Low Pay and Unemployment (Hansard, 13 July 1995)

2. Mr. Robert Ainsworth
To ask the Chancellor of the Exchequer what is his assessment of the economic impact of low pay and unemployment. [32548]

§ The Chief Secretary to the Treasury (Mr. William Waldegrave)
Low pay and unemployment result from low productivity and inflexible labour markets. Government policies have successfully tackled these problems. Real take-home pay has risen at all levels since 1979 and unemployment has fallen by 661,000 since December 1992.

Mr. Ainsworth
Is it not a fact that low pay is now costing every taxpayer £100 a year? Is that subsidy for bad employers a good use of £2.4 billion of public money? Is it not a fact that without a minimum wage, the good employer is undermined by the bad employer, who is undermined by the worst employer, and that the taxpayer winds up picking up the tab?

§ Mr. Waldegrave
I am very surprised that the hon. Gentleman should lead with an argument for the minimum wage. One of the most robust Labour politicians I know, the deputy leader of the Labour party, said: I knew the consequences of a minimum wage were that there'd be some shake out, any silly fool knew that". To bring the script up to date, Lord Healey—the only Labour politician I know who is more robust than the deputy leader—said: Don't kid yourselves—the minimum wage is something on which unions will build differentials … Therefore the minimum wage becomes a floor on which you erect a new tower". Those are the facts, and the people with courage in the Labour party know that they are the facts.

§ Mr. Dunn
Can my right hon. Friend inform the House how those on low pay or the unemployed would benefit from the introduction of a minimum wage, given that a minimum wage would destroy jobs and be a nightmare in the labour market?

§ Mr. Waldegrave
The irony must be that either one sets the minimum wage so low that it does not affect anything, or one moves differentials—unless the trade union movement has completely abandoned virtually everything that it stands for. Common sense tells us that the minimum wage will destroy jobs and that it will not benefit the unemployed one whit.

§ Mr. Skinner
Is the Minister aware that some of us have a figure for the minimum wage? We have done a comparison of those Tory Members of Parliament who receive £10,000 a year from consultancies that they do not declare in the Register. Some £10,000 a year is £5 an hour and the people in my constituency would settle for that. Unlike the moonlighting Tory Members of Parliament, my constituents want only one job.

§ Mr. Waldegrave
It is not uncharacteristic for the hon. Gentleman to have the courage of his convictions. He has 1075 put a figure of £5 an hour on the minimum wage. Let us have a figure from the Labour Front Bench. If Labour Members below the Gangway have the courage to give a figure, why will those on the Front Bench not do the same?

§ Mr. Harry Greenway
Has my right hon. Friend estimated the number of jobs that would be lost if the minimum wage were pitched at the level suggested by the Transport and General Workers Union? Does he not think—[Interruption.] The hon. Member for Worsley (Mr. Lewis) should wake up—and so should the hon. Member for Bolsover (Mr. Skinner). Does my right hon. Friend not think that people are most motivated and happiest when they are in work, even if they are not paid £1 million a year for doing the job?

§ Mr. Waldegrave
The estimates vary, but I have seen an estimate of anything around three quarters of a million jobs. On the basis of the figure advanced from below the Gangway opposite, it would probably be a little higher than that.