, which relates to the proposal in clause 1. Alas, the rest of the Bill does not have the same merit as that first part.
It is always delightful to listen to the hon. Member for Christchurch. He always offers us an entertaining race around the now rather worn and old economics textbooks from the 1920s, the 1870s and the 1850s. Those books are now a little thumbed at the corners, but they are still interesting to read because they shed some light, not so much on the working of a real economy in the 19th century, and still less in the 21st, as on the thinking of those who suggest that the Bill is about freedom. It is not about freedom; it is about taking away social protection for vulnerable people in our society, and that is what we need to talk about.
That is the nub of the intellectual debate about the merits of free-market economics versus what the hon. Gentleman would call the crushing hand of state socialism. Were the minimum wage an example of the crushing hand of state socialism, some Labour Members might be a little happier with the direction of travel in our society’s support for the vulnerable and its recognition of the relationship between those in the most powerful economic positions and those at the bottom of that pile.
Tony Lloyd
The hon. Gentleman rightly pushes me to refer to some of the realities. Let us go back to the time before the national minimum wage. Let us go back to a time when young hairdressers in cities like Manchester were being paid under £1 an hour. Why did they take that work? Because they were young people who felt that they had to buy into the workplace. They had to accept way below any acceptable level of remuneration and way below an income that anyone could seriously live on in the hope that it would give them the experience to carry on in the trade. That was wrong then and it would be wrong if we were to bring it back again. That is the reality of what the Bill would do. It would take the clock back to a time when bad employers were prepared to compete unscrupulously against the better employers at the expense of their employees.
I am totally on board with the hon. Member for Northampton South in advocating the point that good employers work well with their employees. In many cases, good employers train, pay reasonably and provide acceptable working conditions. I have worked for good employers: but not all employers are good; not all employers are acceptable; not all employers operate proper health and safety standards; not all employers offer an acceptable wage for people to live on. That is why we have a floor through which people should not fall.
Philip Davies
I assume from the hon. Gentleman’s earlier comments that he accepts that unemployment is higher now than it was when the minimum wage was introduced, although he could not bring himself to say so. Does he also accept what was said by my hon. Friend the Member for Christchurch (Mr Chope), namely that if the level of the minimum wage is so important, the hon. Gentleman will support the Government in ensuring that people who earn it need not pay any income tax or national insurance?
Tony Lloyd
As I do not support the Bill in the first place, I am not sure how I could be expected to support certain parts of it. However, the ambition to remove taxation from the lowest paid is an excellent one. If the hon. Member for Shipley will support me in trying to ensure that the higher paid make a bigger contribution, it will be easy for us to relieve the low paid of their burden.
The hon. Gentleman’s intervention has led me to another point that I was going to make. If the hon. Member for Christchurch were willing to drop most of his Bill while incorporating my proposal for a high pay commission to ensure that the top rate of pay is reduced, I would feel able to support the first part of it, and we might then be in business. However, I suspect that my views on high pay are as hard for him to accept as his views on low pay are for me to accept.
Let me say something about the economic arguments that the hon. Member for Shipley has invited me to consider. When the Better Regulation Executive investigated the impact of the national minimum wage, it found no link with levels of employment and unemployment. I fear that unemployment will begin to increase, but an interesting aspect of the way in which the labour market has operated recently is the fact that those in work have remained in work much more consistently than was the case during earlier recessions. That is almost certainly partly due to levels of flexible working, but it also belies the proposition that the minimum wage has served as a disincentive to employment, because had it done so the existing work force would have been undercut by would-be entrants. That throws a cloud of doubt over the argument about the operation of free markets at the bottom end of the labour market.
A more important finding by the Better Regulation Executive was that paying a national minimum wage conferred an overall benefit on our economy. The minimum wage has important regional impacts, which is why the idea of a regional differential is ridiculous. The clue lies in the phrase “the United Kingdom’s national minimum wage”. We are indeed a United Kingdom, and the national minimum wage is national. There are good and profound reasons for that. The national minimum wage prevents the dislocation, already too prevalent in our economy, between the overheated south-east and other parts of the country.
I cannot go as far as the hon. Member for Christchurch in describing those other parts of the country as the “more remote” regions. Those of us who live in such regions do not feel that they are particularly remote. However, we “remoters” feel strongly that the people whom we represent and the economies in which we work should enjoy the same level of protection and the same capacity for operation of the minimum wage, partly—indeed, if for no other reason—because it is important in creating regional demand. That is one reason why groups such as the Better Regulation Executive have found that the national minimum wage is, overall, in the national economic interest.
Philip Davies (Shipley) (Con)
It is bizarre that the hon. Member for Manchester Central (Tony Lloyd) thinks that it is appalling for young people to be going out to work for low wages, and that he would therefore prefer them to be sat at home watching Jeremy Kyle and “This Morning” and visiting their local amusement arcades, rather than having gainful employment. That is a matter for him, of course, and we all have our own views on what we think is best for people to do. I think that working is better than doing as the hon. Gentleman suggests, but he obviously disagrees.
I have risen to support my hon. Friend the Member for Christchurch (Mr Chope), and to commend his courage, because there are certain political views people are not allowed to hold. The principle of free speech fell away in this country a long time ago, and it certainly went out of British politics a long time ago. Over time, a situation has arisen whereby we are not allowed to express certain views in polite company, such as questioning the merits of sex education in schools. Also, in the previous Parliament nobody was allowed to question the benefits of the Climate Change Act 2008.
Mr Leigh
It is impossible to have any sensible debate on the national health service, too, as it has become a kind of religion. We have had a catastrophic health statement this week, ruling out competition. There are clearly no-go areas in the arena of public debate, on which the two Front-Bench teams join together so there is no proper debate as to how we can best take matters forward. On the NHS, for instance, the social insurance systems on the continent are far superior and give patients a much better deal, but there is no proper debate of how we might introduce such insurance systems.
Philip Davies
Mr Deputy Speaker, you would not want me to start talking about the national health service in this debate, so I shall resist my hon. Friend’s tempting offer, but he is absolutely right that it is considered unacceptable in politics to argue for certain unpopular causes. I always ask people to celebrate anybody in politics who will stand up and say something controversial or unpopular, because I think they are doing a great service to our democracy, even though they may be insulted by Labour Members. I therefore commend my hon. Friend the Member for Christchurch on bringing this important issue before the House, and for trying to generate a grown-up debate about the benefits, or otherwise, of a fixed national minimum wage that people are not allowed to get out of.
I have always believed that a political consensus is usually a precursor to a disaster. Every party in this House supported joining the exchange rate mechanism, yet it turned out to be a complete disaster. The setting up of the Child Support Agency had cross-party support and it was seen as a great thing, but it has been a complete fiasco. Everyone across the political divide has had to support the setting up of tax credits, too, yet anybody who has had any dealings with the system knows that it has been a complete fiasco as well. The fact that there is political consensus in support of a measure does not mean to say it is good, therefore; it just means to say the measure is likely to be politically expedient.
Mr Chope
My hon. Friend makes a good case. Does he agree that that problem is not confined to our Parliament? The political consensus getting it wrong is precisely what happened in Greece: there was cross-party consensus that the country should join the euro, and what a mess they have made of it!
Philip Davies
My hon. Friend is absolutely right. We should never allow political expediency to prevent a serious debate about what is right, which is why I particularly commend my hon. Friend for raising this issue.
I apologise for not having been present in the Chamber for the beginning of my hon. Friend’s speech. He may well have said then what I am about to say now, but if he did not, I certainly wish to do so. We must acknowledge that the introduction of the national minimum wage has been a huge benefit to a lot of people in employment. As a result of the national minimum wage, the pay of a lot of people who were being paid a low wage went up, so it has been a great success for them. It would be churlish to argue otherwise. I certainly would not pretend that the national minimum wage has been a total disaster for everybody, because it clearly has not. However, just as I would not argue that, I think it would be churlish for Labour Members to put on their political blinkers and just see the benefits that have been accrued by certain people, without being open-minded enough to look at the potential downside of a national minimum wage in its current form. If Labour Members do not think there are any downsides whatever from having a national minimum wage, they are either totally blinkered in their view or they do not live in the real world.
Philip Davies
The hon. Gentleman should know that my hon. Friend is never swayed by my opinion on anything, so whatever I say will not influence his decision. I do not know why the hon. Gentleman thinks everybody else is as lily-livered as he clearly is on controversial matters. All I can say to him and to my hon. Friend is if my hon. Friend does decide to press the Bill to a Division, I will vote for it. I do not think I can make my position any clearer than that.
When the national minimum wage was introduced it was not supported by my party or the Liberal Democrats, as we had a principled objection to it. Like my hon. Friend the Member for Christchurch, I am interested to hear the Minister’s view on this. Mine is that that principled objection turned into expedient support for the minimum wage, but I am sure that the arguments that were relevant then remain relevant today.
We were told that the minimum wage would not make any difference to employment levels. Given that over the following eight years there were higher levels of employment and lower levels of unemployment, it was taken as read that the national minimum wage must have no negative impact on employment. Given that we all want people to be properly rewarded for the jobs they do and that no politician wants to argue for lower pay for people, we have a political consensus on this matter. However, during those eight years there were high levels of economic growth, so it was inevitable that employment levels would rise in that period, with or without a national minimum wage. This clearly has not crossed the minds of Labour Members, but even more employment may well have been created if there had not been a national minimum wage. I used to work in the supermarket industry and retailers in that sector made it clear that about 100,000 extra jobs would probably have been created without a national minimum wage during that time. The fact that the employment level rose during that time does not mean that it was caused because of the minimum wage; it probably occurred despite the impact of the minimum wage.
The real test of a national minimum wage was always going to come when we came to an economic slow-down. It is very easy for employers to maintain those employment rates in good times, but the test was always going to come during a downturn. There are legitimate concerns now about the effect of the national minimum wage, and it would be irresponsible for us to ignore them, even if it would be expedient to do so.
I must make the point that I was never supportive of the principle of the national minimum wage. I think that the payment of an employee by an employer should be a private matter and that if someone is happy to do a job for a certain wage, it should not be any business of the Government to prevent them from doing that job. However, I have to accept that that philosophical argument was lost some time ago, so my concerns are now based on the minimum wage’s practical and unforeseen impact on some of the most vulnerable people. The people who are most disadvantaged by the national minimum wage are not the unscrupulous employers. As my hon. Friend the Member for Christchurch so eloquently said, such employers are still alive and kicking in the black economy; they are still employing people and paying them below the minimum wage. The people who are most disadvantaged by the national minimum wage are the most vulnerable members of society. My concern is that the minimum wage prevents those people from being given the opportunity to get on the first rung of the employment ladder.
The great myth when the minimum wage was introduced was that people who are paid low wages are paid those low wages for the rest of their career. Many people have been paid a low wage to begin with and that has given them some work experience which has allowed them to move up the employment ladder to get higher quality jobs and better wages. My concern is that the first rung on the jobs ladder is far too high for many of the most vulnerable people ever to reach and they are thus unable to move further up. I shall set out an example that I am able to give, having spoken to people in this field.
Let us consider an employer who needs to take someone on and can choose between a former prisoner and someone who has never been to prison. In the real world, who is the employer going to take on, given that they would have to pay both these people the same wage? I suggest that 99 times out of 100 the person who has not been to prison will get the job. As the employer would have to pay both these people the same wage, why would they give the person who has been to prison a chance? The only way the former prisoner would be given a chance by the employer is if the employer was able to say, “I’ll give you a smaller amount for a certain period of time and we’ll see how it goes. If you prove yourself, I’ll move you up.” The employer is not being given that opportunity as that flexibility is not available, and that is preventing certain people from being able to access employment. Consequently, many of these people—even the ones who want to get a job—cannot find employment and so they commit crime again and add to the problems in society.
I went to visit a charity called Mind in Bradford a few years ago. One of the great scandals that the Labour party would like to sweep under the carpet is that in this country only about 16%—I stand to be corrected on the figure—of people with learning difficulties and learning disabilities have a job. The others are unemployed, but why is that? I spoke to people at Mind who were using the service offered by that charity, and they were completely up front with me about things. They described what would happen when someone with mental health problems went for a job and other people without these problems had also applied. They asked me, “Who would you take on?” They accepted that it was inevitable that the employer would take on the person who had no mental health problems, as all would have to be paid the same rate. Given that some of those people with a learning disability cannot, by definition, be as productive in their work as someone who does not have a disability of that nature, and given that the employer would have to pay the two people the same, it was inevitable that the employer would take on the person who was going to be more productive and less of a risk. The situation was doing the people with learning difficulties a huge disservice.
As I said at the start of my remarks, the national minimum wage has been of great benefit to lots of low-paid people. However, if the Labour party is not even prepared to accept that the minimum wage is making it harder for some of those vulnerable people to get on the first rung of the jobs ladder, we will never get anywhere in trying to help these people into employment.
Tony Lloyd
The hon. Gentleman’s arguments are always seductive—they are wrong, but they are very seductive. How low would he be prepared to drop those wages? If someone with learning difficulties was only a quarter as productive as the competing would-be employee, would he be prepared to drop their pay rate to a quarter of the minimum wage? Should it drop to less than a quarter? What is his floor?
Philip Davies
I made my position clear in my earlier remarks but, given how uninteresting I am, I forgive the hon. Gentleman for perhaps nodding off during that section. I did make it clear at the outset that I did not agree with the national minimum wage in principle. I said I thought that what somebody was prepared to work for and what somebody was prepared to pay was a private matter between two people and it should not be interfered with by the Government. The big difference between him and me is that I would much prefer the person with the learning disability to be given the opportunity to get a job, do something worth while and contribute in a way that they want to, whereas he would prefer them to be sat at home, unable to get a job in the first place. He may think that he is taking the moral high ground by believing that it is far better for these people to be sat at home unemployed without any opportunity, but I do not
Tony Lloyd
The hon. Gentleman avoids the question. If there is no floor, people will be paid wages that would be an outrage in our society. If he wants to protect people, he can do so in other ways—he can offer supported employment and he can offer subsidised employment. As you know, Mr Deputy Speaker, our society has on many occasions offered the concept of the “sheltered workshop”—that may not be a good modern term—and we ought to think about that.
Philip Davies
I will tell the hon. Gentleman what is an outrage. It is an outage that in 1997, 47,000 people had been on incapacity benefit for five years or more, but by the time his party had ruined the country that figure had risen to 1.5 million. That is an outrage that he should be reflecting upon. He should think about the fact that so many people were either priced out of the jobs market or were just out of that market as a result of his Government’s policies. That happened either because of the national minimum wage or because the benefits system penalised people for going out to work. That is the real outrage, rather than what he is pointing out.
Mr Chope
My hon. Friend is making a brilliant contribution. Does he accept that one of the tragedies is that this situation was forecast? Back in 1998, the Low Pay Commission said that
“minimum wages may cause a transfer of jobs between groups such as the substitution of more skilled for less skilled workers”.
The less skilled workers are the ones who have lost out as a result of the minimum wage.
Philip Davies
My hon. Friend is absolutely right. Of course, it is very easy for everyone to try to sweep such matters under the carpet, but we would be doing this place a great disservice if we did. I am appalled that Labour Members, who supposedly—as they claim—represent the most vulnerable in society, are perfectly happy for those people never to be given the opportunity to get a job as a consequence of Labour’s policies either on this matter or on benefits.
Mr Leigh
My hon. Friend is making an important contribution and it is important that we have this debate, but let me ask him a question as a critical friend. Let us forget the fact that there is a minimum wage at the moment. Why should a disabled person work for less than £5.93 an hour? It is not a lot of money, is it?
Philip Davies
The point is that if an employer is considering two candidates, one who has disabilities and one who does not, and if they have to pay them both the same rate, which is the employer more likely to take on? Whether that is right or wrong and whether my hon. Friend would or would not do that, that is to me the real world in which we operate. The people who are penalised are those with disabilities who are desperate to make a contribution to society and who want to get on the employment ladder, but find time and again that the door is closed in their face. If they could prove themselves earlier and reassure the employer who took them on that they would not cause a problem in the way the employer might fear—I am sure that there are a lot of myths out there and that many of these people would be just as productive as those without a disability—they might well move up the pay rates much more quickly. At the moment, they are not getting any opportunities at all.
We all know that some employers break the law and pay below the national minimum wage, but it strikes me that the only way employers are likely to get away with that is if they employ illegal immigrants. If an employer is employing a British citizen or someone who is here legally and tries paying them below the minimum wage, legal action can be taken against them, they will face a huge fine and the employee can do something about it. If that employer is employing an illegal immigrant, the power rests with the employer, because they will judge that the illegal immigrant will not take up the case officially. If they do, their illegal status in this country will be exposed and they will be turfed out of the country.
One consequence of the national minimum wage is that it encourages illegal immigration into this country. Illegal immigrants know that they can get employment below the national minimum wage and are happy to do so because it is probably higher than the wage they would earn back in their country. They also know that they will have no problem getting a job because some employers will be crying out for someone whom they can pay less than the national minimum wage. I am not sure whether any research has been done on this, but I would be interested to know how much illegal immigration into this country has come about as a result of the introduction of a national minimum wage.
Whatever the effects on employment of a minimum wage are in general, its effects in a recession must be worse. My hon. Friend the Member for Christchurch may well have made this point before I entered the Chamber, as I was a few minutes late, but people will recall that at the start of the credit crunch, or recession, a couple of companies—my hon. Friend, who is more knowledgeable on this than I am, will correct me if I am wrong, but I am sure that those companies were JCB and Corus—told the people working there that the wage bill needed to be reduced by 20%, so either 20% of the staff could be made redundant or everyone could take a 20% pay cut. One way or another that wage bill had to be reduced. If I remember rightly, the workers in those places—JCB sticks in my mind in particular—got together and voted to take a 20% pay cut. They made that choice themselves. Rather than being made redundant, they chose to take a pay cut.
Mr Bone
My hon. Friend is making a very powerful speech, but does he agree that a 20% pay cut is not a 20% cut in take-home pay for those people who take the cut, because they save on the tax, and is more than a 20% saving for the employer because there is not the same on-cost? It helps both ways, but it is not quite the same.
Philip Davies
My hon. Friend is right and reinforces my point. Those people decided they would prefer a 20% cut to risking a 20% chance of being made redundant.
Mr Leigh
Again, it is very important that we tease out these arguments. Those people took a pay cut, but presumably it still did not reduce their wage below the minimum wage. What worries me about my hon. Friend’s argument is that although I know the Bill says that everything will be voluntary, will there not be massive pressures from employers? Might they not tell staff that they are in awful trouble and ask whether they will consider taking less than the minimum wage? Might they not say to a disabled person, “You’re not quite so good at doing this job; will you please take less than the minimum wage?” Although the provision is ostensibly voluntary, there will be pressure on the employed to take less than the minimum wage.
Philip Davies
My hon. Friend might think that such choices should be available only to people who are highly paid, but a firm in which all the staff are paid the minimum wage might be faced with the same predicament. Why does he think that the only people who should have the choice are highly paid people? Why should more lowly paid people not have the same option to take a pay cut or to be made redundant? Why does he want to deprive them of that choice? Why does he think that only highly paid people are capable of making that decision? Why are not more lowly paid people capable of doing so, if they feel it is in their best interests? To force those people to be made redundant in such circumstances is, I think, an outrage. It is an outrage that we would not allow them to make the choice themselves. The whole principle is that the Government and state know best and know what is best for everybody, so they will not even allow anybody to make the choice for themselves.
Mr Chope
My hon. Friend knows that our hon. Friend the Member for Gainsborough (Mr Leigh) can be a bit paternal at times, but I wonder what he would think of what happened in Ireland? Owing to the centralised situation to which my hon. Friend the Member for Shipley (Philip Davies) refers, the Government decided to reduce the minimum wage in order to get out of a financial hole.
Philip Davies
My hon. Friend raises an interesting point. As I have said, I have lost the philosophical argument and so I think some of the practical arguments should be explored. He pre-empts my speech—I am not sure whether he has been looking over my shoulder—because I was about to make the point that, although a national minimum wage might well be sustainable during periods of economic growth, the Government ought to consider introducing some flexibility to the system during an economic downturn. For example, during a recession they could consider suspending the minimum wage or reducing it. If we are to try to help people into employment during difficult economic times, it is obvious to everybody—bar Labour Members, it seems—that it will be easier without a national minimum wage.
Let me return to the point I made in an intervention. The Opposition have based their whole policy on a number of things on the argument that if we increase the cost of something as much as possible, we will reduce its consumption. For example, the argument goes that if we increase the tax on tobacco and alcohol, we will have fewer people smoking and drinking alcohol to excess. The same principle must apply to employment: if we increase the costs of employment, we will see a reduction in it. That follows the same logic. If the Opposition have decided that if we tax something more, we will not see less of it, I would welcome their conversion, but they cannot have it both ways. They cannot say one thing about tobacco and alcohol and think that the principles are somehow completely different as regards employment.
I want to return to the point made by my hon. Friend the Member for Christchurch about the tax and benefits system, because he was on to something. He powerfully made the point that many people who are self-employed in this country do not earn anything like the minimum wage, particularly when their business faces financial problems or uncertainty. I never hear Labour Members speaking up for those people and arguing that they are being underpaid. It is usually those people who are criticised by Labour Members for trying to reduce the wages of their staff, glossing over the fact that the person who runs and owns the business may well not be making any money at all at that time. It comes back to a point made by my hon. Friend the Member for Northampton South (Mr Binley) about the attitude of Labour Members. I will be charitable and put it down to a simple lack of understanding of what it is like to run a business. I am sure that they are not really nasty people; they are just misguided. They do not understand, because so few of them have ever employed anyone, run a business or faced the pressures of that. They simply do not understand what it is like.
Philip Davies
I have given way enough to the hon. Gentleman. I want to crack on because other Members want to speak. I put Labour Members’ attitude down to their being misguided. I know that the hon. Gentleman was a university lecturer. I am not sure that I class that in the wealth-creating sector. Perhaps we will debate that in the Tea Room afterwards.
Labour Members have the attitude that basically the only way for businesses to make a profit is to screw the customers and the employees into the ground as much as possible; that that is the secret for businesses in making as much money as possible; and that, if it were not for the Labour party intervening at every possible opportunity, across the country the customer and the employee would be squeezed and fat cat businesses would make massive profits. I genuinely think that that is their view of the world. That may be the view in the Victorian age that the hon. Gentleman lives in, but in the modern world that is not how business works. That is not how to make money as a business.
In the real world today, the hallmark of successful companies—the thing that they have in common—is that they look after their customers and their employees. The thing that failed businesses have in common is that they do not look after their customers and their employees. That tends to be what differentiates successful and failed businesses. I am sorry that, still in this day and age, the Labour party has not woken up to the fact that, to be successful in business, people have to look after their staff and customers and that, if they do not, they will go out of business.
Jacob Rees-Mogg
I was concerned about my hon. Friend’s attack on the Victorian age, which was one of the finest ages in British history, when most employers were benevolent, kindly, good and not out of a Dickens novel: they were more Trollope than Dickens by and large.
Philip Davies
I can always rely on my hon. Friend to speak up for the Victorian age. In fact, he usually speaks up for an age before the Victorian age, so I commend him for being so modern, but he is right. In passing, I should say that I know that better than most, because in my constituency, I have Saltaire, which is a world heritage site made famous by Sir Titus Salt, who had his mill in Saltaire, built houses all around the factory for his employees and was the epitome of a benign Victorian mill owner, so I thank my hon. Friend for allowing me to give a plug to Saltaire in case people are looking for a great place to visit.
My hon. Friend the Member for Christchurch made a point about tax. It is perverse that hon. Members can be so wedded to the idea that it is outrageous for anyone to be paid below £5.93 an hour, yet in the next breath be perfectly happy for those people to be taxed. If we are going to have a national minimum wage, if it is a minimum that people can be expected to earn and live on as an employment wage, surely those people should not be taxed on whatever happens to be the minimum wage.
I cannot make a logical case for why the minimum wage should be taxed. It is not that people are taxed by just a bit. People in full-time employment on the minimum wage are taxed, if income tax and national insurance contributions are combined, at about £1,500 a year. If people want to argue for a minimum wage, that is a perfectly respectable position to hold, but surely those same people should be arguing that people on that wage should not pay any income tax. If Labour Members want to confirm now that they agree that people earning the minimum wage should not be taxed, I will happily give way.
Tony Lloyd
I think that the hon. Gentleman is proposing that we should not have taxation below the levels of about £11,000 or £12,000 a year. I think I would go along with that, but there would be a consequence: we would have to find the tax elsewhere and it would probably mean looking at those on high incomes, not those on middle incomes, to fill that gap. I wonder whether he would join me in saying that there should be a bit more tax on the high earners and a lot less on the low earners. We might have a good deal.
Philip Davies
I congratulate the hon. Gentleman on his ingenuity in trying to debate his own Bill before it gets the chance to get off the ground. I will not incur your wrath, Mr Deputy Speaker, by debating that other Bill.
Philip Davies
I will in a second.
Where the hon. Member for Manchester Central and I disagree is that I think that reducing taxation stimulates the economy and ends up giving more revenue to the Exchequer. I know that he has been about a long time. He will find that, in the golden age when Mrs Thatcher was Prime Minister, she proved beyond all doubt that, if we cut the rate of tax, we can increase the receipts from tax, because it stimulates the economy.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have looked at the Bill and I am not sure where it deals with taxation. I know that it is about the minimum wage but we are drifting into the area of taxation, to which I know the hon. Gentleman would not want to take us.
Philip Davies
As ever, Mr Deputy Speaker, I am grateful for your guidance. I am sure that you are right that I was in danger of being taken away from the main issue by the hon. Member for Manchester Central. I am happy to give way to my hon. Friend the Member for Wellingborough (Mr Bone), unless he feels that he will also incur the wrath of the Deputy Speaker.
Mr Thomas
On the question of take-home incomes for low-paid workers, and given the hon. Gentleman's enthusiasm for tax cuts, I wonder whether he saw the comments yesterday of my right hon. Friend the Member for Morley and Outwood (Ed Balls), the shadow Chancellor, calling for a temporary drop in VAT. That is surely a perfectly sensible way of meeting the objectives that the hon. Gentleman wants to achieve.
Philip Davies
Mr Deputy Speaker, I fear that I would incur your wrath again if I were respond to that, so may I just say in passing that I thought what the shadow Chancellor said yesterday was drivel. I will now move on to the rest of the Bill.
My point is that the minimum wage could be reduced by about a pound an hour, which would be a great benefit to employers and may encourage some of them to take on more people. If tax rates were adjusted accordingly and those people currently earning the minimum wage of £5.93 an hour were taken out of tax, they would not be any worse off. Therefore, no one would be penalised by that. Those people would still take home the same rate of pay as they do now, yet it would be a great fillip to employers, many of whom are struggling; as my hon. Friend the Member for Wellingborough helpfully pointed out, there would be benefits in terms of the employment contributions that they have to make as well.
Philip Davies
I have heard that argument. I do not want to be sidetracked, but I do not agree with my hon. Friend. The fewer people at the lower end who pay tax the better. I do not see why we should expect the lowest paid in the country to contribute to taxes. They should be allowed to take home and keep what they earn. It is very rare that I say this to my hon. Friend, but I simply do not agree.
Jacob Rees-Mogg
People on the minimum wage, regardless of their income tax position, will also pay VAT, council tax, tax on cigarettes particularly, tax on alcoholic beverages and often tax by playing the lottery. They will be contributing, even on the minimum wage.
Philip Davies
My hon. Friend is absolutely right; many of those people already pay an excessive amount of tax through their spending, as he says. The best thing that we could do is give them some relief in the income tax that they pay. There is an easy way of ensuring that we can help to stimulate the economy without penalising anybody in the amount that they take home. If the only purpose of the minimum wage is to ensure that people take home a certain amount of money each week, I do not see what objection there could be to people taking home exactly the same amount of money.
I could talk about the provisions in the Bill on asylum seekers. I am not entirely persuaded of the case made by my hon. Friend the Member for Christchurch, because I wonder whether the Bill might unintentionally encourage even more people to come here falsely claiming asylum. He did go some way to persuading me of the merits of his case, so I would not allow that to be an objection to my supporting the Bill. I would be happy to support the Bill because of the minimum wage provision that allows people to choose whether they wish to be subject to it or not, and I would perhaps try to delete the part on asylum seekers in Committee. If hon. Members support the provision to allow asylum seekers to work and to be paid, they could equally support the Bill on Second Reading and attempt in Committee or on Report to delete the part on the minimum wage that they do not like. Given that that opportunity is there for them, I hope that we will not hear any weasel words from people who will be seen to have voted against allowing asylum seekers to work and to be paid. They are voting against that just as much as they are voting against anything else in the Bill. I hope that the hon. Member for Manchester Central will not try to weasel his way out of the fact the he is in danger of voting against something that he claims that he enthusiastically supports. He could try to delete the part he does not like at a later stage.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. This has been an important debate, but we are in danger of overstepping the mark. “Weasel” is right on the edge, and I do not want the debate to deteriorate. It is a good debate and we should not insult each other.
Philip Davies
For the avoidance of any doubt, Mr. Deputy Speaker, I will withdraw the word “weasel”. I certainly did not mean it in any pejorative sense.
Jacob Rees-Mogg
I encourage my hon. Friend to elaborate a little on his views on clause 1, as it is tremendously important. I know that the people of Shipley will be interested, and I am pretty sure that the people of North East Somerset would like to know what he thinks.
Philip Davies
My hon. Friend tempts me. I have no problem in principle with what my hon. Friend the Member for Christchurch said in terms of people being allowed to work, particularly when they have been here for so long. There is a massive issue—the hon. Member for Manchester Central also made this point—where people have been waiting years and years for their cases to be heard and in some cases have set up a family and are still deprived from being able to work. I would prefer to tackle that by speeding up the process, rather than by accepting that the process will take ages and allowing them to work. That is my preferred solution. That is why I am not so enthusiastic about this part of the Bill. However, I will not allow that to prevent me from supporting the Bill if my hon. Friend puts it to a vote.
I appreciate that the national minimum wage is popular, I understand perfectly that it is politically expedient not to oppose it in any shape or form, and I absolutely accept that many people in this country have benefited from the national minimum wage and have seen their pay rise as a result. I do not want to undermine that point. Many people in my constituency and others have benefited from it. But in politics it is crucial that we do the right thing, even if it is sometimes unpopular to do it or to say it. It is essential that we have a proper, sensible debate about these issues to ensure that we get them right. Instead of engaging in a sensible debate where we all agree that everyone has the best interests of the public and low-paid people at heart, those who disagree with us on these matters tend to engage in some rather childish name calling and abuse, often through a lack of reason in their debates.
We want the best for everybody, and although Government Members might have different ways of going about it and a different perspective on it, nobody should be under any illusion, because we want the best for low-paid workers and people who are out of work just as much as Labour Members. I do not decry their different perspective, and I hope that they will not decry ours but instead be grown-up enough to accept that the national minimum wage has made it harder for some people to access the jobs market. If Labour Members are not prepared to accept even that, we are not going to get anywhere with trying to tackle the scourge of unemployment.
The hon. Member for Manchester Central either would not answer my question or did not know the answer to it, but the fact is that unemployment has gone up since the national minimum wage was introduced. When it was introduced, unemployment was at 1.7 million and youth unemployment was 1.1 million, and now unemployment is at 2.43 million and youth unemployment is at 1.5 million. That has happened since we have had the national minimum wage. Whether people like it or not, and whether it is convenient to point out those facts or not, they are the facts of the matter.
I am sure that all Members want everybody to have the opportunity to get a job, to develop their career and for it to flourish in every possible way, but for some people the national minimum wage may be more of a hindrance than a help, and if those people—in my view, some of the most vulnerable people in our society—consider it a hindrance and feel that for a short period taking lower pay to get on the first rung of the jobs ladder is a good thing, I do not see why we should stand in their way.
I hope that we can have that sensible debate, so that we can help everybody in society—not just people in work, but those people who are really struggling to secure their first opportunity on the jobs ladder.
Mr Thomas
I welcome my hon. Friend’s attendance at and participation in this debate. If I am able to secure your indulgence, Mr Deputy Speaker, I hope to set out at greater length what the Opposition think would be a proper way to help working families, as opposed to this legislation.
Crucially, the Bill would enable the minimum wage to be lowered in areas of relatively high unemployment. It would undermine the national nature of the minimum wage, enabling rogue employers to compete on the basis of lower and lower wage rates. I recognise that the hon. Member for Christchurch, as he set out, has always been an unreconciled opponent of the minimum wage—he has been commendably consistent in his views. He must know, however, that with unemployment rising, the Bill would make it easier for minimum wage protection to be eroded.
As I hinted in an intervention on the hon. Gentleman, under clause 3, on the training wage, there would always be ways for employers to claim that training was being undertaken. There would be absolutely no quality control, and there would be a risk of lower wages as a result. Given the Government’s acceptance of the Low Pay Commission’s recommendation of an apprentice rate of £2.50 an hour, there is even less need for the training rate for which he argues. The apprentice rate recognises that someone is not yet up to maximum productivity, but the apprenticeship ensures that proper training is being undertaken, with the employer showing a genuine commitment to quality training.
The Bill would leave low-paid workers even more vulnerable to in-work poverty, and we certainly cannot support that. I gently suggest to Government Members that the minimum wage has been a huge success. It helped to raise pay for more than 2 million people when it was introduced, and some 50,000 low-paid teenagers received a boost in income when a minimum wage for 16 and 17-year-olds was introduced in 2004. When the Conservative party opposed the minimum wage back in 1997, it claimed that it would cost some 2 million jobs. In practice, 3 million extra jobs were created in the following 10 years.
Members may be interested to know how many people benefit from the minimum wage at the moment. Some 1,080,000 individuals were benefiting from it as of last October. In the south-east, where the hon. Gentleman’s constituency sits, there were some 110,000 individuals benefiting from it. In Yorkshire and the Humber, where the constituency of the hon. Member for Shipley is, there were some 100,000.
Philip Davies
I am enjoying the hon. Gentleman’s selective use of figures. Will he confirm that unemployment among adults and youths is now higher than it was when the national minimum wage was introduced?