LOW-PAID WORKERS

HC Deb 29 July 1974 vol 878 cc310-23

6.0 a.m.

Mr. Richard Wainwright (Colne Valley)

I take this opportunity to lay before the House the worsening poverty of several millions of our fellow citizens who are in full-time work. I refer particularly to workers for whom the Government have a direct and special responsibility which they are not carrying out and which has not been carried out for many years, that is to say, to men and women employed in the public sector and in industries for which for nearly 70 years the Government have accepted special responsibility since the wages council system was set up.

I do this against a background of rising unemployment and accelerating inflation. The rising unemployment, alas, prevents many of those who are on poverty earnings voting against poverty with their feet. In more prosperous times the postmen voted with their feet by quitting the postal service and getting employment elsewhere when they were dissatisfied with their poor settlement. Against a background of rising unemployment such action becomes less and less possible, and people are trapped in low-paid occupations.

At a time of accelerating inflation, wealth is being unfairly redistributed in a thoroughly regressive manner. Rapid inflation is a way of penalising the poor and favouring a small section of privileged people in the community. The impact of rising prices is greater the lower one is on the pay scale. At the higher income level people who are faced with rising prices can postpone some of their planned expenditure. In the middle income range great burdens ensue from inflation because of hire-purchase and mortgage costs, but at least the essentials can still be provided for the home and family. But for the low paid the situation gets grimmer and grimmer. Not only do family pleasures and simple essentials go by the board, but people do not have the time or ingenuity or the family support to go through the rigmarole of means tests through which modest relief might be obtained.

Central and local government are necessarily the biggest offenders because they are the biggest employers of the low paid. My figures relate to adult male workers, not because female workers are any less important—far from it—but because unless equal pay becomes a fact male wages tend to be higher than female wages across the board. It follows that the female figures are likely to be worse than the male figures I shall quote.

I estimate that in the public sector at least 250,000 full-time adult male workers are low paid by any acceptable criterion of low pay. There has been almost incessant talk about the need to do something for the low paid, but there has been little action. I hope that the Minister, who has great understanding and experience of these matters, will be able to cite examples of protection for the low paid.

I hope that he will be able to show now, as distinct from the period of Conservative Government, that the people handing out social security at the counters are not themselves in large numbers having to claim FIS for their own families. I await with interest the Minister's observations on that score. I believe that under the Conservative Government the House was virtually misled on the position of employees of the Department of Health and Social Security who were at that time in large numbers drawing FIS.

Although I hope to have news of some improvements in some parts of the public sector, the fact remains that there is an appalling, and in many ways worsening, degree of intolerably low pay. To take a topical example, the rates for adult male full-time ancillary workers in our hospitals in Grade B, for a 40-hour week, provide a gross wage of only £22.80 for hospital laundrymen. Grade C provides only £23.36 for the man who undertakes a responsible job in a hospital central sterile department where any kind of error, slackness or lack of energy can have serious results for the patients. The rate for porters—workers who have to deal with patients in many of our appallingly ancient hospital buildings, negotiating antiquated corridors putting patients into inadequate lifts and taking them away from operation theatres still anaesthetised—is for full-time work only £23.96.

I turn to local government in which respect I believe that we all as ratepayers must share in the guilt in expecting workers to undertake unpleasant public services for an intolerably low return. Let us take the people who man the school-crossing patrols. We know the increasingly hazardous nature of that job, shepherding high-spirited young people across desperately busy highways. Those patrolmen are largely in Grade A, but for a full-time week they earn only £22.17. The unpleasant job of street cleaning or labouring on public sewage farms is rewarded by a pittance of £22.26.

The Government cannot escape their moral responsibilities in ceasing to employ these ill-paid people by turning to such services as contract cleaning. The Government must remain responsible for the miserably low rates which the tightly-knit group of contract cleaning firms in Whitehall and regional offices in many cases pay.

It may be said that all this ought to be dealt with by collective bargaining. But we have it on the authority of enlightened union leaders that collective bargaining has been unable to produce an answer to low pay. That is not surprising, because the context in which pay negotiations take place does not allow for special objectives such as the upgrading of the low paid to come into the argument.

Round the negotiating table, the structure of discussion is strict, rigid and firmly established. The history of recent years when attempts have been made to press the claims of the low paid has shown that our negotiating procedures rarely allow for the special objective of helping the low paid to have an effective hearing.

In the public sector, differentials of pay are not changing in favour of the low paid. In my view and that of my party, there has to be firm Government intervention to tackle this problem, to which so much lip-service has been paid, because the trend is getting worse, and this is happening all the time.

When the Labour Party was previously in power in 1969, the Government produced a White Paper on productivity, prices and incomes. Many of us who were here then remember so well that they had the frankness to admit: One of the weaknesses of the system of free collective bargaining has been its inability to solve the problem of the low paid. Matters got no better when subsequently a Conservative Government took over.

I turn now to the second half of my theme, which is the poverty amongst those adults in full-time work in the many industries covered by wages councils. This is an important area of industry in which many essential goods are produced and many essential services performed. For nearly 70 years it has been recognised that collective bargaining could not be expected to protect the majority of the workers involved.

The Minister may be in a position to provide better figures than I have, but my best estimate is that at least 140,000 manual adult male workers covered by wages councils are receiving weekly earnings for a normal week's work which are by any criterion infamously low. If I included female workers, the figure would be very much larger.

I am indebted to a recently established little team called the Low Pay Unit, which is associated with the name and the resources of the late Seebohm Rowntree, who did so much to expose mass poverty earlier this century. Its report summarises that: During the past 10 years low-paid manual workers in wages council industries have lost ground relative to other groups and have experienced real cuts in their standard of living. Further the introduction of an incomes policy by the 1964 Labour Government and by the Heath administration has not improved the relative position of the low paid despite official suggestions to the contrary. Despite all the homage paid to the needs of the low paid in the various incomes policies which have ground through this House, none of them has effectively tackled the problem.

As for the wages councils, I hope that the Minister will explain the extent not just of his powers but of his influence. Under the Act of 1959, which was the last piece of large-scale legislation affecting wages councils, the wages councils are independent bodies, and the Minister has no statutory duty to butt in. But he has the right to send back in toto to a wages council a recommendation from it. He has no right to alter it or to suggest any differential, but he has the right to send the whole recommendation back to the wages council as not being acceptable to him. I should think that in various channels the Minister and his associates must have some influence with the wages councils.

This was to some extent proved when the Liberal Party took up the case of the lace makers in Nottingham only three years or so ago. We discovered that the wages council for the lace making industry had not met for 13 years. I pay tribute to the Department. When it heard of the reports that we were putting out, which proved to be entirely accurate and reasonably well researched, it asked us to see its officials. Then in some way or other, which it was not for me to inquire about, it was arranged that this wages council, which had been asleep for 13 years, did meet and, within a matter of weeks, it recommended to the Minister a general rise for lace workers of no less than 43 per cent. That was at a time when the permitted norm for incomes in general was only 8 per cent.

That leads my party to suppose that somewhere behind the scenes there are channels of influence which ought to be available to the Minister and ought to be used not simply for the sake of a marginal industry such as lace making.

I have here two other examples of wages council industries where I should think the Minister's intervention is urgently required. The wages council for the laundry industry this very month has published minimum time rates for male workers, including transport workers in that industry.

From the age of 19 years upwards the minimum rate for a week of 40 hours is only £16.45. I appreciate that virtually nobody will be willing to try to live on £16.45. Therefore, a lot of overtime is worked and a lot of moonlight jobs are done and all kinds of improvisations are resorted to. But the fact is that in Government print by a Government-sponsored body—the wages council for the laundry industry—in this very month is put down this intolerably low figure of £16.45. I should have thought that the Minister could have sent that back to the wages council in accordance with his powers and said, "This simply will not do in a civilised country."

I could argue a similar case about the wages council for licensed non-residential establishments, but I will not weary the House with the figures. I could go on.

My final point about wages councils in detail concerns the enforcement of the regulations. On 21st May the Minister was kind enough to give me answers to questions that I asked about the enforcement of wages councils' regulations which, by any standard, I hope I have tended to show are themselves inadequate. Since the standards are so dismally low I expected genuine efforts to be made to enforce them, such as they are. But one of the Minister's answers indicated that, for instance, during 1973 his inspectors had uncovered, presumably by spot checks, no fewer than 7,524 cases of under-paying of wages, 19,737 cases of time records not kept and, quite separately, 3,182 cases of time records which were inadequate under the legislation. The list continues with formidable figures. The punch line in the Minister's answer was this: No employer was prosecuted for a breach of the regulations."—[OFFICIAL REPORT, 21st May 1974; Vol. 874 c. 78.] The text of the law and police and court action are not the answer to human problems, but to give some indication that the Government take the wages council procedure seriously and want to uphold the authority of these bodies there should be at least some prosecutions in the more flagrant cases.

An answer I had from the Minister's colleague made it clear that the trend of offences against wages council legislation over the past five years had if anything been upwards.

We are dealing with a problem which is difficult for a democracy, because poverty is no longer an affair of the masses. This is something for which the Labour Party can rightly take considerable credit. Poverty is now to be reckoned in millions but it no longer affects the majority of our fellow citizens.

The present Home Secretary put the matter very well in a weekend speech when he was in opposition, from which I quote: Today the many are not poor. The many while far from rich, have an approach to comfort and have some free spending money. The poor are now a minority, but a very sizable minority. And the hard fact is that, if the social forces that sustain injustice are to be offset, then the comfortable majority of our people will have to make their contribution… We have to persuade motor car workers for instance in my constituency that they have an obligation to low-paid workers in the public sector. The Minister is bound to admit that the record of his party in recent years in government has fallen behind the splendid traditions of the Labour movement of which my own constituency had a glorious party. In the Fabian publication "Labour and Inequality" Mr. John Hughes, the Vice-Principal of Ruskin College and Director of the Trade Union Research Unit said this about the last Labour Government: We cannot find any important examples of relative improvement in the lot of the low-paid worker during the years of the Labour Government. I hope that the Minister will be able to show that he has taken these words to heart and that the present administration will come forward with some new, bold and, above all, humane proposals for those of our working fellow citizens who still have an intolerably low standard of life.

6.19 a.m.

The Minister of State, Department of Employment (Mr. Albert Booth)

I am glad that we are having this debate, although it is inevitably a short one. It is greatly to the credit of the hon. Member for Colne Valley (Mr. Wainwright) that he has enabled us to discuss a subject which by any objective criteria is a very serious one. It is a subject to which the Government have been giving attention and wish to give increasing attention in months to come.

Since the Government took office, the Department of Employment has had two major priorities on the pay and industrial relations front—the abolition of the statutorypay controls and the repeal of the previous Government's Industrial Relations Act. With these two objectives achieved by the time the House goes into recess—as we hope they will—we shall be able to do more to forward our other objectives, among which the improvement of the position of the low-paid ranks high. I hope to demonstrate that in the two measures I have mentioned we have had a particular regard for low-paid workers.

I do not think anyone could reasonably question the reality of the Governments' commitment. Vitually everything that we have done on the social contract—on rents, food subsidies, rates and so on—helps the less well off, though not only them. We shall be continuing and developing this policy and, as time goes on we shall have, through the reports of the Royal Commission, which I shall be referring to more fully in a moment, a more comprehensive factual and statistical basis on which to found our strategy for the low paid.

In our discussions with the TUC—which were essential if there was to be a realisation of the social contract—we have had a special regard for the low paid, and in the advice that the TUC has given to all member unions particular attention has been drawn to the need, even in the difficult circumstances at present facing the country, to improve the position of the low paid.

The Government have welcomed the TUC guidlines published on 26th June which include a low-pay target of £25 a week. As the TUC report points out, for some groups rates are equivalent to earnings whereas for other groups rates are generally lower than earnings. The negotiation of a minimum figure will therefore be a complex matter and it would be wrong to expect a uniform solution. I must emphasise that this—like everything else—will be a matter for negotiation between those directly involved.

Paragraph 34(vi) of the TUC statement "Collective Bargaining and the Social Contract" says: Priority should be given to attaining reasonable minimum standards, including the TUC's low-pay target of a £25 minimum basic rate with higher minimum earnings, for a normal week for those aged 18 or over". Some consideration has to be given to the extent to which a national wage might be a solution. However, while the idea has a certain attractiveness, I do not believe that it would be an effective means of securing a lasting improvement in the relative postion of the low paid. It would also be very costly. Experience in other countries suggests that traditional differentials tend to reassert themselves in a comparatively short time. This also means that a statutory minimum wage is likely to be much more costly than it might seem at first sight. Moreover there is always a risk that the employment of some of the less-productive workers will become uneconomic and that unemployment will therefore increase.

I believe that voluntary collective bargaining, backed by strong trade unions, is the only effective means to ensure a decent wage for working people—

Mr. Richard Wainwright

Would the Minister be willing to consider not a national minimum wage, the difficulties of which I readily appreciate, but the experience of other countries with a national minimum earnings level for a normal week?

Mr. Booth

That is also a matter which is under consideration. Some of the difficulties which apply to a national minimum wage also apply to a national minimum earnings system. I hope to say something about other ways of tackling this matter, although I take the view that effective trade union representation is the only way of dealing with the problem of low pay. However, I do not rest on that argument as a means of saying that the Government should do nothing about it. There are certain things which the Government must do if the problem is to be solved. In order to inform themselves, the Government need to have a broader examination of income and wealth than has taken place up to now in this country.

That is one reason why the Secretary of State for Employment announced on 18th July that a Royal Commission would be established under the chairmanship of Lord Diamond and would begin work by the end of July. The names of the other members of the Commission will be announced shortly. The consultative document issued on 10th June mentioned that a possible subject for early reference might be the field of low pay. This reference will probably be made in the early autumn and will at last provide a firm factual basis for our policies to alleviate the problems of low pay in all sectors of employment. My right hon. Friend has also published a consultative document on the first reference to the Commission—a standing reference on the distribution of income and wealth. The Commission will begin work on this as soon as it has been formally set up.

The Commission is an integral part of our policy to create a fairer society which, as we said in our election manifesto, requires an impartial study of the present distribution of incomes and wealth, both earned and unearned. The Commission will be primarily educational, concerned with general issues rather than particular cases, and it will produce reports of a factual nature which will assist policy makers and those who are active in collective bargaining.

As I have said, I believe that the effectiveness of trade union organisation of the low paid depends to some extent on the actions of Government and State. This is why we have considered their position in the preparation of an employment protection Bill. It is the Government's intention to introduce such a Bill. I am sure that the House will understand that I cannot at present say with precision what the Bill will contain, but I can say that the problems of the low paid will not be forgotten. A consultative document will be published later this year and the views of hon. Members and interested organisations will be sought at that time.

I will now turn to the specific area of wages council industries. Wages councils are part of industry's negotiating machinery and, being made up of representatives drawn from the two sides of the industries concerned, have traditionally been allowed to settle at their own levels. Indeed the Wages Councils Act confers no powers on Ministers to alter their proposals. I appreciate what the hon. Member said about a Minister having the right to send back the proposals of a council. It has been my experience in my limited time in office and previously when I considered wages councils orders as a member of the Statutory Instruments Committee that their procedure is so inordinately slow that I would dread to send a report back, knowing the procedure which would then have to be followed to reconsider wages in the sector of industry concerned. One effect would be to delay even longer the payment of the increase in wages, meagre and inadequate though it frequently is.

During periods of incomes policy, wages councils have been required to observe the same limits on pay increases, reductions in hours or improvements in other conditions as the rest of industry. In this sector there is, however, the complicating factor of the statutory procedure prescribed, which creates lengthy intervals between the date of settlement and the date of implementation. This interval was further extended under the counter-inflation programme by the need for proposals to be studied by the Pay Board before publication.

During our debate on the abolition of the Pay Board, I quoted the case of the Licensed Residential Wages Coucil, and described how a group of workers waited from June of one year all through that year to February of the following year for an increase. The delay from the second of June to February, which made up the total delay to 20 months, was caused entirely by the Pay Boards' consideration of the wages council proposal. The rates which it produced were such as to appal me and anyone else who was concerned about the problems of the low paid.

The hon. Member quoted fairly the rates of another wages council and compared the low paid position of people in the public service with those on wages council arrangements. I object to neither comparison. Both are valid in the context of a low pay debate. But when one compares public service wages—the hon. Member quoted the £22.80 for the hospital handyman and £22.96 for the hospital porter—with wages of workers in the licensed residential wages councils—one realises that bad as public service wages are, there are wages councils where the situation is very much worse. We should bear in mind that these wages council workers waited 20 months for an award which gave male service workers in C area, the biggest in the country, from £11.58 for group 10 workers up to £17.58 for group 6 workers. From these wages deductions are made for meals or places of residence and so on and from that we can see how very much more serious is the problem in the wages council sphere.

Mr. Richard Wainwright

May I take up the point about delay? In the case to which the Minister referred, in which the Pay Board took this inordinately long time to consider the wages council recommendation, would the workers have suffered if the Minister, who was a Conservative, had sent the wages council recommendation back to it rather than allowing it to go forward to the Pay Board with all the consequent delay?

Mr. Booth

My view is that they could have suffered. I met representatives of this council—the independent chairman and employer and union representatives—and the view they put to me very strongly was that any tampering with the rates—of course I wanted to tamper with them to improve them—could upset the proposal so that the award would have to go right through the machinery of consideration again. That is why I do not feel that the answer to low pay lies in the present system of wages council machinery, although I accept that in the absence of any better form of protection we shall have to retain the wages councils and consideration will have to be given to ways of speeding up their proceedings and even to reinforcing the protection they give. The evidence we have shows that the machinery does not lend itself to providing speedy or improved protection.

Recently, wages councils generally have taken full advantage of the provisions in the Pay Code. In particular, with very few exceptions they have made the maximum permitted reductions in the differentials between men's and women's rates. Since the majority of the labour force in wages councils industries is made up of women, it is thought that at least their relative position will have improved.

Some changes in wages councils legislation have been considered to bring about an improvement in the present system. In the longer term, the Government hope to see the establishment of voluntary collective bargaining in the wages council sector where it does not already exist so that the statutory system can be progressively superseded by voluntary arrangements. In this way, the workers can gain those advantages such as productivity deals, access to disputes procedures, and retrospection of awards which it has not been possible to extend to them in the past by means of wages regulation orders.

The hon. Gentleman referred to the Low Pay Unit, which has published a paper on low pay in the wages council field. My right hon. Friend the Secretary of State is to meet Mr. Frank Field on 7th August to discuss the paper, and I do not wish to anticipate what might be said at that meeting.

In view of what has been said about low pay in the public sector, I want to point out that there is no general problem of low pay in that sector, but there are a number of groups, such as nurses, National Health Service ancillaries and local authority manual workers who are among the low paid.

The pay of nurses is being examined by the Halsbury inquiry which is now expected to report by about mid-September. Increases in pay resulting from the inquiry will be backdated to 23rd May, when the inquiry was announced. Nurses, NHS ancillaries and local authority manuals are receiving threshold payments. These now amount, at £2.40, to more than the majority in these groups received as their basic stage 3 increase, and give the lowest paid a larger percentage increase than higher paid workers.

But even in this area of low pay it is apparent that workers have sensed the benefit of organisation. We see postmen, nurses, teachers and local authority workers demonstrating their wage demands in a way that would have been inconceivable even a decade ago. I believe that it becomes more apparent when there is a Labour Government; that demands are pressed in the belief that expectations will be more readily met. I do not object. I have always favoured setting a higher standard under Labour Governments, but it tends to show that where there is low pay there is no total substitute for representation and effective negotiation.

The hon. Gentleman referred to the Lace Finishing Workers Council, which did not meet from 1959 to 1968. On the initiative of Mr. Ray Gunter, a Minister of Labour in the previous Labour Government, the wages council was reconstituted in 1968, and two social welfare workers were appointed to represent the interests of home workers. The reconstituted council met again in 1969, and revised its rates in August 1970. It has met regularly ever since, most recently in March this year, when increases were agreed which took effect this month.

I acknowledge the hon. Gentleman's legitimate concern. I shall never complain if he raises the problems of the low paid with me, even at half-past six in the morning.

There are serious differences in pay levels. There is the difference between one area and another, the difference between those employed in manufacturing and those employed in service, between those in the private sector and those in the public sector. But I still believe that the greatest difference is that between the organised and unorganised workers, and this is something we can partially remedy in our employment protection measure. We can possibly give to those who are now unorganised and low paid advantages in rights to negotiate which do not lie in other sectors. I trust that it is along those lines that the House will play its part in solving the problems of the low paid.