Wages Bill

HC Deb 11 February 1986 vol 91 cc796-881

Orders for Second Reading read.

Mr. Speaker

I have selected the amendment in the name of the leader of the Liberal party.

4.7 pm

The Paymaster General and Minister for Employment (Mr. Kenneth Clarke)

I beg to move, That the Bill be now read a Second time.

The central purpose of the Bill is to create employment opportunities, especially for young people, but changing the rules governing wage payment, as the Bill proposes, will have other worthwhile results as well. It will not only promote employment and industrial efficiency, but will give rights to workers to ensure that they receive the wages due to them. It will help to break down barriers of status and conditions between manual and non-manual workers, and it will to a small extent reduce opportunities for crime.

The Bill is based on the central economic objective to which the Government have held since 1979 — to achieve an efficient and modern economy where economic growth is accompanied by low inflation, enabling us to compete in international markets and produce real, sustainable, productive jobs. To achieve that we need an efficient and productive private sector, not hampered by unnecessary Government-imposed regulations and restrictions. Secondly, we need an efficient labour market, where there are the minimum of constraints on the rights of employers and employees to agree to offer and accept jobs on contractual terms that suit them both.

We must recognise that social conditions change, and legislation that was perfectly acceptable, indeed extremely desirable, in one age may be quite unsuitable in another. The Bill deals with a legacy of enactments spanning 150 years that have all, in different ways, served their purpose and now need urgent change.

The Truck Acts were passed in the reign of William IV and were designed to deal with Victorian abuses where workers were paid in kind or forced to spend their wages at the company shop. Today, they are preventing desirable moves to non-cash methods of wage payment and the greater harmonisation of the conditions of manual and non-manual workers.

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

The right hon. and learned Gentleman has just said that what is needed is the right of employers and employees to accept work on conditions that are acceptable to both. How can he seriously say that when he knows that this legislation will create the situation in which people will have to take jobs at £30 a week? Surely to God, this cannot be widely accepted.

Mr. Clarke

Perhaps I might first set out the objectives of the Bill and give details of the wages councils in order to refute the parody of the Bill which the hon. Gentleman has just given. There is no question of people willingly accepting wages far below what they can receive from social security.

Mr. Eric S. Heffer (Liverpool, Walton)

rose—

Mr. Clarke

I am not on that point, and perhaps the hon. Gentleman will allow me to continue.

Mr. Heffer

Will the Minister give way?

Mr. Clarke

With the greatest respect, I am not on that point. I was making some general introductory remarks and explaining that the Bill was designed to sweep away the legacy of the past and a series of enactments designed for social conditions of a different age.

I had said that the Truck Acts dated back to 1831 and were originally designed to deal with the situation where workers were paid in tokens or were made to buy goods in company shops. Today, they are preventing a desirable changeover to non-cash methods of wage payment. Wages councils were originally designed to deal with Edwardian abuses, such as poverty wages, long hours, poor health and safety conditions. Exploitation was easy of workers who had no modern welfare state to fall back on when out of work. Today, there are shorter hours of work and some of the strictest health and safety legislation, yet wages councils are still able to regulate every last detail of the employment contract of every employee in every company in large sectors of industry.

When we look at the history of legislation on redundancy rebates, we see that these rebates were designed to encourage employers to shed labour in the 1960s when labour shortages in the overheated economy of the west midlands and elsewhere were a major impediment to growth. Today, the rebates provide a perverse public subsidy to redundancy in an age when, I imagine, we all agree that unemployment is our major economic and social problem.

I believe that when one looks at the history of the various regulations which we are reforming today, it is a perfect demonstration of the conservatism of this country and the resistance to change of any kind that we encounter in our society that we are introducing these reforms in the year 1986.

Let me explain in detail the objectives of the Bill. The first objective is to promote employment. We will do this by simplifying the wages councils orders, by removing outdated restrictions on the method of paying wages, by ensuring that growing and prospering companies do not meet an unfair share of the costs of supporting those which run into difficulties, and by ensuring that young workers can get their foot on the employment ladder by accepting jobs at wages which employers are willing to offer and they are willing to accept, without wages councils preventing the jobs from being offered by insisting on higher rates of pay. We will also ensure that wages councils think about the employment effects when they take their decisions.

The second major new reform is to provide major new rights to employees to ensure they do not suffer unlawful deductions from pay. The third objective is to reduce barriers of status between manual and non-manual workers, by removing laws which have had the undesirable effect of preventing similar terms and conditions of employment being offered to all workers. Finally, we aim, to a modest extent, to reduce crime by removing impediments to the growth of cashless pay, thus reducing opportunities for wages snatches and theft.

I shall now briefly set out what the Bill does and why, and I shall give way at appropriate moments.

The first part of the Bill deals with controls on the payment of wages. It sweeps away a host of ancient and obsolete laws, based on the Truck Acts, governing the way in which wages are paid. The most important provision that we are sweeping away is the right of manual workers to insist on being paid in cash. We propose to remove this provision because it acts as an impediment to the spread of cashless pay, which is preferable for a variety of reasons.

First, it costs, on average, about 50p per wage payment to pay in cash. On the other hand, it costs about 4p by the cheapest non-cash method. The Act is completely out of date in the cashless society in which we live. We are steadily going over to a more cashless society. At the moment, about 39 per cent. of wage payments in Britain are made in cash, against, for example, 5 per cent. in West Germany and 1 per cent. in the United States of America. It seems ironic that long ago we ceased to pay the unemployed in cash — an unemployed person now receives his benefit by girocheque—but we retain these archaic laws for the payment of manual workers.

The other thing that will be achieved is greater security. There were about 450 reported armed robberies at factories or on offices or on the public highway in 1984, many of which were wage snatches. That figure was up by 100 on the 1983 figure. Many of those wage snatches involved great violence to workpeople in charge of money. There is always a greater risk of theft from individuals if a pay packet contains cash. From my experience at the Bar, I have known many criminals who, if only they knew it, had every reason to be grateful to the Truck Acts for the opportunities that they provide for highly profitable wages snatches in the midlands.

The age of the old law is shown by the distinction that it draws between manual labourers and other employees. Non-manual workers have never been covered by the Truck Acts and enjoy many fringe benefits that are not offered to manual workers. They do not get paid in tokens, and they do not have to go to the company shop, but they do get company cars, and they do get health insurance not usually offered by employers to manual workers, even if they want to, for fear of one of the employees invoking the Truck Acts and pointing out a breach.

This is not the only reason for differences in status, but it has tended to increase and perpetuate differences in conditions and status between white-collar and blue-collar workers which have absolutely no place in a modern industrialised society. I ought to emphasise that this part of the Bill does not take away any existing contractual right to payment in cash. It does not force any employer to change to a non-cash payment system if he does not want to.

The Bill introduces an important new and modern set of rights for workers in respect of deductions from pay. At the same time as it sweeps away the ancient provisions of the Truck Acts, new provisions will make unlawful any deduction from pay not provided for in statute, in the contract of employment or by written agreement. The Bill provides extra protection for deductions related to stock or cash deficiencies, which are limited to 10 per cent. of wages. It provides a new right of complaint to an industrial tribunal, and it provides similar controls on payments by workers to employers.

Mr. John Evans (St. Helens, North)

The Paymaster General has made a point of informing the House that there is nothing in the Bill that will force an employer to change to a cashless system if he so desires. What about the employee? Is he given any protection, so that he can refuse to accept the instruction when his employer decides to change to a cashless system?

Will the Paymaster General make the point that there have been many occasions when trade unions representing employers' work forces have entered into voluntary agreements with the employers to move to a cashless system? Why does he have to force this system on employees who may not necessarily want it?

Mr. Clarke

I expect that a growing number of companies will negotiate with their trade unions, where the work forces are unionised, before changing to a cashless system. However an employer and the bulk of employees may wish to move, the fact is that under existing legislation, a manual employee has the right to insist on being paid in cash and can point out that any other arrangement is in breach of the Truck Acts. That has held back movements in the direction of cashless pay in many industries where the bulk of the work force would be content to transfer. As the hon. Gentleman knows, on entering into agreements many unions have discovered that it pays everyone to change because the savings made by the employer can sometimes be shared with the work force.

Mr. Ken Eastham (Manchester, Blackley)

The Minister referred to the savings that can be made. Earlier he said that the cashless system would cost 4p per transaction, whereas a cash system costs 50p per transaction. That will provide a 46p benefit. As an inducement, will the Minister instruct employers to use that money to make concessions to employees if they accept the new method?

Mr. Clarke

In modern circumstances, all those arrangements for pay should be open for discussion between the employer and his work force. The hon. Gentleman's point has not been lost on many negotiators and firms that have already made the change, but the Government do not intend to cover it in statutory form.

We shall replace the old legislation with the new rights that I have just described, which match today's society and which were broadly supported in our consultation exercise. For the first time, they provide a comprehensive, easily understood, easily enforceable and fairer set of statutory rights concerning deductions from all workers, manual and non-manual, and they give special protection to groups such as petrol station cashiers to ensure that their entire pay packets are not devoured by deductions for stock or cash shortages.

Part II, which will be the most controversial part of the Bill, deals with wages councils. Here, our main reforms are aimed at simplifying the requirements that wages councils impose on industry. We shall enable the councils to set a basic level of remuneration, basic and overtime, and a limit on deductions for accommodation, but we shall not allow them to involve themselves in every last detail of the employment relationship, as many do now. We shall take young people out of the scope of the councils. We are sure that the minima set by councils in the past have sometimes damaged the job prospects of young workers.

Mr. Dave Nellist (Coventry, South-East)

What evidence is there that the wage rates set for young people under the wages councils destroy jobs? What is the market level to which the right hon. and learned Gentleman expects the ending of protections to drive wages down? Does he accept the figures provided by his Department in answer to questions from me, which show that since the Government came to office in 1979 school leavers' wages have dropped by 12 per cent. for boys and by 13 per cent. for girls while youth unemployment has trebled? Wages have decreased, but that has not created jobs for school leavers.

Mr. Clarke

Most of the reduction has taken place during the past two years, when the employment of young people has increased. Many academic studies have been carried out which, as the hon. Gentleman knows from the questions that he repeatedly asks of my Department, all come to varying conclusions on the figures. When we considered the total abolition of the wages councils last year, the academics disagreed about the precise extent to which employment would be increased by such a move. However, the academic research is backed by everyone's experience: if the pay of school leavers and other young people is set above the value that they can add to the business, if it is too close to adult rates, or if it is brought into line with adult rates too quickly, people prefer to employ older, experienced workers. That is the experience in industry.

Mr. Richard Hickmet (Glanford and Scunthorpe)

My right hon. and learned Friend said that wages councils will no longer cover people aged 21 or under. What effect will the proposal have on the employment of youngsters who attain the age of 21, or whatever the cut-off age may be? Will not their position be less secure?

Mr. Clarke

One can justify paying someone the adult rate when he has acquired some experience and skill and a track record of employment in a trade. If an employer is given a straight choice between an experienced adult worker who has a background of work in that trade, and a young school leaver or someone who is learning the business, and if there is no sharp distinction in pay, he will almost invariably choose the older worker. The wages councils have striven to set legal minima for young people's wages that are too close to the adult rate. They have changed to the full adult rate at too yound an age. That has also happened in many non-wages council industries as a result of national wage bargaining and bargains struck by some trade unions. The effect of that practice is to make it more difficult for youngsters to obtain jobs than would otherwise be true.

Mr. James Couchman (Gillingham)

Is my right hon. and learned Friend aware that I still run a business, which is restrained by the exigencies of the licensed nonresidential wages council? Is he further aware that, for many years, the terms and conditions laid down by that wages council were such that they just about came to the market minima, but that during the period of inflation in the late 1970s they managed to extract wage increases and increases in terms and conditions which have now become a serious restraint on employment? Therefore, whenever I have a job vacancy, I must think hard about whether I can afford to fill it. Will not the Government's action enable employers to take a much more realistic and perhaps flexible view on employing youngsters for vacancies—[Interruption.]

Mr. Clarke

I am grateful to my hon. Friend. When Opposition Members respond by attempting to barrack an experienced employer—no one could describe my hon. Friend as a hardhearted, Gradgrind, Victorian employer —and to ignore what is repeatedly asserted by many people in the catering, retail and other trades, that wages council orders are too complex and unintelligible, impose terms and conditions that are too expensive, and that they take young people's wages too close to adult wages, so that employing people is something that must be undertaken with care and only some yound people can be offered jobs, they damage the job prospects of many people.

Mr. John Townend (Bridlington)

If my right hon. and learned Friend is convinced that wages council rates destroy jobs for young people and price them out of the market, is it not also possible that wages council rates could price older people out of jobs? He mentioned the young person having been trained and the employer being happy to keep him on at the higher rate when he reached the age of 21. Would that not be to the disadvantage of an adult who was untrained, who was less able and who was perhaps a member of an immigrant minority? Would it not price him out of work, too?

Mr. Clarke

As my hon. Friend knows, many of the wages council orders made for adults are lengthy and complex and purport to deal with every detail of the employment contract. Many are near-unintelligible to employer and employee when attempts are made to interpret them, and instead of setting a minimum rate below which adults should not be employed, there are increasing allegations that many wages councils have tried to set a going rate as part of ordinary negotiations. Therefore, we wish to simplify the orders so that they set only a basic minimum rate for ordinary hours, a single rate for overtime and some restrictions on deductions that can be made for accommodation. Those simplified wages council orders will be less of a deterrent to the employment of adults than the present ones.

Mr. John Prescott (Kingston upon Hull, East)

Will the Paymaster General be more specific about the rates being too high? For example, a youth in hairdressing can earn £31.75 a week, or in retail, £47 a week. Does he believe that those rates are far too high to be paid to a youngster?

Mr. Clarke

For the school leaver who is starting from scratch in a trade where at first he can add no value to the business at all, and who has to be trained, some of those rates have a deterrent effect, particularly if the employer has the choice between taking on an extra young person and taking on an experienced worker from somewhere else. We believe that the right level of pay in those circumstances is the pay which the young person himself or herself wants to take in order to get some experience in the trade, and which an employer is willing to give.

It is no good the hon. Gentleman and others believing that they are protecting young people against low pay if the consequences of the provisions which they defend will actually leave a young person unemployed altogether because he or she has been priced out of the market.

Mr. Prescott

rose—

Mr. Clarke

My speech is being turned into a seminar, and I am not actually in the seminar-giving business.

Mr. Prescott

I am grateful to the right hon. and learned Gentleman for giving way. He is making extremely important points about Government judgments. If one follows the logic of what the Paymaster General is saying, we shall be back to the 19th century, where those who trained paid the employer for the privilege of being trained at the place of work. I inform the Paymaster General that that is already happening in some London hotels today.

Mr. Clarke

With the greatest respect, the reference to the 19th century is the point that I was making a few moments ago. It is true that in the 19th century, people made a payment for training. It is true also that when the wages councils, then called the trade boards, were introduced in Edwardian England, shop assistants slept under the counter, and for them the alternative to employment in that shop was destitution on the streets. Those are not the conditions that we meet now. The wages councils have moved so far beyond the original intention that they have highly elaborate wages orders and lay down detailed conditions and terms of service which price people out of a job altogether.

I have made the basic case and, I hope, explained why we are making the changes to the Truck Acts. In all the orders that we make now we require wages councils to consider explicitly the employment consequences of decisions that they take, which in my opinion is only common sense. However, as my hon. Friend the Member for Gillingham (Mr. Couchman) said, these requirements need to be written into some of the statutory conditions governing wages councils.

My hon. Friend the Member for Bridlington (Mr. Townend) asked why we retain the councils at all. Their continued existence might, in his opinion, have a damaging effect on adult employees. We are making it easier to review, and if need be to change the scope of, or to abolish, the existing councils, but we have retained the councils because the consultation process that we carried out in the summer showed that many employers and trade unions still feel a need for them.

The number of wages councils has been falling steadily for many years. There were 66 in 1953, and that figure has fallen to the present 26. The last Labour Government abolished at least eight councils between 1974 and 1979, including the road haulage council and the milk distributive council. Given that I believe that mistaken statutory minimum wage controls can damage employment, I hope that other industries will continue to be weaned away from the process of statutory pay fixing and move over to a more satisfactory arrangement.

Mr. Richard Wainwright (Colne Valley)

As the right hon. and learned Gentleman is speaking about the Secretary of State's powers to change the wages councils, will he explain to the House why he has abolished the Secretary of State's power to create new wages councils, because he has frequently reminded the House, quite rightly, that we live in rapidly changing times, with new trades and new occupations. Why should the Secretary of State's power to cover some of these be gratuitously struck from the law?

Mr. Clarke

I have to make it clear that I do not see a great role for statutory minimum wage fixing, or wage fixing at all, in today's society. It was only after consultation that we decided to retain them in those industries where both the employers and the trade unions did not feel ready to embark on the kind of world that we are used to in other industries, where these things are freely negotiated and entered into by both parties.

I see no scope whatever for increasing the number of wages councils. I do not see the tide of economic history reversing itself. I do not think that we shall get the present number of unemployed down to an acceptable level in the immediate future. Therefore, I see no case whatever for creating new wages councils and giving rise to the risk of cutting back job prospects in more industries if we start expanding them again.

Most of the interventions have been about young persons. These proposals will allow greater freedom to negotiate a remuneration package for young workers to get them into employment. This will help young people to find jobs. The key point, which is the point on which we are divided and on which this debate will turn, is that, in our opinion, employers will not offer employment to anyone unless they are confident that the worker will be able to add at least his own value to the business. At the moment, young workers are at a disadvantage when there are older workers available who can offer greater experience and skill. The reforms will help young workers to get into jobs and to get that vital first foothold on the employment ladder.

The hon. Member for Coventry, South-East (Mr. Nellist) and others remain sceptical, and the hon. Gentleman asks about the studies. The studies have shown that the wages-councils set the rates for young workers higher, relative to older workers, than is commonly the case in the private sector and in voluntary agreements. A study comparing wages councils' rates with those in 73 voluntary agreements — a study which was conducted not by the Government but by the independent journal, Industrial Relations Review and Report, last August—found that two thirds of wages councils set a 16-year-old rate at 65 per cent. or more of the adult rate, but that half the voluntary agreements set a 16-year-old rate at 60 per cent. or less of the adult rate.

In my opinion, one of the problems in this country is the non-voluntary agreement. We have had a tendency to set school leavers' wages too high in relation to those of adults. Not only do the wages councils set young persons' wages too high in relation to adults' wages, but in some cases they tend to put the minimum age at which someone goes on to the full adult rate too low as well.

Mr. Nellist

Does the right hon. and learned Gentleman not recognise that wages councils rates for 16 and 17-year-olds as a proportion of the adult rate under those same wages councils orders are higher than for industries outside the wages councils? One does not pay bills by percentages and proportions. One pays them in pounds and pence, and for young workers in wages councils one is talking about £30 a week as compared to £60 or £70 a week. Outside those industries, unions are negotiating far higher rates of pay, and even if the proportion of young workers is lower, it means that those young workers are on £50, £60 or £70. That is the essential difference.

Mr. Clarke

Not every low-paid worker is covered by wages councils. That obviously must be general. Other workers are paid at far below the average. When a school leaver gets his first job, the value that he can add to the business can be quite slight. The young person of today has many alternatives behind him — the back-up, the social security system, and so on—to which he can turn if the job is unacceptable. If he is justified in refusing it, it is wrong for the law to stop him.

I must point out to the hon. Member for Coventry, South-East that relatively few young workers have the family responsibility that older workers have, which is why they expect to take lower wages. For those young workers who have heavy family responsibilities —indeed, in my opinion, for the low-paid in general—that are expensive and difficult to maintain on low pay, there is support such as family income supplement, and in due course the Government will introduce the much-improved family credit system.

In my opinion, financial additions of that kind to pay are the best way to keep young workers with families in work, so that they can in due course gain experience and move on to better paid openings. It is wrong to contemplate the small number of young people with family commitments and insist that everybody is paid the statutory minimum — single or living at home or wherever they may be—with the result that they are priced out of jobs.

Mr. John Townend

Are not my right hon. and learned Friend's arguments strongly supported by the. action in recent years of the Electrical, Electronic, Telecommunication and Plumbing Union? It appreciated that the number of apprenticeships in its industries. was dropping because of high starting rates and reduced the starting rates for apprentices by 40 per cent., which resulted in a larger increase in the number of electrician apprentices, at a time when the number of those in all the other crafts were declining.

Mr. Clarke

I quite agree. As my hon. Friend and I know, the EETPU lives in a different world from that in which most of the trade unions and the Labour movement live. The EETPU lives in today's world, where we are trying to get competitive industries and improve people's job prospects. The Labour party and many in the trade union movement still live in Victorian and Edwardian England and defend the statutory provisions in a way which is quite destructive of employment prospects.

Mr. Merlyn Rees (Morley and Leeds, South)

In my constituency I have to live in 1986, and the National Union of Tailors and Garment Workers also lives in 1986. There are many problems in the tailoring industry. The union has pointed out to me that research at Cambridge in the applied economics department has shown that, when pay goes up as a result of the activities of the wages councils, there are expanded job opportunities. Have the right hon. and learned Gentleman and his officials looked at different industries and the effects of such councils in different industries, rather than dealing with them all in a blanket way?

Mr. Clarke

The National Union of Tailors and Garment Workers, and many of its employers, to be fair, live in a world in which they have known wages councils for many years, and find it difficult to contemplate a world without them. As a result of consultation, that industry is keeping its council, which will make its simplified orders.

I am familiar with the work at Cambridge, which attempted to refute another study carried out within our Department. There is no difference in the data, but the interpretation by the academics of Cambridge differs from that made by others and, in their opinion, they make the case that increasing wages will increase employment prospects. I shall not go into the arguments now, as I am sure that we shall do so in Committee. A detailed answer to that case has been prepared by the competing academics. The Cambridge academics' theory is based on the idea that there is a shortage of employees in the tailoring and garment industry and that more women would be attracted to seek jobs in the industry if the pay were increased. I do not believe that argument, and it is not accepted. However, it is an arguable idea based on an interpretation of data from which most other academics have come up with quite the opposite conclusion.

It is clear that if the statutory minima are placed at the level at which they were in several of these trades, we shall reduce employment prospects for many people.

Mr. Richard Caborn (Sheffield, Central)

There has been a difference of interpretation by the Department of Employment. The Secretary of State for Employment in 1981 said the abolition of wages councils, particularly with regard to young people, would be unlikely to lead to more than a very marginal increase in job opportunities in these categories. While there is a difference of opinion on the survey, there is also a major difference of interpretation between the Department of Employment in 1981 and the right hon. and learned Gentleman now.

Mr. Clarke

That is an old study, and it still comes to the conclusion that there will be little more than a "marginal increase". The main difference between the various academics and others who have looked at, for example, the effect of total abolition is that they have disagreed in their results as to the extent to which there will be more jobs. Some have said that there would not be a great increase in new jobs and others have said that the increase in new jobs would be substantial. Even the report which the hon. Gentleman selected, which is one of the less enthusiastic about the reforms that we are suggesting, talks about an increase in employment, albeit marginal. We believe that it will be more substantial than that.

I have asserted the case, no doubt at sufficient length. In general terms, I ask the House to consider the reaction that it would expect employers to take to any part of the cost to their business. I do not regard labour as just another commodity, and I do not think that one can apply the rules of the market to the employment of people. However, if a system is introduced the aim of which is to put the cost of labour above that which it would otherwise be if freely entered into by an employer and an employee, by making labour more expensive people will be even less willing to take on labour and will look for labour-saving alternatives. That was not the problem in Edwardian England, or in the 1960s, but nowadays it is undoubtedly a problem when we have high unemployment. If the House means what it says about its concern for the unemployed, it should join us in repealing outdated legislation which is unintentionally restricting job opportunities.

Part III has the same purpose behind it, but deals with a different subject. Here we are limiting the payment of redundancy rebate, which is no longer a priority for public spending, to employers with fewer than 10 employees. This does not affect the statutory right of the individual employee to receive a redundancy payment from his employer or from the Department of Employment if the employer is unable to pay it. The payment of redundancy rebates in today's conditions is simply not appropriate. Public spending committed to making it easier for people to make their work force redundant must take a lower priority than the public spending on which we are embarking, to promote new jobs in tourism and leisure, to give added support to those going into self-employment and for the initiative by which we are trying to give assistance to the long-term unemployed.

This is a Bill to promote employment. It will do this by easing the regulation of the labour market and removing burdens on employers. It will have a modest but significant effect on the employment level. It is a Bill to enable employers to employ workers under modern conditions without being hamstrung by legislation and controls that are a legacy of yesterday's problems and yesterday's social attitudes, whether the problem was the Victorian "tommy shop", the Edwardian sweatshop, or the overmanned shopfloor of the 1960s. Few Bills can claim such a wide sweep of simplifying and clarifying the accumulation of over 150 years of different sorts of controls dealing with quite different problems.

The Bill is one of the most radical acts of deregulation in wage payment ever undertaken. It replaces 13 whole Acts, over 20 orders and parts of other legal instruments with just one enactment. The Bill is an important part of the Government's strategy to create jobs and ease burdens on employers.

I shall not labour again my view of the Labour party's approach to these matters in what will obviously be its defence of the Truck Acts, wages councils, redundancy rebates and the lot. I have long suspected that a party that spends a great deal of time invoking the Tolpuddle martyrs and has a tendency to talk about the Taff Vale judgment and the strike of the match women in London in today's political scene is likely to react in a somewhat backward looking way to such things.

After looking at the debates on the Shops Bill, I have no doubt that we are likely to find some echoes of a speech made by my old hero, Lord Stockton, in the other place. He once converted me to Conservatism, and now he complains that we have lost our sense of paternalism. I have always rejected the paternalism of the Fabians, the smothering paternalism of the Webbs, and so on, but I have talked about the proposals for the family credit scheme to help those on low pay with family obligations. We certainly protect the health and safety of those at work. A modern paternalism in 1986 should be concerned, among other things, with a reduction in the burden of taxation and national insurance contributions on the pay earned by those on low wages. Protection of the weak should above all look at the employment prospects of people and the jobs that they require, and consider legislation in the light of its likely effect on the jobs in the market.

It is a rather whiskery Victorian father-figure who would defend the Truck Acts and detailed wages councils orders in 1986. The hon. Member for Kingston upon Hull, East (Mr. Prescott) does not fit the bill, but he will be using the argument of a Victorian father. The Bill is an important part of the Government's strategy to create jobs, ease burdens on employers, and tackle today's problems, and I commend it to the House.

4.49 pm

Mr. John Prescott (Kingston upon Hull, East)

The Paymaster General became less convincing as he proceeded to examine the Bill and especially when in conclusion, he quoted the rhetoric of the press statement issued by his Department. In fact, he read that statement with the least conviction.

The Minister said that he did not envisage a reversal of history but the Bill has all the signs of the 19th century — mass unemployment, the reduction of employees' rights and the reduction of trade union and collective rights at the place of work. All these rights are part and parcel of the Government's legislation because they see them as obstacles to the work of the market. The philosophy of the Minister is that the market would determine a lower rate of pay than that which is determined by legislation and thus more people would be employed at a lower rate of pay. That is the basis of the Government's approach.

We will oppose this Bill without hesitation. It is a piece of Tory legislation which talks about the rhetoric of rights and the increase of jobs. It is concerned with reducing those rights and reducing employment opportunities. The Bill has been conceived under 19th-century standards for 20th-century conditions. It continues the Government's role of denouncing international standards—they have denounced more international legislation than any other previous Government. The Bill will reduce the rights of employees and tilt the balance of power in favour of the employer.

The Bill will further increase part-time, low-paid, poverty employment of which we have seen so much in the past few years. It will reduce the wages of those who are lowest paid and will, ironically, further increase the costs for the small employer. The Bill is designed to attack the lowest paid, poorly organised sector of our work force, especially women, who are the majority of employees in the industries to which the Bill refers. It will also specifically affect the youth.

The Government have produced the Bill in the wholly unsubstantiated belief that a cut in wages, which will follow from this reduction of legislation, will lead to more jobs. There was nothing in the Minister's speech that justified that controversial assertion in favour of the legislation.

I reiterate the incontrovertible effects of the Bill. It continues to denounce international agreement on fair employment practices which all previous Governments have observed. Indeed, Lord Stockton made a number of judgments based on this type of legislation in the past. However, I do not intend to refer to him, as suggested by the Minister. The Government are turning the might of legislation and rights on those who are least able to bear the increasing burden. It is a process which no other Government have followed. This process was started by the right hon. Member for Chingford (Mr. Tebbit) who brought before the House the other International Labour Organisation resolution, and denounced the convention on fair wages. The process was continued with the denunciation of the rights of association.

In the Bill the Government have now denounced the convention on the Truck Acts and the convention dealing with wages councils. Of the 92 countries which signed this convention, we are the only country to denounce the international standards for maintaining decent conditions for those who work in industries which are recognised as low paid and poorly organised. We agreed international convention standards because of these factors.

Mr. Kenneth Clarke

We have denounced those conventions because we believe we can replace them with more up-to-date legislation. However, we have ratified six new conventions and we continue to ratify conventions which, in our opinion, suit the labour needs and the needs of the unemployed and others.

Mr. Prescott

Every Government ratify all sorts of conventions—that is their purpose —but they do not accompany them with denunciations of the existing standards agreed by other countries. The Government have a terrible role when judged by other civilised countries. The Government have been referred to the Court of Human Rights for breaching rights more often than any other Government. The Government have a history of breaching fair employment practices and fair human rights as decided by convention. It is on the record for all to see.

Mr. Hickmet

The hon. Gentleman condemns the Government for renouncing those ILO agreements. Despite those agreements, the rates paid to young people by employers who stick to those agreements are lower than those maintained by many of the existing wages councils.

Mr. Prescott

Youth wages are a central issue and whether those wages are higher in this country than elsewhere. However, one needs a comparison of rates and I have never heard anyone quote the actual rates which are at issue. We have tried to get a statement from the Paymaster General—we have asked him what rate of pay he considers to be excessive for a youngster in employment. One would need to compare that rate with the adult rate, but I feel there is much rubbish talked about comparisons between those rates.

Mr. Allan Roberts (Bootle)

Does my hon. Friend agree that the Government's proposals to introduce Sunday trading must also be seen against the background of the Bill? Many of us, on the ground of civil liberties, might be in favour of people's right to buy and sell on a Sunday, but we cannot possibly support that when this type of legislation is introduced. This Bill will affect the wages and working conditions of the people who work in the retail trade.

Mr. Prescott

My hon. Friend has made a powerful point. The Sunday trading legislation has not yet appeared before the House, but I understand that in its progress through another place it has been made clear that the rights of youngsters not to work on Sundays—except by rights contained in the previous Shops Acts—will be denied I understand that the Government have moved an amendment to forestall the implementation of that denial for two years. How convenient that will be—after the next general election. People will not be aware that those rights are to be denied to young people. When the debate comes to this House, we will be able to explore that point more effectively.

The Bill continues to reduce the range of employees rights built up under successive Governments. The Government intend to reverse the advances of the workers. One classic example is unfair dismissal, which was brought in by Tory trade union legislation. That legislation was retained by the Labour Government but this Government now seek to reduce the rights over unfair dismissal. The right to work is a classic right of the people but it has been denied by this Government with their massive unemployment levels of between 4 million and 5 million people.

The Minister spoke about the equality of rights and said that deductions from people's wages could be freely negotiated between the parties. The unemployment level of between 4 million and 5 million is one heck of a pressure which the employer can apply to the employee —accept the conditions or join the millions on the dole. They are not equal partners in the negotiations. Mass unemployment conditions people to accept the driving down of rates of pay which is implicit in the Bill.

Maternity rights, supplementary benefit rights and rights to take cases to a tribunal, all of which have been embodied by the House, have been nibbled away or got rid of. The Bill is in line with that process. The Government are now saying that there is a right to agree cash payments. The right hon. and learned Gentleman told us that people can now have non-cash payments enforced on them, but that they must be agreed in contract between the two parties. Does he believe that those parties are equal? The employer will say, as employers do constantly, "I am re-employing you on new conditions. If you do not like them, get out." That is happning all over the country.

Mr. Kenneth Clarke

That would be unfair dismissal.

Mr. Prescott

The Minister mutters something about unfair dismissal, but he knows that the Government have whittled away at people's rights to appear before a tribunal if there is a possible case for unfair dismissal. That applies especially to youngsters.

Mr. Clarke

Nothing in the Bill can take away from the existing contractual rights of a worker if his contract provides for payment in cash. That provision can be taken away from him only by negotiation. If there is a change in conditions of employment that makes it reasonable for him to refuse to take the change, he can claim unfair dismissal, if he had been there long enough.

Mr. Prescott

That is presumably a right that any new employee would not be able to claim because he will accept the job on the new terms, or not at all. The Minister says that the right is equal. The employer says, "You can work for me and I have a right to employ you." If the Minister had worked in industry, especially on the shop floor, or in the shipping industry, he would know that those rights are not equal at the place of work. If he had such experience, he would understand why people are so angry at his proposing to take away such rights.

Wrongful deduction of wages used to be pursuable in the county court, and the employer could be required to pay compensation. Now, however, there is some form of arbitration at a tribunal, and an employer can be required only to pay the amount that he has wrongfully deducted. More cannot be taken but, as we know from inspections in wages councils industries, many of the industries defy the legislation and therefore gain. There is a maximum fine of £400. The Bill does not change that, yet the industries have saved many thousands of pounds, as the right hon. and learned Gentleman has admitted in parliamentary answers.

There is another right to which the Minister did not address himself—the right to be paid what is called a fair wage. There might be arguments about how to assess a fair wage. There is a European social charter which says that even youngsters and apprentices are entitled to a fair wage. There is a judgment about how to arrive at a figure. Wages councils determine a fair wage for youngsters as a proportion of adult earnings but now, only market forces will determine fairness. It terrifies me to think what some Conservative Back Benchers would pay youngsters. The experience of the hon. Member for Bridlington (Mr. Townend) is well known.

Mr. Eastham

In Europe, to help determine a fair wage, they speak of a decency threshold. Does my hon. Friend agree that such words are not used in Britain any more?

Mr. Prescott

I am grateful to my hon. Friend. The European charter defines the decency threshold at a rate of about £109 a week for an adult. If that is the European standard, the proportionate wage for youngsters here is extremely low. [Interruption.]

The Minister may mumble, but he is a member of a Government that have ratified conventions which aim to ensure fair wages. If there is a fundamental difference between us, it is that we do not believe that market forces will determine a fair wage. The result will be a wage below what legislation dictates. The Minister does not argue that the removal of legislation will allow wages to increase. Everybody knows that they will drop. There is considerable evidence to support that view.

I find it difficult to understand why the Government are so selective. They are vindictive when choosing who will suffer. Their justification is that there is a burden on industry. It is nothing to do with justice or rights, but relates to costs to the employer and unfair burdens on industry. The logical conclusion of their argument is that if employers can get free labour—it nearly is that with the youth training scheme — they will. The Minister might argue that that is a fair cost.

Mr. Robert Atkins (South Ribble)

Trade union rates are paid on YTS.

Mr. Prescott

I hope that nobody will suggest that. It is not even the rate paid by the Labour Government in 1978 on similar schemes. I hope that we do not hear any argument about the fair or trade union rate, which would be much higher. The Bill is about dragooning those on YTS into slave labour type jobs in wages council industries.

Mr. Tony Baldry (Banbury)

Can the hon. Member make it clear once and for all whether the Labour Front Bench supports YTS or whether it believes that it is slave labour?

Mr. Prescott

It is amazing that the hon. Gentleman does not know that the Labour party supported the setting up of a youth training scheme and proposed a two-year scheme, with better terms of remuneration and far better quality of training. All of that has been spelt out. It was in our manifesto. Why did the hon. Gentleman not read it?

The judgment is that reducing wage costs will reduce employers' costs. If they pay less for labour, they will gain; we accept that. The argument is about whether that increases the number of jobs. We know that the young workers' scheme did not, as the Government are abandoning it. It ended up with the employer being subsidised by the Government. It is no use the Minister shaking his head. That is why the Government are scrapping the scheme.

Since the fair wages resolution was denounced, there has been a forced reduction of about 20 per cent. in wages in hospitals and for public contracts. Holiday periods and conditions have also been reduced in the past three years. There has been a reduction in standards, in wages and in the number of jobs. In contracts negotiated by health authorities, fewer people are involved and at lower cost. Presumably the employer benefits. We are talking of rates of pay of less than £1 an hour. I cannot help observing that a barrister introduced the debate and another asked us what we think about YTS, but they are begging around for more money although they are on extremely high rates of pay. Moreover, they belong to a closed shop with a set of rules differing from that of any other closed shop, and no ballots either. Some of the Government's arguments would be more acceptable from those with experience of low pay.

Before I am challenged, I should say that I have worked in wages councils industries. I started in one—catering.I know of the weaknesses in negotiations and what it is like to be told to get out of accommodation because one does not want to work for £2 an hour, even in the days of wages councils. It is difficult to negotiate decent pay in such industries.

We should consider what is happening to the high paid. There was an article in The Observer of 10 February which talked of a City rush for golden handshakes. With regard to salaries—this is a serious point to be considered in a serious way—this is how the low-paid look at it: plenty of yap but no action.

Mr. Peter Thurnham (Bolton, North-East)

The hon. Gentleman speaks of minimum wage legislation without saying where the Labour party stands on it. Has he forgotten that one of his better-known predecessors in the Labour party when she was in power considered minimum wage legislation and decided that she did not want to know any more about it because it would lead to the loss of so many jobs?

Mr. Prescott

Let me declare that we believe in introducing a national minimum wage, and we will argue the case when it has been proposed. Indeed, in a memorable comment regarding wages councils, the hon. Member for Bolton, North-East (Mr. Thurnham) said: If sweatshops are synonymous with wealthshops, I am all in favour of this country becoming a wealthshop where by the sweat of our brow, we can once again become the workshop of the world."—[Official Report, 26 March 1985; Vol. 76, c. 404.] That is the language of the 19th century, so I hope I will hear less from the Conservatives about a minimum wage.

What we find equally offensive are the excessive amounts of money—I believe that even the Prime Minister referred to this—which are currently being made in the City, whereby eight dealers in one share dealing get £280,000 a year. That is more in one hour than most people in wage councils get in a week. I happen to think that that is not fair. I do not know what Conservative Members think.

I find it particularly offensive when I hear people such as the CBI pushing for this kind of legislation. Was it Sir Terence Beckett who talked about nowt for nowt? That is from chief executives and directors whose pay in the last two years has gone through the roof with a massive increase in profits of something like 45 per cent. in real terms between 1981 and 1984—over £20 billion—and an increase in value per unit of production in profitability or as a proportion of the gross national product. This is against real pay, which has gone up 2 per cent.

We hear the CBI talking about nowt for nowt and calling on the Government to do something about changing the wage relationship. I recall a CBI statement calling for changes which said: The CBI recognises there may be concern about those on low pay. It argues that this concern, where legitimate, should be met through the social security system and not through pay. An employer can only pay the rate for the job whereas individuals' needs vary with their circumstances. The chief executives who constitute the CBI have done very well in the last few years. The massive increase in profits, rather than going to create jobs, is a disinvestment in the economy. All that money has gone into the pay and bonus payments of chief executives in industry or, indeed, into property investment in New York. Where it has clearly not gone is into re-equipping industry to bring about the kind of productivity that results in high wages.

There has been no action by Government. The only Government action we have seen is when they came to the House in July 1985 and argued that there was justification for a top salaries review whereby, over a period, civil servants on £60,000 a year, judges and Army officers would receive something like a 17 per cent. increase. Where were the claims then about a market rate? All we heard from the Government then was that we must pay a fair wage to those people, comparable to what they would earn in similar jobs in private industry. The Minister shakes his head, but it is a matter of record—this can be seen in answers by the Prime Minister and by others—that private industry is doing very well, thank you, out of the bonuses given by Government by way of tax reductions.

The greatest claim made for the legislation is that it will create new jobs—that is, that less pay means more jobs. Again, we pushed the Minister for the evidence. The former Secretary of State for Trade and Industry, when he appeared before the Select Committee on Employment on 6 March 1985, was asked what evidence he had to show that a reduction in wages led to more jobs. He was asked: What effect has it had on wages and what effect has it had on employment, is there anything hard on that?". The right hon. Gentleman replied: "No." He was asked: Would it be possible to find out? He replied: No, I do not think so. Even before the Select Committe, the Department gave no evidence.

Reference has been made to the report by the Department on the clothing industry, an industry in which wages have fallen 20 per cent. for men and 13 per cent. for women, with increasing unemployment levels. The department of applied economics in an analysis of the Government's research said: The key assumptions made by the Department were false … The Department's analysis was inadequate … Using the figures the Department should have used, the Department's cost minimising model of the industry shows that, while the rise in male minimum rates produced a small fall in employment, the far larger rise in female minimum rates increased employment by a greater percentage. That is the very opposite conclusion from that reached by the Government.

Similar research was done into the retail industry by Wilkinson at Cambridge, and he came to a conclusion opposite to that put out publicly by the Department. He was so annoyed at the wrongful use of his evidence that he issued a press release denouncing the Department for wrongful use of the research which it had commissioned. Why should we believe what the Minister tells us when the Government abuse such research?

The basic proposition put forward by the Chancellor was that a 1 per cent. fall in the wage rates leads to an increase of 150,000 jobs. Warwick university looked at the Treasury model and tried to determine how that conclusion had been reached. It found that the jobs created by a 1 per cent. fall totalled 15,000. Of the evidence, it said: The estimates that we obtain reveal a much smaller employment response than that predicted by the Chancellor. Part of the difference is attributable to revisions in the Treasury model". The Government fixed and fiddled the Treasury model, just as they do the unemployment figures, and then bring it forward as evidence of justification for the case.

Mr. Kenneth Clarke

I am following the hon. Gentleman carefully to see where his argument is taking him. Is he asserting on behalf of the Labour party all over again that there is no connection between the level of pay and the level of employment? He seems to have broadened his argument. Is that once again the basis upon which the Labour party is going to form policy?

Mr. Prescott

The Labour party readily accepts that, if minimum wages were increased 100 per cent., there may be some effects on employment. It is the consequence of legislation on low pay and jobs that we need to see justified. The range of possibilities of what would happen if one got rid of the wages councils goes from 8,000 over five years to the finding of mad Professor Minford of Liverpool, who talks about 400,000 jobs coming from the change. If the Minister would give an indication of the number of jobs he thinks are likely to be created by the legislation, we would listen with some seriousness, but he has given no such indication. The evidence which we have had in considering the problem objectively suggests that in some cases an increase in rates leads to an increase in employment.

Mr. Nellist

If the Minister is correct in his argument that high wages lead to high unemployment, will my hon. Friend accept from me that the lowest unemployment in the world would be in India and the highest in Sweden? It is investment in manufacturing industry which determines productivity, not the level of wages of workers.

Mr. Prescott

That leads me to the point that the cost to the business man may be a wage in one sense, but what about the non-wage cost? It may be an increase in investment which we have failed to get, but industry will have to carry other costs.

Under the Bill an employer will have to carry the extra cost of redundancy if he has fewer than 10 employees. Already employers are complaining. An employer may have to carry more labour than he needs because he cannot afford to make anyone redundant.

In the last few years there has also been an increase in national insurance contributions. The Government have complained about Labour Governments increasing national insurance payments. Since 1978 the national insurance contributions paid by employers have risen by 6 per cent. but the greater increase of 52 per cent., has fallen on employees. So not only does the employee carry the greater burden of the cost, but he will have to face the possibility of a reduction in his wage.

The real reason for the Bill can be seen in the fears about its consequences. The Labour party and the TUC have produced documents about the reform of wages councils. Of course we have been calling for their reform, but the real reason for the Bill is to increase the employment of youngsters. The best evidence of that is the Cabinet papers of 1982, which I have quoted before, in which the right hon. Member for Waveney (Mr. Prior) was arguing against the proposition that control of youngsters' pay should be removed from wages councils. He gave certain evidence to the Cabinet; he said that the proposal to exclude young persons and part-time workers was a suggestion that usually comes from small shopkeepers. That is a very relevant point. Later, he said: there is unlikely to be any very significant scope generally for actually paying these categories less and increasing job opportunities thereby. He felt that if that were done it would be largely at the expense of the jobs of full-time adult breadwinners. I do not think any of my hon. Friends would disagree with those conclusions. He added: Such substitutions would involve the higher economic costs of adult unemployment. That is precisely the point we make. He also said: the same inducement would be likely to lead to their dismissal on reaching adult age.

That was the conclusion of the right hon. Member for Waveney in recommending to the Cabinet that it should not take such action. He also concluded that the exclusion of young persons and part-time workers fom the scope of wages councils would be unlikely to lead to more than a very marginal increase in job opportunities for these categories and largely at the expense of fulltime adult jobs. I am in no doubt that serious political and legislative difficulties of such a course would outweigh any conceivable benefits". That was all thrown out by the caring capitalist, the right hon. Member for Chingford.

There are other reports to which I do not have time to refer. The Auld report thought that wages councils were necessary to protect shop workers if Sunday opening was granted. The Select Committee on Employment made it clear that, although there might be reform it could lead to a significant substitution of adult employees by youngsters.

Let the House judge me by the prediction that the legislation is to prepare the way for the removal of adult workers, mainly women, earning £40 and £50 per week and their replacement by YTS youngsters on £27 a week. The beneficial effect for the Government will be a reduction in the unemployment figures because youngsters are recorded as unemployed but most of the women do not pay national insurance contributions and will not be registered as claiming unemployment benefit. It will be yet another massaging of the unemployment figures.

We have heard Ministers reading press releases about people's rights. The position of employers is being strengthened at the expense of employees. Even the limit of 10 per cent. on deductions from the wages of garage forecourt employees will not be 10 per cent. of the gross wage but 15 per cent. of the net wage, which might be as much as £6 for someone earning £40 per week. Have Ministers thought of the implications of such a deduction on employers who are gung-ho at the moment about what they can do to employees?

We hear great rhetoric about the rights of individuals. An employee should have the right to say that he wants his money in cash because he cannot go to the bank or cannot manage his affairs without paying bank charges. Why can the individual not exercise his right to receive his wages in cash?

We shall also be challenging the removal of the employee's right to premium paid overtime. The Bill is preparing for the abolition of overtime in shops so that that industry will be ready for Sunday opening. I am glad to see the Minister nodding. Under shops legislation, if someone works on Sunday he gets a premium payment even if he has not worked all week. Under the Bill the Minister will lay down that someone must work 30 or 40 hours a week before getting overtime. That means that Sunday work will be given to youngsters and part-timers and people who work in shops will not get the premium payments that they expect.

The Bill does not extend rights or employment opportunities. It is designed to switch the balance of advantage to the employer at the expense of those least able to afford it. The purpose is to bring down the unemployment figures. The Bill will impose 19th-century conditions on 20th-century Britain, with one law for the wealthy and another for the poor employees. It particularly singles out women and young people, those on less than £40 per week, as the obstacles to the return to full employment and prosperity.

Labour will repeal the legislation without hesitation and will put Britain back among civilised nations, where we shall observe international standards and at the same time refuse to place the greatest burden on those least able to bear it.

5.27 pm

Mr. Tony Baldry (Banbury)

In an earlier debate I argued at length why I believe wages councils should be reformed, not abolished. Therefore, I am pleased that the Government, having consulted widely, have decided to reform rather than abolish wages councils. I do not intend to repeat the arguments that I advanced previously as to why reform, not abolition should take place, but I am pleased that the Government, having listened, have decided on reform in ways advocated by myself and other hon. Members.

Before coming to the specific reforms that the Government have decided to introduce, there is one misconception which it is important to dismiss. The suggestion that wages councils and minimum pay levels are necessary to tackle poverty must be cleared out of the way. There is very little correlation between low pay and poverty. The Royal Commission on the distribution of income and wealth, the Diamond commission, initiated research by Richard Layard. Professor Layard has been described by The Sunday Times as a leading Government critic. The Royal Commission concluded: Of workers in the bottom 10 per cent. of income relative to supplementary benefit only one fifth were in the bottom 10 per cent. of hourly earnings. The reason is that the poorest workers are men with large families, many of whom earn a reasonably high wage, while most of those on the lowest pay are married women where earnings ensure that the family are not among the poorest. … a substantial proportion of low paid employees are not in poor households, and a substantial proportion of the poor are not low paid.

To put it briefly, the problems of the poor are not so much low pay as no pay. Another misconception—

Ms. Clare Short (Birmingham, Ladywood)

rose—

Mr. Baldry

With respect, there is much that I want to say.

Mr. Robert Atkins

Give way.

Mr. Baldry

I shall give way at the behest of my hon. Friend.

Ms. Clare Short

We would all agree that not all of the poor in Britain are low-paid workers, but the opposite does not apply. Is the hon. Gentleman aware that of low-paid workers in Britain, those covered by wages councils are the lowest paid? Of course, 2 million out of the 2.75 million are women, and of those one in four is either a single head of household or has no other income to the household. The hon. Gentleman cannot assume that low-paid women are not in families living in poverty.

Mr. Baldry

I reiterate that poverty is as much the consequence of no pay as low pay. For example, pensioners and single parent families with no pay are the group with the highest incidence of poverty.

Another misconception which needs to be dismissed is the suggestion that somehow pay rates and levels of employment have no relationship. Ten years ago the right hon. Member for Leeds, East (Mr. Healey) said: the number of people who have a job will depend directly on the level of pay received by those in work." — [Official Report, 6 April 1976; Vol. 909, c. 271.] That was said by the right hon. Member for Leeds, East when he was Chancellor of the Exchequer. I should have thought that it would be common sense to everyone in the House that wages which are not earned by productivity can only cause greater inflation and result in the loss of jobs.

Mr. Eastham

The hon. Gentleman referred to a statement which was made 10 years ago. Does he believe that when that statement was made by my right hon. Friend the Member for Leeds, East (Mr. Healey) he was suggesting that the lowest paid should have even less money proportionately than those on high pay? It may be that he was alluding to something else.

Mr. Baldry

The right hon. Member for Leeds, East was clearly saying that pay levels and the number of jobs have a direct correlation. If the Labour party has not learnt that in 10 years, that is its fault and it is a great pity.

I submit that the Bill introduces two sensible reforms. The first is by limiting the wages councils' ability to set a single minimum rate and a single overtime rate. Within the rhetoric of the hon. Member for Kingston upon Hull, East (Mr. Prescott) one got the impression that the Government were abolishing wages councils. They are not. All that the Government are seeking to do for adults is to remove some of the over-complications and complexities of the wages councils at the present time.

The Department of Employment consultative paper correctly stated that, at present, the wages orders sometimes run to 30 pages in length and apply to many different grades or categories or worker; their provisions are frequently difficult for both employers and employees to understand, with the result that many of the underpayments which occur arise from misinterpretation rather than wilful disregard of legal requirements; the rigidities of the orders inhibit employers in the development of sensible wage structures and systems of remuneration more appropriate to their businesses; the law permits the issue of orders with retrospective application which can cause real problems, particularly for smaller employers who can be faced with increased expenditure which they had not forseen. All these burdens can inhibit the growth of small businesses in the wages council trades and thus damage employment.

Indeed, the complexity of the present wages orders issued by wages councils pose a particular problem for small businesses. For example, one order is 34 pages long and specifies 144 different rates. One can produce many examples of complexity. One can produce a page 4 ft by 2 ft which has to be pinned up—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. The hon. Gentleman is getting out of order. He should not be displaying wages council orders.

Mr. Baldry

Perhaps I should refer to —[Interruption.] I am sorry that it causes consternation to the Labour party that the size of the sack and bag wages council order—

Miss Betty Boothroyd (West Bromwich, West)

I can assure the hon. Gentleman that it does not cause us dismay. However, whatever is shown in the House has to be interpreted in Hansard. What the hon. Gentleman has before him cannot be interpreted in Hansard.

Mr. Baldry

The admission that the wages council orders are beyond interpretation in Hansard makes my point.

Perhaps I can quote briefly from two wages orders which apply to many people. The first is the hairdressing undertakings wages council order. Many people work as hairdressers. An employer of hairdressers has to consider no fewer than 14 categories of employee and 12 different categories of rates of pay. I should not have thought that if one walked into a high street hairdresser one would imagine that the employer, before employing someone, would have to consider whether he or she was employing an apprentice, cashier, clerical assistant, sales assistant, chargehand, clerk, receptionist, college-trained student, manager or manageress, manicurist, operative hairdresser, prospective apprentice, senior apprentice or shampooist. For each of those there may be a different rate of pay and for each of those one would have to consider whether a clerk or a receptionist means a worker who is wholly or mainly engaged in one or more of the following activities — clerical work which includes responsibility for maintaining ledgers or wages books or preparing financial accounts of a hairdressing undertaking or of a branch or department thereof; receiving customers; arranging customers' appointments.

Mr. Couchman

Will my hon. Friend concede that to a small employer the arrival of the wages inspector is a matter for considerable concern, because the great confusion and complexity of the various orders means that many small employers have great difficulty working out precisely what the pay and conditions of their employees should be?

Mr. Baldry

The hon. Member for Kingston upon Hull, East gave the impression that there was substantial under-payment under wages councils orders. In fact, compliance with wages councils orders is generally high. When pay was checked in 1983, 93 per cent. of workers were found to have been paid correctly. However, a substantial proportion of the under-payment which does occur is doubtless due to the complexity of the orders. I submit that there is no possible advantage to employees of having a system whereby their employers are confronted with orders as complex as many of the present wages council orders. I find it amazing that the Labour party should seek to protect a system which is so complex and which can lead to employers finding themselves constantly confused and working against the benefit of employees because under-payment is often due to the fact that it is almost impossible for employers to determine the correct rate.

Mr. Prescott

Is the hon. Gentleman putting forward the argument that as 93.7 per cent. actually pay the rates, the other 6 per cent. who do not are employers who do not understand the legislation?

Mr. Baldry

Even the Low Pay Unit has to acknowledge that some members of the Inspectorate themselves … argue that the complexity of the orders means that, in some cases, underpayment … is genuinely due to employers' ignorance … It is not surprising that employers complain of ignorance or that technical breaches occur. That was the evidence of the Low Pay Unit in its paper "Who Needs Wages Councils?" Therefore, even the Low Pay Unit concedes that the complexity of the present wages council orders leads to under-payment.

Mr. Prescott

Ninety-five per cent.?

Mr. Baldry

No. Ninety-five per cent. appears to comply with the wages council orders.

Mr. Prescott

That is only because they know what to comply with.

Mr. Baldry

Under-payment is often due to the complexity of the wages structure. I am surprised that Labour Members do not wish wages councils orders to be made simpler for the benefit of both employee and employer to ensure minimum standards below which no employee can fall and so that everyone can understand clearly and precisely what he is doing. That would give much more freedom to employees and employers properly to negotiate the wages and conditions that they want. In that way 12 or 14 rigid categories would not be imposed on a hairdressing establishment by an outside body. The hairdresser and his staff would be free to determine for themselves how employees should be remunerated, with the protection of a wage level below which no one could fall.

The second sensible reform that the Bill will produce is that of removing those under 21 years from the scope of wages councils. Wages council rates have almost certainly created barriers to employment by setting payments at too high a level for those under 21. The average minimum rate for young people under wages council cover is significantly higher relative to adult rates than minimum rates under national collective agreements. No fewer than 22 of the 26 wages councils pay 16-year-olds a higher proportion of the adult rate than the average proportion paid to that age group under national agreements. In some instances the youth minimum rate set by wages councils is exceptionally high. That must be set against a background where starting pay for school leavers in Britian averages 60 per cent. of adult rates, while in the rest of Europe the average is below 20 per cent.

The hon. Member for Kingston-upon-Hull, East did not deal with the point that was raised by my hon. Friend the Member for Glanford and Scunthorpe (Mr. Hickmet). My hon. Friend asked why other countries which comply with the ILO convention, such as West Germany, pay rates to young people that are significantly lower than those paid in Britain. Youth wages as a proportion of adult wages are higher in the United Kingdom than in any other Western country, and the reason for that is simple.

For far too long there has been a conspiracy within parts of the trade union movement to keep youth wages high and the result has been to keep young people out of jobs. Given the high proportion of employees who are on the minimum rate and the high level of youth earnings relative to adult earnings, it is easy to conclude that wages councils have reduced the employment opportunities for young people and that they continue to do so. There is a clear case for removing young people from the provisions of wages councils as such a move would help to price young people back into work.

Apprentices' pay cuts can increase the chances of work. A notable deal, which has already been referred to, is the one which took place between unions and employers in the electrical contracting industry. Cutting the wages of new apprentices has given thousands more young people a chance to learn a craft. The arrangement was negotiated with the relevant trade unions. The number of apprentices in that industry has increased from 850 a year a few years ago to more than 3,200 in 1984. I should have thought that the Labour party would applaud increases in opportunities for young people that enable them to gain experience, work and training, which is what the apprenticeship agreement has produced. The employers and the unions agreed that the pay for apprentices was too high, and they acted accordingly, with the direct result that the number of apprentices has trebled.

Instead of the old fixed four-year apprenticeship terms, trainees are now tested on their attainment and can qualify considerably earlier. It is sad that this example has not been followed in other sectors of industry. Negotiations broke down within the engineering industry over one union's insistence that apprentices should enjoy a pay increase in line with that for adult workers. When one engineering company observed that it had no apprentices, the union replied that it wanted to keep rates high for young people for when the company took on apprentices in future. The reality is that if trade unions insist on youth rates remaining nearly as high as those for adults, few apprentices will be taken on. It is only by having a sensible approach to youth pay, in the same way as our continental competitors, that we shall see more young people getting into work, training and apprenticeships. For far too long there has been a conspiracy on the part of some sections of the trade union movement to keep young people out of work by keeping youth rates in an artificially high level.

In West Germany, apprentices earn between 15 and 25 per cent. of the adult wage; in Britain they earn between 50 and 60 per cent. It must be realised that the level of youth wage rates relative to the rates of other competing groups of workers is important. In September 1985, the OECD, in its "Employment Outlook", reported as follows: Increases in relative youth wages for other than market reasons and downward rigidity in youth wages relative to those of adults have resulted in job losses for young people in some member countries. Is that what the Labour party wants? Does it want job losses to ensue for young people? High youth wages choke off training opportunities and reduce employment opportunities for young people. It is not surprising that employers are unwilling to employ youngsters at rates comparable to those paid to adults. If an employer has to make a choice between taking on an adult or a young person at almost the same rates, he will take on the adult. There is no incentive for an employer to recruit and provide young people with training.

The provisions within the Bill are not the draconian changes that the Labour party would have us believe. They are sensible reforms which strike the right balance between guaranteeing protection for adults in ensuring that there is a wage level below which they cannot fall and helping in the creation of new jobs. Those reforms will lead to a more sensible and rational approach to wage negotiations in the longer term and to the creation of new jobs. If so, they are well worth supporting. I support the Bill and the measures that it seeks to enact.

5.48 pm

Mr. Richard Wainwright (Colne Valley)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: That this House declines to give a Second Reading to a Wages Bill almost wholly negative in its provisions which, while removing all statutory protection for young employees, do nothing to reduce youth unemployment and nothing to tackle the serious current problems of poverty wages amongst unavoidably unorganised workers, which remove the Advisory, Conciliation and Arbitration Service from Wages Council procedure, and which reduce United Kingdom protection of low-paid workers below the level maintained in most European Economic Community countries and in the United States of America.

The parts of the Bill that deal with the repeal of the Truck Acts and the ending of redundancy rebates for most employers are important, but they can be left to debate in Committee and on Report. Therefore, I shall concentrate my remarks, which will be as brief as I can contrive while covering the necessary ground, to the proposed wages council changes.

In a sense, some modest note of congratulation is due to the Government for resisting the worst of their slogan mongers and thus not abolishing the wages councils, which would have created fearful tasks for a progressive Government in due course. However, the Bill so cripples and confines the wages councils as to make it close to an abolition measure. Our amendment stresses that it is strange that the Government, who pride themselves on facing modern conditions and problems in new ways, should produce a Bill which is almost entirely negative.

I accept that there is need for reform. There is urgent need for reforming what will be the policing of this measure. Among other things, Parliament's authority suffers when legislation is deliberately under-policed and sections of society are virtually given the go-ahead to flout what Parliament has enacted, as has happened with lack of wages orders enforcement.

The operation of the wages councils also needs to be reformed. During the Liberal campaign in the 1970s against low wages I was involved with the appalling petrification of the lace finishing wages council. It had been allowed to petrify and become completely inoperative mainly because the employers, sometimes aided by the Government, had implied to the lace workers, mainly in Nottingham, that pay increases would threaten their job security. In the event, that turned out to be wholly untrue. Eventually we managed to bring back to life the lace finishing wages council, to the benefit of that industry. Reform was needed, because there was no machinery to compel the wages council to do its job. If all sides of the council membership decided to be inactive and paralysed, the needs of the workers counted for nothing.

We should also beware when simplification is referred to as reform. The sack and bag employers may be unduly harassed by the complexity of the regulations in their industry. However, in an industry that employs expert personnel managers—for example, the catering industry — a very sharp Government draftsman is needed to ensure that the orders are proof against highly expert manipulation. Nobody can say that the catering industry—

Mr. Couchman

Will the hon. Gentleman give way?

Mr. Wainwright

I shall give way in a moment.

Nobody can say that in recent years the catering industry in this country has been repressed, that catering enterprise has been smothered and that new developments have been hindered by wages regulation. I now give way.

Mr. Couchman

I am grateful to the hon. Gentleman for giving way. Is he aware that very large sections of the catering, hotel and particularly public house trade are in the hands of very small business men who do not employ skilled personnel managers to take part in wage negotiations for the industry?

Mr. Wainwright

Wise hoteliers belong, in my experience, to a highly efficient and admirable trade association that rightly provides them with expert guidance. It would be foolish of the Government so to streamline that set of regulations as to be made an ass of by the experts who are engaged to help that admirable industry.

Ms. Clare Short

Will the hon. Gentleman give way?

Mr. Wainwright

Yes, but perhaps for the last time.

Ms. Short

Income Data Services carried out a study of the retailing and the licensed and hotel trade to which the hon. Gentleman referred. It covered 2 million out of the 2.75 million workers who are protected by wages councils and said that they were dominated by large, not to say giant, firms. If the workplace is small, that does not mean that they are not run by very large employers who are easily able to cope with the details of wages council orders.

Mr. Wainwright

I do not suggest that the smaller units in the catering industry must therefore be ignored; far from it. Fortunately, they are protected by admirable trade associations. However, the Bill is depressingly negative in that it ignores more recent forms of exploitation and quite unjustifiable low rates of pay. The Paymaster General told us that the scene has changed since the time of King William IV and since 1909 when, under Winston Churchill, wages councils were introduced by a glorious Government. However, he failed to take his own medicine and recognise that there are many relatively new industries in which pay and conditions are disgraceful and where the opportunity for workers to be organised into trade unions is very small because of the nature of the job.

For example, I am sure that many meritorious companies are sensible enough to pay their security guards well, for which they receive good service; but some security guards are very badly paid by less scrupulous employers. They are almost impossible to unionise because of the isolated nature of their work. Another example is the launderette, as distinct from the laundry which is covered by a wages council. There are some good employers in launderettes, but others pay very meagre wages.

Contract cleaning has also experienced a great boom because of the absurd numbers game with the Civil Service reductions. The number of people directly employed in cleaning has been reduced. They were sacked from Government employment, but in many cases they were re-engaged by a contract cleaning company the following Monday, often at a lower wage. Furthermore, many branches of the leisure industries, apart from catering, pay very poor wages for the services which their employees give, in all weathers.

Why are these industries not covered? Why do the Government not adopt a new approach to try to alleviate poverty of this kind? The Treasury Bench would do well to take to heart the apposite words of the right hon. Member for Henley (Mr. Heseltine) who at Blackpool last weekend spoke to an, apparently, largely enthusiastic audience about the need for society to create the wealth with which to improve living standards. He said that it is wrong to blame the weak when the strong fail and it is not the foot soldiers who lose wars. Those words rang in my ears this afternoon when it was suggested that unemployment is caused by the activities of wages councils. It is wrong to blame the foot soldiers—

Mr. Thurnham

Will the hon. Gentleman give way?

Mr. Wainwright

No, I have given way generously until now.

I regret that the Bill contains no provision for the establishment of new wages councils. Furthermore, a highly civilised part of the Wages Councils Act 1979 is to be abolished. It provides that if employers or employees' representatives propose an extension of the wage fixing arrangements, the Advisory, Conciliation and Arbitration Service can be brought in—ACAS is cited time and again in the 1979 Act—to advise the Secretary of State. To remove the role of ACAS seems to be short sighted.

The Bill will limit the activities of those wages councils that are allowed to survive only to the setting of a single minimum hourly rate in respect of basic hours and also a single overtime rate. It is difficult to imagine anything more crude and impracticable that could be applied in the complex circumstances of most wage fixing.

I ask the Minister for Employment or the Under-Secretary of State for Employment who is to wind up the debate, to say how the Government expect to persuade independent people of experience and reputation —assuming that it is in the Government's mind to continue to have independent people on the wages councils—to accept such a crude, useless and futile task as setting only one nationwide rate for basic hours and only one overtime rate, whether it is an overtime rate for Sundays or an overtime rate for an extra half an hour at the end of the day. It can be compared with a hospital authority advertising for a consultant surgeon but adding, "The only implements available are one carving knife and one pair of scissors." The system will fall into disrepute because of the absurd task to which the Government have chosen to limit wages councils.

As for the need for a much wider range of regional wage rates, the Government have ignored entirely the two nations that their seven years in office have created. The two different economies, as the Under-Secretary of State knows, representing as he does a relatively stricken and devastated part of the country compared with most parts of the west London area, call out for different minimum rates.

It is absurd to suggest, as clause 14(5)(a) does, that the wages councils should be obliged to consider employment and wages only in the more distressed parts of the United Kingdom. The wages councils should be obliged to consider prevailing wages rates, and living costs in all the different travel-to-work areas, thus taking account of reginal variations. [Interruption.] It is no good Conservative Members showing their ignorance of conditions in other parts of Britain by being amused. If they lived in the part of Britain in which I have worked and which I know well, they would realise that there is an enormous gulf between what is regarded as tolerable pay in parts of Yorkshire and what is regarded as tolerable pay in the extremely expensive areas of west London and parts of the home counties. The whole matter should be subject to greater scientific regional examination instead of being reduced to a mere two wage rates nationwide.

I come to the central question which has rightly occupied so much of the debate—workers under 21. A Liberal Member is entitled to say something about this because, for 20 years, we have shown that we are well aware of the appalling contribution that excessive pay increases make to unemployment. At a time when Members of the Conservative party were conspiring with the future leader of the Labour party, the right hon. Member for Blaenau Gwent (Mr. Foot), to destroy Mr. Harold Wilson's incomes policy, we insisted, as we have always done since then, that an incomes policy is an essential requirement of full employment. We need no lectures on the dangers of certain people's pay levels creating unemployment, but it is hypocrisy to suggest that provisions for young people which require a second-year apprentice hairdresser to receive £34 gross in return for a 40-hour week are doing young people out of valued employment.

The Conservatives when in opposition were loud in their complaint that, in talking about pay, it is no good talking about percentages — the absolute amount of money is what matters. All the elaborate arguments that in Britain, in certain cases, a higher proportion of adult pay for young people is the legal minimum than in other countries are beside the point in the light of the meagre amount which that arithmetic produces. A higher proportion of pathetically small minimum pay cannot be regarded as a menace.

The alliance believes that this crippling of wages councils by the exclusion of young workers will have such a destabilising effect on the competition between small firms that the net number of new jobs available for young people is likely to be less rather than more. Certainly, the number will not be significantly increased.

The CBI is not enthusiastic about the removal of young people from the scope of the Bill. If some employers are allowed to exploit unknowing young people to the hilt, unfair competition will damage the overall prospects for youth employment by closing down good firms.

I agree that an age trap has been created. Many people will be sacked or discouraged from continuing their employment when they reach the dangerous age of 21 when they will be entitled to some modest protection. West Yorkshire, part of which I represent and where I have always lived in peace time, has the worst low pay record of all the big urban regions, even though there are a number of well-paid occupations and common-sense industrial relations in the area.

Mr. Prescott

Nowt for nowt.

Mr. Wainwright

"Nowt for nowt" was the appropriate dialect to which Sir Terence Beckett resorted in his rather unfortunate remark.

Far away from Westminster there are areas where low pay is a long-standing curse and where young people live with the culture of the work ethic. They live in non-conformist areas where there is still a faint stigma attached to vigorous and able-bodied young people who do not get a job. The idea that youngsters can be exploited without hindrance is repugnant to people of common sense, no matter which way they vote in elections.

In Yorkshire and Humberside as a whole, more than 290,000 people, many of them women and many others from ethnic minorities, have some protection — not much — with the existing wages councils structure. Although the system could be simplified and streamlined, I do not believe that it should be removed.

Let us compare Britain with the rest of the industrial world, as we must always do. The International Labour Organisation reported in 1984 that almost all industrial countries now operate minimum wages systems and that, to its knowledge, none exclude young workers. Those who talk about the United States as a paradise of deregulation and think that its magnificant job creation record is due largely to the unshackling of enterprise and letting employers rip, fail to realise that, for at least the past 20 years, there has been nationwide minimum wage regulation in the USA. My evidence shows that this is widely observed and accepted as part of the equipment of a civilised nation.

In view of all these considerations, I hope that the amendment will receive the support of hon. Members on both sides of the House. The alliance will vote against the Second Reading.

6.7 pm

Mr. Peter Thurnham (Bolton, North-East)

I listened carefully to the Opposition and heard nothing to make me feel that I should alter the opinion that I held when I was a member of the Select Committee that looked into wages councils and when I dissented from the majority report that wages councils should be continued. Wages councils are nothing but a deterrent to employment. When unemployment is so high, I can see no justification for keeping them.

I congratulate my right hon. and learned Friend the Paymaster General and Minister for Employment on bringing forward this welcome legislation, and my hon. Friend the Under-Secretary of State for Employment—the hon. Member for Rossendale and Darwen (Mr. Trippier)—on his support. I am pleased that the hon. Member for Newham, North-East (Mr. Leighton) is in the Chamber, because I think that he was not able to be with us last June for the debate on wages councils. I look forward to hearing his contribution.

The hon. Member for Colne Valley (Mr. Wainwright) referred to foot soldiers not losing wars. I point out that foot soldiers do not go on strike or have recourse to wages councils and disputes during a war. It is because the foot soldiers have been so affected by attempts to protect them from market forces that we have lost so many wars. Despite the Labour party's wish that market forces should be put on one side, the result is unemployment.

The Bill is a welcome contribution to measures to remove all restrictions on certain employment up to the age of 21. I hope that, when the Bill is considered in more detail and is put into practice, the Minister will consider whether it is needed in particular industries. It contains no provision that implies that wages councils should be continued. The hon. Member for Colne Valley seems to think that we need new wages councils for new industries, but I see no need for them. New industries have come forward without wages councils, and I believe that such interference would be the last thing they would want.

What will happen once workers reach the age of 21? If they lose their job at that age, perhaps they should be given a box of ministerial fudge to make up for the way in which the Bill attempts to strike a compromise. That compromise is unnecessary, and may exist only in words, because the Bill will make wages councils toothless by limiting them to such a degree that they will not work. We have already heard how many wages councils have fallen by the wayside, but I am satisfied that they will continue to fall by the wayside, even with the provisions of the Bill.

I remind right hon. and hon. Members of what the studies have shown. The right hon. Member for Morley and Leeds, South (Mr. Rees) has an early-day motion calling attention to the garment industry. I ask him to read carefully the Department of Employment's report on the garment industry, which showed that between 1954 and 1971 about 50,000 jobs were lost. I do not see any evidence to refute that argument, and that situation has been repeated in other industries.

The most surprising thing about the debate is the Labour party's inability to come forward with its proposals for minimum wage legislation. I asked the hon. Member for Kingston upon Hull, East (Mr. Prescott) what the Labour party was doing, and he said that it was still considering the matter. Labour Members were still considering it when we debated the matter in June. As usual the Labour party is living in the past.

When the matter was considered in 1969, a report by the Department of Employment—

Ms. Clare Short

That was in the past.

Mr. Thurnham

We are living in the past. The report was produced in 1969 and showed that a minimum wage law would create considerable unemployment, particularly in areas of great difficulty, such as Northern Ireland. Why does the Labour party continue to talk about minimum wage legislation, which is the logical progression of any wages councils legislation, and about applying it to every industry but not come forward with proposals for it? I think that it is because it would lead to job losses. Why press for it in certain industries if a case cannot be made for it in all industries?

We have already had some reference by my hon. Friend the Member for Bridlington (Mr. Townend) to the agreement between the electrical contracting industry and the electricians union. The House and the country can be greatly pleased by the actions of the electricians union in helping to keep the freedom of the press. We can congratulate the electricians union. I am proud to play a part in the electrical industry, and we can congratulate the union on an agreement for apprentices which reduced the pay from £41.63 to £27.88 per week, which had the effect of increasing the number of apprentices recruited into that industry from 850 in 1982 to 3,210 in 1984.

Ms. Clare Short

The agreement was about taking numbers of YTS trainees into the electrical industry, so the Government were paying their wages. I am sure that many jobs could be generated if the Government would pay out large sums in wages. That tells us nothing about the general question of cutting youth wages to generate jobs.

Mr. Thurnham

The hon. Lady has just made the point that we want to hear. She said that many more jobs could be generated if employers did not have to bear the full cost of the wages. That is exactly our argument, and it is applicable above all to those who are in need of training.

I started work on £4 5s a week, and yesterday I was reminded by the hon. Member for Manchester, Blackley (Mr. Eastham) that he started work on 12s a week. In those days people were not deterred from starting work and learning a trade by the wages, and employers were not deterred from taking them on by wages which were too high.

We have also heard a great deal of talk from the Opposition about the effect of market forces in creating high wages. Surely this is evidence of the fact that we should encourage market forces to allow high wages, instead of trying to deter them. To judge from the way in which the Opposition are going on, anyone would think that we needed a wages council for the City. Perhaps some poor people in the City cannot earn as much as some others. It is surprising that I have heard nothing from the Opposition about asking for a wages council for the City. It would seem that it is only some people about whom they are worried.

I regret that I cannot attend the whole debate. This is because the annual meeting of the electrical contracting industry is being held today and I have undertaken to attend it. I shall do so with great pride, in the knowledge that that industry has set an example and given encouragement to all others. I wish the Bill every success.

6.15 pm

Miss Betty Boothroyd (West Bromwich, West)

The hon. Member for Bolton, North-East (Mr. Thurnham) has done a good deal of work on the operation of wages councils. I have tried to wade through this Bill before us, and I find it to be a pernicious piece of legislation. As the Paymaster General indicated in introducing it to the House, it received most notoriety for its disgraceful proposals for the reform and abolition of wages councils. I hope to deal with those proposals in a moment, but first I should like to comment on the wholly inadequate proposals in part I of the Bill.

As I understand it, part I repeals 11 Acts of Parliament, and sections from a further four items of protective employment legislation. It is very far-reaching indeed. I do not think that we can ignore part I of the Bill.

Reference has been made to the Truck Acts. Of course the Truck Acts are very old. They protected the rights of working people. One of the things that they did was to stop payment in kind for work done. They said that money had to be the reward for labour that had been exerted. Working people had a choice: they could be paid in cash, by cheque or by some other means. One effect of the repeal of the various Truck Acts and Payment of Wages Acts is that it will put the clock back. The move towards cashless pay will be encouraged, and manual workers will no longer have the long-established right to be paid in cash. That was confirmed this afternoon by the Paymaster General, in response to an intervention, when he said that any manual worker taking up a job after this Bill becomes an Act will no longer have the choice. The choice will be that of the employer, and my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) made much of that, and rightly so, in his speech. It is an erosion of the individual's rights, and a most retrograde step.

Equally important, as a corollary to this, the statutory protection offered by the Truck Act 1896 against an employer making deductions from wages has also disappeared. I think many hon. Members in all parts of the House will he familiar with individual cases which have been brought to them. Law centres have considerable experience of this, especially in relation to petrol station cashiers who face harsh deductions. The Industrial Law Journal gave the example of a cashier who worked 40 hours a week for £65, and who took home £5.60 at the end of the week after deductions because errors were deducted from earnings. Part I repeals the protection under the Truck Acts and does not replace it with statutory regulations acceptable to us.

That is hardly surprising, because the Government show little respect for employment protection legislation. The Bill falls short of providing the protection necessary in many ways. First, there is no justification for abolishing the criminal sanction against employers which is at present contained in the Truck Acts. When arbitrary deductions from wages cease to be a criminal offence, it is likely that more employers will make them. I recognise that clause 5 allows for the repayment of deductions to an employee, but only after that employee has gone to an industrial tribunal and obtained a favourable decision that the deduction was unlawful. That cannot be right. Clause 5 is too woolly and is by no means an adequate safeguard, and I ask the Minister to be more specific when he replies.

Secondly, the Bill does not provide protection for workers who are dismissed and who apply to an industrial tribunal on the ground that unlawful deductions have been made. In my view, any employee dismissed in such circumstances should be able to bring a claim for unfair dismissal without the need to have been in that employment for two years. There is a huge void here, and the Minister must explain it fully when he replies.

Third, in relation to clause 1, it is insufficient to provide for the deductions from wages to be made through a written term of contract. Contracts of employment which contain such terms may have been signed many years previously, and may not be in precise language. The employee may have forgotten agreeing to the contract, and may be genuinely unaware of its provisions and what it means. The least that we can accept is that the Bill should contain provisions to enable employees who face deductions for shortfall to offset those deductions against weeks when the total wage is in balance or when there is a gain. This legislation does not contain such provisions, and it is quite unacceptable.

The blatant inadequacies in part I are only a prelude to the abhorrent nature of part II and the proposals for the reform of wages councils. We hear constantly from the Chancellor of the Exchequer and Ministers, and we have heard again today, that wages councils price workers out of jobs. I know of only one body that has had that effect on the British people —the Government. Bankrupt of ideas for industrial and economic regeneration, they have savaged the country, particularly the area of the west midlands, and reduced it to a human wasteland.

Last month, my constituency reached a new all-tame high of more than 7,000 people out of jobs. The black country towns have always been low-wage areas. It is not the wages councils that have put the people there out of work; it is Government policy that has put them on the dole.

Mr. Lewis Stevens (Nuneaton)

Does the hon. Lady agree that during the 1940s, 1950s and early 1960s many workers in the steel and associated industries in the black country were not low-paid? They may have had to work hard for their money, but some people in those industries earned good money.

Miss Boothroyd

People in the steel foundries in the black country have always worked hard for their money. I have visited all the foundries in my area, and even today in some places one cannot see 6 ft in front of one because of the dust and grime. People who have worked in those conditions have always earned their money. I do not accept that the money was good in the 1940s, 1950s and 1960s. My area has traditionally been a low-wage area. The hon. Gentleman may think that the wages there have been better than in other areas, but I do not accept that.

There is little evidence that if wages were reduced from between £65 and £72 a week, to between £55 and £62 a week it would create a significant number of jobs. If the Minister has such evidence, it is incumbent on him to let us have it. The best evidence that I could find—and I am being very generous—is that if wages councils were abolished, about 6,000 jobs would be made available. That is a generous estimate, and I have studied a great deal of evidence. To put that figure in perspective, on average unemployment, which is now well above 5,000 per constituency, it would mean only about 20 new jobs per constituency. That does not improve job prospects. It is merely a drop in the ocean. For the Government to argue that either the abolition of wages councils or reforms to remove their teeth will create jobs is not true.

Mr. Baldry

rose—

Miss Boothroyd

The hon. Gentleman has already made his comments. I hope that the House will bear with me if I consider some more simple figures.

The Low Pay Unit tells us that young males have accepted wage rises which are 23 per cent. lower than the average increases for adult males, and that the comparative figure for young women is 30 per cent. Falling wage rates among young people show no increase in employment. What has happened is that there has been a trebling of unemployment among young people. Therefore, for the Government to base their deregulation argument on job creation is pie in the sky. It is shocking that the Government have decided to ignore the need to provide minimum wage machinery for young people. The legislation is a savage attack on the young, and underlines the Government's shameful action in abolishing employment protection machinery.

But it is not only an attack upon the young. I am also worried about the potential of clause 13. It is a dangerous clause because it allows further abolition of protection. It empowers the Secretary of State to remove individual employers from the scope of wages councils. In future it will be interesting to see which firms are released from their present obligations to employees. No doubt firms such as Trusthouse Forte and others in the catering and service industry which make considerable contributions to Tory party funds will have little trouble in persuading the Secretary of State to remove them from the scope of wages councils.

In this country one third of the work force—about 8 million people—live on or near the official poverty line. About 3 million of them are protected by wages councils. Those people are receiving between £60 and £70 a week in wages. In the past four years, of establishments visited by wages inspectors about 37 per cent. were found to be under-paying. On average, some 10,000 complaints are received each year, and of those the wages councils discovered that some 70,000 people were being underpaid.

It is scandalous that the Government can even contemplate reducing the protection of those people. The new philosophy of caring capitalism to which we were treated last week, if it means anything in practice, means the retention and strengthening of wages councils rather than their emasculation and abolition. Conservative Members—although very few have been present today —should think very carefully tonight rather than merely follow a blind rationale which has no evidence at all to support it.

6.31 pm

Mr. Ron Leighton (Newham, North-East)

The Bill is mean and repugnant and comes from a mean and spiteful Government. There has always been too wide a gap in this country in pay and wealth. Those at the top get too much and those at the bottom too little and that position is now getting much worse. There has been a pay explosion in the City of London and among company directors while the Government are taking away from those at the bottom what little they have.

For a century, wages councils have sought to give at least some little protection to the weakest and poorest in our society and the most vulnerable in the labour market. The councils seek to protect those who are unorganised, in scattered workplaces, women part-timers, home workers and ethnic minorities. All those groups are disadvantaged when compared to the rest of the work force.

No one would say that the pay of those people is anything but low. The Government's consultation document gives the figures of £63 to £73 a week. No one could say that such a pittance is a living wage. Nor could they say that the distribution of earnings has changed, particularly for those at the bottom. Their earnings, relative to the rest, have changed little for a century. No one can say that the pay of workers in the wages councils sector has increased relative to others. The reverse is true. An answer to a question I asked on 15 January 1985 showed that in 1974 pay in the wages councils sector was 73 per cent. of that of all industries and services. In 1984, 10 years later, it had declined to only 65 per cent. The same is true of youth wages.

There is no evidence that wages councils are pushing up wages to unrealistic levels, nor is there any evidence that weakening wages councils will create more jobs. Ministers who appeared before the Select Committee on Employment could give no evidence for that. The Select Committee concluded: The empirical evidence submitted to the Select Committee does not provide unambiguous support for the notion that the elimination of wages councils would have the sort of employment effect which would provide an overwhelming case for abolition. The Bill has no intellectual credentials. It is not based on evidence. It rests solely on the prejudice, dogma and ideological spite of the hard Right.

The Government want even lower wages at the bottom of the heap and they pretend that that would create more jobs. However, they said that when they abolished the fair wages resolution and schedule 11 to the Employment Protection Act 1975. Again, when asked at the Select Committee, the Government were unable to say how many jobs that had created. Of course they cannot state how many, as no jobs have been created.

If low wages created jobs and economic success, we should be at the top of the European league, as our wages are the lowest. If wage cuts, especially for the lowest paid, are the key, critical variable affecting the success of the economy as a whole, why are wages lowest in the parts of the United Kingdom where unemployment is highest and vice versa? Why are wages higher in successful industries than in less successful ones? Why is Calcutta not an example of prosperity? Obviously the Government are getting other things wrong, such as the exchange rate, interest rates and their training policy. It is wrong to expect the low paid to carry the can.

There has been a salary bonanza at the top of British industry, which has spiralled out of control. That has happened especially in the City of London where salaries, and what I now understand are called financial packages, have increased by 100 per cent. in the past two years. All sorts of people receive over £250,000 a year, yet the new earnings survey showed that the poor got poorer in 1985. The bottom 10 per cent. had pay increases less than the rate of inflation and the top 10 per cent. well above that. There has been a major increase in inequality. The sharp, real cuts for the worse off have been accompanied by the highest unemployment, while the well off, who have done best, have the least unemployment.

The ideological argument is that, if wages are forced down sufficiently, they will reach a market clearing rate. That would mean that unemployment would end. There are very few outside the loony Right who would believe that. The former Under-Secretary of State for Employment, who has moved on—I do not know if this is why he moved on—said on 18 December 1985 in response to a Conservative Back Bencher: The Government are considering the future of the wages council system. The point about young people will be taken on board, but even he will recognise that not every young person in every region will get a job at whatever level of wages." — [Official Report, 18 December 1984; Vol. 70, c. 152-3.] Only the loony Right could believe such ideological nonsense.

That approach becomes monstrously unfair and unjust because pay and remuneration in Britain are not decided by the laws of supply and demand. Members of Parliament are a good example of that. Many more people want to become Members of Parliament than there are places. Plenty of people would be willing to be Members of Parliament for no wages at all. Where does the law of supply and demand in the market apply to Members of Parliament? Is not the same true of admirals, generals, the judiciary and civil servants?

In the higher reaches of industry, the directors merely vote each other huge salaries. The wages of most workers are covered by collective bargaining. Therefore, most people are covered by some form of institutional machinery. The proposal is not that all that should be altered and deregulated. It singles out those at the bottom where wages councils provide some kind of institutional framework to help those without organisation and attacks, deregulates and depresses them. That is absolutely monstrous.

Mr. Baldry

Surely the converse of that is true. The lowest paid will be the only group in the community to have wages council protection to ensure that there is a level below which it cannot fall. They will be the only people in the community who will get protection. It will not be removed. The hon. Member and other Opposition Members speak as if the wages councils will be abolished. With respect, they will not be abolished; rather, they will be reformed.

Mr. Leighton

They are not going to be abolished yet. The Bill is a halfway house on the way to abolition. The hon. Gentleman's point was very obscure. Normally he is perspicacious and sharp as he understands these matters well and writes pamphlets about them.

The hon. Gentleman knows as well as all hon. Members that most people's pay is not decided by the laws of supply and demand. It is covered by institutional machinery. The suggestion is not that we should abolish the institutional machinery for everybody, but that we should tamper with the minimum of institutional machinery that protects those at the bottom of the pile. That is monstrous, offensive and repugnant.

I find it particularly repugnant to listen in the House to wealthy Members with good contracts of employment, good salaries and pensions turning on the poorest and claiming that their wages must be reduced for the public good while those hon. Members stay on the gravy train.

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)

I merely wish to endorse what my hon. Friend the Member for Banbury (Mr. Baldry) said in his intervention. He made the point that we are talking about youngsters under the age of 21. My hon. Friend suggested that the hon. Gentleman is making the wrong speech in the wrong debate. He is assuming that we are going to scrap the wages council system. That is incorrect.

Mr. Leighton

I heard the point the first time it was made. The second intervention adds nothing to it.

It is doubly offensive to tackle wages councils which protect those at the bottom of the pile when the Bill comes only months after top people—top civil servants, judges and senior service personnel — were given prodigious increases in their already too high salaries. Some, like the Cabinet Secretary, received up to 47 per cent. What is it but hypocrisy to give so much to those at the top whilst depriving those at the bottom? It is obscene.

I come to the point made by the hon. Member for Banbury (Mr. Baldry) about young people. There is no justification whatever for removing young people from the protection of the wages councils. With their inexperience and their desire for a job, they are the most vulnerable of all. If the hon. Gentleman does not wish to listen to me, he may listen to the CBI which told the Select Committee: There was little enthusiasm for the suggestion that all young workers should be excluded from coverage by wages councils.

The fairy story about young people pricing themselves into jobs has been tested. Since 1979, youth wages have been reduced, absolutely and relative to those of adults. I was told in a parliamentary answer on 16 January 1985 that between April 1979 and April 1984 the average gross earnings of males over 21 increased by 79 per cent., but those for 18 to 20-year-olds increased by only 63 per cent., and the under-18s by only 57 per cent. Youth wages had fallen by 23 per cent. in relation to male adults. Young women's pay had fallen by 30 per cent. Did it work? Did youth employment increase? The contrary happened. Youth unemployment has actually trebled. The argument is bogus.

A differential between youth and adult wages is justifiable, but there is no evidence that the differential has become too narrow. Is the argument that it should become so pronounced that it would provide an attractive cheap subistitute for adult labour, thus leading to more adult unemployment? Adult unemployment is more expensive for the state because of the difference in adult and youth benefits.

Research shows that any increase in the employment of young people, because of their cheapness as a result of their wages being forced down by their exclusion from wages councils, would be largely at the expense of adults. That is what is known as the substitution effect.

In most wages council trades, there is little difference in the jobs done by adults and young people. There would be an inducement which would be likely to lead to the dismissal of young people on reaching adult age. That is what is known as the age trap. In other words, the sack would be a 21st birthday present. What sort of early employment experience would that be for young people?

The Bill confirms to young people that the Government are their enemy. Instead of this mean and spiteful measure, the Government should be securing better access for youth labour to the main labour market by providing decent education and training rather than developing a low-wage youth unemployment sector providing cheap substitutes for adults.

The Bill aims other blows at vulnerable low-paid workers. Orders can be simplified, but that does not mean, as the Bill lays down, that there should be a single minimum rate with a single overtime rate. That could destroy paid holidays, weekend pay, shift premiums, guaranteed pay and skill differentials. What justification is there for that? Why steer the worst employers in that direction? The Bill is a halfway house towards complete abolition.

Why should workers at the bottom of the pile not be entitled to holidays like everyone else? Why remove the holiday provision? Is the Minister aware that in a number of unorganised industries not presently covered by the wages councils—the security industry and instant print shops are examples—the absence of holiday provision is by no means rare? The only purpose of including that provision is to allow holidays to be cut or eliminated. That would lead to fewer jobs. That is something about which Conservative Members should think when they have their long summer recess. They should realise that abolishing holidays for the lowest paid would increase unemployment.

Overtime rates and premium payments, except for the single rate, are to be excluded, yet the principle of higher rates for weekend working, anti-social hours and shifts has been widely accepted. Why should they be suppressed? The Government appointed the Auld committee to study the Shops Act 1950. The committee strongly recommended the retention of protection for shop workers because of the strong likelihood of exploitation of some shopworkers in the form of lower wages particularly for unsocial hours, and possibly in a longer working week. The Committee said that it set great store by the preservation of the role of wages councils in fixing … holidays and holiday pay for the retail trade. I hope that when the Minister replies he will tell us why the Government are turning their back on the Committee that they set up.

Let us consider the Bill's requirements for a single rate of pay. In all cases where there is more than one rate, the rates must be amalgamated. What logic is there in that? Will they be amalgamated up or down? In hairdressing, for example, there is a difference of about £15 between the top and bottom rates. Are some people to be expected to take a drop of about £15 in their pay?

A single rate of pay does not allow for legitimate differentials. Why not? I thought that Conservatives believed in differentials. There is no need for all these restrictions and backward steps. If the Minister thought that wages councils were getting things badly wrong there would be nothing to stop him saying so and asking councils to make adjustments. Employers are represented on all councils and they have independent members. Wages councils should take the decisions. They should not have them imposed arbitrarily upon them by the Government.

We are sometimes told that the wages councils are no longer needed, that they are things of the past. Unfortunately, that is not so. We have already heard that the Auld committee said that they were essential in the retail trade. We hear of cases where cleaning has been privatised. ACAS suggested that we needed a new wages council for contract cleaning. There are new industries such as security, instant print shops, video shops and others where we hear reports of exploitation.

The Minister probably knows that in his area some of the worst sweatshops at the beginning of the century were in the clothing industry. It employed newly arrived immigrants. In recent years, we have had a new group of immigrants, many of whom are being exploited in back-street sweatshops which are often fire hazards, and are as bad as any at the beginning of the century.

Last week, the Paymaster General announced a mouse of a scheme by which some £8 million would be spent in inner-city areas with high immigrant populations. The Bill will add to their employment disadvantages, because they are disproportionately represented in wages council industries. Anyone who is a woman, part of the ethnic minority, young, a part-timer or a home worker, or who works in hotels, catering, retailing, clothing or hairdressing definitely needs wages councils. One of the main reasons why we need a new Labour Government is to restore a proper system of minimum wage and employment protection for the weaker and badly exploited section of our work force.

6.49 pm

Mr. Lewis Stevens (Nuneaton)

I welcome the Bill with relief, because I had a feeling that the wages councils would be abolished rather than reformed. I am pleased that they are to be reformed. The hon. Member for Newham, North-East (Mr. Leighton) made several points about the need for national minimum rates to protect the low paid and to prevent exploitation of new immigrants. However, will those problems be solved by wages council modification? Those problems occur with the present system of wages councils. The Bill retains the wages councils to set minimum rates. It is important that people working in our fragmented industries are protected by a minimum rate.

The Opposition have criticised the single minimum rate for ordinary hours and the single premium rate for overtime hours, but "minimum" is the operative word. There has been criticism of what people earn in the City and what other people earn, but we are discussing wages councils setting minimum rates for industry. Surely that protection is still there for those industries.

The style of the wages councils and how they are set up will not alter. Why should the minimum rate be worse than it is at present?

My hon. Friend the Member for Banbury (Mr. Baldry) mentioned simplification. That is necessary, because the present complexity of the regulations produced by the wages councils causes confusion among the people whom they are designed to protect. Well-run clothing companies, such as Abbey Hosiery with 1,000 employees in my constituency, know the regulations on health and safety, wages and the rest. Those who do not understand the regulations are the very people who could be helped by them. The hon. Member for Newham, North-East mentioned exploitation of those paid below the rates. That occurs in small companies, but not in the larger well-run companies.

If the wages councils have a limited role in setting wages, there is more chance that throughout industry people will become aware of required rates of pay and they will be more likely to stick to them. In a sample, about 37 per cent. were paid below the rate set by the wages councils, so there is already exploitation. The protection in the Bill is of the right type. It is easily understood and it will apply across the board.

Many aspects that can be interfered with by wages councils, such as working conditions and contracts of employment, are covered by health and safety and other legislation. That legislation should provide adequate protection for workers in these industries.

The majority of industries covered by the Bill are fragmented. It is still difficult to look after areas where there is no control over low wages. The minimum rates set by the wages councils are exceeded time and again by those firms that have well-organised unions and employee associations. In the clothing industry and many others, people are paid above the minimum rate set by the wages councils. The problem does not apply to all the 2.75 million people nominally looked after by the wages councils. The affected group is much smaller.

It is important to leave the protection of the minimum rate of pay within the orbit of the wages councils. However, I have reservations about the age limit. It is easy for the Opposition to reject the idea that rates of pay for young people have an effect on jobs. If a business has the choice of using people who can contribute to the business, wages are only one of several factors that influence the decision. It is nonsense to suggest that a 21-year-old who has reached a good position in a company is not worth more to the company than he was at 16 or 17. That is the virtue of training people.

The clothing industry is a typical example. The rate of work and the production output of some well-trained people after four years or so is worth maintaining, even though a youngster would be paid less. A youngster would be pushed out if a firm had to pay him a high wage, especially during his early years in the industry. That is not an economic proposition for a company. If a company faces hard times, as many do with competition from abroad and elsewhere, it does not make sense to take the risk of a low return on the money that is invested during the early years.

Mr. Caborn

We are discussing industries that employ semi-skilled or unskilled staff. If a young person of 16 is taken on and after two years in the establishment becomes competent in the job, would the hon. Gentleman accept the scenario that 18 to 20-year-olds on a lower wage, because they are not protected by the revamped wages councils, could displace adult workers over the age of 21 because they would be paid considerably less? The history of industries that employ people under wages council regulations shows that training periods are about one to two and a half years, not the five years that has been suggested. They could very easily displace adult workers.

Mr. Stevens

I would have preferred a lower age limit of 20 years rather than 21 years. I share some of the hon. Gentleman's concern, but not to the same extent. As people progress within an industry, especially in a small business, they become more useful, so the return on investment is still present. However, I do not agree with all the hon. Gentleman's argument. People are kept on if they are useful to a business.

I believe that five years is a relatively long period, and far longer than the general training period in those industries.

Apart from that small reservation on the age limit, I believe that the general principle is right. The fragmentation of the industries that are covered by the wages councils means that the decision to employ a young person is influenced by wage rates and the return, because in many cases those industries employ few people. To employ young people is a considerable commitment by a small company.

Mr. Nellist

The hon. Gentleman talks about the abolition of wages councils for young workers, most of whom work in the shops and distributive trades. Has he seen the comments of the management of Dixons—the electronics shops — yesterday or the day before, objecting to a two-year YTS scheme because they cannot provide enough training to keep those kids going for two years? That is precisely the point which my hon. Friend the Member for Sheffield. Central (Mr. Caborn) was trying to make.

Mr. Stevens

I am amazed that a company which should wish to train people to acquire the knowledge that they need, would reject the YTS. That is not generally the view of companies, especially small companies, which, to get the best out of people. need that training period. It is an investment in their future.

The proposed legislation on wages councils is not the dramatic anti-employee or anti-youth measure suggested by the Opposition. It provides a basic protection to adult workers and it does not completely remove the recognition of young people's needs. Many companies will pay higher wages and will reward effort. The hon. Member for Newham, North-East (Mr. Leighton) mentioned differentials, which can be negotiated and included. We should not forget that trade union and employee negotiations have a much wider scope than sole reliance on wages councils.

I am pleased that we have retained the wages councils because they act as a good guide to small businesses, which do not wish to exploit their employees, to know the normal rates that they should pay. Such businesses can say, "We know the minimum, but if we pay £5 or £10 extra to someone who does a good job, it is simply a recognition of his efforts." Removing the complexities will do nothing but good.

Some hon. Members have asked whether we should have told wages councils that they were not doing their job. During the Labour Government, some of the decisions made by wages councils caused some embarrassment to those who were trying to introduce pay norms. Wages councils have a duty to recognise the impact of their decisions on the industry and on those who come within their orbit. We have provided a much more successful pattern for the future. It will be simpler, and much easier to run and, at the end of the day, will provide basic protection. It is not a rejection of wages councils, but a simplification of the present process.

Far too much is made of the Government's attempt to get rid of some of the obstacles to employment, when all that we are trying to do is to provide a choice between cash payments and non-cash payments without causing great difficulty to employees. The contractual obligations can be worked out between employers and the work force, and the repeal of the Truck Acts can do nothing but benefit the general negotiating position. It is possible to object in theory to removing those laws, but in practice it must be good to say to people, "Our modern system is handled mainly by the bank." For most people, the option will not detract from their present rights.

Mr. Caborn

But it is not an option. The Bill will provide that an employer can deny a request for cash payment by an employee, so the option of cash payment is being removed.

Mr. Stevens

The employer can decide the matter. The general effect will be simply to remove some antiquated practices.

The Bill is a step forward in our attempt to create a better atmosphere, especially for small businesses, 10 provide simpler administration for payment of wages and for the control of wages councils. In line with "Lifting the Burden", it must be step forward in our industrial and commercial activities.

7.4 pm

Mr. Don Dixon (Jarrow)

My hon. Friend the Member for West Bromwich, West (Miss Boothroyd) and I are Members sponsored by the General, Municipal, Boilermakers and Allied Trades Union, which fought so hard to stop employers paying the poverty wages imposed by wages councils. The last thing that the low-paid want today is lectures from part-time Tory Members of Parliament such as we have heard this afternoon.

When the Paymaster General introduced the Bill, he said that it was to deal with the problems of today's economic climate. What are today's problems? More than 4 million people are on the dole; crime rates are the highest that we have experienced; suicides are increasing; our manufacturing industry is collapsing round our necks; for the first time since the industrial revolution, we are importing more than we export; there is a record number of bankruptcies; the National Health Service is suffering from the turmoils of privatisation, which has resulted in hardship for patients and employees; and our education system is at a standstill with no prospect of a return to normality, because of the Government's obstinacy. Those are the problems of today, and that is what the Paymaster General should have said when he introduced this paltry Bill.

On the day on which the White Paper on employment was published, the Government announced the recommendations of the Top Salaries Review Body. One Minister stood at the Dispatch Box and accepted recommendations to increase the pay of judges, admirals and generals by up to 47 per cent., and the next Minister, who has now been banished to Northern Ireland, said that we would deratify ILO convention 26. That shows the cynicism of the Government. That is one reason why they have had to introduce this paltry Bill, which is aimed at the lowest paid.

Part II deals with the removal of those aged under 21 from the scope of the wages councils. That will affect about 500,000 young workers. The Government claim that that will create jobs, but no economic evidence supports that assertion. The truth is the reverse. My hon. Friend the Member for West Bromwich, West mentioned wages since 1979. Since then, young males have accepted wage increases which are 23 per cent. less than the average increases for male employees, and young women's pay has increased at a rate 30 per cent. lower than that of adult women. In 1984, young workers aged under 18, excluding all YTS trainees, received average wages equivalent to about 37 per cent. of the average adult wage. In 1948, 10 per cent. of 16 to 17-year-old males earned less than £38 for a full week's work, plus overtime. Those are the people who are supposed to be pricing themselves out of jobs.

Those who work in hairdressing receive paltry wages, yet they still have to pay electricity and gas bills and buy clothes and food to survive. None of the Tory Members who have spoken has experienced such conditions, although not long ago the hon. Member for Derbyshire, West (Mr. Parris) came to Newcastle and tried to live on unemployment benefit. He ran out of money before the end of the week. He was in debt by the Wednesday. He went round the pubs in Newcastle bumming beer, because he could not afford a pint. Yet he is one of those who lecture the low-paid. Those well-heeled Members of Parliament have jobs outside here as well as their fat parliamentary salaries.

My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) referred to holiday provision. This will be the only EEC country that fails to provide legal holiday entitlements for all workers, if that is taken out of wages councils orders as the Bill suggests.

The Bill also talks about setting a single rate of pay. The first consequence is that the wages councils will have no jurisdiction over a wide range of terms and conditions, including shift premium rates of pay. The Shops Bill will force people to work on Sundays and this Bill will mean that they are not covered by wages councils, because such provision will be taken out of wages councils orders. That is how the Government are dealing with the lowest paid.

Part I relates to deductions from pay. My hon. Friend the Member for West Bromwich, West spoke about hotel and catering wages, in which young people get a lodging allowance taken from their wages. The Bill will give unscrupulous employers the chance to take all sorts of things from the employee's wages. Wages councils also deal with the cost of laundering. Again, if the Bill is passed, that will not be covered.

We shall be the first of the 94 signatories to the ILO convention to deratify. That will be a disgrace for this country internationally, because the convention concerns the lowest paid.

The northern region has recently set up a new Low Pay Unit. I pay tribute to Michael Campbell, the leader of Tyne and Wear county council, and Tom Bayliss, the chairman of the TUC northern region, whose efforts resulted in the setting up of the unit. It has said that, in addition to the region's 250,000 people out of work, nearly 500,000 people are in work but fall in the low wage category. Not many hon. Members who have spoken today have been in that situation.

As my hon. Friend the Member for Kingston upon Hull, East said, women suffer especially from the hardship of low pay because often they are the only persons in the family who can find work. Therefore, they take over the role of the breadwinner. Half the women who do part-time work in the northern region are paid less than £2 an hour, and over 60 per cent. of full-time working women are paid less than £100 a week. The official published figures show that Tyne and Wear workers are among the lowest paid in the country. That does not bear out the Government's argument that if one accepts lower wages, there will be more employment. We have the lowest wages in the country but also the highest unemployment.

The Minister has spoken about youngsters pricing themselves into work by taking lower wages. But what will happen to those whom they price out of work? Where can they go if the youngsters take lower wages? What will happen to the adults covered by the wages councils? The Bill is a charter for unscrupulous employers who will pay off the adults and employ young slave labour. That is what the Government want.

The hon. Member for Penrith and The Borders (Mr. Maclean), who has only just come in, has probably been in the Dining Room and spent more on a dinner than some young waiters receive for a week's wages. We are subsidising such meals. In my area, shipyard workers and workers skilled in heavy industry, who have unhealthy and unsafe jobs, are still among the lowest paid in the country. That is because employers have a reservoir of the unemployed, which is forcing workers' wages down.

The Bill has nothing to do with employment. It is meant only to carry out the Government's cynical dogma. It will force youngsters to take lower wages and allow employers to pay off adults and employ youngsters. When the youngsters become 21, they will find themselves on the street.

I hope that we shall reject the Bill. My hon. Friends have expressed many fears. I fear that we shall get ourselves bogged down in technicalities. We must remember that we are talking about the lowest paid workers, who will be paid even less, and whose conditions will worsen with the effects of the Bill. I hope that some Conservative Members have a conscience and will join us in the Lobby to vote against the Bill.

7.15 pm

Mr. Ken Eastham (Manchester, Blackley)

The Select Committee on Employment spent many weeks on a study on the low-paid. I have no doubt that when Conservative Members originally considered the low pay issue they had made up their minds that they would abolish the wages councils. However, the evidence submitted to the Committee was so overwhelmingly against that proposal, which came not just from trade unions and workers, but from industry, that it became obvious that the Government could not be so hard-faced as to abolish wages councils. They thought that, to start with, they would take on the under-21s. I say "to start with", because I believe that the Government's ultimate intention is to abolish wages councils altogether.

Mr. David Lightbown (Staffordshire, East)

Hear, hear.

Mr. Eastham

I hear an hon. Member saying, "Hear, hear". I wish that he would stand up so that he can be identified, instead of grunting in the corner. I shall gladly give way if he wishes to say something.

Mr. Lightbown

It will be in the record.

Mr. Eastham

We know that 2.7 million workers, mainly women, are affected. We also realise that by and large they are not organised. They have no trade unions to fight for them. This is the consequence of the poor working conditions and the indignities that they have to suffer.

Wages councils are set up as a safety net. As the Minister insisted that the legislation would increase jobs, it is reasonable to pose a question. Why is it that the right hon. and learned Gentleman uses the lowest paid working group to create more jobs? There might be some logic in somebody on £250 or £300 a week creating more jobs, but no action is proposed for them. The Government are attacking the people who are on starvation pay.

As my hon. Friend the Member for Jarrow (Mr. Dixon) said, we shall be the first country to revoke ILO convention 26. We are a so-called civilised nation, a so-called progressive nation, but countries such as Italy, France, Germany and many others still believe that there is a case for wages councils.

Last year the Department of Trade and Industry ran a survey that was tied up with a document called "Burdens on Business". It is interesting to note that, on the analysis of the questionnaire, only eight of the 200 companies spoke about wages councils. Of the 19 so-called burdens, wages came sixteenth in the list.

Mr. Trippier

I was the co-ordinating Minister for that report, and of those covered in the survey only a relatively small percentage were covered by the wages councils or in wages councils industries. That is the simple explanation.

Mr. Eastham

Perhaps the Minister will agree that their priorities were not as expected. By and large, the important issue was the high interest rates charged by the banks. It was not about low-paid workers. As a percentage of the finished goods, low pay was not a factor.

Evidence from Japan and Germany has shown that if one treats the employee fairly and properly there is an increase in productivity and profitability. These countries, which are pointed out to us as being so successful, state that to treat their workers properly has a benefit. When one listens to the Conservative Government, one realises that their policy is the exact reverse. We aim, but fail, to compete with Japan and Germany. Within the worker groups of the wages councils, there are a great number of black workers. They are mostly unskilled workers and are once again affected.

It is rather interesting to note that America has recognised the problems. I should like to quote from President Johnson, who made a statement about riotous outbreaks in 1968 in the United States. He said: The only long-range solution for what is happening lies in an attack … on the conditions that breed despair and violence … ignorance, discrimination, slums, poverty, disease, not enough jobs. We should attack these conditions not because we are frightened of conflict but because we are fired with conscience … because there is no other way to achieve a decent and orderly society".

I only wish that this Government would pick up some of these messages, because danger signals are there. I spent two days in Liverpool this week with the Employment Select Committee and met some of the black groups who are in absolute despair of the policies and the complete disregard for their lot in society.

Mr. Eddie Loyden (Liverpool, Garston)

My hon. Friend the Member for Jarrow (Mr. Dixon) made a point that should be handed on constantly to this Government —that it is in areas of low pay that high unemployment exists. I am sure that my hon. Friend was made aware of that during his visit to Liverpool. If the Conservative Government's arguments are correct there should be full employment in Merseyside, but in fact there is 22 per cent. unemployment.

Mr. Eastham

I am well aware of that, and I fully endorse what my hon. Friend says. The Government cannot ignore the direct link between poverty and wages. There is also a direct connection with ill health and premature death. These are the results of inadequate diet, clothing, heating and housing. All these are the sad effects of poverty. This legislation will contribute to and increase these problems, yet we in the Select Committee meet groups and try to convince people that we really care and want to do something about these problems.

Are wages too high? Why does it always have to be the lowest paid who have to make the sacrifices? National average pay at present is about £168 per week. However, a newspaper published on 13 January 1986 spoke of a £24-a-week 'slave labour' probe … A 'sweat shop' laundry. In Preston there are adults working for 60p an hour—£26 per week. The Minister said that the minimum wage for youngsters, 60 per cent. of the adult wage, is too high, yet 60 per cent. of that £26 would be about £15.60. According to the Government's analysis, that figure is too high.

I wish to relate some of the experiences that I have had in the city of Manchester. I initiated the Adjournment debate of 5 July 1984, on Phillips Rubber Limited. A constituent had come to see me who had a wife and two children and whose basic rate of pay was £48 a week. The workers negotiated a wage increase and the company's final offer was an increase of £1.92. The Advisory, Conciliation and Arbitration Service was approached, but this benevolent company rejected any proposals. These are some of the wages which the Government say are too high.

Another example of pricing oneself out of work, in modern Tory Britain, concerned a cleaning contract firm. The firm used some women as part-time cleaners. The wage for five nights work was £17.50. The management declared that it was changing that and that it would give the women £1.50 as an attendance rate to make sure that they turned up for all five nights. However it was not £1.50 extra. The management reduced the basic wage to £16 a week and the women would obtain the £17.50 only if they were good girls and made sure they were there for the five nights. These are the type of wages that one can quote.

I am pleased and proud of the fact that in the Greater Manchester area a local low pay unit has been set up. It is doing some magnificent work. It recently published a document which said: One in three full-time workers in Greater Manchester earn less than the Council of Europe's "decency threshold" for wages. Amongst part timers four out of five earn poverty wages. Only two other major urban regions have a worse record … About 25,000 establishments are covered by wages councils in the Greater Manchester area. The vast majority of these are shops, pubs and clubs, hotels, restaurants, and cafes, hairdressers and clothing manufacturers.

It is interesting to report to the House that the low pay unit in Manchester makes observations about the cuts in wages inspectors and the consequent illegal underpayment of the minimum rates of pay. In 1984, 1,310 workplaces —5.3 per cent. of those in the region—were inspected, and 43 per cent. of all employers visited in the Greater Manchester area were found to be breaking the law. Despite the Government's strong line about law and order, there has not been one prosecution as a result of those inspections of stinking rates of pay.

I shall give just one example of a cleaner in a medium-sized contract cleaning firm in Alton, Lancashire. She was female, aged 35 and had three children at school. She worked 15 hours a week and received £1.20 an hour. It cost her £2 a week to travel to work and she had to pay for cleaning overalls, which cost another £1. She lost £3 immediately, even out of her meagre pay. These are starvation rates of pay. These are the issues about which, if the Government have a conscience, they should do something. I have a question for the Minister, and I should like answer. If low pay is the answer, why is there not full employment in India, Pakistan or Portugal, which are low-wage economies?

I was in a jobcentre in Liverpool on Monday and I observed that much the same was happening there as in Manchester. Some of the rates of pay are so insulting and embarrassing even for employers that they no longer put the pay on the card, but say, "Wages negotiable." The Minister ought to give a directive to jobcentres through the Manpower Services Commission to say, "We are not prepared to take these adverts until the rates of pay are clearly stated." We know what "negotiable" means—the lowest wages that employers can get away with, and even that would be too much for some of them.

The Minister spoke about values. I shall never forget the Prime Minister at the last general election talking about Victorian values — Victorian values such as poverty, disease, the workhouse, rickets, fear, slums and practical slavery. Those are the values that the Government really want to return to. The Bill is Robin Hood in reverse. The robber barons are back in Britain.

7.32 pm

Mr. Gerald Kaufman (Manchester, Gorton)

On a point of order, Mr. Deputy Speaker. I apologise to the House for interrupting this important debate, but I wish to raise a matter which is directly related to the rights of the House.

A little while ago, in another place, amendments proposed by Lord Denning, and carried with the assistance of Lord Stockton, turned upside down, reversed and wrecked one of the principal and fundamental clauses of the Shops Bill. The amendment means that clause 2 of that Bill, instead of withdrawing Shops Act 1950 protection from all employees aged over 18, reinstates and entrenches Shops Act protection for all workers in shops, not just shop assistants. It includes all of those employed in connection with retail trades and businesses. It is a fundamental amendment to a Bill which is due shortly to come to this House.

I understand that the procedures of the other place do not permit the Government at this late stage to reverse the amendments. Therefore, when the Bill comes to this House, instead of doing what the Government originally proposed, it will entrench the rights of all workers in shops. That is the Bill which the Home Secretary will have to present for a Second Reading, unless the Government decide not to proceed. It is important for the House to know whether the Government intend to withdraw the Shops Bill as the other place has torpedoed it. If, however, the Government decide to present it to the House for Second Reading in the form in which it will come from the other place—

Mr. Deputy Speaker (Sir Paul Dean)

Order. I am sorry to interrupt the right hon. Gentleman but I am not quite clear what connection there is between that Bill and today's debate in this House.

Mr. Kaufman

I am raising my point of order for two reasons. First, this is an urgent matter which has just presented itself and, secondly, it is directly relevant to the Wages Bill. The Shops Bill claims to introduce reforms recommended by the Auld committee, and the Wages Bill addresses another of the Auld committee's recommendations. That is why the matter is directly relevant and why it is appropriate and necessary to put to you, Mr. Deputy Speaker, the point of order on which I should be grateful for your ruling and advice.

The Shops Bill and the Wages Bill run in tandem. When the Shops Bill is presented to this House by the Home Secretary will he be obliged to commend a Bill which runs in tandem with the Wages Bill and which, if it is introduced in the form in which it will leave the other place, will entrench the rights of shop workers? The Shops Bill will contain other matters about which we are worried. Will the Government be obliged to proceed with the protection of shop workers which Lord Stockton has made it necessary for them to proceed with?

Mr. Deputy Speaker

The right hon. Gentleman has already made it clear that this is largely a matter for the Government, and not for the Chair. When the Shops Bill eventually reaches this House, it will be dealt with in the form in which it then stands. As for today's debate, the House knows that we are masters of our procedure and that no event that might have taken place today in another place will in any way alter our procedure or our debate on this Bill. Of course, it is perfectly in order, if it is felt appropriate, to refer in argument in the debate on the Wages Bill to debates that may be taking place on another Bill in another place.

Mr. Kenneth Clarke

Further to the point of order, Mr. Deputy Speaker. If the right hon. Member for Manchester, Gorton (Mr. Kaufman) wants to take part in our proceedings on the Wages Bill, I am sure that the whole House will welcome his trying to catch your eye, Mr. Deputy Speaker. As for events in another place, I understand that an amendment has been carried by a majority of one against the Government. It would not be right for the Government or the House to prejudge that amendment now, but I think that it will be found on examination that it is by no means as fundamental to the objects of the Bill as the right hon. Member obviously hopes.

To my understanding it is by no means unusual, if a Bill commences in another place, for that House to amend the Bill so that it begins its progress through this House in a different form. It would be quite wrong for the Government to anticipate their reaction to amendments in another place at this time and to prejudge whatever decisions this House might want to reach in due course about the final form of the Bill. I can, however, assure the House that any suggestion that we might withdraw the Shops Bill is absurd.

Mr. Deputy Speaker

It is most unusual to debate a measure that is being debated in another place. I am very anxious that we return to the debate on the Wages Bill.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

In the Auld report it will be recalled that the two questions were inextricably linked—the shops legislation on the one hand and the wages councils legislation on the other. If the Government are in difficulties and would like to reconsider their position, Mr. Deputy Speaker, is it not within your power to suspend the sitting and consideration of the Bill?

Mr. Deputy Speaker

I am very surprised to hear some hon. Members of this House saying that we should be unduly influenced by what is taking place in the other House. Let us return to the debate on the Wages Bill.

Mr. Robert C. Brown

Further to that point of order, Mr. Deputy Speaker. I am in difficulty. As you know, I seek to catch the eye of the Chair in the debate and if I succeed, I intend to make specific reference to the wages council order which deals with anti-social shifts, split shifts, weekend working and night work, which have traditionally been rewarded with extra payment. Under the Wages Bill, this will no longer be the case. One industry in which this will be felt particularly is retailing with the forthcoming—

Mr. Deputy Speaker

Order. The hon. Gentleman seems to be telling me that he has an additional argument which he wishes to use in his speech. He will be perfectly entitled to do so if he is called in the debate.

7.42 pm

Mr. Gerard Neale (Cornwall, North)

One ought perhaps to express some thanks to the right hon. Member for Manchester, Gorton (Mr. Kaufman) for having introduced into the debate some excitement and interest.

I wish to confine my remarks to what has been said particularly by the hon. Members for Manchester, Blackley (Mr. Eastham) and for West Bromwich. West, (Miss Boothroyd). Having served with the hon. Members for Manchester, Blackley and for Newcastle upon Tyne, North (Mr. Brown) on the Select Committee on Employment, I know that they care deeply about employment and unemployment matters. While they would no doubt claim for themselves a deep sincerity of purpose for the people whom they represent, in particular those who are unemployed, I think that they should not question the sincerity of purpose of my right hon. and learned Friend the Minister for Employment and my right hon. and hon. Friends on the Government Front Bench who see a different solution to the problem. It may be that one solution is more right than another, but we on the Conservative Benches are equally worried about the situation, and are determined to find ways to alleviate the problem of unemployment and to produce the best solutions.

The hon. Member for West Bromwich, West referred to the fact that the Bill was lacking in giving to those who have had unfair and unwarranted deductions made from their pay the right to appeal to industrial tribunals. I should have thought that clause 6 is quite clear on their rights in that event.

There is a fundamental difference between the two sides on this issue. The Opposition seem to believe that, because an individual, of whatever age, warrants a size of wage packet that will enable him to lead a certain way of life, however simple that may be, it is therefore possible for that wage to be met by the employer. As a Member who comes from a very low wage economy area, nobody knows better than I that businesses are not necessarily able to pay such wages. If a company is not generating sufficient profit, the work is often there to be done, but there is not the money to meet the wage expectations outlined by Opposition Members.

The Bill is refreshing in that it cuts through some of the hypocrisy and humbug surrounding employment legislation as it affects wages. The vital thrust of the Bill is that it provides for a person's work to become more attractive to a prospective employer. The hon. Member for Newcastle upon Tyne, North referred to the top salaries review body, and the fact that the Government wished to see the recommendations enacted. I do not regard the two things as being in conflict. The Government realised that in certain areas we were losing the right people simply because we were not paying enough to keep them.

Mr. Robert C. Brown

Is the hon. Gentleman aware that any Defence Minister has ever been short of suitable candidates for promotion to general, air marshal or admiral?

Mr. Neale

From personal experience of particular ranks, no. However, I know that the legal profession has a severe problem in getting the right people to take the top jobs of judges and so on.

Young people must be made attractive to employers as employees. While the employer may have work for them to do, his business may not justify his paying them the appropriate wage. Some youngsters are willing to work at the rate which the employer can offer, but to enter into such an arrangement would be immediately to break the law. This must be borne in mind.

It must be realised that, particularly in places such as Cornwall, employers are well versed in the effects of unemployment. Tourism has been mentioned. In such places as Newquay, Bude and other parts of Cornwall, employers know that unless the holidays which they are selling are competitive in price and in what they can offer with those available in Spain, they will be unable to sell them. The prices at which the holidays can be sold will affect the level of wages. Either we sell holidays at prices that people will pay or we do not sell holidays and do not employ workers. We cannot get away from that. One problem in my constituency is that often unemployment benefit is in excess of what employers can pay, so it is better financially for people to stay on the dole.

The amendments to the Truck Acts 1831 to 1940 are long overdue. It must make sense to restrict regular cash movements between banks and employers. In the United States, the movement of money from banks to employers and out to employees constitutes only about 1 per cent. of the total payroll. In Germany the relevant figure is 5 per cent. and here it is 37 per cent., with all the attendant problems of administration and wage snatches.

Let us examine those two aspects. If the administration of a business is made more simple, its products become more competitive in price. That leads to two things. Management can pay more to employees who are engaged in production or the company can become more competitive and thus increase its viability and the number of jobs it can offer. In regard to robberies, again there are tremendous additional social costs involved for people detecting the crimes, for insurance payments, for subsequent court actions, and for prison thereafter for those who are convicted.

Because of the competition that has developed among banks during the period of office of this Government, those who shift to being paid through banks find that their bank accounts are not subject to charges if they remain in credit. Also they have a 24-hour money service through cash machines. So payment of wages through banks is not inconvenient but in many ways makes life easier.

I agree with my right hon. and learned Friend's decision to restrict the role of wages councils to wages and payment matters and to rule out negotiations on many fringe benefits. Major employers tell us that they often have to carry out two sets of negotiations, one with the unions on various fringe benefits and another with wages councils. Opposition Members will no doubt say that trade unions want to get the best conditions they can for their members. One respects that view, but it constantly raises the wage factor in a business. Opposition Members may ask what is wrong with that. When one is managing a company, one knows that only a certain wage factor can be carried as an overall cost before it starts to hit the cost of the product or service that is provided. Opposition Members must realise that. If the wages cost is too high, an employer immediately find ways of making his business more efficient. In doing so he may shed staff, so that hits the very people that the trade unions are trying to protect.

Despite what Opposition Members say, the most welcome part of the Bill deals with young people. It would be ludicrous for anyone to say that the Bill will cure youth unemployment. Of course it will not and no one is suggesting that for a single moment. Without any shadow of a doubt, however, it will help in many instances to increase the chances of young people being able to take work for which they will be paid. Some employers complain that they cannot employ some young people because of their educational standard. Other employers blame the lack of maturity of young people. But all too often employers find that young people of 16, 17 and 18 have too high an expectation of the starting wage or of the amount that they will be earning within a short time. Their expectations are so high compared with the value of the work they will be doing that employers cannot afford to employ them.

If we make a comparison between ourselves and places such as West Germany we find that apprentices in West Germany get 15 per cent. to 25 per cent. of the adult wage, whereas here it is 50 per cent. to 60 per cent. and in some cases even 75 per cent. Therefore, it is self-evident that there will be a great problem unless we reduce the amounts that young people receive.

Opposition Members get very upset when the abbreviation EEPTU is mentioned, because to them it is a rogue union at the moment. It entered into an arrangement with electrical contractors whereby the wage of apprentices was reduced from £41.63 to £27.88. As a result, between 1982 and 1984 the number of apprentices went up from 850 to 3,210. That is the example that Opposition Members should consider.

Various hon. Members have said that the Bill will do nothing to increase the number of jobs. A study carried out by the Department of Employment suggested that 50,000 jobs had been lost between 1954 and 1979 because of wages councils. According to another report, 230,000 jobs could result from the abolition of wages councils. Even a report made for the Leader of the Opposition admitted that more jobs would come. The most critical point, borne out by surveys and by my experience in my own constituency, is that if a young person is given the option of no likely job or a job at a reasonable wage, though not as good as he had hoped for, he will be pleased to take the work because he will see an opportunity to better himself.

None of my right hon. or hon. Friends sees the Bill as a cure-all for the unemployment problem, particularly for young people, but those of us who have studied the problem in our own areas are aware that work is available in many small businesses but they are restricted because of the amount that they are required by wages councils to pay. They can offer work because they have work to be done. The level of profitability in those firms is limited simply because of their turnover and the amount that they can trade. I think that the Bill will offer better possibilities for those people and in that sense what my right hon. and learned Friend is attempting to do is welcome and should be supported.

8 pm

Mr. Tom Pendry (Stalybridge and Hyde)

When the hon. Member for Cornwall, North (Mr. Neale) was called, I thought that we would have a contribution from a Conservative Member which would relate to the Bill. Indeed, as the hon. Gentleman represents part of the country which has some of the lowest paid workers, one would expect him to speak up for them. That did not come through. I hope that on reflection, when reading his speech, he will realise that he did not do justice to his constituents. I hope that as many of his constituents as possible will read his remarks.

The Bill has been described by many hon. Members as repellent, repugnant or paltry, but I certainly think that it is a national disgrace. It is yet another example of the Government's attitude to the low-paid worker. We have heard about Victorian values from some hon. Members relating to what the Prime Minister said at the general election. Even in Victoriana the low-paid workers were protected in one form or another by Parliament.

When the Minister opened the debate, he said that the Bill represented progress. He was talking in a language which certainly no Opposition Member understood when he said that the Bill was about employment. If one looks at the figures produced by the hon. Member for Cornwall, North one certainly cannot argue that it is about employment. It is not, and the Government know it.

I wonder why the Government, with all their problems, are prepared to enter this fight—because that is what it will be. I do not know why they are engaging in a battle which they cannot possibly win. One could argue that they may possibly win in the next 18 months, until the general election. But do they believe that the disadvantaged—and there will be many disadvantaged as a result of the Bill —will rush to the polls to reinstate them at the next election?

Two weeks ago we debated the Social Security Bill, and in that debate we heard speech after speech which clearly demonstrated that many families in this country would be made poorer—the unemployed, single-parent families, the disabled pensioner and the student. Will those people be grateful to the Government? Of course not.

Before I come to the consequences of this legislation, I should like to draw the attention of the House to another group of people who are soon expecting to hear from the Government about their wage claim. The group of low-paid workers to whom I refer are in the National Health Service. It is not only our nurses who deserve a better deal, but the back-up workers in the Health Service—the ancillary workers. I declare an interest as chairman of the National Union of Public Employees' group of sponsored Members of Parliament, but I want to tell the House that we are not just thinking about those low-paid workers under wages council. One can argue that there are many low-paid workers who are in some ways worse off.

For example, a laundry worker in the NHS would receive £72.53 for a 40-hour week. The wages council's statutory minimum for a 39-hour week is £74. The National Health Service rate for a canteen assistant is £72.53 for a 40-hour week. The wages council's statutory minimum for a 39-hour week is £69.11. A domestic supervisor working a 44-hour week, including four hours overtime on a Sunday, would take home £88. I could relate many more of those rates of pay in the Health Service, but I think I would be ruled out of order if I went much further. However, those rates are disgraceful, and they are being made more disgraceful by the Government; and those workers are looking to the Government in the near future to say something positive and encouraging about their wage claim.

I have already described the Bill as a disgrace because it hits at workers who have looked to successive Governments for protection. To be fair, Conservative Governments over the years, from Sir Winston Churchill down to the right hon. Member for Old Bexley and Sidcup (Mr. Heath), have regarded such workers as a worthy group of people in need of protection. When the Minister opened the debate, we heard camouflage, gloss and cant about the Bill. We all know what the Bill is about and I do not see why the Government should disguise it. After all, their leader does not disguise her approach to the poorer workers in this country. If the Prime Minister was trying to disguise it, she has not done a good job with the legislation which has been pouring out recently.

No amount of camouflage could possibly disguise the fact that those under attack by the Government are young people. People under 21 years of age will be bashed by the legislation. The effects are clear. Young people are already among the most disadvantaged in terms of wage rates. My hon. Friend the Member for Newham, North-East (Mr. Leighton) pointed that out. After today, they can look forward to being the most under-privileged youngsters in the civilised world. As the House already knows, at present one in five of all young people are covered by wages council rates of pay. By introducing the Bill the Government effectively, as the House again knows, contravene International Labour Organisation convention 26. By doing that, the Government strip young workers of the protection afforded to similar workers in competitor countries in Europe. That is another example, as was forcibly demonstrated by my hon. Friend the Member for Jarrow (Mr. Dixon), of the Government's disregard for international agreements.

We are told by Ministers that this is the price for generating new jobs. All the evidence, despite what was said by the hon. Member for Cornwall, North, suggests that the number of jobs will be very small. Even if the figure is as high as that suggested by the Government, it hardly justifies the removal of basic protection from young workers. The truth is that we are likely to see young workers exploited to the detriment not only of themselves but of many adult workers. That has already been pointed out. Those young people will be taking some of the jobs of their elders as a result of the legislation. In Thatcher's Britain we already see a proportion of male manual workers earning less than the Council of Europe's decency threshold. That has doubled since 1979 from one in 10 to one in five.

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

rose—

Mr. Pendry

I would normally love to give way, but I shall not, because the Conservatives are scratching around for speakers. I do not see why I should give them the opportunity of an intervention. I know that some of my hon. Friends have some worthwhile contributions to make. If the hon. Member for Nottingham, South (Mr. Brandon-Bravo) understands my point, I shall go on.

The proportion of manual workers earning less than the poverty wage has increased from two thirds to four fifths over the period that I have just mentioned. The number of families forced to rely on family income supplement to top up their low wages has trebled since 1979. In fact, a third of our total work force, according to the Council of Europe rate, are low-wage earners.

The reason why the Government will not get away with their low pay arguments from now on is because, thank God, we now have the Low Pay Unit. The House and the nation are gradually beginning to get the message about the facts of low pay. I should like to pay tribute to the work of the Low Pay Unit, especially, being a Greater Manchester Member of Parliament, to the low pay unit run by Steve Carr in Manchester. He is doing a great deal to highlight some of the problems of low pay in that low-wage area, where 25,000 establishments are covered by wages councils and the rates of pay range from between £65 and £78 per week. Even when measured against average full-time earnings of the employed within Greater Manchester, that is very low. I understand that average full-time earnings in Greater Manchester are £160 a week.

I shall give some real examples of low wages. Conservative Members may not know whether similar examples are to be found within their constituencies, but I should be surprised if there are not. A butcher, employed near Stalybridge in my constituency, who is 28 years of age and has two children, receives gross pay of £69 for a 49-hour week. That is the sort of person who will be caught by the Bill.

Another example is Albert—I shall not give his surname—who is 20 years of age. He has worked for one year in a shop at Hyde which sells cut-price household goods. He is the only member of a large family who is employed. He takes home £48 for a 48-hour week. It has been calculated that he is under-paid by 45p an hour and is owed over £800 in lost wages. The effect of the Bill, when enacted, would be to remove employees such as Albert from the scope of wages councils orders. A claim for under-payment could be made only if he were one year older.

Another example from my constituency involves a person who is a carpet fitter by trade. He was employed until Christmas by a small Tameside firm which employs 15 workers. When he was made redundant, he contacted the Greater Manchester low pay unit about obtaining redundancy pay. The result of the unit's efforts was that my constituent was able to secure a redundancy rebate of 35 per cent. That would not be open to him under the Bill.

I have given only three of many examples that I could present to the Under-Secretary of State for Employment, who is to reply to the debate. The Minister, who represents a north-west constituency, must be aware of the problems to which I am drawing the attention of the House. I am sure that when he replies he will give us his in-depth knowledge of what he has learnt from moving around the area. I know that his constituents will be taking an interest in the debate.

It is unfortunate that I do not have the Minister's attention, but I hope that he will tell us, when he replies, how he proposes to strengthen the wages councils for those who are over 21 years of age. Will he strengthen the factory inspectorate? Will he ensure that the 43 per cent. of employers in Greater Manchester who were illegally under-paying their employees in 1984 will be prosecuted? Will he ensure that it will not take 19 years on average for those making illegal payments to be prosecuted? Will he give us a guarantee that wages councils will be beefed up to deal with injustices? The Minister must come clean when he replies. He must understand that there are many who believe that the wages councils should be more effective in future than they are now.

The low-paid and other disadvantaged groups do not have sophisticated channels of communication. They do not have plush public relations companies and they cannot present their case in the newsapers. However, they have their unions, low pay units and Labour Members, and, most of all, they have their votes. That is why the Bill will be rubbished after the next general election. They will make their complaints through the ballot box about the sort of legislation that is now pouring out from the Government. Let us hope that the Government will take note of what has been happening to the Shops Bill in another place and in Committee will produce a Bill that will not be recognised as the measure that is now before us. We shall give the Government every assistance in Committee if they wish to produce a measure that will meet the country's needs, and especially those of young workers.

Several Hon. Members

rose—

Mr. Deputy Speaker

Order. The Front Bench replies are expected to begin at about 9.20 pm and six Back Benchers still hope to contribute to the debate. I hope that contributions will be brief.

8.14 pm

Mr. Richard Caborn (Sheffield, Central)

The contributions to the debate by Conservative Members have been divorced from what is happening in industries in which the low-paid are employed. The most despicable feature of the debate is the way in which the Government have tried to shift their responsibility for the mismanagement of the economy over a considerable period from themselves to the backs of low-paid workers. When industrialists talk about their problems they do not refer to wage levels. Instead, they talk about high interest charges and the manner in which the Government have prevented capital investment in British industry.

The Bill is asking the low-paid to pay for the mismanagement of the economy by the present Administration. There are many who are concerned about the low-paid, and many of the concerned are in the inner cities. I shall refer to three main areas of concern and then deal with the consultation document and the Bill. In doing so, I shall address myself to whether they have been able to advance their case.

There are many who are concerned about the reform of the wages councils, because it is recognised that in many instances the councils provide base lines for wages. The base lines are the products of discussions within individual industries. The Bill will lead to rolling in by the state and we shall not see the rolling back of intervention. Without legal minima, many of my constituents will be reduced to poverty wages. I represent an inner-city constituency which faces horrific problems, and the Bill will compound the problems.

The effect of poverty wages is apparent not merely to those who receive them. There are consequences for the local economy, as low wages reduce considerably the purchasing power of those within the local economy. The Government are trying to provide resources through their cosmetic schemes for the inner cities, but at the same time they are withdrawing resources which could well be produced by ensuring proper wage levels for those in the inner cities.

After detailed consideration of the consultation paper and the Bill, it appears that it is the Government's fundamental premise that decreasing wages will significantly increase employment. I believe that that is a flawed premise. The Paymaster General argued that wages councils present an obstacle to the creation of more jobs and the freedom of employers to offer, and job seekers to accept, jobs which otherwise would be acceptable. The much-quoted department of applied economics of Cambridge university concluded that where wages councils have been abolished there have been no consequential benefits for those seeking employment. It found no evidence of any increase in economic efficiency and no increase in the number of jobs in the industry or industries that had been subject to wages council control. Indeed, it found significant evidence of an increase in low pay.

The Paymaster General questioned the usefulness of wages councils in the light of changes in rates of pay, employment legislation, social security and welfare provision. Rates of pay for those at the bottom end of the pay scale have not improved. Between 1973 and 1984 the earnings of full-time male workers within the lowest earnings band declined from 65.6 to 61.6 per cent. of those in higher paid employment. During the same period, many higher paid workers' earnings increased considerably. Many low-paid workers have suffered a significant decline in real earnings, while prices have risen, by between 5 and 6 per cent. per annum. The full protection that is offered to some by employment protection legislation does not extend to employees in small firms, and workers who are covered by wages councils are employed in many such firms. The poverty wages that will result from the abolition or reform of wages councils will force many of the workers involved to become dependent on the state.

Mr. Baldry

Will the hon. Gentleman give way?

Mr. Caborn

No, because Mr. Deputy Speaker has reminded the House that many other hon. Members wish to take part in this debate.

The consultative document states that employment in wages councils' industries is atypical, with two thirds of them being part-time workers and four fifths of them female. The implication is that these workers are less important and that their incomes are less crucial than those of other workers. However, many female workers are the sole breadwinners in the family and rely upon their full-time or part-time earnings to provide the crucial family income. Well over four times as many families would be below the poverty line without women's earnings in one form or another. Reform of the wages councils will have a particularly adverse effect upon such workers.

The suggestion that compliance with wages councils orders is higher than non-compliance is due to a misunderstanding. In 1983, 9,842 establishments were found to be breaking the law, but only two were prosecuted. Instead of clamping down on this criminal activity, the Government have weakened the enforcement machinery. Since 1979 the number of inspectors has been cut by one third to 119. Firms can now expect to be visited once every 19 years. However, in 1984 one third of the establishments that were visited were found to be underpaying 18,000 workers; 15 per cent. of those whose pay was inspected were found to be underpaid.

Statements have been made, without supporting documents, that a number of studies support the view that statutory minimum rates of pay jeopardise employment. Since 1977 the number of low-paid workers has increased. Unemployment has also increased dramatically. The suggestion that further cuts in wages would reverse this trend is unsupported. The evidence from other countries, particularly Japan, suggests that increases in the number of jobs have paralleled rises in wages.

The consultative document referred to the Treasury's paper entitled "The Relationship Between Employment and Wages." It claimed that a 1 per cent. increase in average real wages resulted in the loss of 150,000 to 200,000 jobs, yet wages councils account for only 8 per cent. of the total hourly wages bill, and for even less of the total weekly wages bill. The abolition or reform of the wages councils would result in a massive fall in wages. Is that what the Government want? This information was fed into the computer by the Low Pay Unit, using the Treasury model, and it showed that in the five years following abolition or reform only 8,000 jobs would be created, which is less than half the increase in unemployment in most months. It is suggested that trades covered by wages councils offer rates of pay for young people that are higher than most employers are willing to pay. Great emphasis has been laid by Conservative Members on this suggestion.

However, since 1979 the wages of young workers have fallen sharply, compared with adult rates of pay. They represent a cut of 4 per cert. in real earnings. In 1984 young workers under the age of 18 received an average, excluding YTS, of 37 per cent. of the average adult wage. In 1981 the right hon. Member for Waveney (Mr. Prior), who was then the Secretary of State for Employment, said that the exclusion of young people and part-timers from the scope of the wages councils would be unlikely to lead to more than a very marginal increase in job opportunities in these categories.

There seems to have been a significant shift in thinking, based upon the evidence that was available then to the Department of Employment. To remove young people from the scope of wages councils will probably lead to lower-paid young people displacing adult workers, especially women and ethnic minority workers. There is even concern on the Conservative Benches that this might happen.

Angela Galvin, who works in Sheffield's low pay unit, said: We have been talking to young people in Sheffield who are working 10-hour days, often without a proper break, for as little as £1.20 an hour. The proposals would remove what little protection they have and cause enormous problems for adult workers. You don't need a degree in economics to realise that the employers will not hire adults if they can employ young people for a pittance. That point has been clearly demonstrated in this debate. There is concern, even on the Conservative Benches, about the fact that 18, 19 and 20-year-olds who have had a modicum of training will be in a position to displace workers who are 21 years of age, or older.

It has also been suggested that wages councils impose considerable burdens upon employers. A recently published Department of Employment paper entitled "Burdens on Business" states that research found that only 4 per cent. of employers mentioned wages councils as having a detrimental effect upon business. The department of applied economics at Cambridge stated: Unregulated low wage employment destabilises product markets, increases uncertainty and risk, slows down the rate of scrapping of outdated equipment and consequently reduces both the level of new investment and the profitability of new investment in high wage firms. Many firms fear the effects of undercutting leading not only to shoddy work but to forcing firms out of business. The Contract Cleaners and Maintenance Association fear these effects and have pledged themselves not to undercut minimum NHS wage rates and conditions in Health Service contracts.

The Bill fits clearly into the Government's overall strategy for wage earners: to force down and depress wages in order to create a low-wage economy. This is to be seen in many facets of the Government's policy, whether it be the youth training scheme, or wages Bills or their attitude to industry. The Government are now attacking the lowest paid in our society.

I end with a quotation from Winston Churchill: It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions. It was formerly supposed that the working of the laws of supply and demand would naturally regulate or eliminate the evil. … But where you have … no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst."—[Official Report, 28 April 1909; Vol. IV, c. 388.]

Those words are as relevant today as they were when wages councils were established all those many years ago.

8.27 pm

Mr. David Maclean (Penrith and The Border)

I wish to deal with two aspects of the Bill: first, the Truck Acts and their effect during the past century and, secondly, the general principle of pricing people into work.

The Truck Acts legislation has undoubtedly hampered the growth of all non-cash methods of wage payment. It has acted as an impediment to efficiency in British industry. Moreover, it is inconsistent with the well-established principle that terms and conditions of employment are essentially matters to be determined contractually between workers and management rather than by legislation.

The main body of the Truck Acts legislation, which comprises the four Truck Acts of 1831 to 1940 and a number of ancillary and related provisions in other Acts, was passed in the 19th century to protect manual workers from abuses associated with the payment of wages. When I listen to Opposition Members, I feel that they are still living in the 19th century. They believe that such abuses still take place. We know what some of those abuses were. The bosses, the evil capitalists, had their factory shops. Rather than pay wages to their workers, they gave them tokens that had to be spent on the grossly over-priced goods in their factory shops.

The Truck Acts, which stipulated that workers should be paid in cash, formed one of the most valuable pieces of legislation to prevent that flagrant and disgusting abuse. There is no reason to suppose that if we abolished the Truck Acts we should suddenly find that 25 million workers in this country would revert to a form of token payment or to taking payment in kind instead of insisting on cash: cash through the credit transfer system, and cash through the cheque system. We are talking about money. The workers will still receive money rather than payments in kind. In 1983 the Government suggested that they would repeal this outdated legislation. The Bill will certainly undertake that long overdue task.

My hon. Friend the Member for Cornwall, North (Mr. Neale) cited some statistics. A much higher proportion of the working population in other countries are commonly paid through methods other than a wage packet on a Thursday night. In the United States, a much larger percentage of the population have bank accounts and use credit transfer systems. Only 1 per cent. of wage payments are made in cash. In Germany, only about 5 per cent. of wage payments are made in cash. In 1984, mainly because of the attitudes of trade unions, which were vested in the last century, 37 per cent. of wage payments in Britain were made in cash.

Can any hon. Member put up a sensible non-emotional argument on why we must have wages paid in cash in a wage packet? What is so philosophically sound or morally justifiable about a person going home with an average weekly wage of £100, £160 or £300 in cash? What is so morally wrong about transferring that cash through a credit transfer system to the bank? I would gladly listen to any hon. Member who could put up such an argument.

Ms. Clare Short

The Labour party's argument is that it should be up to the workers to negotiate. There are advantages to employers in moving to cashless pay. No one is against that, but employers should meet the wishes of their employees. This measure takes away the need for the workers to agree to the change. We believe in freedom of choice for the work force.

Mr. Maclean

That argument is rather rich. It gives those trade unions that control the work force of 9 million people a complete bar. If a large number of the workers want a credit transfer system, it will not be possible for them to get such a system. This legislation will not compel people to be paid by cheque. I accept that the change should result from freedom of choice. I know of industries where the workers have had to go behind the backs of their union bosses to get a credit transfer system. They negotiated for an extra few days pay with the management to allow them to move to a credit transfer system. They now all like that system.

There is no doubt that, on efficiency grounds, the credit transfer system is infinitely preferable to paying in cash. A tremendous cash saving can be made from paying people through credit transfers. The hon. Member for Birmingham, Ladywood (Ms. Short) suggests that we should not have this system, but I suggest that she should put it to the Sevices Committee that the House should set an example. Perhaps more people would then attend the Chamber late on a Thursday night as hon. Members queued up at the Vote Office to collect their little cash packets.

Ms. Clare Short

Will the hon. Gentleman give way, because he is misleading the House?

Mr. Maclean:

I shall not give way on this occasion. Contrary to Opposition Members, who seem never to give way, Conservative Members give way occasionally. I have given way once to the hon. Lady. I may give way later if she comes up with a reasonable point.

My main point is on fighting crime. I do not like the way the Opposition have glossed over the fact that in 1984 there were 450 reported armed robberies from factories and offices or on public highways in England and Wales. I declare an interest, because I worked for a security company which was, and still is, involved in the transfer of large amounts of cash. The Opposition quote examples of low pay in their constituencies. I can quote examples from the time when I was involved in cash deliveries. As a training officer, I dealt with the maimed and injured people who came to my classroom because they had been shot or otherwise injured during armed robberies. Too many women are widows because their husbands were engaged in cash transit work and were killed during robberies.

Unfortunately, the number of armed robberies against cash transit firms is increasing. This does not occur with just the large and well protected firms. There are too many robberies of office girls carrying the cash down to the bank in carrier bags or suitcases. It cannot be right in a modern sophisticated age to entrust the collection of wages to people who have to walk to the banks with carrier bags and suitcases for the cash. It is high time the Truck Acts were repealed.

The core of the Bill is about the removal of young workers from the wages council system. There is no doubt that high wages for young people choke off training opportunities and reduce employment opportunities for young people, because employers are not willing to employ youngsters on the pay that they are forced to give adult workers. There is no harm in again citing the statistics. In West Germany, apprentices earn between 15 and 25 per cent. of the adult rate. In the United Kingdom, they earn between 50 and 60 per cent. of the adult rate. In wages council trades, the basic rate paid to 16-year-olds is 65 per cent. of the adult rate, and for 17-year-olds it is 75 per cent. Most wages councils require the full adult rate to be paid at 18 or 19. When my hon. Friend the Member for Cornwall, North said that young workers were paid 50 or 60 per cent., he was asked, "Fifty or 60 per cent. of what?". That is largely irrelevant.

Ms. Clare Short

Not if one is trying to pay the rent.

Mr. Maclean

It is not irrelevant to the young people who cannot get jobs. We have heard much talk from the Opposition about defending the low-paid, but they must decide about whom they are really concerned—the 25 million people who have a job, or the 3.5 million people who are not in work?

Mr. Robert C. Brown

Both.

Mr. Maclean

If the Opposition were genuinely concerned about both, the hon. Gentleman would not attempt to support a measure which would freeze out a minimum of 8,000 workers and possibly 250,000 workers, and prevent them from getting a job.

There is no doubt that reducing relative wage levels for young people to a rate that reflects their inexperience and the value of their contribution can have a startling effect. The EETPU—the hon. Member for Ladywood said that Conservative Members could not quote any other examples—

Ms. Clare Short

It is true.

Mr. Maclean

I cannot quote any other examples because all the other trade unions have exercised such a tight grip over their workers and over management that they have not allowed an agreement similar to the electricians' agreement to be negotiated. If more trade union leaders had the guts of those in the electricians' trade union, there would be a darned sight more agreements such as that negotiated by the EETPU.

The May 1985 study by the Department of Employment on the effect of wage minima in the clothing industry suggested that up to 50,000 jobs had been lost between 1954 and 1979 because of wages councils. If there was a possibility of a factory closing this week, resulting in the loss of 50,000 jobs, would there not be applications under Standing Order No. 10, and would not the right hon. Member for Manchester, Gorton (Mr. Kaufman) be dropping in with more points of order to raise after he had primed his press men to wait in the Press Gallery? If 50,000 jobs are lost through the actions of trade unions, we hear not a cheep from the Opposition.

In July 1985, in an article in Economic Affairs, Dr. Stanley Siebert estimated that an extra 250,000 jobs for young people would follow the removal of the effects of wages councils. The most pessimistic study mentioned by the Opposition suggests that a minimum number of jobs —only 8,000 extra—might be created if wages councils were abolished. I like that humbug! If it were a question of the Government dismissing 8,000 employees, or of 8,000 jobs being lost, would we hear these sob stories from the Opposition? When there is a possibility of 8,000 new jobs as a minimum, with a possibility of 250,000 new jobs, being created, there is not a cheep from the Opposition.

What do the young people want? We have heard constituency examples of what might happen to young people in employment, but we have heard nothing about the young unemployed. In July 1985, a Gallup poll showed that eight out of 10 of the young people interviewed said that they would prefer low pay to start with rather than have no job at all.

I can understand why the Labour party does not understand the principle of pricing young people into a job. It is anathema to them. They never had to consider the matter while the trade unions ruled the country. I can understand why Labour does not understand it. The employers had no say in those jobs in the trade unions which came about through patronage and nepotism. They had no say in the jobs in the mines, in the shipyards in SOGAT, in the NGA and in all those jobs which were handed down from father to son. They had no say in the jobs for the boys in the trade union movement, about which Labour Members are so pleased. They do not understand the concept of pricing into a job, and they do not particularly like it.

Many of us have priced ourselves into a job. I trained as a lawyer, but I did not try to step into a highly paid job in middle management. I priced myself into a job and started at £40 a week in 1975, and that was not a particularly high wage then.

What the Opposition do not like about this concept is. that it brings in a spirit of independence. They would like every person to have to depend on employment, to be employed by someone else. They want to stop at national trade rates which are dictated by the unions. Labour Members dislike the philosophy of the Bill.

I must say to the hon. Member for Jarrow (Mr. Dixon) that I shall not take a lesson in wages morality from him. Conservative Members are accused of paying more for a lunch than a young worker is paid during a week, or during a day. I find that rather insulting as someone who is the son of a tenant farmer, brought up in the highlands of Scotland in the 1950s. I do not think there were many expense account lunches going for them or for Conservative Members.

The hon. Gentleman is still living in the days of class warfare. He likes to believe that Members on the Labour Benches represent working-class lads and are working for the low-paid and for the unemployed. It sticks in the craw of Labour Members when they see a Conservative Member—such as my hon. Friend the Member for Sherwood (Mr. Stewart)—representing a mining area. They cannot understand it. A situation in which individuals can take a low-paid job to begin with, and through their own efforts and hard work rise to the top and command much higher salaries, or break out of the employee-employer mentality and go into business for themselves, is anathema to Labour Members. They dislike it intensely, and that is at the core of their resistance to this measure, because it gives independence to young people to go out and seek a job at a lower rate than the minima which Labour Members would like to insist that everyone should have.

My hon. Friend who is to wind up the debate was in Penrith recently to present awards and a cheque at one of our super new hotels in the area. Penrith business men say to me, "Look, we appreciate what you have done so far and the fact that you are trying to reduce the burdens on industry. You have abolished Labour's iniquitous national insurance surcharge. You are changing the national insurance rules. You are trying to help us, but please make it easier to get young people into employment. We want to employ young people and take on young workers, but there is no way that we will pay them grossly inflated wages for the first few years when they cannot sell that equivalent amount in goods." A man in a shoe shop said to me, "I would happily take on a worker tomorrow, provided that I could pay him a lower rate than the standard norm which the wages council imposes, because in the first year he will not be able to sell £50 worth of shoes."

There is one other statistic that I want to give from Penrith. It has been said tonight that low pay brings with it areas of high unemployment. One of the growth areas in my constituency is taking businesses which have given up in other parts of the country, particularly Liverpool, where the attitude to industrial relations is not conducive to success. Penrith has 11.2 per cent. unemployment, and I do not think that Labour Members would say that we are a high wage area. We are a relatively low wage area in Cumbria, yet we still have only 11.2 per cent. unemployment, and the reason has nothing to do with wages councils. It is to do with the fact that we are the 12th highest constituency in the United Kingdom for small businesses and private enterprise, for people breaking out on their own and setting up businesses.

There is one superb example which I see every couple of weeks. Last Easter, a young man knocked on my door. He said that he was leaving school during the summer months and wanted to set up a window cleaning business. He was going around collecting potential customers, and he has now set up in business for himself. He has not sat back and listened to the whines from the Opposition that we cannot create more jobs; that young people are accepting wages that are below a magic norm which they would like to see paid. That young man has priced himself into work. The Bill will allow thousands of others to price themselves into work, and it ought to be accepted and passed.

8.45 pm

Mr. Dave Nellist (Coventry, South-East)

Because of the shortness of time I shall not deal with part I or part III of the Bill. I want to concentrate instead on the position of young workers under part II.

About five days ago I described this Cabinet as being like a headless chicken running around in its death throes. After Westland and the "Brittangate" scandal, and Austin Rover and so on, that was perhaps an acceptable description.

But there is nothing aimless about tonight's Bill. It is a squalid measure deliberately aimed at half a million young workers in this country. Where are the Tory protesters, who one would have believed in recent weeks were bursting out all over the Tory party? Where are these "One-Nation" people from the weekend protesting about standards of low pay in this country? There has not been one genuine speech from the Tory Benches today defending the position of young unemployed or young low-paid workers. The fact is, of course, that we have not one nation but two. While young workers earn £30, £40 and £50 a week, the Government have a Cabinet Secretary on £1,500 a week. We have a Government who preside over an economy in which 26 companies have directors earning over £150,000 a year. Top of the tree is Richard Giordano, managing director of British Oxygen, who gets £15,000 a week for selling fresh air. Even that is dwarfed by the hon. Member for Brighton, Hove (Mr. Sainsbury) and the other two members of his family who run that little grocery store— Sainsbury's—and who between them own £808 million-worth of shares and take home £150,000 a week.

It would take somebody covered by one of these wages councils over a century to earn what these three individuals get in a week, yet we are told that it is one nation. Incidentally, the other member of the family is the treasurer of the SDP; they do not get out of it scot-free.

We are told that there is a split in the Tory party over the future for Britain. There is a little disagreement between the right hon. Member for Henley (Mr. Heseltine) and the right hon. Member for Chingford (Mr. Tebbit). It is like the difference between the iron fist and the velvet glove. When the Government come with this Bill to mug young workers and nick their wage packets, those young workers will not be too worried whether or not the hand that nicked the money is wearing a glove, unless the Government intend to cover up the fingerprints and conceal who is taking the money away from them.

The instrument of renunciation which announced that the Bill was going to be introduced was published in July. Tory Members said how wonderful the youth of this country were who had just raised £50 million the previous weekend in the Live Aid concert, yet three days later, on the Wednesday, they castigated precisely the same young people for pricing themselves, their friends and their neighbours, out of work. Twenty-four hours later, the Government said that, in order to have an incentive to get the right people in the job, they needed wage rises of 30, 40 or 50 per cent. for 2,000 generals, top civil servants, judges and so on. When Ministers are told that it is rubbish that low pay and high employment go hand in hand, they are reluctant to give straight answers. During the past few years, the number of wages councils has fallen from 61 to 26. What has happened to pay and employment in sectors where wages councils have disappeared? If that were examined, one would find dramatic falls in both employment and wages. "Why look in a crystal ball when one can read the book" on the effects of the abolition of these councils?

Since 1979 when the Prime Minister walked into 10 Downing street, school leavers' wages have fallen, relative to adult wages, by 12 per cent. for boys and 13 per cent. for girls. During the same period, youth unemployment has trebled. Youth wages have been driven down, but jobs have not been created. Yet the Government say that young people must be priced into jobs, and that if only they would accept low wages, employers would recruit them rather than skilled adults. The Department of Employment's statistics show that eight out of 10 jobs, which were supposedly created by the young workers scheme and other forms of subsidy and wage cutting, are job substitution. Older workers are being driven out of jobs. The Government are merely shifting unemployment up and down the age spectrum and around the country. No real new jobs are being created.

The wages councils have existed for 75 years. About 500,000 workers will be affected by the fact that wages councils are no longer to apply to those aged under 21. The rates of pay range from £32 for 16-year-olds to £78 for 21-year-olds. I have received dozens of letters from young workers, mainly young women, since I introduced a national minimum wage Bill which called, in today's money, for £120 for a 35-hour week as a national minimum wage, below which no 18-year-old should be allowed to fall.

A lass in Hounslow in Middlesex who is a dental assistant wrote: My boss says says he can't afford to give me a rise, which I think is stupid—he has a Rolls Royce. Last year I said to him I was looking for another job. He said 'OK! Find another job then. There's 3,000 people on the dole in this area. I can easily get another little junior.— That shows how wages have been driven down, and how employers, encouraged by the Government, use mass unemployment to cow workers and their trade union organisations into accepting poor working conditions.

A 19-year-old office worker in Wolverhampton wrote: When I was doing my training, I was on £30 a week. Now I'm kept on permanently, I get £32.50 a week. As I am 19, I do not think that this is a good wage. I will not ask for a pay rise as they will only give me the sack. The fear of unemployment is used to keep young workers on poverty wages.

A 17-year-old office worker in York tells me that she is nearly 18 and is receiving take-home pay of £41 a week. She attends night classes twice a week on her own accord, and works hard because she realises that that is the only way to get on. At 18 she should be entitled to a good rise, but she was disgusted to find out that £65.70 a week was the amount to which she was legally entitled. She doubts if she could even get an increase to that level. All she wants to be content is to go home after a good day's work, having earned a decent wage for that day's work. If the measure is passed, there will be no contentment for 500,000 workers.

During the past six years the Government have cut the YTS allowance by £14 a week. If it had increased according to earnings or inflation it would be £40 a week, but it is £27. That follows the prediction of Sir John Hoskyns who was a member of the Cabinet's Think Tank and adviser to the Prime Minister. He drafted the original YTS, and said that its aim was to increase the differential between youth and adult wages. Add to that the Government's new legislation, such as preventing claims against unfair dismissal until a person has worked for two years for the same employer, and one sees that the measure seeks to produce a conveyor belt of school leavers. They will get on it aged 16 at £27.30. After two years YTS they will enter a job for which there is either no minimum legal requirement for a wage or for which the general level of wages has been driven down to between £30 and £40. Before two years is up, when they could claim unfair dismissal and receive the full adult rate at 21, they can be chucked out on their ear. Then there are supplementary benefit cuts to ensure that they have no incentive to go on the dole to escape poverty wages.

Tory Members often argue that the gap between wages and benefits is not big enough. First they cut the benefits, and now they seek to cut wages. Next, they will cut more benefits. The Government are always trying to drive down those levels so that they can hand out more tax cuts to the top 5 per cent. Despite their arguments, unemployment climbs relentlessly. Despite getting rid of earnings-related benefit and other meagre protections to the unemployed, they cannot explain why in the 1960s, when the gap was smaller between the wages of those in work and the benefits of those who had lost a job, unemployment was less than a tenth of its present level.

Several Tory Members, especially the hon. Member for Penrith and The Border (Mr. Maclean), mentioned the Henry Neuberger story about 8,000 jobs being created within five years if wages councils were substantially reformed. What do 8,000 jobs in five years mean? They mean 2.2 jobs per year per constituency. More than 7,000 people are unemployed in my constituency. Are the Government saying that I must tell about 2,500 young workers in my constituency that they must accept wage cuts, so that we can create 2.2 new jobs a year in the constituency? If the position were not so serious, that would be ridiculous and laughable.

People are unemployed because there are no jobs, and because £50,000 million has left the country during the past five years for South Africa, Brazil, Korea, Argentina and other countries where wage rates are deliberately kept low at the barrel of a gun, and where unions are illegal. That is what the Government want in this country. They want Bangledesh wages in Britain, British workers to be the coolies of western Europe, and trade unions to have the same restrictions that the Government admire in Brazil, South Africa and Poland.

We want real jobs. Last summer 5,000 youngsters let school in Coventry. One in eight of them got a job, totalling 675. One hundred and eighty-nine youngsters left special schools for the mentally and physically handicapped. Two years ago, only two found a job, but this year we had a big increase of three, as five found a real job. What good is it to mentally and physically handicapped kids, who usually end up in unskilled or partly skilled jobs, to see cuts in their wage rates? Will that get their friends jobs? Absolutely not.

One firm, GEC, had 1,000 redundancies in Coventry before Christmas. Lord Weinstock is involved. Was that because of high wages or a lack of money? GEC has £1,400 million liquid cash in the bank, so it cannot tell me that it cannot invest in Coventry and provide jobs. In the west midlands, 50,000 young workers will lose protection because of the Bill. For the remaining workers, paid holidays, weekend and shift premiums, overtime, and skill differentials will go. Between 6,000 and 8,000 young workers will lose all protection in Coventry.

I am not speaking merely to defend wages councils, although I shall vote to defend them. They are inadequate because the Tory Government have tried to make them inadequate. They have cut £2.5 million from the budget, and one third of the inspectors. In the west midlands the average inspection rate of a factory is once every 16 years. In the west midlands, 300 employers were found to be underpaying workers last year but not one of them was prosecuted. The Government have cut the mileage allowance for the inspectors and some inspectors run out of petrol in August. They spend September, October, November and December locked in the office because they cannot get their cars on the road to investigate factories.

In the face of all that, the Government call themselves a Government of law and order. Last year, 11,000 miners were found guilty of breaking the law. Some 600 were sacked and 200 were put in prison. Over the same period, 9,500 employers were found guilty of breaking the law but only two were prosecuted and were fined £107 each. Since 1981, 18 employers have been prosecuted out of the 30,000 or 40,000 who have been found guilty. So according to the Tories the working classes must abide by the law but the Government's friends in industry change the law to avoid having to observe it.

The level of unemployment in this country has nothing to do with wages. It has everything to do with the inability of the capitalist system to provide jobs for working people. I asked why the lowest unemployment was not in India and the highest not in Sweden, if high wages caused high unemployment. Why has unemployment dramatically increased over the past six or seven years? The answer is simple. It is due to the refusal of those who own and control wealth to invest in manufacturing industry in this country.

I have quoted a figure of £50,000 million but I have a better statistic than that. The leading banks estimate that the current gap between investment in British manufacturing industry and that of Europe, Japan and America has opened up to £200,000 million. That is 35 to 40 times the sum invested each year in the factories. Unemployment has nothing to do with wages in hotels, shops, and the clothing and catering trades. It is due to lack of investment. That is why British industry has lost its world markets. It controlled a third of the world markets in the 1950s, but now its share is down to 6 per cent. Not only has it lost the world markets; it has lost domestic markets as well. We should look at the level of our imports of fridges, motor bikes, cars, electronics and those in all the other sectors of the economy. We used to call this country the workshop of the world; now it is the warehouse of the world because of the lack of investment in manufacturing industry.

The problem is not caused merely by a lack of money. In the three years from 1981 to 1984, the top 51 companies in this country had a 77 per cent. rise in profits. Several of those companies have Tory Members on their boards of directors. Those companies saw their profits rise at twice the speed of their turnover. In other words, they increased exploitation of their workers and pushed down their workers' wages.

There are two nations in this country and the Bill is designed to exacerbate that position. A million people earn more than £20,000 a year and 8,000 of them are millionaires. That latter figure has doubled under the Tory Government, yet there are 9 million people living on poverty wages. In the face of that, how can we talk about creating jobs when some Tory Members are earning £350 a week, and there are some who have not just one job, but three or even five jobs? In fact, the right hon. and learned Member for Hexham (Mr. Rippon) has 32 jobs apart from being a Member of Parliament. In 29 of those he is the chairman of the company concerned. How many people is the right hon. and learned Gentleman putting out of work? How can Tory hon. Members understand what it is like to live on £40 or £50 a week?

The Government are doing nothing for youth unemployment. Last year, 517,000 youngsters left school to chase 12,355 vacancies. The chances of a school leaver getting a job in England is 39 to one. In Wales the chance is 129 to one and in Scotland 144 to one. There were 51 careers offices without one vacancy. A further 36 careers offices had only one job each on offer. How will cutting the wages of kids on £35, £40 or £45 a week increase the jobs on offer in careers offices? To get those jobs, the first thing that we must do is get rid of those on the Treasury Bench and ensure the return of a Labour Government prepared to take the economy into public ownership, plan the economy and give the workers rights and a say in how that economy is run.

I began by describing the Bill as squalid. I end in a similar vein. It is because youth unemployment has trebled under the Government that we need greater protection for those youngsters in work. Since 1979, under this Prime Minister, 500,000 school leavers have never had a day's work. The protection of their friends who have jobs and the wages which they presently enjoy—if I may use that word—ought to be a matter of urgency for the House.

If the Bill is passed and the wages council protection for young workers disappears, there is only one route left for those young people. The trade unions—the General, Municipal, Boilermakers and Allied Trades Union, the Union of Shop, Distributive and Allied Workers Union, the Transport and General Workers Union, and the National Union of Public Employees—must ensure in the next six months a massive recruitment campaign among young workers so that we can have a strong labour and trade union movement constructed around youth.

Those young workers who may read the report of this debate should not despair, despite seven years of the Tory Government. Those workers should be involved in constructive vandalism. They should tear apart the Tory capitalist economy brick by brick and replace it with an economy in which the workers who create the wealth have a say in how that wealth is distributed and where ownership is vested in working people. Then the low pay in which this Tory Government revel and want to make worse can be put into the dustbin of history for ever.

Several Hon. Members

rose—

Mr. Speaker

I understand that the Front Bench speakers wish to rise at 9.20 pm. Three hon. Members wish to take part in the debate. If they were to take five minutes each, I should be able to call them all.

9.4 pm

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

I wish to comment on three aspects of the Bill—wages councils, small firms and payments other than in cash.

Before coming to the House, I was employed as a manager in the clothing industry. Our problem was the shortage of skilled workers and the cost of training. The company was always in advance of anything that the wages council recommended, particularly at the skilled end of the wage scale. It therefore puzzles me why the hon. Member for Jarrow (Mr. Dixon) should challenge the clause defining an adult skilled worker as someone of the age of 21. I cannot see the logic of arguing that that will mean young people entering the industry and pushing out adults when, in the same breath, the hon. Gentleman said that when they finished their first few years of work and reached the age of 21, they would be dismissed. That is illogical.

When we had questions on this subject some months ago, I asked my right hon. Friend the Secretary of State for Employment whether he would allow industries to choose a mechanism that would establish a definition for an adult skilled worker in that industry instead of the Government choosing the age of 21.

A number of hon. Gentlemen have referred to the problem faced by young people entering an industry. Let us take as an example someone aged 19. He may have been away from school for three years. He may have been in retailing, done unskilled work or been out of work. That person may suddenly have the opportunity of moving into an industry that requires skills. Under present legislation, there is no way in which a manufacturing company which primarily requires skilled workers can take on that 19-year-old. Under the existing regulations, the company would have to pay that young man the full skilled wage because, according to the book, he would have been in employment for three years. He would have to be paid the full adult rate. It would therefore turn him away. I know that to be the case.

The hon. Member for Birmingham, Ladywood (Ms. Short) is always keen to defend the rights of women workers. The problem that I have described applies to the textile industry. It is even worse when a woman is involved. A woman may have married young, had a family and want to return to work. Because she is over 21, she cannot go into the textile manufacturing industry, because present constraints require that she be paid the full adult rate although she can contribute nothing.

I accept that research has resulted in the age of 21 being chosen. I should have preferred the textile industry to be able to say that someone was an adult worker when he or she could show three years' employment within the industry. That would have answered the problem.

I believe that the description "small firm" still causes confusion. The technical description of a small firm is one that employs fewer than 200 people. The Bill addresses itself to deregulation—if I may use that phrase—for firms employing fewer than 10 people.

In the bus legislation we use the terms "large bus" and "little bus". I wish that we could incorporate into legislation the term "little firm", so that we would know that we were discussing firms employing fewer than 10 rather than the term "small firm", which is the usual off-the-cuff description of firms employing fewer than 200 workers.

Those hon. Members who have never sought to run a business, however small, cannot imagine the hassle and disincentive of a rule book a mile long to someone who seeks to create employment. Anything that we can do to remove regulations and paperwork from the little firm must help employment.

I endorse the logical and clear arguments of my hon. Friend the Member for Penrith and The Border (Mr. Maclean) in favour of trying to do away as much as possible with the transfer of cash. For many years it was always a source of great worry to me, as the factory manager, to send our senior clerk with an assistant to the bank to collect the wages for more than 200 staff. We tried all the mechanisms, such as going at different times or making the trip on different days. That brought about the problem of storing large sums of money overnight in a safe, which in turn brought insurance problems. We happily changed to security vans, which make runs at the same time and on the same day, but the House is well aware of the tragedies that have happened to security vans.

If we can move towards the techniques of other sophisticated countries, where staff are paid by cheque or credit transfer, we shall have moved sensibly in the right direction and made at least a step towards abolishing one form of crime—the weekly attacks on people who collect wages in cash.

9.11 pm

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

It is often said in the House that the best speeches are the ones that are never made. I am afraid that that is applicable to me this evening.

In the few moments available to me I wish to put some facts on the record. I am most interested in the part of the Bill that relates to wages councils. I could not get as excited as the hon. Member for Penrith and The Border (Mr. Maclean) about the Truck Acts, and I have no intention of getting involved in that aspect.

The wages councils cover almost 3 million workers. The main industries covered by the councils, which have not been fully discussed, are hotel and catering, retailing, and textiles and clothing. Of the workers covered by the wages councils, four fifths are women, about 2 million people; two thirds are part-time workers, about 2 million; one fifth are young workers, about 500,000; and one tenth are home workers—of whom many are disabled—and they represent about 330,000 people. The Bill takes vicious sanctions against those people.

The wages councils set minimum wage rates and other terms and conditions of employment such as holidays, but the proposals in the Bill will remove all under-21s from wages councils regulations, restrict wages councils to setting a single rate of pay, introduce new powers for the Secretary of State to modify or abolish individual councils and to deratify ILO convention 26 on low pay.

The main effects of the proposals will be that young workers' wages will be forced down to the YTS level of less than £30 a week. Adult workers will be replaced by cheap workers aged under 21, and that will hit women workers especially hard. Many workers will lose their legal right to annual holidays. It is worth repeating that Britain is the only EC country that does not provide legal holiday entitlement for all workers. It is a scandal that, of the 21 democracies that form the Council of Europe, Britain stands out like a sore thumb. There was a time when hon. Members like myself who are members of the Council of Europe could travel to Strasbourg with heads held high and with pride in our country, but now the finger is pointed at us. It is galling to hear Members of Parliament from countries such as Turkey talking about the British Government treading on human rights. I no longer go to Strasbourg with great pride, because at every Council session members quote the decision on Cheltenham, the repression of trade unions and convention 3632. The next time we go to Strasbourg, they will be accusing us over ILO convention 26.

9.15 pm

Mr. Michael Hancock (Portsmouth, South)

I am grateful to the hon. Member for Newcastle upon Tyne, North (Mr. Brown) for allowing me five minutes to speak in the debate. I was amazed by the way in which the Paymaster General bounced into the Chamber this afternoon and spoke with so much enthusiasm for the legislation, yet found it so difficult to drum up support among Conservative Members. For long periods, few Conservative Members were present, and there was a lack of support for his enthusiasm.

Other hon. Members have listed the problems that will beset youngsters. Yesterday, we had a debate about young people in training, and hon. Members on both sides of the House expressed anxiety about getting youngsters into work. The Bill will not get people into work; I am surprised that so few Conservative Members realise the problems of 17 and 18-year-olds in their constituencies, many of whom are married and some of whom have children. They have the same problems and the same struggle to exist as do people twice or three times their age. Yet the Government display cynical contempt for their position, and say that we can price them into jobs. I have never heard anything so stupid as the suggestion that we can price many youngsters into jobs. No one got to grips with the problem of providing jobs for them to fill. Do those hon. Members who have spoken seriously suggest that hairdresser shops will suddenly recruit more staff? Of course not. They will simply pass out of the door those who have reached the age of 21.

I am amazed that hon. Members have not considered more carefully the problems of the restaurant trade in their areas. It is not good enough for hon. Members to comment on the problems that they have in getting people into work without seriously considering the consequences of what happens elsewhere. I hope that the alliance amendment will attract support from both sides of the House, because even some Conservative Members must realise that it is worthy of support.

There is no doubt that the Truck Acts must be considered. It would be stupid of any hon. Member to suggest that the wages councils present the best way to solve all the problems facing youngsters. That is not true, and we must investigate ways to improve the system.

This legislation will do nothing to improve the lot of young people. It will undoubtedly make it more difficult for them to survive in a job once they have it, and the cynical disregard shown by Conservative Members is a clear example of the contempt in which they hold young people. They do not give a damn about the young unemployed and by their actions they are convincing me, and I hope the young unemployed, that they have little or no regard for the people who are lucky enough to have a job. Few of those people who are now aged 18 will still be in a job when they are 21 should the Bill be passed.

When the Paymaster General sucks on his Fisherman's Friend to warm him, as he did after he finished his speech, he should consider that the heat that he gets from that will be as nothing compared with the heat of our young people when they see what this Bill will do for their prospects for the future.

9.20 pm

Ms. Clare Short (Birmingham, Ladywood)

The Bill, as many Labour speakers have said, is a nasty, mean-minded measure, which will attack the living standards of some of the poorest workers. It is unacceptable to the Labour party, and it is notable that far more Members spoke from the Opposition Benches, while the Tory Whips have gone around scraping up people who have clearly come in and prepared speeches a few minutes before they delivered them.

It is not good enough for the Postmaster General—[Interruption.] Perhaps he is the postmaster for the Secretary of State, the Prime Minister's friend, who sits in the other place. It is not good enough for the Paymaster General simply to pretend that the Bill is tidying up some outdated legislation. It is a dishonest argument and not worthy of the serious issues that we are discussing. Equally, it is unworthy of the hon. Member for Penrith and The Border (Mr. Maclean) to claim to be concerned about the young unemployed. If he were, he should look at the evidence, which would make him realise that the Government's attack on the living standards of the low-paid young workers will do nothing to increase employment for young people.

Wages council workers are among the lowest paid of the low paid. We are talking about real poverty, about people who run out of money at the end of the week and who have to decide whether to buy bread or put money in the gas meter. That is not a joke, and hon. Members should not pretend that the situation can not be compared with Victorian times, when there was "real" poverty and pretend that there is not real poverty now. There is, and it is growing. In our constituencies, we meet people who suffer terrible problems, and I am shocked that Conservative Members are not sensitive to those who are suffering.

We are talking about people who are living on wages that are less than Conservative Members, and perhaps even Labour Members, would spend on one dinner. I am told that the Paymaster General is a gourmet, so he probably spends more. We are talking about cutting wages that, for adults, range from £50.25 to £76.50; and that is gross. Off that money has to be taken tax and national insurance. So people take home pay that is between £7 and £9 less than that.

Those who will be most hurt by the Bill are the young people. Some 500,000 young workers will immediately cease to have protection for their wages and see direct wage cuts. That is the Government's intention, and they want to introduce such a move. Even so, there is an attack on the wage protection for adults. The hon. Member for Banbury (Mr. Baldry) kept attempting to intervene during Labour Members' speeches to suggest that there was to be no such attack, but that is not true. One rate with no differentials for skills means that it is likely that wages will level down to that one rate. There is no special weekend working rate which means that workers, especially shop workers—the Shops Bill will come to this House shortly—will be expected to work longer hours for less pay. In retailing, this measure will lead to a loss of jobs and fewer people employed.

The meanest proposal is the lack of protection that will be given to some of the poorest workers to ensure that they have a holiday each year. We will be the only country in Europe which will cease to provide this for their workers. There will be no protection for shift workers either. The hon. Member for Banbury has tried to suggest that it is not true that there are poor people working in the wage councils sector, but I am shocked that he attempts to advance such an argument. The majority of the people who work in the wage councils sector—the lowest paid workers in Britain—are women. In one in four households the main breadwinner is a woman either because she is on her own or her partner is unemployed or low-paid. Almost half—45 per cent.—of low-paid women, working full time, are single parents or living alone.

Mr. Baldry

rose—

Ms. Short

I shall give way when I have finished my attack on the hon. Gentleman.

The hon. Member for Banbury went on to suggest that it was somehow outrageous that in the wages councils sectors the young workers had a higher percentage of the full adult rate than they did in other sectors. He simply does not understand. A wage of £40 is the minimum on which to survive—to be able to get out, get the food, get the bus and get to work—and the minimum to make it worth working. If one is working in the low-paid sector where the adult rate is £80 or so, £40, or something approaching that, is a higher percentage of £80 than it is of the average wage across the economy—which is £168.

Mr. Baldry

I am obliged to the hon. Lady for giving way. The point I made and on which I think there is no argument, is that the main cause of poverty is not low pay but no pay. I was not seeking to suggest that there were not people working in the wages councils sector who were in poverty. But, overall, poverty is due to no pay rather than low pay.

Ms. Short

We agree that unemployment is far too high and causes poverty. We know that under this Government unemployment has soared and that the incidence of low pay has increased. The number of people earning poverty pay has increased massively under this Government. The two have gone together—an increase in poverty because of unemployment and an increase in poverty because of low pay. It is not one or the other.

The Government's proposals are based on pure dogma and blind prejudice, and the Paymaster General knows that. There may be some Tory Back Benchers who believe in Tory dogma and propaganda and have not examined the evidence, but I do not believe that the Ministers at the Department of Employment are not aware that their case is unproven. The Government have scratched around and commissioned research project after research project to try to prove that their dogmatic views are true. They have failed. There is no respectable academic evidence to support their views. The Government are aware of that and should be ashamed of trying to suggest otherwise.

Britain has a low wage economy. The hourly wage level in Britain is below that of every other European country. Unit labour costs in real terms, measured in a common currency, fell by 10 per cent. between 1979 and 1984. If we compare Britain with the United States—which we understand is the great model which we should emulate and to which we should sell half our industries —unit labour costs rose by 24 per cent. in the same period.

Let us take the example of Japan—Conservative Members should try to understand the lesson that is available from Japan. Between 1967 and 1977, United Kingdom hourly earnings rose by 13.5 per cent. while those in Japan rose by 15.9 per cent. The hourly rates in Japan rose to a greater extent. However, unit labour costs in Japan rose by only 8.1 per cent. as compared with 11.5 per cent. in the United Kingdom. It is significant that, during the period 1974–1977, Japan's gross capital investment per head of population was more than twice that of the United Kingdom. That is the remedy.

What is wrong with the British economy is our low investment over a long time. The answer does not lie with low wages and sweat shops, which create such unstable conditions that employers cannot invest because they are under-bidding each other for cheap labour. The result of that is Britain competing with the poorest countries in the world, and never getting out of our difficulties.

We are told that wages are too high in the wages councils sector and that, if they would only drop, there would be more jobs. From 1974 to 1984, pay has fallen steadily as a percentage of national earnings in that sector—from 73 per cent. to 65 per cent. It has been suggested that pay in the wages councils sector has increased. That is quite wrong. What is more, there has been no increase in the number of jobs. What the Government are telling us has been tested, and it does not work.

The Government claim that it is necessary to create jobs for young workers and therefore to cut their wages. We were told in the disgraceful press release put out by the Department of Employment, which was not sent to us, and which the Paymaster General read today: The central purpose of the Bill is to create new job opportunities, particularly for young people. Since 1979, payment to young workers has fallen relative to adult workers. Young males are now paid 30 per cent. less in comparison with average earnings and women are paid 24 per cent. less than the average, yet unemployment has doubled.

The Government's thesis has been tested. Young people's wages have fallen dramatically, but unemployment has continued to increase dramatically. What are these massive wages of young workers that must be cut? Men under 18 get 34.9 per cent. of the adult rate of pay. How can anybody suggest that that is not significantly cheaper than an adult? Men aged 18 to 20 get 55.7 per cent. of the adult rate. In terms of money, first year apprentices in hairdressing get £31.75 gross. They have to pay tax and national insurance out of that. Other young hairdressers receive £37.70. These are the earnings which Conservative Members want to cut. In retailing, the rate for 16-year-olds is about £47. The Paymaster General told us that he wanted such a level of pay reduced. He should be ashamed of himself. I am sure that he spends more on one dinner. In retailing, 17-year-olds get between £52 and £55—as much as £20 less than an adult doing the same job.

We have more evidence from a Government experiment—the young workers' scheme. The Government have already tested the thesis. They subsidised young people's wages, and at enormous expense. They paid £15 a week to an employer who would pay £45 or less a week to a young worker, and £7.50 if he paid £50 or less. What did they find? The Institute for Manpower Studies in Sussex found that 94 per cent. of the subsidised jobs would have existed anyway. That was a massive subsidy to cut youth wages to generate all of the jobs that we were told would cry out to be filled if only wages were lower, but they did not materialise. Employers grabbed the subsidy for jobs that would have existed anyway. The Government's own figure is 77 per cent.

And what of the 10 per cent. of new jobs that were created? No less than 40 per cent. were adult jobs. Young people replaced adults. What the Government are doing in the Bill was tested in that scheme, and it failed. That is why the Government have got rid of the scheme. In so far as the Bill will succeed, it will enable young people to be employed at the expense of adults. Those adults will be mostly women, probably the young people's mothers. When they are 21, the young people will be chucked out of work so that their younger brothers, sisters and cousins can be taken into low-paid work.

The Government pretend that some of this simplification—and I think that we would agree on a need for a review of the wages council orders but not an undermining of protection for the low paid—is necessary because so many of the firms in this sector are small. That simply is not true. It is worrying for us to face a Government who keep pouring out claims for their legislation but when we examine the evidence, we find repeatedly that the claims are false. It is not a matter of interpretation; they are falsified.

For example, as I said to the hon. Member for Colne Valley (Mr. Wainwright) in an intervention, Income Data Services did a survey of wage council workers in retailing, hotels and the licensed trade—that is, 2 million workers out of 2.75 million workers. In its words and not mine, these sectors are dominated by large, if not giant, firms. It cannot be argued that such massive employers do not understand wages council orders and are incapable of applying them. The Department of Employment's own surveys of employers and small businesses found no expression of concern in any quantity about the problems of employment legislation in respect to wage councils.

The ILO convention has been mentioned by a number of my hon. Friends, and 94 countries have signed it. It is the most popular convention. Many Third world countries have signed it and have agreed to give some minimum protection to workers and young workers. One country finds it necessary to get out of that convention, and that is Britain. Britain cannot afford to protect its young in the way that Third world countries can. We should be deeply ashamed. We hear Conservatives talk about the need to cut wages and to create jobs. How is it that all these other countries can manage to comply with that convention but we cannot?

What else do we know? We know what the Government have done since they came to power. They have weakened the existing protection given by the wages councils. The number of inspectors has been cut by one third. The number of employers who have been breaking the law has grown. Those figures have been quoted in a number of speeches. What do we expect? The law has been weakened and now they will enforce it even less and it will be broken even more. Even those weedy conditions which are included in the Bill will not apply to all workers, and the kind of protection which they are entitled to expect in Britain in 1986 will not be forthcoming.

The Truck Acts have been mentioned by a number of my hon. Friends. The Government say that they want to encourage cashless pay. We are not against cashless pay, but we think, as do the banks, that it should not be forced upon people. In our view, employees are entitled to negotiate. For some workers, there are difficulties: if one earns a small amount of money it may not be worth having a bank account, and some other arrangements will have to be made. For example, if one lives in a rural area and cannot easily get to a bank, that will need to be accommodated. It should be a matter of free choice and negotiation. It is not necessary to take away from workers the right to object. Employers should be required to negotiate with workers if they want to move to cashless pay. As I said earlier, the banks did not even ask for this. There is a long-term trend away from cash pay and towards people having bank accounts. We would expect that trend to continue, but let people do it freely as they wish and not have it forced upon them by a Government who take away the protections they previously enjoyed.

The Government make a false claim when they state that in future all workers will be better protected because deductions of more than 10 per cent. cannot be made. The only remedy that workers have is to go to a tribunal. The only penalty for employers is that they will be forced to pay back 10 per cent. All employers will surely say: if in doubt, deduct. Employers will be deducting 10 per cent. in retailing, in garages and so on in the absence of a penalty. In addition, there has been no increase in the penalty for employers who break wages council orders, yet as new criminal justice legislation is enacted, fines are being increased. The Government do not mean to enforce the legislation or to punish employers who are breaking the law.

What does it all amount to? As I said at the beginning, it is a mean-minded measure based on dogma, not evidence. It is an attempt to cut the wages of the poorest workers in Britain. It will not create jobs; it will simply create more poverty. It is wrong on the basis of justice for working people; it is also wrong on the basis of economic efficiency. It is nonsense if Britain goes down the road of seeking to compete with the poorest countries.

The good employer who wants to train his work force and who wants to invest will be undercut by the bad. That is what Winston Churchill said in 1909 and what the CBI said in part of its evidence in the Government's consultation. There is a real danger that the bad employer will undercut the good. That is the road that we are going down.

We will have sweatshop conditions. In my region of the west midlands we used to have full employment and decent wage levels. We now have some of the lowest wage levels in the country. In my constituency we have Victorian textile sweatshops employing people at illegal rates of pay in dangerous conditions. In other parts of the country where the clothing industry has more capital investment, more training and more sophistication, it is being undercut and is being forced to close down. That is bad for employees in Birmingham and the west midlands, and it is a bad road for the Government to go down.

Let us hear nothing more from the Prime Minister in interviews with the CBI magazine about her great concern for the low-paid and her anxiety to ensure that they should have tax cuts. We know that the Government have no concern for the low-paid; otherwise they would withdraw the Bill. We shall fight it thoroughly in Committee.

9.41 pm

The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier)

We have had an interesting and useful debate. Much has been said with a strength of feeling that I recognise. We are being pulled in opposite directions by two different tides. Some hon. Members, such as the hon. Member for Newham, North-East (Mr. Leighton), suggest that we should keep wages councils in exactly their present form, while others, such as my hon. Friend the Member for Bolton, North-East (Mr. Thurnham) suggest that we have not gone far enough. Between those positions, we are proposing a sensible and moderate reform.

Having listened carefully to the hon. Members for Kingston upon Hull, East (Mr. Prescott) and for Birmingham, Ladywood (Ms. Short), I believe that they brought the wrong speeches to the debate. They talked continually as if we intended to scrap the wages councils system. That is not the case. Certainly we intend to reduce rigidities and red tape in the labour market to promote jobs. Certainly we intend to bring the law on the payment of wages into the 20th century. Certainly we intend to help young people to take that vital first step on the employment ladder against competition from older and more experienced workers.

At the same time, we want to maintain a basic level of protection for workers in wages council industries where the work of the councils has become an accepted part of the fabric of the industry. We also want to provide new protection against deductions from pay where there is known abuse to ensure that workers are paid what is rightly due to them and that a large proportion of their pay packets does not disappear in deductions. I repeat that we are retaining wages councils.

Useful points have been made in the debate. My right hon. and learned Friend the Paymaster General and I will consider them seriously. That is a genuine commitment. It is expected that Governments of all political persuasions do not listen to the appeals made to them when they put forward Green Papers or consultative documents. In this case we issued consultative documents on parts I and II of the Bill. We have settled on proposals that won majority support in the consultation exercise. So the hon. Member for Manchester, Blackley (Mr. Eastham) is wrong. We could have gone down the route of scrapping wages councils but we decided not to do that because we thought that we should opt for the moderate way. We recognise that many employers were making representations to us at that time saying that they thought they were useful in the particular fabric of that industry.

Mr. Eastham

The Minister has said to the House that the Government intend to retain the wages councils. That is meaningless, because Member after Member has said that thousands of firms are breaking the law. Is the Minister saying that the Government propose to ensure that those companies will abide by the orders of the wages councils? They are obviously not doing so at present.

Mr. Trippier

We are actually talking about people who are breaking the law —only 8 per cent. of those who were visited. We are concentrating on the worst offenders. I think that the hon. Gentleman will have to accept that we intend to keep up the pressure on that. The point that the hon. Gentleman and his colleagues must accept is that we are determined to keep the wages councils in their present form but without the control across a wide front for those aged under 21.

We have listened to those who have made representations to us in the consultation procedure. One would have thought that that would receive some welcome from the Opposition, but it did not. The views of some hon. Members, as expressed today, seem to be as rigidly set in the old mould as some of the ancient and anomalous legislation that the Bill seeks to repeal. It is vital to see the Bill in the context of the Government's wider policy of deregulation and simplification. We are intent on removing burdens and red tape from employers. We want to let the ordinary business man, principally the small business man, get on with the job that he is good at—creating wealth and work. The one thing which has been missing from the debate is any recognition by the Opposition of the people who set up those businesses and create the jobs.

Mr. Foulkes

rose—

Mr. Trippier

It is as if the jobs were conjured out of thin air. [Interruption.]

Mr. Speaker

Order. One at a time.

Mr. Foulkes

rose—

Mr. Trippier

If the hon. Member will take his seat, he will enjoy this. I am going to attack the alliance.

The alliance amendment is absolutely fascinating. It seems that the alliance parties have completely abandoned the small business man's lobby. They do not seem to recognise that they are the people who create the jobs. Yet, in the past, the alliance has been quick enough to fly on our coat tails when we have been pursuing the policy of deregulation and simplification. I have had question after question on that matter in the past. Can this be a U-turn by the alliance? Is it going to abandon the small business man altogether?

Mr. Wainwright

Did the Minister not hear me say that the CBI, through its small firms division and then its council, has shown no enthusiasm for the major parts of the Bill, for the good reason that no self-respecting new or small business man wants to be labelled a third-rake employer?

Mr. Trippier

I have a great deal of regard for the CBI's small firms council but representations by the CBI generally, I should think, would not represent the small firms lobby in general. I was fascinated when, far from suggesting that we should deregulate, the hon. Gentleman suggested that we should have different rates of pay in all travel-to-work areas. By my estimation that makes 334—

Mr. Foulkes

rose—

Mr. Trippier

With great respect, the hon. Gentleman has not been in the Chamber for the majority of the debate.

Mr. Robert C. Brown

rose—

Mr. Trippier

That would make 334 different rates of pay. If the Bill gives the average small employer in a wages council industry a little more time to spend on running his business, developing it and strengthening it, rather than having to grapple with the complexity of wages council orders, it will be a worthwhile measure on that score alone. In the wider context, the Bill has a significant contribution to make to changes in the way that we regard methods of creating wealth and jobs, developing—

Mr. Foulkes

rose—

Mr. Speaker

Order. The Minister is not giving way.

Mr. Foulkes

On a point of order, Mr. Speaker. I ask you to help my right hon. and hon. Friends, Mr. Speaker. We had great difficulty earlier on. Is it the case that the Minister said that only 8 per cent. of employers break the law—

Mr. Speaker

Order. I think that the hon. Gentleman heard that perfectly well.

Mr. Trippier

The hon. Gentleman should not have risen in his place. I am trying desperately to answer some of the questions that have been asked by his hon. Friends during the debate. He is wasting the time of the whole House. If my responsibilities—

Mr. Caborn

rose—

Mr. Trippier

I hope that the hon. Gentleman will be fair. He has had a fair crack of the whip. He had the opportunity to make his speech and he intervened in the speeches of others. He did not allow others to intervene while he was speaking. I have allowed many interventions in my reply. I think that the hon. Gentleman had better resume his seat.

Given my responsibilities within the Department I have considered the Bill in the light of the question, what will it do for the small employer and his work force? The short answer is that it will do a great deal. Part I makes it possible to sort out a system of wage payments that suits everyone. The employer will not find that he can offer a far better package of terms of employment to non-manual workers, perhaps including fringe benefits such as a car, than he can offer to manual workers, for fear that manual workers will complain about a breach of the Truck Acts. That is something on which no one seems to have touched during the debate. The employer will be able to sort out a set of controls on deductions from pay that is agreed between him and his employees and which ensures that everyone knows where he stands, with a quick and simple system of appeal to an industrial tribunal.

Part II will make wages council orders much simpler to understand. It will limit them to the basic elements in pay and will ensure that wages councils consider the employment implications of the decisions that they take, which is only common sense.

Part II will open up the possibility for employers to take on extra young people at a rate of pay that properly reflects the value that they can add to the business. That is the point that my hon. Friend the Member for Penrith and The Border (Mr. Maclean) was making—I think that he was doing so effectively—and that is what will concern the potential employer. He will address himself to the value that a young person will be able to add to the business.

Mr. Nellist

rose—

Mr. Trippier

If the young person will be unable to cover his own wage, the employer will not accept him or her. We must recognise that young and inexperienced workers will not be able to add the same value to the business as older workers. That is the argument that my hon. Friend the Member for Banbury (Mr. Baldry) rightly advanced. Faced with that choice, the employer will not normally take on young workers if more experienced workers are on offer.

If we have an order of priorities, we must concentrate on young workers, and the Bill will assist in that process. There may be some substitution, but we believe that there will be a net increase in employment as a result of our proposals.

Part III introduces a sensible reform in that it frees public spending on job creation instead of subsidising redundancy. The position of small employers is safeguarded and—

Mr. Nellist

Will the Minister give way on part II?

Mr. Trippier

No.

However, the position of the small employer is safeguarded. Much has been said, particularly by the hon. Member for Coventry, South-East (Mr. Nellist) about young workers. The Bill will give youngsters a chance. Furthermore, relatively few young workers have the same family responsibilities as adults, and for those who do there is financial support in the family income supplement.

Mr. Nellist

rose—

Mr. Speaker

Order. The hon. Member has made his speech. The Minister is not giving way.

Mr. Trippier

The philosophy of the legislation is to return such questions as holiday entitlement, which is a contractual matter, to agreement between employer and employee. And so they should be.

Mr. Nellist

rose—

Mr. Trippier

All the existing contractual rights of workers will continue. I say again that we are not scrapping the wages councils.

Mr. Nellist

On a point of order, Mr. Speaker.

Mr. Trippier

Much has been made in the debate—[Interruption.]

Mr. Speaker

Order. I will take the point of order.

Mr. Nellist

You have had occasion, Mr. Speaker—perhaps more than once during the two and a half years that I have been a Member of Parliament—to remind me of the traditions and customs of this House. The Minister referred specifically to me. Is it not, in your opinion, the custom for him to give way when I ask him to do so?

Mr. Speaker

I understand that the Minister is referring to speeches that have been made during the debate. He is necessarily referring to hon. Members who have spoken in the debate.

Mr. Trippier

The hon. Gentleman has a nerve, Mr. Speaker. I cut my wind-up speech from half an hour to 20 minutes to allow hon. Members such as him to get in, because every time the hon. Gentleman opens his mouth he helps our side.

Much has been made in the debate of the different conclusions that have been drawn relating to the impact —[Interruption.]

Mr. Speaker

Order. We are getting towards the end of the debate. Let us keep it in order.

Mr. Trippier

As I have already said, much has been made of the different conclusions that have been drawn relating to the impact upon wages council rates. The studies reach different conclusions. That has been referred to by both sides of the House.

Mr. Nellist

rose—

Mr. Trippier

Different conclusions are also drawn about the scale of the effects. However, in one respect they point in the same direction. In general, the different studies provide evidence that regulating wages and pushing them up can harm job prospects, especially for the young. A common-sense conclusion seems to be drawn and it is generally understood to be the basic law of economics: to raise the price means to cut the demand. When the abolition of the wages councils was being debated, the studies produced a wide variety of estimates.

Mr. Nellist

rose—

Hon. Members

Sit down.

Mr. Trippier

All showed some gain in the number of jobs. Even the study "From the Dole Queue to the Sweatshop", published by the Low Pay Unit—this was referred to by the hon. Member for Sheffield, Central (Mr. Caborn)— and written by Henry Neuberger who styles himself the economic researcher to the Leader of the Opposition, estimated that 8,000 jobs would be created. Earlier today the hon. Member for Kingston upon Hull, East (Mr. Prescott) pressed my right hon. and learned Friend the Paymaster General for a figure. We have now given that figure. [Interruption.] It is given in this study and it shows a net increase. We are happy that there is general acceptance of the fact that there is a net increase in the number of jobs.

Mr. Nellist

Will the hon. Gentleman give way on that point?

Mr. Trippier

No.

The most amazing hypocrisy that we have heard from Opposition Members would lead one to believe that the Opposition, when in government, had never scrappd a wages council, yet during the last two periods when the Opposition were in office they presided over the scrapping—

Mr. Prescott

Will the hon. Gentleman give way?

Mr. Trippier

No, not on this point.

More than 500,000 people came out of the wages council system. That was referred to by the hon. Friends of the hon. Member for Kingston upon Hull, East, not by him.

Mr. Prescott

Yes, it was.

Mr. Trippier

The same sympathy should have been expressed for those who came out of the wages council system then as have come out of it subsequently, and who may have come out of it very recently.

Small firms have had a poor deal out of the redundancy rebate scheme. They have been paying in contributions for the past 20 years but have been getting little back. There have been massive redundancies in the nationalised industries, including steel, gas and rail, and in large organisations, such as GEC and ICI. This is good legislation for jobs, especially for young people seeking work. It is good for business men, especially small business men. I commend the Bill to the House.

Question put, That the amendment be made:

The House divided: Ayes 25, Noes 265.

Division No. 67]	[10 pm
AYES
Ashdown, Paddy	Owen, Rt Hon Dr David
Beith, A. J.	Penhaligon, David
Bruce, Malcolm	Ross, Stephen (Isle of Wight)
Campbell-Savours, Dale	Steel, Rt Hon David
Carlile, Alexander (Montg'y)	Stewart, Rt Hon D. (W Isles)
Field, Frank (Birkenhead)	Thomas, Dafydd (Merioneth)
Freud, Clement	Wainwright, R.
Hancock, Michael	Wigley, Dafydd
Howells, Geraint	Wilson, Gordon
Hughes, Simon (Southwark)	Wrigglesworth, Ian
Johnston, Sir Russell
Kennedy, Charles	Tellers for the Ayes:
Kirkwood, Archy	Mr. David Alton and
Livsey, Richard	Mr. James Wallace.
Meadowcroft, Michael

NOES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Aitken, Jonathan	Carlisle, Rt Hon M. (W'ton S)
Alexander, Richard	Channon, Rt Hon Paul
Amess, David	Chapman, Sydney
Ancram, Michael	Chope, Christopher
Arnold, Tom	Clark, Dr Michael (Rochford)
Ashby, David	Clark, Sir W. (Croydon S)
Aspinwall, Jack	Clarke, Rt Hon K. (Rushcliffe)
Atkins, Rt Hon Sir H.	Clegg, Sir Walter
Atkins, Robert (South Ribble)	Cockeram, Eric
Atkinson, David (B'm'th E)	Coombs, Simon
Baker, Rt Hon K. (Mole Vall'y)	Cope, John
Baker, Nicholas (Dorset N)	Couchman, James
Baldry, Tony	Cranborne, Viscount
Banks, Robert (Harrogate)	Critchley, Julian
Batiste, Spencer	Crouch, David
Bellingham, Henry	Currie, Mrs Edwina
Bendall, Vivian	Dickens, Geoffrey
Benyon, William	Dorrell, Stephen
Best, Keith	Douglas-Hamilton, Lord J.
Biffen, Rt Hon John	Dover, Den
Biggs-Davison, Sir John	du Cann, Rt Hon Sir Edward
Blackburn, John	Durant, Tony
Body, Sir Richard	Dykes, Hugh
Bonsor, Sir Nicholas	Eggar, Tim
Boscawen, Hon Robert	Emery, Sir Peter
Bottomley, Peter	Evennett, David
Bottomley, Mrs Virginia	Fairbairn, Nicholas
Bowden, Gerald (Dulwich)	Fallon, Michael
Braine, Rt Hon Sir Bernard	Farr, Sir John
Brandon-Bravo, Martin	Favell, Anthony
Bright, Graham	Fletcher, Alexander
Brinton, Tim	Forman, Nigel
Brittan, Rt Hon Leon	Forsyth, Michael (Stirling)
Brooke, Hon Peter	Fowler, Rt Hon Norman
Brown, M. (Brigg & Cl'thpes)	Fox, Marcus
Bruinvels, Peter	Fraser, Peter (Angus East)
Bryan, Sir Paul	Freeson, Rt Hon Reginald
Buchanan-Smith, Rt Hon A.	Fry, Peter
Buck, Sir Antony	Galley, Roy
Budgen, Nick	Gardner, Sir Edward (Fylde)
Bulmer, Esmond	Garel-Jones, Tristan
Burt, Alistair	Gilmour, Rt Hon Sir Ian
Butcher, John	Glyn, Dr Alan
Butterfill, John	Goodlad, Alastair
Carlisle, John (Luton N)	Gower, Sir Raymond

Grant, Sir Anthony	Pawsey, James
Greenway, Harry	Percival, Rt Hon Sir Ian
Gregory, Conal	Pollock, Alexander
Grist, Ian	Porter, Barry
Ground, Patrick	Portillo, Michael
Grylls, Michael	Powell, William (Corby)
Hampson, Dr Keith	Powley, John
Hanley, Jeremy	Prentice, Rt Hon Reg
Harvey, Robert	Price, Sir David
Heddle, John	Raffan, Keith
Henderson, Barry	Raison, Rt Hon Timothy
Heseltine, Rt Hon Michael	Rathbone, Tim
Higgins, Rt Hon Terence L.	Rees, Rt Hon Peter (Dover)
Hogg, Hon Douglas (Gr'th'm)	Rhodes James, Robert
Holland, Sir Philip (Gedling)	Rhys Williams, Sir Brandon
Holt, Richard	Ridley, Rt Hon Nicholas
Howell, Ralph (Norfolk, N)	Ridsdale, Sir Julian
Hubbard-Miles, Peter	Roberts, Wyn (Conwy)
Hunt, David (Wirral W)	Roe, Mrs Marion
Irving, Charles	Rossi, Sir Hugh
Key, Robert	Rost, Peter
Knight, Greg (Derby N)	Rowe, Andrew
Lamont, Norman	Rumbold, Mrs Angela
Lang, Ian	Ryder, Richard
Lawler, Geoffrey	Sackville, Hon Thomas
Lawrence, Ivan	Sainsbury, Hon Timothy
Lawson, Rt Hon Nigel	St. John-Stevas, Rt Hon N.
Lennox-Boyd, Hon Mark	Sayeed, Jonathan
Lewis, Sir Kenneth (Stamf'd)	Shaw, Giles (Pudsey)
Lightbown, David	Shaw, Sir Michael (Scarb')
Lilley, Peter	Shepherd, Colin (Hereford)
Lloyd, Ian (Havant)	Shepherd, Richard (Aldridge)
Lloyd, Peter (Fareham)	Silvester, Fred
Lord, Michael	Sims, Roger
Lyell, Nicholas	Smith, Tim (Beaconsfield)
McCrindle, Robert	Soames, Hon Nicholas
McCurley, Mrs Anna	Speed, Keith
Macfarlane, Neil	Spence, John
MacGregor, Rt Hon John	Spencer, Derek
MacKay, John (Argyll & Bute)	Spicer, Jim (Dorset W)
Maclean, David John	Spicer, Michael (S Worcs)
McNair-Wilson, M. (N'bury)	Squire, Robin
McNair-Wilson, P. (New F'st)	Stanbrook, Ivor
Major, John	Stanley, Rt Hon John
Malins, Humfrey	Stern, Michael
Malone, Gerald	Stevens, Lewis (Nuneaton)
Maples, John	Stewart, Allan (Eastwood)
Marlow, Antony	Stewart, Andrew (Sherwood)
Marshall, Michael (Arundel)	Stewart, Ian (Hertf'dshire N)
Mates, Michael	Stokes, John
Maxwell-Hyslop, Robin	Stradling Thomas, Sir John
Mayhew, Sir Patrick	Sumberg, David
Mellor, David	Tapsell, Sir Peter
Merchant, Piers	Taylor, Teddy (S'end E)
Meyer, Sir Anthony	Tebbit, Rt Hon Norman
Miller, Hal (B'grove)	Temple-Morris, Peter
Mills, Iain (Meriden)	Thomas, Rt Hon Peter
Mitchell, David (Hants NW)	Thompson, Donald (Calder V)
Moate, Roger	Thompson, Patrick (N'ich N)
Monro, Sir Hector	Thorne, Neil (Ilford S)
Montgomery, Sir Fergus	Thornton, Malcolm
Moore, Rt Hon John	Townend, John (Bridlington)
Mudd, David	Tracey, Richard
Murphy, Christopher	Trippier, David
Neale, Gerrard	Trotter, Neville
Needham, Richard	Twinn, Dr Ian
Nelson, Anthony	van Straubenzee, Sir W.
Neubert, Michael	Vaughan, Sir Gerard
Newton, Tony	Viggers, Peter
Nicholls, Patrick	Waddington, David
Norris, Steven	Wakeham, Rt Hon John
Oppenheim, Rt Hon Mrs S.	Waldegrave, Hon William
Ottaway, Richard	Walden, George
Page, Sir John (Harrow W)	Walker, Bill (T'side N)
Page, Richard (Herts SW)	Waller, Gary
Parkinson, Rt Hon Cecil	Ward, John
Parris, Matthew	Wardle, C. (Bexhill)
Patten, Christopher (Bath)	Watson, John
Patten, J. (Oxf W & Abgdn)	Watts, John
Pattie, Geoffrey	Wells, Sir John (Maidstone)

Wheeler, John	Woodcock, Michael
Whitfield, John	Yeo, Tim
Whitney, Raymond	Young, Sir George (Acton)
Wiggin, Jerry	Younger, Rt Hon George
Wilkinson, John
Winterton, Mrs Ann	Tellers for the Noes:
Winterton, Nicholas	Mr. Archie Hamilton and
Wolfson, Mark	Mr. Francis Maude.
Wood, Timothy

Question accordingly negatived.

Main Question put forthwith pursuant to Standing Order No. 41 (Amendment on Second or Third Reading):—

The House divided: Ayes 263, Noes 206.

Division No. 68]	[10.15 pm
AYES
Adley, Robert	Critchley, Julian
Aitken, Jonathan	Crouch, David
Alexander, Richard	Currie, Mrs Edwina
Amess, David	Dickens, Geoffrey
Ancram, Michael	Dorrell, Stephen
Arnold, Tom	Douglas-Hamilton, Lord J.
Ashby, David	Dover, Den
Aspinwall, Jack	du Cann, Rt Hon Sir Edward
Atkins, Rt Hon Sir H.	Dykes, Hugh
Atkins, Robert (South Ribble)	Eggar, Tim
Atkinson, David (B'm'th E)	Emery, Sir Peter
Baker, Rt Hon K. (Mole Vall'y)	Evennett, David
Baker, Nicholas (Dorset N)	Fairbairn, Nicholas
Baldry, Tony	Fallon, Michael
Banks, Robert (Harrogate)	Farr, Sir John
Batiste, Spencer	Favell, Anthony
Bellingham, Henry	Fletcher, Alexander
Bendall, Vivian	Forman, Nigel
Benyon, William	Forsyth, Michael (Stirling)
Best, Keith	Fowler, Rt Hon Norman
Biffen, Rt Hon John	Fox, Marcus
Biggs-Davison, Sir John	Fraser, Peter (Angus East)
Blackburn, John	Fry, Peter
Body, Sir Richard	Galley, Roy
Bonsor, Sir Nicholas	Gardner, Sir Edward (Fylde)
Boscawen, Hon Robert	Garel-Jones, Tristan
Bottomley, Peter	Gilmour, Rt Hon Sir Ian
Bottomley, Mrs Virginia	Glyn, Dr Alan
Bowden, Gerald (Dulwich)	Goodlad, Alastair
Braine, Rt Hon Sir Bernard	Gower, Sir Raymond
Brandon-Bravo, Martin	Grant, Sir Anthony
Bright, Graham	Greenway, Harry
Brinton, Tim	Gregory, Conal
Brittan, Rt Hon Leon	Grist, Ian
Brooke, Hon Peter	Ground, Patrick
Brown, M. (Brigg & Cl'thpes)	Grylls, Michael
Bruinvels, Peter	Hamilton, Hon A. (Epsom)
Bryan, Sir Paul	Hampson, Dr Keith
Buchanan-Smith, Rt Hon A.	Hanley, Jeremy
Buck, Sir Antony	Harvey, Robert
Budgen, Nick	Heddle, John
Bulmer, Esmond	Henderson, Barry
Burt, Alistair	Heseltine, Rt Hon Michael
Butcher, John	Higgins, Rt Hon Terence L.
Butterfill, John	Hogg, Hon Douglas (Gr'th'm)
Carlisle, John (Luton N)	Holland, Sir Philip (Gedling)
Carlisle, Kenneth (Lincoln)	Holt, Richard
Carlisle, Rt Hon M. (W'ton S)	Howell, Ralph (Norfolk, N)
Channon, Rt Hon Paul	Hubbard-Miles, Peter
Chapman, Sydney	Hunt, David (Wirral W)
Chope, Christopher	Irving, Charles
Clark, Dr Michael (Rochford)	Key, Robert
Clark, Sir W. (Croydon S)	Knight, Greg (Derby N)
Clarke, Rt Hon K. (Rushcliffe)	Lamont, Norman
Clegg, Sir Walter	Lang, Ian
Cockeram, Eric	Lawler, Geoffrey
Coombs, Simon	Lawrence, Ivan
Cope, John	Lawson, Rt Hon Nigel
Couchman, James	Lennox-Boyd, Hon Mark
Cranborne, Viscount	Lewis, Sir Kenneth (Stamf'd)

Lightbown, David	Ryder, Richard
Lilley, Peter	Sackville, Hon Thomas
Lloyd, Ian (Havant)	Sainsbury, Hon Timothy
Lloyd, Peter (Fareham)	St. John-Stevas, Rt Hon N.
Lord, Michael	Sayeed, Jonathan
Lyell, Nicholas	Shaw, Giles (Pudsey)
McCrindle, Robert	Shaw, Sir Michael (Scarb')
McCurley, Mrs Anna	Shelton, William (Streatham)
Macfarlane, Neil	Shepherd, Richard (Aldridge)
MacGregor, Rt Hon John	Silvester, Fred
MacKay, John (Argyll & Bute)	Sims, Roger
Maclean, David John	Smith, Tim (Beaconsfield)
McNair-Wilson, M. (N'bury)	Soames, Hon Nicholas
McNair-Wilson, P. (New F'st)	Speed, Keith
Major, John	Spence, John
Malins, Humfrey	Spencer, Derek
Malone, Gerald	Spicer, Jim (Dorset W)
Maples, John	Spicer, Michael (S Worcs)
Marlow, Antony	Squire, Robin
Marshall, Michael (Arundel)	Stanbrook, Ivor
Mates, Michael	Stanley, Rt Hon John
Maxwell-Hyslop, Robin	Stern, Michael
Mayhew, Sir Patrick	Stevens, Lewis (Nuneaton)
Mellor, David	Stewart, Allan (Eastwood)
Merchant, Piers	Stewart, Andrew (Sherwood)
Meyer, Sir Anthony	Stewart, Ian (Hertf'dshire N)
Miller, Hal (B'grove)	Stokes, John
Mills, Iain (Meriden)	Stradling Thomas, Sir John
Mitchell, David (Hants NW)	Sumberg, David
Moate, Roger	Taylor, Teddy (S'end E)
Monro, Sir Hector	Tebbit, Rt Hon Norman
Montgomery, Sir Fergus	Temple-Morris, Peter
Moore, Rt Hon John	Thomas, Rt Hon Peter
Mudd, David	Thompson, Donald (Calder V)
Murphy, Christopher	Thompson, Patrick (N'ich N)
Neale, Gerrard	Thorne, Neil (Ilford S)
Needham, Richard	Thornton, Malcolm
Nelson, Anthony	Townend, John (Bridlington)
Neubert, Michael	Tracey, Richard
Newton, Tony	Trippier, David
Nicholls, Patrick	Trotter, Neville
Norris, Steven	Twinn, Dr Ian
Oppenheim, Rt Hon Mrs S.	van Straubenzee, Sir W.
Ottaway, Richard	Vaughan, Sir Gerard
Page, Sir John (Harrow W)	Viggers, Peter
Page, Richard (Herts SW)	Waddington, David
Parkinson, Rt Hon Cecil	Wakeham, Rt Hon John
Parris, Matthew	Waldegrave, Hon William
Patten, Christopher (Bath)	Walden, George
Patten, J. (Oxf W & Abgdn)	Walker, Bill (T'side N)
Pattie, Geoffrey	Waller, Gary
Pawsey, James	Ward, John
Percival, Rt Hon Sir Ian	Wardle, C. (Bexhill)
Pollock, Alexander	Watson, John
Porter, Barry	Watts, John
Portillo, Michael	Wells, Sir John (Maidstone)
Powell, William (Corby)	Wheeler, John
Powley, John	Whitfield, John
Prentice, Rt Hon Reg	Whitney, Raymond
Price, Sir David	Wiggin, Jerry
Raffan, Keith	Wilkinson, John
Raison, Rt Hon Timothy	Winterton, Mrs Ann
Rathbone, Tim	Winterton, Nicholas
Rees, Rt Hon Peter (Dover)	Wolfson, Mark
Rhodes James, Robert	Wood, Timothy
Rhys Williams, Sir Brandon	Woodcock, Michael
Ridley, Rt Hon Nicholas	Yeo, Tim
Ridsdale, Sir Julian	Young, Sir George (Acton)
Roberts, Wyn (Conwy)	Younger, Rt Hon George
Roe, Mrs Marion
Rossi, Sir Hugh	Tellers for the Ayes:
Rost, Peter	Mr. Tony Durant and
Rowe, Andrew	Mr. Francis Maude.
Rumbold, Mrs Angela

NOES
Adams, Allen (Paisley N)	Ashley, Rt Hon Jack
Alton, David	Ashton, Joe
Archer, Rt Hon Peter	Atkinson, N. (Tottenham)
Ashdown, Paddy	Bagier, Gordon A. T.

Banks, Robert (Harrogate)	Hancock, Michael
Barron, Kevin	Hardy, Peter
Beckett, Mrs Margaret	Harrison, Rt Hon Walter
Beith, A. J.	Hattersley, Rt Hon Roy
Bell, Stuart	Haynes, Frank
Benn, Rt Hon Tony	Heffer, Eric S.
Bennett, A. (Dent'n & Red'sh)	Hogg, N. (C'nauld & Kilsyth)
Bermingham, Gerald	Home Robertson, John
Bidwell, Sydney	Howells, Geraint
Blair, Anthony	Hoyle, Douglas
Boothroyd, Miss Betty	Hughes, Dr Mark (Durham)
Boyes, Roland	Hughes, Robert (Aberdeen N)
Bray, Dr Jeremy	Hughes, Roy (Newport East)
Brown, Gordon (D'f'mline E)	Hughes, Sean (Knowsley S)
Brown, Hugh D. (Provan)	Hughes, Simon (Southwark)
Brown, N. (N'c'tle-u-Tyne E)	Janner, Hon Greville
Brown, R. (N'c'tle-u-Tyne N)	John, Brynmor
Brown, Ron (E'burgh, Leith)	Johnston, Sir Russell
Bruce, Malcolm	Jones, Barry (Alyn & Deeside)
Buchan, Norman	Kaufman, Rt Hon Gerald
Caborn, Richard	Kennedy, Charles
Callaghan, Rt Hon J.	Kilroy-Silk, Robert
Callaghan, Jim (Heyw'd & M)	Kinnock, Rt Hon Neil
Campbell, Ian	Kirkwood, Archy
Campbell-Savours, Dale	Lambie, David
Canavan, Dennis	Lamond, James
Carlile, Alexander (Montg'y)	Leadbitter, Ted
Carter-Jones, Lewis	Leighton, Ronald
Clark, Dr David (S Shields)	Lewis, Ron (Carlisle)
Clarke, Thomas	Lewis, Terence (Worsley)
Clay, Robert	Litherland, Robert
Clelland, David Gordon	Livsey, Richard
Clwyd, Mrs Ann	Lloyd, Tony (Stretford)
Cocks, Rt Hon M. (Bristol S)	Lofthouse, Geoffrey
Cohen, Harry	Loyden, Edward
Coleman, Donald	McCartney, Hugh
Conlan, Bernard	McDonald, Dr Oonagh
Cook, Frank (Stockton North)	McGuire, Michael
Cook, Robin F. (Livingston)	McKay, Allen (Penistone)
Corbett, Robin	McKelvey, William
Corbyn, Jeremy	MacKenzie, Rt Hon Gregor
Craigen, J. M.	McNamara, Kevin
Crowther, Stan	McTaggart, Robert
Cunliffe, Lawrence	McWilliam, John
Dalyell, Tam	Madden, Max
Davies, Rt Hon Denzil (L'lli)	Marek, Dr John
Davis, Terry (B'ham, H'ge H'l)	Martin, Michael
Deakins, Eric	Mason, Rt Hon Roy
Dewar, Donald	Maxton, John
Dixon, Donald	Maynard, Miss Joan
Dobson, Frank	Meacher, Michael
Dormand, Jack	Meadowcroft, Michael
Douglas, Dick	Michie, William
Dubs, Alfred	Millan, Rt Hon Bruce
Duffy, A. E. P.	Morris, Rt Hon A. (W'shawe)
Dunwoody, Hon Mrs G.	Morris, Rt Hon J. (Aberavon)
Eadie, Alex	Nellist, David
Eastham, Ken	Oakes, Rt Hon Gordon
Edwards, Bob (W'h'mpt'n SE)	O'Brien, William
Evans, John (St. Helens N)	O'Neill, Martin
Ewing, Harry	Orme, Rt Hon Stanley
Fatchett, Derek	Owen, Rt Hon Dr David
Faulds, Andrew	Park, George
Field, Frank (Birkenhead)	Parry, Robert
Fields, T. (L'pool Broad Gn)	Pavitt, Laurie
Fisher, Mark	Pendry, Tom
Flannery, Martin	Penhaligon, David
Forrester, John	Pike, Peter
Foster, Derek	Prescott, John
Foulkes, George	Radice, Giles
Fraser, J. (Norwood)	Randall, Stuart
Freeson, Rt Hon Reginald	Redmond, Martin
Freud, Clement	Rees, Rt Hon M. (Leeds S)
Garrett, W. E.	Richardson, Ms Jo
George, Bruce	Roberts, Allan (Bootle)
Gilbert, Rt Hon Dr John	Roberts, Ernest (Hackney N)
Gould, Bryan	Robinson, G. (Coventry NW)
Gourley, Harry	Rogers, Allan
Hamilton, James (M'well N)	Ross, Ernest (Dundee W)
Hamilton, W. W. (Fife Central)	Ross, Stephen (Isle of Wight)

Rowlands, Ted	Thorne, Stan (Preston)
Ryman, John	Tinn, James
Sedgemore, Brian	Torney, Tom
Sheerman, Barry	Wainwright, R.
Sheldon, Rt Hon R.	Wallace, James
Shore, Rt Hon Peter	Wardell, Gareth (Gower)
Short, Ms Clare (Ladywood)	Wareing, Robert
Short, Mrs R.(W'hampt'n NE)	Weetch, Ken
Skinner, Dennis	Welsh, Michael
Smith, C.(Isl'ton S & F'bury)	White, James
Snape, Peter	Wigley, Dafydd
Soley, Clive	Williams, Rt Hon A.
Spearing, Nigel	Wilson, Gordon
Steel, Rt Hon David	Winnick, David
Stewart, Rt Hon D. (W Isles)	Woodall, Alec
Stott, Roger	Wrigglesworth, Ian
Strang, Gavin	Young, David (Bolton SE)
Straw, Jack
Thomas, Dafydd (Merioneth)	Tellers for the Noes:
Thomas, Dr R. (Carmarthen)	Mr. Ron Davies and
Thompson, J. (Wansbeck)	Mr. Ray Powell.

Question agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

c881
1. BUSINESS OF THE HOUSE 24 words
c881
2. WAGES BILL [MONEY] 107 words