§ Mr. George Robertson (Hamilton)I beg to move,
That leave be given to bring in a Bill to regulate the administration of service charges in hotels and restaurants; and for connected purposes.The purpose of the Bill is simple. It is to give a fair deal to the customers in a hotel or restaurant who pay the service charge on their bill believing that it will go to the staff who gave them the service. It is also designed to give a fair deal to the staff who provide the service, who at present have no legal entitlement to the service charge or any right to information about its allocation, the timing of its payment, or even its existence.The average person using a hotel or restaurant enters into a contract when ordering a room or a meal. He or she is obliged to pay the service charge if it is advertised on the menu or on the room rates. It it is not paid, a civil action can be raised by the hotel or restaurant to recover the amount.
No such legal status is accorded to the distribution of the accumlated service charge. Instead of the charge being the property of the staff, as the vast majority of customers suppose it to be, it is "massaged" by the management of the hotel or restaurant and either distributed on their behalf to the staff, in which case both tax and national insurance levies are paid, or passed to a tronc—an independent fund—with elected or even non-elected representatives of the staff administering the distribution of the money. In that case tax is paid on it, but national insurance contributions are not.
Self-evidently, there is a different system for every hotel or restaurant in the country. There is also scope for the most inspired fiddling and ripping off at every stage. Customers can easily be ripped-off, because they pay the service charge irrespective of the quality of the service provided. Even a Fawlty Towers hotel, with the soup poured over the customer's head and spaghetti dumped in his lap, will charge the 10 or 12½ per cent. service charge—a form of coerced generosity that makes no sense.
Even when the service is first-rate the customer has no guarantee that the money that he pays in lieu of a special tip is going to the best staff, the whole staff, or to the staff at all. A former hotel worker, who is now manager of a restaurant, wrote to me this week saying:
There is no doubt that hotel companies and proprietors more often than not see the service charge as pure profit—the cream on the cake.Coming from somebody who is now in management and has worked in a number of hotels, that gives a stark explanation of the reality of what happens to the customer service charges in all too many hotels and restaurants.If they have to pay the levy, customers have the right to know that it goes not to swell profits but as additional revenue to the staff. For the staff in hotels and restaurants, the service charge is not simply a frill. For thousands it is a livelihood. It can make up one-third to even a half of the earnings of many of them, for all their working lives. It is no mean amount, and such staff deserve protection—a legal right to what was designed for them.
Not only should the service charge be the legal property of the staff; they must have the right to know how it is paid, by what system, when it is to be paid, and who is 408 to make the decisions on it. For too long hotel staff have tolerated systems of paying out that have meant that the old hands in the hotels control the troncs, paying out at the end of the season and depriving any employee who left before then, or paying out according to a rigid seniority system, an attendance system, or even a system based on age.
Wages in this low-paid, ill-organised, high-turnover industry cannot be left to the whim of any senior hall porter in a four-star hotel or an even more iniquitous system than that. Service charges are no small beer, even to the Government. The Inland Revenue checks the troncs in hotels and restaurants and levies tax on what it expects hotel staff to receive from them. It also assesses tips, and taxes them. However, when I asked the Treasury not long ago how many independent troncs there were in the country it said that it did not know.
Millions of pounds have been lost to the Treasury because of the non-levying of national insurance contributions on tronc payouts in this huge industry. In addition, poorly paid hotel staff have suffered, and will continue to suffer, when they claim earnings-related benefits and pensions.
Tipping gratuities, service charges and backhanders are all part of a bygone feudal era. They degrade the giver and the receiver and encourage the blackmail State, in which one pays over the odds for a taxi but not for a bus; for a hotel porter, but not for a supermarket attendant; for a waiter, but not for a newsagent.
The supposedly equalising service charge was born to spread the rewards of the major service industry beyond those who simply deliver the plate. We are now seeing daily that it has become a questionable baseline for additional gratuities.
It is a pernicious trend that sees this large, important and ill-done-by labour force in the hotel and catering industry continue as a low-wage, low-status occupation, deferring more and more to a reluctantly generous band of customers. As a former official of the Hotel and Catering Workers Union, I know that the vast majority of people employed in this huge industry want, and always have wanted, a fair wage for a fair day's work. They do not want to have to depend on the generosity, coerced or spontaneous, of the customers and of the institutions in which they work. The Bill would be a small step towards making sense and sanity of an irrational, unprofessional, illogical and outdated wages structure. It is a step that I believe would be widely welcomed.
Question put and agreed to.
Bill ordered to be brought in by Mr. George Robertson, Mr. A. E. P. Duffy, Mr. Robert C. Brown, Mr. Jack Ashley, Mr. James Johnson, Mr. Neil Carmichael, Miss Betty Boothroyd, Mr. Michael English, Mr. Frank R. White, Mr. Giles Radice and Mr. Don Dixon.