HC Deb 28 October 1993 vol 230 cc1074-80

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]

10.11 pm
Mr. Peter L. Pike (Burnley)

I am grateful, Madam Speaker, for the opportunity to raise the matter of low pay in Lancashire. I also raised the matter in the House last Tuesday when, in my view, I received an unsatisfactory answer from the Minister of State, Department of Employment.

I had asked the Minister in a written question whether he had had any discussions with jobcentres in Lancashire with regard to the subject of low pay. Due to the summer recess, that question had been on the Order Paper longer than the normal period of 10 working days. However, the Minister stated that he had had no discussions on the subject. In response to my supplementary question, he, gave me what, in my view, was an insulting reply by referring to something that had been advertised in Victoria street in London. His reply had little or no relevance to the situation in Lancashire or to my constituency.

I feel that the issue is of such importance that I immediately sought to raise it on the Adjournment. I am grateful for the opportunity of having a different ministerial response to the case.

Low pay is a scandal affecting the whole of Lancashire. The incidence of low pay in Lancashire is far higher than it is in the country as a whole; indeed, the whole of the north-west is in a similar position. Low pay is just one example of the way in which the Government have eroded working conditions since 1979. They have eroded protection for workers, and they have introduced policies which I find totally unacceptable. The Government's taxation policy is one example. They have moved from direct taxation to indirect taxation, which penalises in particular people on low pay. Those on low pay must use a high percentage of their income—indeed all of their income—because otherwise they cannot survive.

The Government's policies on privatisation and compulsory competitive tendering lead to job losses and cuts in pay and working conditions. There is not one bus worker in Lancashire who, as a result of the Transport Act 1985, now enjoys the same working conditions as he did prior to the Act.

I have not simply raised the issue recently; I have raised it continuously. I have been fortunate enough in the past 12 months or so to be able to raise the issue of low pay in Lancashire on three separate occasions with the Prime Minister. Even when I raised the matter with him, I received an unsatisfactory reply to the points that I made. The issue is extremely important and I hope that the Minister will respond to my points.

Earlier this year, in early-day motion 1442, I drew attention to a programme shown on Channel 4 on 15 February produced by Hard Cash Productions, Cutting Edge. In the programme the journalist Sima Ray drew attention to the scandal of low pay in Burnley, Pendle, Blackburn and Preston. It gave specific examples of some appalling instances of low pay.

The Lancashire 1993 economic situation report said: The deterioration of average earnings in Lancashire is reflected by figures produced by the Low Pay Unit in Greater Manchester, based upon unpublished data from the 1992 New Earnings Survey, which revealed that more than half of Lancashire employees, (51.8 per cent …), earn below the low pay threshold. For its purpose, the low pay threshold was £197.27 per week.

When I refer to low pay, I do not mean pay of £197.27, which is £5.19 an hour; I mean pay of £3 an hour or less. It is a scandal and a disgrace. The Low Pay Unit showed that in Lancashire 11.4 per cent. of the jobs on offer in five jobcentres in September 1992 were at £2.60 an hour or less and 85.5 per cent. were at £3.50 an hour or less. Those jobcentres were Blackpool south, Blackpool central, Preston, Blackburn and Burnley—a fair selection of jobcentres.

In Blackpool central and Blackpool south, a high percentage of the jobs offered wages of just over £3 an hour because they were protected by the wages councils. But now the wages councils have been abolished. Already a larger number of jobs in Blackpool are being offered at less than £3 an hour—jobs in the hotel and catering trade, which were some of the last to be protected by the wages councils.

When we consider the effect of abolishing the wages councils, we must bear it in mind that many of the people who were protected were women. The Trades Union Congress said: By abolishing Wages Councils on August 30, the Government has removed one of the last remaining forms of protection against wage-cutting and contravention of the equal pay principle for these vulnerable workers. That is an extremely important point. The Government's record is outrageous and is out of step with other countries in Europe.

The Lancashire economic situation report for 1993 said that a high proportion of employees and advertised jobs in Lancashire were at wages below the contribution level for national insurance. Therefore, those people do not qualify for sick pay, unemployment pay or maternity benefit. That will cause them problems with their pension in the years ahead. It is disgraceful.

I regret that my hon. Friend the Member for Blackburn (Mr. Straw) cannot be here for the debate tonight. My hon. Friend the Member for Preston (Mrs. Wise) also could not be present. They would have wished to speak in the debate, time permitting. My hon. Friends the Members for Rossendale and Darwen (Ms Anderson) and for Lancashire, West (Mr. Pickthall) are here to support my argument.

We all have people who come to our advice bureaux about low pay. A young married man with two children came to my advice bureau two years ago, not about his wages but about safety aspects at the factory in which he worked. He did not work in my constituency; he worked in a small footwear factory in the constituency of Pendle which is adjacent to my constituency. He was very concerned about several safety aspects, but he dared not complain. He had been out of work for a long time and he wanted to keep his job. He was terrified of raising the question of safety with his employer because he was afraid that he would lose his job if he did.

As that man was leaving my surgery he suddenly said, "At the top line, my pay is £40 for a 40 hour week." I asked him whether all the workers received that sum and he told me that the foreman received £50 a week. I asked him whether he was a member of a union and whether he wanted me to do something. He said, "Oh no. I don't want to lose the job. I've been out of work two years and it's better to be working than to be out of work." What a disgraceful and shameful position that is.

Ms Janet Anderson (Rossendale and Darwen)

I must emphasise that problems like that continue. My hon. Friend referred to someone who was paid £1 an hour two years ago. Only two weeks ago, a constituent of mine came to see me in my surgery. Two years on, she had been offered a job at £1 an hour.

As my hon. Friend has said, the problem is widespread across Lancashire and it has now reached scandalous proportions. To illustrate that, let me point out that a recent survey in the Bacup and Rawtenstall jobcentre area carried out by Labour-controlled Rossendale borough council showed that 75 per cent. of the 239 jobs available paid less than £3.50 an hour. That is a scandal which my constituents can no longer tolerate.

Mr. Pike

I thank my hon. Friend for making those points. She has underlined my case. This is a scandal. It is wrong to call these wages low wages. They are poverty wages and disgracefully low wages, and we must focus attention on them.

I want now to concentrate on examples in a document published in September by the Lancashire and Cumbria citizens advice bureau. The Government sometimes believe that the Low Pay Unit and others are politically biased. The last thing that the citizens advice bureau can be accused of is political bias. I will refer to some of the cases and then state briefly what the Government should do.

The document states that a client from a Lancashire bureau had worked three years for a local solicitor for an hourly wage of £3.54. Her employer paid no tax or national insurance for her and refused to give her a written statement of her terms and conditions of employment. She was dismissed for asking for holiday pay.

A client from another bureau in Lancashire worked for his employer for four and a half years, sometimes up to 60 hours a week, and was paid an hourly rate of £1.86. His comment was: If I could get another job or if another employer existed, I would go there. In another case, a client said that he worked 77 hours a week at an hourly rate of £1.50. He said: I had to work seven days a week for three weeks to get my weekend off. A citizens advice bureau in another part of Lancashire said that a male client working as a hotel cleaner was paid £50 for an 18-hour week which works out at £2.77 an hour. He was told that if he was to receive family credit, his wage would be reduced to take account of that.

There are many examples of such cases. A full-time hairdresser earned £30 a week. That is absolutely outrageous. An 18-year-old client in a fabric company was paid £1 an hour. If he had been covered by a wages council, he would have received £2.72 if he was over 21. Another CAB in Lancashire reported someone working a 39-hour week in a shoe shop for £90.

The document contains page after page of cases like that. The Minister must accept that the problem is not small. We are not talking about people who are working for reasonable levels of pay. We are talking about people who are working for poverty levels. I could produce pages and pages of statistics from citizens advice bureaux, Lancashire county council, the Low Pay Unit and from Burnley borough council. People cannot impove their houses because they do not have enough money to do it.

The Government have rejected the case for a national minimum wage. It is time that we had a national minimum wage. [Interruption.] The Minister shakes her head. She will say that a national minimum wage will threaten jobs and that the idea is a load of nonsense. Every other country in Europe has a form of pay protection—not necessarily a national minimum wage—for workers.

When the legislation that abolished wages councils was being considered, several companies in my constituency wrote, through me, to the Minister, saying, "We are paying people this amount. It is outrageous that we should have to face competition from people who pay £1 or £1.50 an hour less for what is effectively slave labour." It is time that the Government talked of fair pay and fair working conditions for a fair day's work. It is time that the Government recognised that working people in this country are entitled to fair treatment. They have not had fair treatment from the Conservative Government. If it is not too late, the Government must change track and show that they are prepared to tackle these problems and do something to eliminate low pay as speedily as possible.

10.26 pm
The Parliamentary Under-Secretary of State for Employment (Miss Ann Widdecombe)

I congratulate the hon. Member for Burnley (Mr. Pike) on obtaining this debate. It is also right to acknowledge the presence of other hon. Members at this hour—the hon. Members for Rossendale and Darwen (Ms Anderson) and for Lancashire, West (Mr. Pickthall) and, until I stood up, when for some unaccountable reason they left, the hon. Members for Rochdale (Ms Lynne) and for Cheltenham (Mr. Jones). I appreciate their interest in this extremely serious subject.

I totally reject the criticisms that the hon. Member for Burnley levelled at my hon. Friend the Minister of State. When my hon. Friend replied to the hon. Gentleman, he pointed out quite reasonably that one of the hon. Gentleman's colleagues had advertised a job at no pay at all but that there was nothing disgraceful about that because the person concerned, as a result of the experience that he gained, went on to gain a full-time job. My hon. Friend the Minister of State was trying to point out that there are various patterns of entry into the labour market.

It makes no sense at all, at a time of recession, to try to eliminate low pay if the result is no pay. Firms which have been struggling to survive might find that they can keep jobs if they are able to keep their wages bills low. It is better for the country, for Lancashire and for the people who are employed as well as for employers if firms can stay in existence and maintain jobs so that they are ready to take the fullest possible advantage for themselves and their employees of the recovery which nobody now doubts is happening.

I was most interested to hear of the hon. Gentleman's investigations of the jobcentres in his constituency. I make an offer to the hon. Gentleman. He will know that, some years ago, I had a connection with Burnley, but it is a long time since I have been back there. Perhaps the hon. Gentleman would like me to visit his constituency in due course when the diary permits and we could examine some of the pay rates offered in Lancashire.

Mr. Pike

I recall when the Minister was the candidate for the Burnley constituency—I was then the agent—in 1979. I would be more than happy to welcome her to Burnley. Should not jobcentres make it clear what the rate is for every job so that applicants know exactly what remuneration is being offered?

Miss Widdecombe

I certainly share with the hon. Gentleman an ambition that people who go to a jobcentre should get the fullest possible information not simply about the rates of pay but everything connected with a job, which it is reasonable to assume one would get. I have no information at all to the effect that that is not what is happening in our jobcentre in Burnley. However, I listened to the hon. Gentleman and I am prepared to follow up the matter. Perhaps he will allow me to write to him in due course on that specific point. I will not be visiting Lancashire in the next few days or weeks but, in view of his warmish welcome, I will certainly put a visit on my schedule.

Perhaps I could make some general points. Much of the hon. Gentleman's thesis tonight is based on the reports of the Low Pay Unit. Clearly, he is trying to satisfy himself that the situation that the Greater Manchester Low Pay Unit attempted to describe in September 1992 somehow still exists. Indeed, he is sure that it exists because he has found a number of vacancies that offer less than £100, if I did my calculations correctly. He therefore reached the conclusion that low pay is widespread in Lancashire.

By making that extrapolation, the hon. Gentleman is making the same mistake that the Manchester Low Pay Unit made last year—that is, that advertised rates of pay somehow represent actual remuneration in the local labour market. By basing his arguments about the level of pay on the reports of the Low Pay Unit, he does not get the full picture of the current situation. Not only is the specific report more than one year old; as with so many reports produced by low pay units up and down the country, it is based on research restricted to a survey of vacancies displayed only in jobcentres.

The report of the Greater Manchester Low Pay Unit compared the wages on offer to potential recruits with various thresholds—in this case, national insurance contributions at £54 a week and approximate income tax thresholds of £66 per week for single people and £99 per week for married persons. The Low Pay Unit adds to those benchmarks entirely arbitrary weekly rates of £135 and £155 per week and its spurious low pay threshold of £197 per week. The hon. Gentleman appears to have swallowed whole the assumptions, methodology, reports and conclusions of what I consider to be not very scientific analysis.

Mr. Conn Pickthall (Lancashire, West)

With permission, can the Minister estimate what she considers to be a low-pay threshold?

Miss Widdecombe

The hon. Gentleman is not asking a sensible question because what is low pay does not mean that that is the income on which a household must live. A lot of the low pay that is identified is the income of young, single people still living at home and deliberately chosen part-time work on the part of second and third wage earners. One of the ironies is that, if we adopt the policy of a national minimum wage as proposed by the hon. Member for Burnley, because of the amount of low earning among second and third wage earners, we would benefit the richest 30 per cent. of the population, not the poorest 30 per cent.

Naturally, the hon. Gentleman looked to Europe. I notice that Labour Members always look to Europe when they think that it is convenient, and look sharply away when we have statistics that they do not like. The hon. Gentleman pointed to countries which have minimum wages. The country with the closest to what the Labour party is proposing is Spain. Spain has a statutory minimum along the lines that a Labour Government would go. The fact is that Spain has 22 per cent. unemployment.

If the hon. Gentleman surveyed his constituents—I do not think that they have changed much in intelligence since I was up there, which means that they are a sharp bunch —and said, "Come on constituents of Burnley, would you prefer not to have your job or would you prefer that there were some low-paid vacancies in Lancashire?", I think that they would opt for the latter. People up there are quite wise and I commend their wisdom to their Member of Parliament.

Mr. Pike

Although I realise that the Minister has focused her attention on what the Low Pay Unit said, would she be prepared to look at the evidence of cases that go to the citizens advice bureaux? If I send her a copy of that document, will she respond to it?

Miss Widdecombe

Whatever the document the hon. Gentleman sent me, whether from the citizens advice bureaux or anywhere else, I would certainly look at it and respond to it. I should not dare to throw anything that the hon. Gentleman sent to me in the wastepaper basket. I look forward to responding to that communication in due course.

Earnings constituency by constituency are not as thoroughly documented as earnings by region so I shall consider earnings in the north west region, which will interest those in neighbouring constituencies. The 1993 new earnings survey shows that average weekly gross earnings for both men and women in the north west are higher than in any other region except the south east, including London. In the north west, average gross earnings have grown by 4.5 per cent. for men and 5.8 per cent. for women since the 1992 new earnings survey. People in real jobs in the north west of England are not low paid. On average, they are better paid than people in most of the rest of the country.

Ms Janet Anderson

The Minister has implied that "poverty wages", as my hon. Friend the Member for Burnley (Mr. Pike) rightly described them, are generally paid to single people. However, featured in the Darwen Advertiser in my constituency last week was a family man with an MA from Cambridge, who had been offered £1.66 an hour as a packer, which was the only job he could get. The Minister implied that the jobs on offer in the local jobcentres do not necessarily reflect the overall picture in the area. Where do the unemployed go for jobs? They go to the jobcentre. Indeed, the Government force them to go there. In the jobcentre in my constituency, a third of the jobs on offer pay less than £2.60 an hour and 75 per cent. pay less than £3.50 an hour.

Miss Widdecombe

The unemployed may have to go to the jobcentre but the Government certainly do not restrict them to the jobcentre. A general fallacy prevalent among Opposition Members—not just in this debate but in a number of arguments that they raise—is that somehow all the information on trends and jobs can be extrapolated just from the vacancies that occur in jobcentres. For example, Opposition Members are always asking me how I account for the large number of people chasing one job. But when one asks what each figure is based on, it is simply on jobcentre vacancies, whereas they are but a proportion of the labour market. I commend Opposition Members to study carefully the high turnover in the labour market and the number of vacancies. Just by looking at the number of vacancies that are filled and created every month they will realise that they cannot possibly be restricted to jobcentres alone.

Although I do not dispute the fact that Opposition Members can come up with examples of low pay, I have disputed throughout that, from those, extrapolations can be made suggesting that the problem is widespread, is worse in Lancashire than elsewhere and is not improving. My statistics, which are thoroughly independent and well validated by the earnings survey, clearly show that the position is improving, Lancashire does well compared with the rest of the country, and low pay is not widespread.

Neither the Government nor any previous Government, of whatever party, have defined low pay. Definitions of low pay, such as those used by the Low Pay Unit, the Trades Union Congress or the Council of Europe, are entirely arbitrary and fail to take account of the particular circumstances of individuals or households. For example, if the Council of Europe's so called "decency threshold" —68 per cent. of the national weekly wage, which was £215 in April 1993—had been held constant in real terms, the numbers earning below it would have fallen by more than 3 million since 1979. Therefore, on those figures, the number of people earning below the decency threshold has fallen. There is a clear lesson to be learnt from that: living standards depend upon a range of factors, not just pay alone. Low pay is relative; there will always be some workers who are lower paid than others.

It is utter wishful thinking to suppose that every wage packet represents a family's whole income. The low paid are the young, single people and part-time workers, many of whom are second, third or even fourth earners in their households. Consequently, only 7 per cent. of those in the bottom tenth of the earnings distribution live in the poorest tenth of the population based on household income. Low pay is not synonymous with low income or poverty, however defined. Having no job is the single most important cause of poverty—only some one fifth of the poorest tenth of the population live in households where the head or spouse is a full-time worker.

Those are the important facts. I thank the hon. Member for Burnley for raising the issue, but I believe that he has done so in a misguided way.

Question put and agreed to.

Adjourned accordingly at nineteen minutes to Eleven o'clock