HC Deb 17 July 1985 vol 83 cc326-39

4. 11 pm

Mr. John Prescott (Kingston upon Hull. East)

On a point of order, Mr. Speaker. The substance of the statement on wages councils which is about to be given to the House was reported in The London Standard at 2 o'clock this afternoon. I wonder whether you can say what rules govern these matters, because many Opposition Members read in the evening paper what the Minister was going to say.

Mr. Speaker

The House will be aware that I have the greatest sympathy with what the hon. Member has said. If statements which are embargoed are issued to the press, they should not be printed.

The Secretary of State for Employment (Mr. Tom King)

indicated dissent.

Mr. Speaker

If they are embargoed, they should not be printed before the statement is given to the House.

Mr. King

Further to that point of order, Mr. Speaker. In case there is any misunderstanding, may I say that I share the feelings of the hon. Member for Kingston upon Hull, East (Mr. Prescott) about this matter. No embargoed statement was issued to the press. The House will have to draw its own conclusions as to whether there has been a leak. I take the strongest exception to leaks from my Department. I bitterly regret the fact that this has happened.

Mr. Prescott

Further to that point of order, Mr. Speaker. The Secretary of State has acted honourably in giving that statement. Will he look into the matter further and tell us later how the report occurred?

Mr. King

If I can, because I should dearly love to do so.

Mr. Speaker

Mr. King, to make his statement.

4.13 pm
Mr. Tom King

With permission, Mr. Speaker. I should like to make a statement concerning the Government's intentions on the future of wages councils and on international labour convention No. 26.

As the House will know, I published in March a consultation paper on the future of wages councils. That canvassed two main options: either total abolition or reform of the system—including, in particular, the limitation of their powers and duties and the removal of young people from the scope of wages councils.

In addition to the report from the Select Committee on Employment, over 700 organisations and individuals responded to the consultation paper. While the TUC and individual trade unions favoured retention, the consultations confirmed that there is a widespread dissatisfaction among employers with the present wages council system. The majority of them favoured a range of substantial reforms to meet these concerns. I promised to inform the House as soon as the Government had taken decisions on those matters, following the ending of the consultative period.

The Government's overriding concern is to promote employment and to remove any excessive burdens on employers. The present system inhibits the creation of more jobs and that is especially true in the case of young people. The present powers of wages councils also undoubtedly impose complex and unnecessary burdens on business. The Government believe that the case for radical reform is clearly made, and propose to introduce early legislation which will, first, remove all young people under 21 from any regulation by wages councils.

Hon. Members


Mr. King

Secondly, it will confine wages councils to setting only a single minimum hourly rate and a single overtime rate for those aged 21 and over.

I shall also be proposing new powers which will significantly simplify the procedures under which the Secretary of State may modify or abolish individual councils.

Following consultation, the Government have decided to deratify international labour convention No. 26 and I shall be informing the International Labour Organisation of our decision within the next few days. The window for denunciation opened on 14 June and it is necessary to give 12 months' notice before the convention ceases to apply. That will therefore mean that, subject to the progress of the necessary legislation in this House, it should be possible to bring into effect changes approved by Parliament as soon as they become law.

My right hon. and noble Friend the Minister without Portfolio, supported by my right hon. Friends and myself, published yesterday the White Paper, "Lifting the Burden". That set out clearly the Government's determination to reduce burdens on business and to seek in every way to improve the prospects for jobs. This statement today of a major package of reforms is directed to precisely those objectives, and I commend it to the House.

Mr. Prescott

It is both deplorable and ironic that two statements made to the House today should involve the ever-increasing greed of some of the City wealthy within our society and wages councils. The statement on wages councils represents an unashamed renunciation of Britain's international obligation to maintain minimum protection for the lowest paid in Britain, of whom I have employment experience.

Why does the Secretary of State disagree with the conclusions drawn by his predecessor, the right hon. Member for Waveney (Mr. Prior), who, as we are aware from a leaked Cabinet document from 1982, bitterly opposed such mean measures because they would marginally increase the number of jobs at the expense of adult workers and would be portrayed as an attack on those who are particularly vulnerable?

Does the Secretary of State accept that Britain is the only one of 92 civilised countries which is now prepared to renounce its international obligations? The Government's renunciation of the fair wages resolution in 1983, as the evidence presented to the Select Committee on Employment showed, led to a 25 per cent. reduction in wages, holidays and conditions and fewer jobs. Does he accept that some protection is necessary to guarantee minimum holiday periods and paid weekend overtime, as the all-party committee on Sunday shopping recommended that those conditions should be an essential part of any implementation of Sunday shopping? How will these proposals affect that recommendation?

In his statement, the Secretary of State claimed that his proposals would increase jobs. What evidence does he have to support that statement, as he confirmed to the Select Committee only a month ago that he had no such evidence?

As the Secretary of State must know, many of the 2.75 million people covered by the wages councils are women in very low-paid jobs, often earning sums below the supplementary benefit level. What estimate has he of the increase in the family income supplement benefits, which will grow with the downward pressure on wages that the decision is designed to achieve?

In International Youth Year, the Government's contribution is to remove legislation that is covered by international convention. It will mean less pay, shorter holidays and greater exploitation of youth labour by funnelling YTS youngsters into lower-paid industries. It will reduce the unemployment figures by replacing them with low-paid women workers, who will not be eligible to register as unemployed. It is a squalid proposal, consistent with the Government's overall policy of making the wealthy wealthier and the poor poorer, and there is no evidence that it will produce extra jobs.

Mr. King

In his opening comment, the hon. Member complained about a leak from my Department. He then boasted of another leak. I object to all leaks from my Department.

Anyone who has begun to understand the operation of the wages councils will know of the complexity of the orders. They are a major burden on employers. Many of the problems of the present system—and what are alleged to be breaches of it—arise from the sheer complexity of the orders.

We are determined to encourage employers to give the best possible opportunity to young people. We believe that the proposal will help in the employment of young people. That is why we attach importance to it.

Sir Ian Gilmour (Chesham and Amersham)

Although I believe that the wages councils are marginal to the problem of unemployment, I congratulate my right hon. Friend on proceeding by way of a sensible improvement of the wages councils, rather than by way of abolition, which would have been a grave mistake.

Mr. King

I note what my right hon. Friend says and I understand his point. I believe that our package of proposals is a sensible way to proceed. We attach the highest importance to the creation of new jobs. I may disagree with my right hon. Friend as to the extent to which our proposals may help to reduce unemployment.

Mr. Ron Leighton (Newham, North-East)

Is the Secretary of State aware that the removal of young people from the protection of wages councils is based on prejudice, not evidence? Youth wages have declined markedly, both relative to those of adults and absolutely, since 1979, yet youth unemployment has risen disproportionately faster.

Does the Secretary of State know that the young workers scheme—a device to lower youth wages—was singularly ineffective in providing new jobs? Does he realise that, if there is an increase in the employment of young people because of their cheapness, it will be at the expense of adults? Does he realise that that will be additional evidence to young people that the Conservative party is their enemy?

Mr. King

I do not accept the hon. Gentleman's last point.

There is clear evidence that, if the wages of young people were more sensibly related in percentage terms to the adult rate—as they are, for example, in West Germany—a number of additional jobs would be created. At the moment, it is impossible in many areas for employers to employ young people of 16 and 17 at 50 per cent. or 60 per cent. of the full adult wage rate. In West Germany, the percentage of the adult wage may be between 15 and 25. My concern is to see the creation of openings and opportunities for young people. When their wages are artificially high, it simply ensures that there are no jobs for them.

Sir William Clark (Croydon, South)

Will my right hon. Friend agree that in many respects over the years the wages councils have outlived their purpose? Indeed, they have inhibited new employment and the creation of more wealth.

It is acceptable that young people under 21 should be exempt from the wages councils, but will my right hon. Friend keep under constant review the effect of the revised wages councils provisions on those over 21, and if necessary increase the age limit?

Mr. King

I give an undertaking that we shall keep these matters under review. The modification or abolition of individual wages councils is an important component in my proposals.

My hon. Friend will have noted my comment that the majority of employers within the wages council areas favour reform. Account should be taken of that fact.

Mr. David Penhaligon (Truro)

Is the Secretary of State aware that, while many may recognise that there is some logic in paying the adult rate at 21 rather than at 18 or 19, the removal of all protection from those under 21 will be seen as outrageous? It will permit exploitation of one of the most vulnerable sections of our society. The whole concept of wages councils was to protect the vulnerable.

Given what is proposed by the Secretary of State, will he say why it was decided to deratify? As I understand international labour convention No. 26, the Government could probably stay within it, even given the proposed changes in the wages councils. What does the Minister see as the advantages of deratification, other than being able to abolish the lot at a later date?

Mr. King

I draw the hon. Gentleman's attention to a slightly bizarre feature of the ILO procedure. He said that the changes would "probably" come within the convention. Obviously, we have to ensure that we act entirely in accordance with our international obligation.

Under the ILO system, one has either to give notice now, while the window is open for a year, or for five years one has no opportunity to make any change whatever. In an area that is important for domestic policy-making, it is essential that we should have the opportunity to determine the policy ourselves.

The greatest area of vulnerability for those under 21 is unemployment. I am putting forward proposals to give them the best possible chance of jobs.

Sir Peter Hordern (Horsham)

I congratulate my right hon. Friend on bringing forward the proposals. Do they include the agricultural wages council? What is to become of that council?

Mr. King

My hon. Friend is referring to the agricultural wages board, which is dealt with under a separate convention. My right hon. Friend the Minister for Agriculture, Fisheries and Food has already made a separate statement about that.

Mr. Frank Field (Birkenhead)

Is the Secretary of State aware that thousands of my constituents will regard the Government's statement as offering them a prospect of poverty on benefit or poverty on low wages?

Will the Secretary of State come with me to Merseyside jobcentres, where he will see jobs advertised at £1.20 an hour, £1 an hour, £57.25 a week, and some at princely sums of £70 and £91 a week?

Will the Secretary of State now withdraw his policy of trying to reduce money wages, and for the first time as a Government spokesman bring proposals to the House aimed at raising real wages?

Mr. King

I was on Merseyside on Friday, as the hon. Member may know. His point refers to the present situation. I am not sure whether he is suggesting that my proposals will change it in a significant way.

Mr. George Walden (Buckingham)

Is my right hon. Friend aware that many of us will support his proposals, not because they appear to be a compromise—which is no doubt how they will be represented in the press—but because they satisfy the two main concerns at the forefront of our minds, jobs for the young and protection of workers where that is most needed?

Mr. King

I believe that that is right. I believe that small businesses have the potential to be and will increasingly be the source of more jobs. The burden of cost and compliance with the regulations is a major constraint on further employment, and that is the issue to which we give the highest priority.

Mr. Don Dixon (Jarrow)

Does the Secretary of State realise that his proposals will not create one job, and that many unscrupulous employers will sack those over 21 and replace them with youngsters under 21 at lower wages?

Is it not ironic that the Secretary of State for Employment should make a statement attacking those at the bottom of the wage scale when his colleague, the Chancellor of the Exchequer, has just made a statement about the fiddlers at the top?

Mr. King

I do not agree with the first comment of the hon. Member. This measure will mean the creation of more jobs. A number of cases are being reported to my Department about young people being dismissed because they have been offered jobs that they are willing to accept at wages which the employer can afford. Inspectors are then saying, "You are not allowed to accept that job." I can recount those instances to the hon. Member. That is an intolerable situation and one which this House should not countenance.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Is my right hon. Friend aware that all comfortable and respectable opinion will congratulate him on his statesmanlike fudge? The only people who will regret his decision are the weakest and the poorest, who will continue to be priced out of work until these councils are abolished.

Mr. King

I note the characteristic question of my hon. Friend. This will be of real help to young people in giving them a better chance of avoiding the ultimate degradation of unemployment. It will give them the chance of jobs, and I attach great importance to that.

Mr. J. D. Concannon (Mansfield)

What protection can the Secretary of State offer if, as has been said, a person's 21st birthday becomes the date of his sacking? Is the only redress a young person will have on his 21st birthday the unfair dismissals legislation? If that situation comes about, will the Secretary of State review the policy he is pursuing today?

Mr. King

I do not accept the scenario painted by the right hon. Member. He knows the situation which exists now and knows very well that in this country young people's wages have got out of phase. The evidence I am about to give may be obtained from the Electrical Contractors' Association and the EETPU. An agreement there reduced the wages of first-year apprentices from £42 to £28. As a result, the number of apprentices in that industry trebled.

Mr. John Gorst (Hendon, North)

I congratulate my right hon. Friend on proceeding by way of reform rather than abolition. Could he give an assurance that, if abuses or hardships are brought to his notice, he will act swiftly to deal with them?

Mr. King

As instanced by the hon. Member for Birkenhead (Mr. Field) there are problems in the present situation. We wish to ensure that we have a system in which employers recognise their responsibilities, and in which we create the maximum number of jobs at wages which employers can afford and which employees are willing to accept. That is our objective in tackling the problems of unemployment. We will obviously keep a close eye on the situation as it develops.

Mr. Ken Eastham (Manchester, Blackley)

Is it not a fact that poverty wages have a direct effect on people's life cycle? The Minister referred to apprentices' rates of pay, but that has nothing to do with wages councils. The rates are negotiated with the trade unions. On occasion, the Minister has quoted the United States of America as not having wages councils, but is it not a fact that the United States has a minimum wage, which is higher than that recommended in the United Kingdom?

Mr. King

I used the illustration of apprentices because it is the clearest possible illustration of the principle. I know perfectly well that apprentices are not covered by wages councils. I am seeking to make the point that, when the wages of young people are fixed at an economic level, it is likely to lead to more jobs. The hon. Member referred to the problems of poverty. The question from the hon. Member for Kingston upon Hull, East (Mr. Prescott) was about state support, for instance in the form of family income supplement. What we must not do is confuse the two issues.

Mr. Nicholas Lyell (Mid-Bedfordshire)

Is it not clear from the comments of Opposition spokesmen, both official and alliance, that they recognise that these measures will help young people price themselves into jobs? Is it not also clear, and will my right hon. Friend confirm, that the recommendations of the Auld report on the deregulation of Sunday trading, are still available as an option?

Mr. King

The Auld report made recommendations about the retention of wages councils and about the setting of minimum wages. Those matters will need to be considered in whatever legislation comes before this House. I am surprised that the Opposition do not accept what is now widely perceived, that wage rates for young people—even though they have fallen back, as the hon. Member fairly said—are still significantly higher than, for instance, in Germany. It is interesting to note the much higher level of youth employment in Germany as a result.

Mr. Kevin Barron (Rother Valley)

In answer to a question put by me on 11 June 1985, asking whether the Department was thinking of attacking the minimum wages paid to people under 21 years of age, the Under-Secretary of State, the hon. Member for Eltham (Mr. Bottomley), said no. Can the Minister tell us why his Department has changed its mind in that time, as I suggest it has? The Minister misquoted an agreement with the Electrical Contractors Association about trainees, but that has nothing to do with wages council industries. What evidence does he have that cutting this vital protection for people under 21 will help? In most of the areas we are talking about, people work for £1 an hour; we are not talking about anything lavish. What evidence can the Minister give us that he is going to do anything other than attack low wages and bring them down to YTS levels? I am sure that that is the thinking of this Government.

Mr. King

I am sorry that the hon. Member will not accept the clear illustration I gave. He probably knows, for example, that Ford apprentices in this country are paid twice as much in their first year as Ford apprentices in Germany. There are many more apprentices in Germany. The principle is that an employer fixes wage rates for starting people who in their first years of work make only a limited contribution to the performance of the business. He will not offer them employment if wage rates are fixed at a level way beyond what they are worth.

Mr. Gerald Howarth (Cannock and Burntwood)

I welcome my right hon. Friend's recognition that the reform of wages councils will create more jobs. Will he not accept that the abolition of wages councils would increase job opportunities even further? Will he not therefore go further than he is going today?

Mr. King

As I said a little earlier, we took the consultations very seriously. It was significant that a sizeable majority of employers preferred reform and preferred to keep the wages councils. It is important that young people should be exempted and we are also taking these alternative powers to deal with the problems of individual councils. However, we will keep the matter under review.

Mr. Robert C. Brown (Newcastle upon Tyne, North)

How can the Minister seriously suggest that those over 21 need minimum wage protection while those under 21 are to have this protection abolished by law? Is the Minister aware that, in conventions on human rights, this nation is now the pariah of the 21 nations of the Council of Europe? If we depart much further from democracy, our right to be a member of the Council of Europe will be seriously challenged.

Mr. King

I do not know what on earth the hon. Member bases his last assertion on. We are not proposing to introduce universal rights for all those over 21. We have consulted all the industries covered by wages councils, and they favour reform. There is an urgent need in the case of young people, and we intend to look individually at the other councils.

Mr. Alan Howarth (Stratford-on-Avon)

I congratulate my right hon. Friend on the thoroughgoing reform which he has announced, and for refusing to be swayed by the unimaginative and heartless advocates of the Opposition. Does he agree that it is quite wrong to present an issue in terms of the withdrawal of protection for young people, when the reality is that wages councils have all too often laid down minimum rates of pay for young and inexperienced people at levels above those which employers can afford? That has been one of the causes of the present serious problem of unemployment.

Mr. King

I suspect that I am not the only Conservative Member who is nauseated by those who preach about the problems of unemployment but will not face up to some of the tough decisions that must be taken, and do not realise what is really happening. I hope that when we see the improvements that will be made by this measure, even some Opposition Members will recognise its merits.

Mr. Robert Maclennan (Caithness and Sutherland)

How many of the industrialised countries with which we are in competition have found it necessary to denounce ILO convention No. 26? If we are out of line, is it because the Government's policy on minimum wages has failed, or because their policy on the employment of the young has failed?

Mr. King

As the hon. Member may know, the ratification of ILO conventions is extremely complex. Several countries ratify very few. The United States, because of its federal structure, has ratified few, if any. We have ratified rather more since we came into office, and have deratified only two. Labour Governments deratified ILO conventions. We shall consider them practically and pragmatically.

Mr. Tony Baldry (Banbury)

Is my right hon. Friend aware that many will conclude that the Government have found exactly the right balance between protecting the interests of the weak and lower paid and ensuring that wages councils do not inhibit the creation of new jobs? Does he further agree that it is right to take younger people out of the remit of wages councils, since in this area they have inhibited the creation of new jobs by setting too high wages? It is right to set simple, single adult rates, because wages council orders are far too complex—often running to 30 pages—for employers or employees to understand, and are thus self-defeating. Many will conclude that, after the widest possible consultations, the Government have come to the most sensible conclusion.

Mr. King

I am grateful to my hon. Friend. I know of his close interest in the subject and the work that he has done. I hope that the drastic simplification of the operation of wages councils—previous studies of orders show how complex they have become, especially for smaller employers—will assist in the creation of new jobs.

Mr. Andrew F. Bennett (Denton and Reddish)

Does the Secretary of State accept that, in commending wages council legislation to the House, Winston Churchill made the fundamental point that the good employer is undercut by the bad employer and that the bad employer is undercut by the worst employer? That was why wages councils were needed. What evidence does the right hon. Gentleman have to show that Winston Churchill's recommendations were wrong? Does the Secretary of State want youngsters to be employed only by the worst employers?

Mr. King

If the hon. Gentleman had made more than a superficial study of the position, he would have known that Winston Churchill set up trade boards, which were mostly concerned with health and safety. They are now covered in separate legislation. The trade boards dealt mainly with manufacturing industry, whereas the wages councils cover mainly hotels and catering, the retail trades and part-time workers, including many women. The Government at that time were anxious to prevent sweating, as it is called, which is now covered by separate legislation. It is a different matter.

Mr. Ray Powell (Ogmore)

Will the Minister let us know the total number of young people who will be affected by the measures? Will he also remember that many shop workers, who are still not covered by wages councils, are young? What protection will he give to them? The Minister talked about sweatshops. In Ogmore, 8,000 people are unemployed, 1,000 of whom are youngsters aged under 21. What protection will he give to those who are working in the sweatshops that are mushrooming in my constituency and in Wales generally?

Mr. King

I thought that the hon. Gentleman said that they were unemployed, but I may have missed the point. Obviously, I cannot give the hon. Gentleman the figure. We believe that the measures will lead to increased job opportunities for youngsters, but it is impossible to predict how many will be affected.

Mr. Peter Thurnham (Bolton, North-East)

In welcoming these partial steps, may I ask my right hon. Friend to remember, when considering each industry, the advantages of abolition, especially for 20-year-olds, who might celebrate their 21st birthdays by getting the sack?

Mr. King

I understand my hon. Friend's point but, considering the earnings in those areas, I hope that that will not be the case. The new measures will help to avoid the obvious anomalies, where employers who wish to employ more young people cannot do so because they are required, for example, to pay a 16-year-old who has never worked 50 per cent. of the full adult rate. That cannot be justified, and we must tackle the problem.

Mr. Michael Foot (Blaenau Gwent)

Since the right hon. Gentleman is content to lower standards and wages., especially for the young, does he believe that it is a good idea for other countries to follow our example? Does he not understand why those conventions were signed? Is it not disgraceful that Britain should be at the head of a drive to lower standards?

Mr. King

The right hon. Gentleman has heard all the exchanges on this matter, yet he appears to have paid no attention to the points that have been made. How can it be a positive benefit to any youngster to fix wages, in relation to adult rates, at twice the rate paid in Germany, if the result is that British youngsters are unemployed while German youngsters have jobs?

Mr. Spencer Batiste (Elmet)

Can my right hon. Friend confirm that he has received many representations from industries involved with wages councils advocating their retention, but the removal of the damaging side effects that have built up? Is he aware that the skilful balance of measures that he has announced this afternoon will be widely welcomed by those who are genuinely concerned about job creation and increased training prospects for the young, although it will not be welcomed by those who weep crocodile tears and have no constructive alternatives to suggest?

Mr. Prescott

Twenty pounds a week—that is what it means.

Mr. King

I am grateful to my hon. Friend, who put the point better than I have succeeded in doing so far. I genuinely believe that we can help young people in this way. There is no merit in artificially preserving rates of pay which ensure that no one obtains employment.

Several Hon. Members


Mr. Speaker

Order. I know that this a matter of great interest to the House, but we have a heavy day ahead of us. I shall allow questions to continue for 10 minutes, and I hope that everyone can be called.

Mr. Michael J. Martin (Glasgow, Springburn)

As a former trade union officer, I know that many people in the catering trade work long hours, and that many youngsters in that trade are mentally and sometimes physically handicapped. They know nothing but hard work, and they are entitled to the protection of the Government. What will the right hon. Gentleman do to ensure that such youngsters are not exploited?

Mr. King

The hon. Gentleman raises a serious point about handicapped people, which no doubt will arise when we discuss the legislation.

Mr. Michael Forsyth (Stirling)

Does my right hon. Friend agree that wages councils discriminate against the handicapped, ethnic minorities and young people, and that his proposals will be a fillip for them? Does he agree that the Opposition have shown that they can offer nothing to the young unemployed, and that they are happier to respond to the needs of their bosses in the trade unions than to tackle these fundamental problems?

Mr. King

I very much agree with my hon. Friend. The hon. Member for Glasgow, Springburn (Mr. Martin), who is an experienced trade union official, will know that there is a real problem here, which we must consider. The operation of wages councils can inhibit the employment of disadvantaged people who, above all, want the respect and responsibility that comes from employment.

Mr. Greville Janner (Leicester, West)

While recognising that the Government's proposals are part of the continuing process designed to strip those who are fortunate enough still to have jobs of basic minimum legal protection, may I invite the Minister to set out his proposals for the next stage in the process? Since he has decided to simplify the method of introducing regulations to abolish wages councils, thereby depriving the House of its normal procedures, and following the quadrupling of the qualifying period for unfair dismissal protection, can he say which councils he intends to abolish? Or will he not tell the House even that?

Mr. King

The hon. and learned Member, with his expert legal knowledge, has raised a number of points which will arise if legislation comes before the House, as I certainly hope it will, and which we shall need to debate. My concern today was to set out the main framework at the earliest opportunity, as I promised the House I would. That I have done. I do not wish to pursue further the line which the hon. and learned Gentleman invites me to travel.

Mr. Conal Gregory (York)

Does my right hon. Friend share my incredulity at the comments made by the Opposition in connection with a number of the councils such as the ostrich and fancy feather and artificial flower council, and the need for them? May I draw to his attention the fact that the Dutch Government introduced the young person's level of 23 and that, by considering reform along those lines, we will increase Britain's greatest growth industry, tourism? There will be delight, particularly in tourism circles in Yorkshire, that, as a result of these measures, some 60,000 to 70,000 jobs a year will be created.

Mr. King

I certainly accept what I think is a very important point. If we are considering future sources of employment, the scope for tourism is very significant. I hope that we may soon have something more to say on this.

The age level is obviously a matter of judgment. I took the view, after full consideration, that 21 was the right age. I have no doubt that that matter will be debated fully when we come to consider the legislation.

Mr. Derek Fatchett (Leeds, Central)

Given that the Government's case depends on their argument that low wages will produce more jobs for young people, can the Secretary of State explain why the highest levels of unemployment for young people are found in those regions with the lowest wage rates for young people and the lowest levels of unemployment for young people are found in those areas with the highest wage rates for young people?

Mr. King

A number of other factors—not least the concentration of traditional industries and the scale of problems which have affected some of those industries—also dominate those issues.

Mr. Christopher Chope (Southampton, Itchen)

My right hon. Friend's announcement today will be widely welcomed, because it will create many new job opportunities for young people. It will give young people the freedom to negotiate their own wages. I wonder why my right hon. Friend is denying this freedom to those who are over 21 and whether, in the light of the White Paper issued yesterday, he will consider excluding from the provisions of the wages councils all those employed by small businesses.

Mr. King

I understand that point. I think that the balance which I have tried to strike is the right one, and I commend it to the House. But I have no doubt that all these issues of detail will be a matter for discussion in the progress of the legislation.

Mr. Max Madden (Bradford, West)

Why do the Secretary of State and his Government seem to regard being young as an illness? Does the Secretary of State understand that he is going to have a very tough time persuading young people that he is doing them a good turn by cutting their pay and reducing their conditions of employment?

Mr. King

I am amazed that the hon. Gentleman is prepared to defend the system when he knows perfectly well that, by historical accident and sometimes by negotiation, wage rates for a number of young people are fixed at levels which simply are not economic and at which, therefore, there are not jobs. I will recommend as firmly as I can a system that will give encouragement to jobs and will give the best possible oppotunities to young people by employers being able to offer them employment. At the start of their working life, when they are not able to make a significant contribution to the firm, employers are willing to give them a chance, provided that the level of pay is one which a company can afford.

Mr. Matthew Parris (Derbyshire, West)

How is it possible for the Opposition to argue that abroad low wages create jobs because they give foreign manufacturers the edge over ours, yet those mechanisms do not apply at home?

Ms. Clare Short (Birmingham, Ladywood)

We have low wages.

Mr. King

The truth is that, as the hon. Lady the Member for Birmingham, Ladywood (Ms. Short) says, we have low wages and low productivity and we then jack up the wages of young people in a quite unreal relationship to the wages of adults. As a result, we tend to have the worst of all worlds. It is to amend that situation that I bring these proposals to the House.

Mr. Stuart Bell (Middlesbrough)

Is the right hon. Gentleman aware that in the the northern region high unemployment and low wages go hand in hand, and that, since 1979, unemployment has doubled in the manufacturing sector, with 250,000 able-bodied men and women on the dole? In addition, 440,000 workers are on less than the decency threshold which was worked out by the Council of Europe. Is he aware that in my constituency there is one street in which 90 per cent. of the people are unemployed? Can he tell the House where in his announcement today there is any message of hope, expectation or a lifting of morale for those people?

Mr. King

The hon. Gentleman will know that we have taken a number of measures, concerned with improving training opportunities, work programmes for the unemployed and the help which we can give them in a range of different ways. We are determined to take every step which may help to open more employment opportunities. We are starting now to create more jobs, but not fast enough to bite into the levels of unemployment. However, we are on our way, and we will continue to take steps which will genuinely help employment opportunities. I know that the hon. Gentleman comes from a difficult area which has tragic problems, but we will face up to those problems and we will take the steps which we genuinely believe can help.

Mr. Martin M. Brandon-Bravo (Nottingham, South)

May I join those who welcome the policy of reform rather than of abolition? However, are we right to choose some arbitrary age to distinguish between adults, skilled and otherwise? I am concerned about late entrants into an industry. It might be far better for an industry to be able to have a say in defining what is adult—for example, after three or four years of experience in an industry. That may be of greater practical significance than choosing the age of 21 or even 23.

Mr. King

I hear what my hon. Friend says, and I respect his close knowledge of one of the industries concerned in this area. It is, of course, important for the House to keep in mind that what we are talking about here is simply the minimum rate. It is open to industries to make alternative arrangements within that framework. It is the basic flaw in the situation with which we are concerned.

Ms. Clare Short

Is the Minister aware that we on the Labour Benches are nauseated by Tory Members with two or three jobs, earning £25,000 a year plus, talking about cutting the pay of young people who earn £35 a week and adult workers who earn between £63 and £75, many of them working for supplementary benefit rates? The Minister is not entirely honest with the House. His party has for a long time been determined to cut the wages of young workers. The Government therefore introduced a scheme called the young workers scheme, whereby they subsidised employers at the rate of £15 per week to cut young people's wages. The scheme failed completely, and is about to be abolished. A report of the Select Committee on Public Accounts found that 77 per cent. of the subsidised jobs would have existed anyway, and the vast bulk of the other jobs were jobs taken from adults. The Minister knows that cutting youth wages will not create more jobs.

The House should also note that, although the brunt of the attack is on young people, there is also an attack on low-paid adult workers. That means mostly women and black workers. The provisions to pay only for a single hourly rate and one rate of overtime result in no protection for holidays, no protection for piece-rate workers and no minimum rate, so that a worker can be sent home any day of the week if there is not enough work. The attack is upon all the protections of some of the poorest and most vulnerable in society. The Government are inspired by a future in which Britain will compete with some of the cheapest lowest paying sweatshops of the world The Opposition believe in a high-wage, high-skill, high-investment economy. We reject this statement, on the grounds of social justice and economic efficiency.

Mr. King

The hon. Lady says that she believes in all those things. A better recipe than her approach for destroying more jobs more quickly it is difficult to imagine. How can she make these accusations and allegations when she knows perfectly well that I have already referred to the relationship with Germany? Why is it that in Germany it is not thought unacceptable to have sensible and economic levels for young people? That economy is not seen as a low-wage, low-tech, low-skill economy; it is seen as a sensible way to get young people in with a better chance of training and a better chance of a job. That is what we are embarked upon. The distortions and allegations which she makes have no part in our programme.


Mr. Michael Brown (Brigg and Cleethorpes)

On a point of order, Mr. Speaker. At the beginning of the statement made by the Secretary of State for Employment, the Opposition shadow employment spokesman, the hon. Member for Kingston upon Hull, East (Mr. Prescott), raised a point of order with you about the statement being made in the House before being given prominence elsewhere. Is it not extraordinary that, after raising that point of order, the hon. Gentleman did not have the courtesy to listen to the remainder of my right hon. Friend's statement?

Mr. Speaker

That is patently not a matter for me.