National Minimum Wage Bill

HC Deb 16 December 1997 vol 303 cc162-239

Order for Second Reading read.

Mr. Deputy Speaker (Sir Alan Haselhurst)

Before I call the President of the Board of Trade I must announce to the House that Madam Speaker has decided to apply the 10-minute rule to all Back-Bench speeches throughout the debate.

5.25 pm

The President of the Board of Trade and Secretary of State for Trade and Industry (Mrs. Margaret Beckett)

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

I am proud to be able to stand before the House today moving the Second Reading of the National Minimum Wage Bill. The Bill will introduce, for the first time in the United Kingdom, minimum wage protection for all workers and will begin to end the scandal of poverty pay.

This is one of the many areas of politics in which for the Opposition the debate has stood still. They continue—most of them at least—to attack even the principle, let alone the detail, of a national minimum wage as if they and not we had won both the argument and the election. Indeed, this is a good example of the stark differences between us; differences which shape a wholly different approach to Britain's competitiveness.

Increasingly in recent years, the Conservative party has argued that Britain can only and should only seek to compete by aiming to be the cheapest at all costs; aiming to be the bottom of the heap; aiming for the lowest wages and the worst working conditions to be found among our competitors. It was truly a counsel of despair.

The previous Government inherited a country long regarded, certainly since the earliest days of the industrial revolution, as the workshop of the world. Yet the underlying thrust of the policy of the previous Government was to try to turn Britain into the sweatshop, certainly of Europe if not of the world. Fortunately, undercutting the wages and working conditions of countries such as China, for example, was beyond even the previous Government, although heaven knows they tried. In the process they added to changes coming from elsewhere—to a ridiculous extent—and created endemic and high levels of insecurity across every group and profession in the country. Thanks to them, it is well understood that in today's world there is no longer any such thing as a safe job or even a secure profession. Those who thought themselves well-established in their comfortable middle years saw their personal and financial security stripped away and a Government utterly indifferent to their impact on the lives of individuals, of families or of society as a whole.

It is never possible to summarise differences in political philosophy in a sentence or two, but it certainly goes to the heart of the difference between ourselves and the Conservative party that it sought to achieve competitiveness through lowest price whereas we seek to achieve it through high quality. We profoundly believe that Britain's only route to a secure and competitive future is to remain at the forefront of technological development, of the pursuit of innovation and indeed of quality in all the goods or services that we seek to supply, whether domestically or across the world.

It is against that background that we recognise the role that having basic and fair minimum standards, including fair minimum standards for pay, can contribute.

Mr. John Redwood (Wokingham)

The right hon. Lady has already misled the House in her remarks. She said that all workers will be covered. There are four categories exempted in the Bill before the House so I hope that she will correct the record. Will the right hon. Lady tell the House—

Mr. Deputy Speaker

Order. The right hon. Gentleman might like to reconsider the words he used about the right hon. Lady.

Mr. Redwood

Would you like me to say that the right hon. Lady inadvertently misled the House? The right hon. Lady said that all workers will be covered, but that is not in the Bill before the House.

I want to ask a simple question. Has the right hon. Lady now resolved the conflicts with her ministerial colleagues? Is she telling the House now that every young worker, trainee or otherwise, will be covered by the Bill at a single, standard national minimum rate, or is she still undecided about whether all young workers and trainees will be covered?

Mrs. Beckett

I do not know why the right hon. Gentleman bothered to rise to make that point. Obviously, the issue of who is covered by the Bill is something to which I shall come shortly. I am sure that he is well aware that the issue of how young people will be affected is one which we have referred to the Low Pay Commission, and I shall come to that in a minute.

Labour Members support a national minimum wage, not only because it is just, but because it has the potential for real economic benefit, provided that it is set at a sensible rate. Moreover, that is not merely our view, but a view which is attracting growing support across British business and commerce.

The evidence for why we need a national minimum wage is quite clear. Despite the previous Government's assertions, having no floor at all for wages has in itself created considerable problems in the labour market. It has increased costs and pressures on the public purse and it has undermined many efficient and worthwhile companies which are at risk of losing market share as they are undercut by cowboy operators.

In consequence, we see low standards, not merely becoming the norm, but being reflected in the poor quality, or indeed the lack of any training or of development, in the work force, in levels of productivity that still lag far behind our competitors because improved productivity depends crucially on improved levels of investment, and in consequent reductions in the competitiveness of much of British industry.

We have seen welcome improvements of late, both in the statistics on unemployment and in the fact that more people are in work now than in recent years. Nevertheless, after 18 years of a Government who came to power on the slogan "Labour isn't working", we found unemployment 50 per cent. higher than we left it in 1979, even after some 30 or so changes in the way in which it has been measured. Within that total, the number of people who have been unemployed for more than a year is almost double the figure for 1979.

Within that overall picture on employment, the link that the Conservative party claims to detect between low levels of pay and high levels of employment is discredited by much of the evidence of its record in power. Until they were abolished by the previous Government, wages councils provided minimum pay rates for the most vulnerable of our work force, who worked in industries that had a history both of low trade union representation and of low pay. Apart from the existence of the wages councils, legislation such as the fair wage resolution or schedule 11 to the Employment Rights Act 1996 ensured that workers were paid rates at least comparable to those enjoyed by similar workers in competing companies.

The previous Government systematically and step-by-step dismantled all those protections. In 1986, young people were removed from coverage by the wages council system. During the Second Reading debate on the Wages Bill 1986, the right hon. and learned Member for Rushcliffe (Mr. Clarke) explained that the then Government's aim was to create employment opportunities especially for young people and to create— 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".—[Official Report, 11 February 1986; Vol. 91, c. 796.] What happened? Certainly, levels of pay fell. But there is a good deal of evidence to suggest that employment among young people actually fell.

Abolition of the councils in 1993 saw earnings in those industries covered, particularly for the new entrants, fall in real terms. But employment in those sectors did not increase relative to the rest of industry. Nor indeed did low pay continue to be confined largely to those areas previously covered by wages councils. Now some 880,000 workers earn less than £2.50 an hour, which is a third of the average hourly rate. Those workers are found throughout the United Kingdom, not just in areas that have traditionally tended to be low paying. There are innumerable examples of people working long hours for a very low hourly rate.

The Low Pay Unit has examples of someone working in a chip shop in Birmingham and taking home 80p an hour, of a factory hand earning £1.22 an hour and a residential home worker earning £1.66 an hour—another example involves a sales clerk in Wrexham earning £1.12 an hour. The recently opened Trades Union Congress hotline has uncovered cases such as that of a waiter paid £12 for an eight-hour shift, during which any tips that he received were taken from him, and a cleaner working in an independent school, who was paid £40 for a 40-hour week.

The consequence of that policy, apart from insecurity and poverty among those in such low-paid work, is a massive cost to the public purse. More than £2 billion will be paid in 1997 in family credit alone to subsidise employers paying wages at those levels. The taxpayer is paying a heavy price for the previous Government's decision to remove any floor on earnings. Not only did that result in poverty wages, but a pay gap was created between rich and poor which has grown to its largest level since the 1880s; and there has been a growth in inequality which is faster than in any other industrialised country apart from New Zealand.

Moreover, the present position is actually undermining employers who are competitive in any fair marketplace—undermining the quality of the goods and services that they can offer and damaging their competitiveness in consequence. That has been increasingly realised across British business. For example, the Business Services Association recently said: A minimum wage would allow reputable companies to compete for business on the grounds of quality rather than price". The Reed agency survey found that 48 per cent. of employers with fewer than 100 employees were in favour of a national minimum wage, with 27 per cent. thinking that it was a "very good" idea. Not long before the election, the private company DHL, carried out a survey among UK exporters, almost 70 per cent. of whom in their responses to the survey indicated that they were either not opposed to, or directly supportive of, a national minimum wage.

The underlying reason was quite simple. Companies that can compete internationally only on the basis of quality nevertheless almost always need a secure domestic market base. Cowboy operators who undercut that domestic market share undermine the ability to keep and compete on the quality which is essential to obtain orders in the international marketplace. Far from being an aid to British business in its international competitiveness, the lack of any standards and any basis of minimum levels of pay actually turns out to be an impediment.

The case that I have made so far is a case for having any basic standards at all, but it is important to recognise that, within those basic standards, common sense suggests that we should have a single national rate for the minimum wage. Such a wage is a key part of our strategy to enhance employability and to help those at present without jobs to move into work. It will be implemented against a background of tax and benefits reform and of a new deal to promote not just quality employment, but quality training to give people the skills and flexibility that they need to prosper in today's and tomorrow's labour market.

The combination of those policies should open up the world of work for far more people. Today, we have about 1.4 million people out of work at the same time as there are many thousands of job vacancies—particularly in the midlands, as elsewhere, where employers complain of skill shortages which damage the economy's competitiveness, as well as tending to foster inflation.

In many cases, the pay rates on offer in the labour market that we inherited from our opponents are not high enough for people to be able to move into work, and the skills and experience that the unemployed have to offer are often not suitable for the vacancies that continue to exist. We need to build a fresh ladder from welfare to work, and the minimum wage is an important rung on that ladder.

We quickly set to work on the policy. Within 90 days of the general election, we had set up the independent Low Pay Commission, chaired by Professor George Bain, to examine the case for the level at which a minimum wage might be introduced.

Mr. Redwood

Can the right hon. Lady give us some guidance on the following question? Does she think that a waitress on £3 an hour who gets free accommodation and food is better or worse off than a factory worker on £4.50 an hour who is trying to live in central London and has to meet his own expenses for accommodation and food, or a bar steward on £4 an hour in Liverpool who gets free food, but has to pay for his accommodation? Which is better off? Will any of those workers be covered by the Bill?

Mrs. Beckett

I have consistently made it clear that we have no intention of second-guessing the work of the Low Pay Commission. The comparisons that the right hon. Gentleman makes are those which the commission has been set up to address. As I said a moment ago, the commission is taking widespread evidence and those are the issues it needs to consider.

Mr. David Chidgey (Eastleigh)

I welcome the fact that the Government have established the Low Pay Commission; my party has long argued for such a body. I am, however, confused. The right hon. Lady argues that common sense leads her to believe that a national minimum wage is the right route. Why, in that case, is she not prepared to let the Low Pay Commission examine the matter and, perhaps, endorse her view?

Mrs. Beckett

I shall come back to that issue in a moment. For the hon. Gentleman to describe his party's support for a minimum wage as long held is slightly flattering. I do not, however, want to intrude on private grief. We have, of course, looked at all the issues, and we have looked carefully at the arguments about different rates of pay and different conditions and circumstances. We have, however, come to the conclusion that it would not be sensible for the Low Pay Commission to spend time examining them.

Mr. John Bercow (Buckingham)

I am grateful to the right hon. Lady for giving way on that point. She referred to Professor George Bain. Is she aware of his statement that he would be surprised if there were not some job losses and that the question was whether those jobs would be better lost anyway? Does she agree that it would be better if low-paid jobs did not exist?

Mrs. Beckett

That is not what Professor George Bain said.

Mr. Bercow

It is on the record.

Mrs. Beckett

Yes, Professor Bain's words are on the record and I advise the hon. Gentleman to scrutinise them. I have some experience of his accuracy. I am well aware of what Professor Bain said and it was not as the hon. Gentleman represented it. Professor Bain made it clear, as we have always made it clear, that we could never say, hand on heart, that no one would ever be able to claim— I stress the word "claim"—that in some way, levels of employment had been affected. Again, I shall come back to that point.

We set up the Low Pay Commission within 90 days of the general election. The Bill will give a statutory framework to the commission's work and if it passes through both Houses, regulations to implement the detail of Government decisions will be introduced in the year ahead.

The terms of reference that we set for the Low Pay Commission indicated that it should take full account of prevailing economic circumstances as well as the circumstances that surround the implementation of the minimum wage itself, such as the changes that we envisage in the tax and benefit system. Those terms of reference also make it clear that we believe that the minimum wage should be a single hourly rate establishing a general wage to apply across the board.

I know that the hon. Member for Eastleigh (Mr. Chidgey) was quoted—he will no doubt correct me in his speech if he was quoted inaccurately—as suggesting that this was a policy of dogma. It has nothing to do with dogma. Even the mention of the interaction between levels of a minimum wage and other aspects of the tax and benefit system makes it clear why we told the Low Pay Commission not to spend time assessing the case for regional or for sectoral rates.

The difficulties of boundary definition would be insuperable. First, we have no clearly defined and long-established regional boundaries as such in the United Kingdom. Secondly, what matters? Is it where someone works or is it where he or she lives? If we considered different regional rates, would they also interact with different sectors? Again, there would be bound to be differences and difficulties of definition which would hugely complicate the administration and, indeed, the costs of introducing a minimum wage. For companies that have employees in more than one region or individual employees who work in more than region, the complications could be enormous.

One issue that is more frequently raised is the treatment of small and growing firms. Although, understandably, there has been some anxiety among representatives of small business, not least because of the extremely distorted information they got from the Conservative party, there is now a growing acceptance even in this area of the economy of the case for a national minimum wage. That was illustrated, for example, at the 1997 conference of the Federation of Small Business where a majority of those who attended voted in favour of a national minimum wage, sensibly negotiated.

Mr. Michael Fallon (Sevenoaks)

That claim has been made before. Has the right hon. Lady not read the manifesto of the Federation of Small Businesses? It says: The Federation is in principle opposed to a statutory minimum wage.

Mrs. Beckett

I can tell the hon. Gentleman categorically that we know that the Federation of Small Businesses passed the resolution I described; that has never been disputed. Indeed, my hon. Friend the Minister for Small Firms, Trade and Industry was present in the hall, unlike Conservative party representatives, when the debate was held. There is no doubt that the federation carried such a resolution.

What is important is not only that the federation conference voted in favour of a minimum wage, sensibly negotiated, but that we have again asked the Low Pay Commission to take account of the impact on small firms when it formulates its recommendations.

Mr. David Prior (North Norfolk)

Why is there no one on the Low Pay Commission who has had first-hand experience at the sharp end of running a small business?

Mrs. Beckett

The hon. Gentleman is entirely mistaken and I suggest that he looks again at the composition and membership of the Low Pay Commission. Mr. Dewar is a well-recognised representative of the small business community. The commission is taking evidence from the small business sector and it will take account of the views of small business in its recommendations.

Mr. Ian Bruce (South Dorset)

Will the right hon. Lady give way?

Mrs. Beckett

Is this on the same point?

Mr. Bruce

Yes. I understand that the right hon. Lady must make her own case and must, obviously, support what the Labour party has decided. I and my colleagues are, however, confused. The Government moved quickly to say that its new deal would effectively give employers a subsidy of about £2 an hour— £75 a week—to take on a long-term unemployed person. Why is it right for the Government to get people into work by giving a £2 subsidy and yet to say that they will create jobs by bringing the minimum wage upwards? I am confused. Those are both Labour party policies and they seem to contradict each other.

Mrs. Beckett

The policies do not contradict each other. I do not know whether the hon. Gentleman was present in the Chamber earlier; I do not criticise him if he was not because we all have other commitments. I have already made the point that the welfare-to-work programme is the kind of issue that the Low Pay Commission will take into account when it makes its judgment.

I remind the hon. Gentleman that it has never been intended that the welfare-to-work programme should continue in perpetuity. It is a one-off step which the Government have felt forced to take because of the previous Government's total inaction. We inherited a large-scale problem of unemployment, particularly among young people, and we thought it right to take dramatic action to deal with the problem, as we are now doing.

That point brings me to the issue of young people. We have asked the Low Pay Commission to look with particular attention at young people and specifically to consider whether there should be any special treatment for them. We do not want the legislation to provide a disincentive for young people to stay on in education and training, and that is why it is important for the commission to take evidence and carefully to assess the area.

We are, of course, well aware that there are many workers under 26 who are fully as productive as any older worker and who may have family commitments. No decision has yet been made by the Government on those issues. We await the Low Pay Commission's recommendations on what exemptions, if any, might need to be made for young people, on whether there might be a lower minimum or minima and in what circumstances those conditions might apply. It is for that reason that we have taken limited powers in the Bill to make exceptions if the Low Pay Commission so recommends and if the Government so decide. All those matters would stand to be laid before this House in the regulations.

Mr. Barry Sheerman (Huddersfield)

I fully understand and welcome the point that my right hon. Friend is making, but there are many exploited young people in this country and many businesses that grow and thrive on that exploitation. I know that she will take that into account, but a marker must be given to the Low Pay Commission that we are concerned about the exploitation of young people.

Mrs. Beckett

I share my hon. Friend's concern about the exploitation of young people, but I know that he shares my view that exploitation of people in the work force of whatever age is damaging and should be resisted. I am mindful of the comment that is sometimes made about the dignity of work, and I share the view that it is always better, if it is at all possible, for people to be in the work force and that work can contribute to self-esteem. However, being brazenly and blatantly exploited does not contribute to anybody's self-esteem: it is damaging, undermining and engenders a high degree of cynicism.

Audrey Wise (Preston)

I congratulate my right hon. Friend on introducing the Bill, but will she give an assurance that any regulations that may be made—although I hope they will not be—under clauses 3 and 4 will be brought to the House for debate and vote?

Mrs. Beckett

Of course—I can unreservedly give my hon. Friend that assurance. It would be quite wrong for an issue of such substance not to come before the House and it is the Government's intention that it should do so.

I have referred several times to the work of the Low Pay Commission. The commission includes representatives of employers and workers drawn from a range of sectors and industries. It is undertaking a wide-ranging consultation exercise to obtain views of employers, workers, interested bodies and the general public; and, on the point made by my hon. Friend the Member for Huddersfield (Mr. Sheerman), I know it has taken evidence from a number of young people. It has received a large number of written submissions and undertaken a series of visits throughout the United Kingdom to hear the views of those who seem likely to be directly affected by the legislation.

We expect the commission to report its recommendations to my right hon. Friend the Prime Minister and to me by the end of May 1998, and, following that report, we shall consider the content of the regulations to implement a national minimum wage. Those regulations will set the rate, specify the reference period and determine the method of assessing the minimum wage, including issues such as benefits in kind, to which the right hon. Member for Wokingham (Mr. Redwood) referred earlier. We have asked the Low Pay Commission to look at all these issues.

The regulations will determine the method of calculation and the make-up of the pay that can be taken into account when assessing whether the national minimum wage has been paid. We recognise that pay today can be made up of a large number of elements, including overtime, performance bonuses, benefits and allowances that are payable for particular working circumstances or which include additional payments for shiftwork, piecework or payments in kind. All those are issues which the Low Pay Commission will consider, on which it will report to us, and on which, once we have reached a decision, we shall frame regulations.

That brings me to the issue of enforcement. There is no point in having a national minimum wage that cannot be enforced, but an efficient regime needs to balance the potential burdens on business of the structure of regulation itself against the need to ensure that individuals receive their rights and are adequately protected; and that the economic as well as the social benefits we envisage flowing from a national minimum wage do indeed ensue. The Bill provides for a flexible approach to enforcement. It allows us to appoint officers to enforce the minimum wage or, if it is thought more sensible, to engage the services of officers of an existing Government Department or agency. In this respect, we are building on existing practices and procedures, given that individual workers already have the right to go to an industrial tribunal to recover wages that have been unlawfully deducted, or to a court for breach of contract.

The Bill provides powers to enable officers to levy financial penalties on employers who fail to comply with an enforcement notice. That should ensure that there is no delay in workers receiving the wages to which they are entitled. We will not tolerate those who refuse or wilfully neglect to pay a worker the minimum wage, or those who fail to keep adequate records or who keep false records. Employers who deliberately flout the law may be guilty of a criminal offence. However, we hope and believe that there will be few employers who would ever face criminal action under this legislation. Responsible companies—the vast majority, who want the cowboys who give them a bad name to be strictly dealt with—have nothing to fear and a great deal to gain.

The popularity of the national minimum wage with the general public is a triumph of decency over dogma. The Conservative party, barely engaging in the real debate about a national minimum wage, has sought from the beginning to use scare tactics as dishonest as they were scurrilous. If memory serves me, Conservative Members said at one time that 750,000 jobs would be lost if ever there was a national minimum wage. As time went on and that argument appeared not to carry weight, the figure rose to ludicrous proportions, resulting in a claim that 2 million jobs would be destroyed if any national minimum wage were introduced.

Those who have been around long enough to remember the introduction of equal pay legislation will remember a remarkably similar debate. I well recall the issue because, at the time, my mother was a trained teacher who had a family of three and an invalid husband to support. She did not receive the same pay as a man in her circumstances. We were told then that the introduction of equal pay legislation would mean that women would simply disappear from the marketplace—something which does not seem to have been a noticeable feature of recent years. In fact, women's pay in real terms and relative to men's has increased significantly since 1975, when the Sex Discrimination Act was introduced; and between 1975 and 1997 women's participation in the labour market has increased dramatically from 60 to 72 per cent.

Of course, we can never prevent people from claiming that a national minimum wage will cause them to lay off staff, or indeed claiming it as justification for having done so. I remember that, just before the 1992 general election, a fairly major employer was quoted as having written to all its employees to say that, if they were so unwise as to vote Labour and a national minimum wage was introduced, several hundred of them would have to be laid off. Within a few weeks of that election, which resulted, as we all recall, in a Tory Government and no national minimum wage, several hundred of them were nevertheless laid off. There is nothing that we can do about that sort of claim.

However, as I hope we have made clear, there is by no means a simple relationship between the introduction of a national minimum wage and levels of or access to employment. It may be the opinion of Conservative Members that there is a simple link between the two, but the evidence does not support such a claim. Every other developed nation has some form of national minimum wage or statutory wage protection. Conservative Members claim that the existence of such policies in other countries in the EU is merely a reflection of their lack of competitiveness; but the United States, with which Conservative Members are much keener to compare us, has had a minimum wage since 1938. Employment there rose by 18 million in the 10 years to 1994. In a fairly recent example, when the state of California raised the level of its minimum wage, employment also rose. I do not suggest that there is a simple link between the raising of the minimum wage in the United States and employment rising there, as the Conservative party would try to argue if the opposite were true; I simply say that it suggests that the relationship between pay and employment is much more complicated—as are the economic effects of such a policy—than the Conservative party would wish to suggest.

Mr. Bercow

I am grateful to the President of the Board of Trade and acknowledge her generosity in giving way. Does she think that the United States is right to exempt small businesses from the national minimum wage? If she does, why does she not apply such an exemption in the United Kingdom?

Mrs. Beckett

The United States has quite a complex structure for its various minimum wages. That does not alter my point, which is that when the minimum wage there was raised, employment rose too. That completely defeats the Conservative party's argument.

Let me remind the hon. Gentleman—or inform him—of last year's OECD publication, "Annual Employment Outlook", which argued that minimum wages help to defend the social fabric of industrialised nations—not a point which the Conservative party necessarily contests—and that minimum wages do not appear to cause job losses among the most affected groups—women, young people and the unskilled.

Mr. Redwood

The right hon. Lady is generously giving way today. Was the DTI wrong to answer a question by saying that 1 million jobs would be lost if we had a national minimum wage at half average earnings? That answer was calculated before the election by high calibre DTI staff. If she thinks that the DTI was wrong, will she publish all the forecasts of job losses that have been sent to the Department, and an independent assessment by her officials of the job consequences of the minimum wage?

Mrs. Beckett

I do not recall the precise questions quoted by the right hon. Gentleman. I do know, however, that no Government Department would make such an assessment without first being given some criteria on which to work. In all the examples ever quoted by the Conservative party, on this and many other issues, the criteria on which such calculations are made have been set by politicians, Ministers and political advisers in the Conservative party. All civil servants can do then is base their calculations on the guidance they have been given as to the background against which such judgments may be made. Given what we know about the quality of guidance given by the Tory party, there is no substance to the right hon. Gentleman's point.

Mr. Chris Pond (Gravesham)

Can my right hon. Friend confirm that the assumption given to Treasury officials and the DTI before the election was that differentials from top to bottom would be fully restored if a minimum wage were introduced? In other words, a pay rise for a hairdresser would be replicated in percentage terms at the very top, among the fat cats. After the election, however, for no particularly good reason, these same Ministers decided to reduce the assumption to differentials being only half restored from top to bottom—another assumption with no empirical basis.

Mrs. Beckett

My hon. Friend is correct. I remember a similar example of Tory accuracy. Before the general elections of 1987 and 1992, the Tories decided that if a Labour Government were elected they would immediately increase public spending by £35 billion. On that basis, they asked the Inland Revenue to cost what that would mean if registered purely as an increase in the standard rate of income tax. That resulted in the idea of a lop increase on the standard rate of tax.

The Conservatives then went to innumerable small businesses and others asserting that it was Labour party policy to put 10p on the standard rate of tax. They stressed how much this would cost people and industries. Before the recent election, I was sent a letter written by an hon. Member—I will not name him to spare his blushes—who had turned this into a fund-raising exercise. He told small businesses in his constituency, on the basis of what he called Inland Revenue figures—they were actually dishonestly compiled by the Tory party—that a Labour Government would cost them £10,000, "so why not give a large sum to my election campaign to prevent the election of a Labour Government?"

The right hon. Member for Wokingham also asked me for an independent assessment by my officials. As he is well aware, no assessment, independent or otherwise, is possible until we have a clear idea from the Low Pay Commission of what it might recommend; thereafter, the Government will have to come to a judgment.

Secondly, the right hon. Gentleman has asked me in a press release to reveal—I hope that I am not misrepresenting him; I recognise that I am depending on press reports—forecasts that we are supposedly suppressing. There are no such forecasts, and it is hard to imagine how the right hon. Gentleman came to think there were. I fear that they are yet another figment of his imagination.

The main issue with respect to a national minimum wage is getting the policy mix right. So long as it is set at a sensible level, taking economic circumstances into account, it can contribute to growth and job creation, while helping to tackle poverty pay and to alleviate the burden on the taxpayer.

The need for such an approach has long been recognised. When the late Winston Churchill introduced legislation in 1909 to set up the trade boards, the predecessors of the wages councils, he said: where you have what we call sweated trades, 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". As a result of the former Government's policies, too many British workers still have to work excessive hours to take home a living wage.

Modern companies depend on constructive partnership with their work force. They depend on stimulating confidence and creativity because those are the principal assets enabling them to compete in the global economy, where a competitive edge is so desperately needed. A policy of a national minimum wage will contribute greatly to such developments. That policy is right, it is fair, it is just and it is sensible. It is a clear example of how a Labour Government can and will make a real difference to the lives of people across Britain, contributing to fairness and prosperity for the many, not the few. I commend the Bill to the House.

6.6 pm

Mr. John Redwood (Wokingham)

I am delighted that the President of the Board of Trade is in her place for once and has done us the courtesy of coming here—[Interruption.] I am about to say something nice about the right hon. Lady—hear me out. I am delighted that, for once, she has put the case for one of the many Bills that her Department is introducing. I am delighted, moreover, that she took so many interventions. It is all welcome progress for the right hon. Lady, who has been such a notable absentee—

Mrs. Beckett

I am indifferent to the rubbish that the right hon. Gentleman spouts. In all the time I have been in this House I have consistently given way to interventions. I have no qualms about taking them at all.

Mr. Redwood

I am delighted to hear it. The right hon. Lady is always courteous in that respect, as I am to her. It is nevertheless difficult to intervene when the right hon. Lady never comes here to speak in the first place. That was the problem that we faced at any rate until the past couple of weeks. It is a rare pleasure to find her here making a case.

Our disappointment is that the right hon. Lady did not answer any of the fundamental questions about the legislation. She will not tell us to whom it will apply, what the rate will be, or how this measure will tackle poor wages. The truth is that she does not know: she has sub-contracted those problems to the Low Pay Commission, but she will not even guarantee that she will accept all the commission's advice.

No one dislikes poverty wages more than I do. It is no part of our case that we should seek to condone low wages—

Mr. Bob Blizzard (Waveney)

If the right hon. Gentleman does not like poverty wages, why will he not draw a line somewhere? What is a reasonable or decent wage— £2.50, £1.50 or 80p an hour? In short, what constitutes poverty pay?

Mr. Redwood

Our view is that people should be offered a minimum income, not a minimum wage. We set out what we thought that that minimum income should be in our benefit proposals and in the other proposals that we set out over the past 18 years. If the hon. Gentleman's party had done as much as the Conservative party to lift people out of poverty, those people would be a lot better off than they are today.

Ann Keen (Brentford and Isleworth)

What minimum income would the right hon. Gentleman recommend?

Mr. Redwood

I am happy to do so. The minimum income is set out in the benefit regulations, which we bequeathed to the Labour Government when we left office. We allowed family credit top-ups to those in low-paid employment, reflecting their family circumstances. There is no single minimum, as the Labour party will find out; it depends where one lives, how one lives and what one's responsibilities are. We bequeathed a sensitive system in which we had put in place additional benefits for those who needed more income.

We therefore say: minimum income yes; minimum wage no. We want every family in this country to be able to earn enough from work to lead a decent life. Of course that is our objective, and let no Labour Member deny that or say to the contrary. The Conservative party wants a prosperous country. The issue is how to achieve it. Legislation cannot create prosperity in the way that the Government naively believe; there must be a low-tax, low-regulation economy, full of enterprise and initiative so that small companies can prosper, and more and better jobs are created.

Mr. Pond

If the right hon. Gentleman is so concerned about poverty and had such well-established policies on a minimum income, will he explain why, under the regime that he represented, those registered as in poverty increased from 5 million to 14 million, and why low pay is now the single most important cause of poverty? Those are the official figures.

Mr. Redwood

That was a wild flight of fantasy from the hon. Gentleman. There are not 14 million people in poverty and we put in place benefits to ensure that everyone had the wherewithal to get food and shelter and the basics for a reasonable life, because that is what happens in a decent society. I deeply resent Labour Members implying that we did not care because we do, and we are very worried tonight that jobs will be lost as a result of this measure.

Mr. Michael Jabez Foster (Hastings and Rye)

Some people in my constituency work for 90p an hour. The right hon. Gentleman said that he wants people to earn enough to get a minimum income. How many hours do my constituents need to work at 90p per hour to raise that minimum? How long a period does the right hon. Gentleman think is reasonable?

Mr. Redwood

The hon. Gentleman was not listening to what I was saying. I was saying that some wages are too low for decent family life, which is why we introduced benefits to top them up. I should like those wages to be much higher and I have suggestions on how to make them higher. That is exactly what was happening under Conservative policies—we were backing enterprise and lower taxes. The Labour party wants to put taxes up and raise people's pension contributions and tries to make people worse off through higher taxes. I am against that.

Mr. Ivor Caplin (Hove)

Is the right hon. Gentleman happy about jobs in his constituency being advertised at £2 an hour?

Mr. Redwood

I challenge the hon. Gentleman to find a job in my constituency being advertised at £2 an hour.

Mr. Caplin

I have among my notes an advertisement for a job in Wokingham at £2.20 an hour.

Mr. Redwood

The hon. Gentleman has not found a job at £2 an hour. I make another promise to him—

Mr. Caplin

Will the right hon. Gentleman give way again?

Mr. Redwood

Let me answer the hon. Gentleman's question first, and perhaps he can then get himself out of the mess that he is in. The job that he mentioned at £2 an hour has gone up by 10 per cent. in two seconds. Who knows what it might be by the end of the debate?

I went to the local employment centre in Wokingham the other day—not in search of a job for myself but in search of truth about this issue. I was told that the advice given to employers was not to advertise jobs at below £4 an hour. The labour market is buoyant thanks to the outgoing Conservative Government's policies, and the advice to employers in my constituency wanting to hire more workers is to offer higher rates. I concur with that judgment. I want the same prosperity for other parts of the country as my constituency has been privileged to enjoy under a Conservative Government in recent years. I shall now allow the hon. Gentleman to redeem his foolishness.

Mr. Caplin

If there is a mess, it is of the right hon. Gentleman's making. He is the one in a hole, not me. Does it matter whether the wage is £2 or £2.20? Is he happy for his constituents to be paid £2 or £2.20 an hour?

Mr. Redwood

I have made my position clear. My advice to any constituent thinking of taking that job is that he or she could easily get a better job in Wokingham at a higher rate. That is how a market economy works.

Mr. Thomas Graham (West Renfrewshire)

Is the right hon. Gentleman aware that thousands of people have lived on poverty wages for the past 18 years? They did not like working all week—40 or 60 hours a week—and then having to go with their begging bowls to the DSS. That is an absolute tragedy. The previous Government would have continued to subsidise folk to go to work. That is not what people in this country want. They want a living wage which will give them the opportunity to stop going to the Government with a begging bowl. That is how to improve the quality of life and of products in Britain. Had the previous Government realised that, Conservative Members would not be sitting where they are now.

Mr. Redwood

The hon. Gentleman is making a rather good point beneath that provocative exterior. He is saying to those who keep their jobs after this legislation has gone through that the benefit will accrue mainly to the Treasury rather than to the individuals concerned, because for every extra pound that they get from their employer they will lose a lot in benefit withdrawal. That is one of the difficulties of the scheme that the Government are putting forward: it will help the Treasury more than it will help individuals working in the private sector. It will also hit the Treasury in many other ways, however, and we shall all end up losing.

Mr. Bercow

Is my right hon. Friend aware of the research by Stewart and Swaffield, who found that between 1991 and 1993, 9.3 per cent. of the work force were on low pay but only 2 per cent. of the workers involved suffered low pay for the whole three-year period? Does that not utterly demolish the Government myth that there is a huge and permanent pool of poorly paid people in Britain? There is not.

Mr. Redwood

My hon. Friend is absolutely right. When I was a student I worked for much less, in the money of the day, than the national minimum that the Labour party now has in mind. I was happy to do so because I knew that it would not be a permanent condition. I am delighted that it was not. Many people accept jobs that are not well paid at the beginning of their careers or working lives because they live at home and do not have the same high expenses. They then gain experience and become more useful to a future employer, and go on to get better jobs. The best way to get a good job is to have had a not-so-good job and work one's way up. What the Labour party is trying to do is to kick away the ladder of opportunity for many people who wish to climb it.

We believe in the state ensuring a minimum income rather than insisting on a minimum wage. That is why, when we were in office, we introduced housing benefit, family credit and other benefits, which helped those in low-income work as well as those who were out of work. We reflected family responsibilities because we considered that important. We shall continue to support the payment of benefits to those in work if their wages are not sufficient.

If only we could legislate to ensure good wages for all without loss of jobs, but our case today is that we cannot because it will not work. The Government fear that it will not work and they are deeply divided, as we see from the leaks over the all-important detail of how wide ranging a minimum wage should be. Many young people, skilled people and disabled people will lose their jobs or be prevented from getting a job if the wrong decisions are made and if the Bill goes through in a clumsy form.

The Labour manifesto and election campaign clearly stated that the national minimum wage would apply to everyone. That is how the President of the Board of Trade and Secretary of State for Trade and Industry wrongly began her remarks this evening. She did not suggest that any region, group or age band would be excluded. When we objected that that could prevent some young people from getting a job at all, Labour spokesmen in those broadcasts just asserted that we were wrong.

We now know that the Minister without Portfolio, who is not without influence in the Government, takes a different view, as we can see from leaked letters to colleagues and from his remarks to the Labour party conference. He thinks that the rate should be kept low and exemptions arranged to prevent too many jobs being lost. He was reported as saying that a different rate for young workers was the right course of action". His subsequent "clarification" still leaned heavily in favour of no single national minimum for all. His thinking merely echoes that of the Deputy Prime Minister, who in opposition let slip the following, in more vernacular language than one usually gets from the Minister without Portfolio: And I knew the consequences"— of the national minimum wage— were that there'd be some shakeout, any silly fool knew that, and it was in one of our documents that that would be one of the consequences … When I made that statement"— I continue to quote— it was on Sky TV, it was then was told by the spin doctors that we're not saying that". The Deputy Prime Minister went on to reveal his battle with the spin doctors—deeply intriguing. He summed up magisterially, in a way that the President of the Board of Trade would be well advised to heed: I've said since I don't like people giving stories of sound bites, avoiding difficulties by saying 'Isn't this the easy option, there's no difficulties', you lack credibility if you don't point out some of the difficulties of some of the options you propose. That's essential for the credibility of myself"— I speak for the Deputy Prime Minister on this occasion— but also more important the Labour party. What an extraordinary confession: the Deputy Prime Minister himself says that jobs will be lost if a national minimum wage is implemented. The Deputy Prime Minister says that the Labour spin doctors were wrong to cheat the people by pretending that there were no such problems. The Deputy Prime Minister recommended that a clean breast be made of the job losses, so that Labour would be telling the public the truth. If only the right hon. Lady would follow the advice of her senior and illustrious colleague, we would have a much better debate today.

Mr. Sheerman

The Government obviously realise that the matter is complicated and are consulting, doing their homework and trying to tackle the legislation as best they can. That is better than any legislation that the previous Government produced; yet derision from the Opposition is all the thanks that the Government get. After 18 years of legislation being pushed through the House without consultation, this legislation will be right, it will be well researched, and it will be done well. That is what the Opposition cannot stomach.

Mr. Redwood

We are trying to clarify the complexities and difficulties and to ask questions, in the hope that that will lead to better policy. We heard today from the right hon. Lady that she intends to blunder on with the policy, with no assessment of the job consequences, no knowledge of who will be covered by it, with certain exceptions already excluded in the Bill, and no view yet on what the rate should be.

The Opposition argue that Ministers should be forming a view on those matters, and should be offering the proper information for this debate and the national debate that it could lead. We would willingly help in that debate. We will debate seriously in the interests of people who want to keep their jobs, and in the interests of those who want higher pay. We are happy to do that, but unfortunately the right hon. Lady is showing her usual indecision and lack of interest in the detail of her Department, so she veers round the issue and does not answer the questions.

The right hon. Lady's first guidance to the Low Pay Commission implied that there would be no exemptions. Her subsequent letter suggested that the commission consider exempting all young people. Tonight, she began by saying that there would be no exemptions, although there are some already, then she wandered off and said that perhaps some young people could be left out. Confusion is endemic, and that is sad when so much is at stake for the people whom the Government claim that they want to help.

Today, we need answers to these crucial questions: how will wages be calculated? Who will qualify for the minimum wage, and who will be exempted? How many jobs are at risk? What will happen to differentials? Will the Treasury or the individual gain more from higher private sector pay? What will be the total cost to the taxpayer in the public sector and as a result of the possible bigger job losses? How will the health service pay for the increased pay bill? Will more money be made available? What is the level likely to be? How can we judge the Bill without knowing the main point—the rate that the Government are recommending?

First, we need to know more about the coverage of the measure. It is vital to know how young people are to be treated. Is a young person one who is under 19, or under 21? What about the wide-ranging definition offered by the right hon. Lady in her letter to the Low Pay Commission, of under 26? Are trainees to be exempted? We have heard different views expressed by Ministers. How is a trainee to be defined?

Are the disabled to receive special treatment—the Bill leaves open that possibility, as I read it—or will this heartless Government merely cut their benefits and put at risk some of their jobs? That is an important issue. My party's view is clear: do not cut the benefits for the disabled. I wish that the right hon. Lady could say the same thing.

Mr. Phil Woolas (Oldham, East and Saddleworth)

Is the right hon. Gentleman saying that my right hon. Friend is wrong to consult? If, at this stage of the process, she were to lay down the answers that he seeks, would not the right hon. Gentleman, rather than congratulating her, condemn her for the policy measures that she was putting forward? Does he think that it is right to consult all parts of industry or not?

Mr. Redwood

It is admirable for Governments to consult, but the usual practice is to consult first and legislate second.

Mr. Woolas

The right hon. Gentleman has conceded that he agrees with the minimum income. In light of that principle, is it not entirely honourable and correct to consult on what proportion of that income should be made up of wages? He cannot have his cake and eat it.

Mr. Redwood

I am happy for the Government to consult. They said that they believed that they could introduce a minimum wage with no job losses. We are sceptical. They should consult to get proper advice, and they should legislate, if they must, when they have finished their consultation. It is preposterous for them to present the Bill tonight with none of the crucial issues resolved, so that we cannot have a proper debate.

Mr. Stephen Hesford (Wirral, West)

Will the right hon. Gentleman accept the following statement—not from me, but from a briefing from the Confederation of British Industry, which many hon. Members have seen? It states: The CBI believes that there is little evidence that the rates set by the Wages Councils in the 1980s and early 1990s caused job losses. A minimum wage set in line with Wages Council rates, uprated to today's prices, would be unlikely to cause significant damage but would still cover around 10 per cent. of all employees. Does my right hon.—does the right hon. Gentleman accept that?

Mr. Redwood

I thought that I was about to become the hon. Gentleman's Friend, but he pulled back in the end. The CBI states clearly in its evidence: Even a modest minimum, set around the £3 mark, could lead to job losses unless wage differentials are squeezed. The CBI believes that wage differentials should not be squeezed.

Mrs. Teresa Gorman (Billericay)

Is not the question who should be consulted? Is my right hon. Friend aware of the Low Pay Commission's research paper, which quotes an article heading: Pay panel dominated by Labour economists"? Six of the nine people are university economists who have a strong Labour background, or are from the trade unions. Can we get a balanced view, when the people who provide the jobs are the business community, not the panel?

Mr. Redwood

My hon. Friend makes a powerful point. We all object to the absence from the Low Pay Commission of anyone with hands-on experience of running a small business.

Several hon. Members

rose—

Mr. Redwood

I must make progress, as many other hon. Members wish to speak in the debate.

We need to know more about the Bill's coverage, as I was saying. Are older people already in receipt of pensions to be exempted from the measure? Why did the Minister of State, the hon. Member for Makerfield (Mr. McCartney), who is present tonight, tell us that there would be no sectoral or regional exemptions, when some are already recorded in the Bill?

The Bill exempts share fishermen, some merchant seamen and charity workers. It leaves open the possibility of exempting others. Are we witnessing a titanic struggle between old Labour, who want a high minimum wage for all, with no exemptions, and new hard Labour, who do not? We still do not know which side the President is on, because she sits on the fence and hopes that she will not have to answer the questions.

Are the Government aware that in many foreign countries that have adopted minimum wage legislation, the list of exemptions has grown year by year as different groups have come to their legislators and said, "Please exempt us, because we think that it is doing more damage to job prospects than it is doing good in raising poor wages"? We have already heard a powerful exchange on the United States experience, with a much lower rate, I think, than the Government are considering—$5.15 an hour—and a raft of exemptions, including all of small business, the sector which generates most of the additional jobs in that economy and in ours.

I wonder whether Ministers are to be exempted from the legislation. We have at least two Ministers who receive no pay at all for their jobs—the Minister for Trade and Competitiveness in Europe, and the Paymaster General. In view of what we have learnt about how they have been obtaining money from offshore trusts in the past or shares or other advantages, I wonder whether it would be better if all that is owing to them were repatriated, they paid UK tax on it and we paid them a ministerial salary. I wonder whether it might be suitable to amend the Bill to ensure that Ministers receive a salary. However, in all other respects, arrangements for Ministers should remain on the same basis as for everyone else. I think that blind trusts and offshore trusts are proving problematic for the Government.

We also need to know how pay will be defined. The right hon. Lady and I had a vaguely interesting exchange a little earlier during which I think that she got into a muddle. I repeat that question. Does the right hon. Lady think that a waitress on £3 an hour with free accommodation and meals is better or worse off than a factory worker on £4.50 an hour and no extras living in central London or a bar steward on £4 an hour with free food who lives in Liverpool? The right hon. Lady said that all those issues would be examined by the Low Pay Commission and that a judgment of Solomon would be arrived at. I ask her to think again: she has ruled out the Low Pay Commission's considering any regional differences.

The right hon. Lady must surely understand—although she has a grace-and-favour residence at present—that living accommodation in central London is a lot more expensive than accommodation in Liverpool. Does that matter? Does it not mean that a particular rate of pay in London does not buy nearly as much as the same rate of pay in Liverpool? Would it not be more sensible and sensitive to reflect that fact in the legislation that she proposes?

Mr. Woolas

rose—

Mr. Redwood

The hon. Gentleman has attempted to make several points, and I have answered all his queries. I must now make progress as other hon. Members wish to participate in the debate.

The right hon. Lady needs to tell us who will be better off and who will be covered by the legislation. Will she correct her previous answer and confirm that the Low Pay Commission cannot take account of regional differences, because she has ruled that out?

Mr. Gordon Prentice (Pendle)

If the right hon. Gentleman is arguing that there should be differential wages because of different costs in the regions, does that logic apply also to benefits? Should there be different rates of benefit regionally?

Mr. Redwood

To the extent that housing benefit is geared to the cost of housing, that is exactly what we have at present. This Government and the previous Government accepted the case for higher wages in London: it is called "London weighting". I find it difficult to understand the right hon. Lady's argument that it is impossible to define regionally different groups of workers who might need different levels of remuneration. The Government do that all the time when paying their workers. The right hon. Lady should rethink that issue. Is London weighting wrong and should it be abolished under the new ruling? Perhaps the Government should consider differential rates in the context of a minimum wage in order to reflect the logic that governs the way in which they pay their staff.

Barbara Follett (Stevenage)

I thank the right hon. Gentleman, who has been generous in giving way. Does he believe that there should be differential rates for family credit? In August 1996, there were 8,000 claimants of family credit in his Wokingham constituency. According to my calculations, that represents about 12.2 per cent. of the electorate—which is a high percentage. Does the right hon. Gentleman believe that those people should have differential rates? What would he do for those family credit claimants in his constituency?

Mr. Redwood

I am rather sceptical of the figures offered by the hon. Lady. I have received no complaints about the way in which family credit is paid, and I do not think that it affects as many constituents as the hon. Lady suggests. We left behind a system that we thought was right. We applied differentials in the way that I have described that we believed adjusted, more or less, to the different pattern of costs and living expenses around the country. We now hear that the Government do not like that: they wish to treat some people much better than others according to a lottery of where they happen to live. We think that that is extremely unfair.

As we have made clear, our principal worry is job losses. The right hon. Lady did not answer properly my question about Department of Trade and Industry figures that were produced before the election. Of course there are assumptions underlying those figures. An assumption was revealed in the question, which referred to half national average wages and half differential restoration—not full differential restoration as the hon. Member for Gravesham (Mr. Pond) would have us believe. The answer was calculated by independent officials in whom I have the utmost confidence on those sorts of issues.

If the right hon. Lady would like to offer a different set of assumptions or if she has found an error in the way in which the officials calculated the figures, I invite her to correct the figures or provide alternative figures based on her alternative assumptions. We can then debate the matter properly. It is unacceptable for the right hon. Lady to produce a piece of legislation that many in this country believe will destroy many jobs and then wash her hands of the matter by saying, "I have no idea whether any jobs will be lost. I'm not going to calculate any figures and, if there are any figures in the Department, I'll make sure that they are all suppressed."

Incidentally, hon. Members are not allowed to table questions about that issue because we are told that it is hypothetical. The previous Government did not regard it as such. This Government claim to believe in greater openness. So why is a whole serious of questions—which are very germane to an important policy pledge by the Government—blocked off when the previous Government were happy for that and similar issues to be out in the open?

Judy Mallaber (Amber Valley)

Did the right hon. Gentleman believe that the introduction of equal pay legislation would lead to job losses? Does he have any evidence that it did so?

Mr. Redwood

The hon. Lady will find no remarks by me about that subject on the record, so I am afraid that her point is not well made. She did not supply a quotation by me on that subject because she could not find an embarrassing one.

Professor Bain warned of job losses, and that danger is reflected in the testimony and evidence coming from industry after industry—to which my hon. Friend, the hon. Member for Sevenoaks (Mr. Fallon) hopes to refer if he catches the eye of the Chair later in the debate. The right hon. Lady claims that the Low Pay Commission has all the wisdom and that, in due course, it will arrive at the right answers. However, she will not tell us whether she will endorse the Low Pay Commission's findings or whether she will overturn its advice. That implies that the right hon. Lady has a view on what those answers will be.

If the right hon. Lady were entirely independent and had no knowledge about what the Government should do, she could tell us tonight that she will accept all the recommendations offered by that group of wise men and women whom she has assembled at the Low Pay Commission. Her reluctance to do so shows that there are limits on their decisions. Would it not be better for the right hon. Lady to tell the House and the Low Pay Commission tonight what limits apply to its considerations so that it is not put in the embarrassing position of supplying advice that she is unable to accept?

If we look at the bigger picture, we can see that Labour is bad for business. The policies that it espouses will destroy jobs. The right hon. Lady's policy on the brewing industry has already lost 1,500 jobs directly, as one of the chief executives in that industry recently put on record. Many more jobs will be lost in manufacturing and exporting.

Mrs. Beckett

I remind the right hon. Gentleman that every commentator, apart from the gentleman to whom he referred, suggested that, for good or ill, if I had made a different decision, twice as many jobs would have been lost. No one—apart from the individual whom the right hon. Gentleman quotes—suggested that the impact on employment would have been different and that no jobs would have been lost if I had made a different decision.

Mr. Redwood

The fact remains that the person who said that was the one who had to sign the redundancy notices—he took a very dim view of the right hon. Lady's decision.

Other people have provided some interesting testimony on that subject. Mr. Michael Hindley, Labour MEP for Lancashire South, adopts a global perspective. He says that the single currency will lead to actual cuts in wages and he strongly attacks the Government's policy of backing what he calls the "corporatist liberal-democratic state" as viewed through Brussels. He believes that the Government's economic and constitutional policies will lead not to higher wages, but to lower wages.

I see the right hon. Lady frowning—she obviously does not agree with that view expressed by a senior Labour figure. I suspect that she is also not happy with Mr. Tim Pendry from Labour Reform. He makes it clear that the speeches made at the Labour party conference were "triumphs of mental vacuity"—many Conservatives would agree with that wise judgment. He goes on to say that he thinks that the Government will let down the values that the left believes in, and that he is prepared to split the party if necessary because he has no faith in those on the Government Front Bench. [Interruption.] The Conservative party is extremely happy under its new leadership, and we know exactly what we think about these issues. It was the Labour party displaying the splits last week—and I think that there are plenty more where they came from. We have seen that again today, and I trust that we shall see it during this evening's debate. Many Labour figures feel that it would be wrong to exempt any group, and wrong also to have anything other than a high national minimum wage, and never mind the consequences. They think that the issue of decency is more important than that of full employment. I happen not to agree with that position, but I understand it. It is a reasonable socialist position for Labour Members to advance.

Others, perhaps including the right hon. Lady and certainly the Minister Without Portfolio, believe that it would be wrong to take action that could damage job prospects and destroy opportunity when the Government are making so much about the need for people to get any sort of job so as to get off benefit. They are saying, in other words, that such action should not take place. It is clear that the split will become worse. The right hon. Lady was unable to answer any of my questions because the split is already so lethal to her party.

A national minimum wage in the private sector, apart from destroying jobs, will help the Treasury rather more than those who are in employment. I pray in aid none other than the Secretary of State for Health, who says: The national minimum wage will help to reduce the £4 billion which taxpayers must contribute towards benefits that make up, in part at least, for the low wages paid by the worst employers."—[Official Report, 15 May 1997; Vol. 294, c. 264.] Exactly. Much of the benefit will go to the Treasury on that account, but the Treasury has an unspecified and huge bill in respect of public sector wages, and worse still as a result of redundancies and lost jobs.

We want some answers. We want more jobs, not fewer. We want a proper enterprise economy. We also want decent living standards by backing that enterprise economy. I urge my right hon. and hon. Friends to oppose the Bill.

Mr. David Maclean (Penrith and The Border)

On a point of order, Mr. Deputy Speaker. This is a rather distressing point of order. We are led to understand that, since the debate commenced this afternoon, the police have issued a warrant for the arrest of a Member on one of the most grave charges that exists—attempting to pervert the course of justice.

Have you, Mr. Deputy Speaker, received any indication from the Leader of the House about whether she will make a short statement at 7 o'clock on the position of the hon. Member for Glasgow, Govan (Mr. Sarwar), including what rights and interests he still has in this place? Will the right hon. Lady clarify the situation? Is the hon. Gentleman entitled to attend the House although a warrant has been issued for his arrest, if he is given bail? I think that the House needs the hon. Gentleman's position to be clarified. We need to know what the situation is with the hon. Member for Govan.

Mr. Deputy Speaker (Mr. Michael Lord)

I have received no indication that such a statement is to be made.

6.42 pm

Mr. Tom Pendry (Stalybridge and Hyde)

I am pleased to have the opportunity to contribute to an important debate—indeed, it will affect hundreds of thousands of workers. I am pleased also to see my hon. Friend the Member for Gravesham (Mr. Pond) in his place. I hope that he will be able to catch your eye, Mr. Deputy Speaker, in the light of his 17 years of service in the Low Pay Unit and especially his time as national director. That background signifies his belief in the importance of the issue that is before us.

Before I came to the House, I was a full-time official of the National Union of Public Employees, which represented low-paid workers in the national health service and local government. It was always that union's policy to campaign for a national minimum wage. I was happy to be engaged in that fight for decent wages for the union's members.

It was indeed a fight, as some of my hon. Friends know. The union's policy was not that of the Trades Union Congress or the Labour party at that time. Happily, the union's campaign has borne fruit. Its policy is now that of the TUC and the Labour party, and here we are on the Floor of the House discussing a Government Bill that will soon, we hope, be secured as an Act. The measure will reduce the inequalities in the wages system.

During my time in this place, I have raised the problems of low pay, especially in the Greater Manchester area. I was able to highlight some of the low-wage problems in the area thanks to the magnificent work of the local low pay unit as far back as 1974, when a debate on low pay took place in the House. I referred to the shocking discrepancy between the rate of pay of the average worker in my constituency and the rate in the rest of the country; to low-wage earners in the north-west and to rates in the south-east.

Little has changed since those times. Average gross weekly earnings in Stalybridge and Hyde are now £308.40; in the rest of England and Wales they are £370.70. I am pleased that my right hon. Friend the President of the Board of Trade clearly spelt out that the Bill is about a national minimum wage with no regional exemptions, no special sector rates and no derogations for companies.

I am not suggesting that the Bill is perfect. I am sure that others will join me in taking that view. I know that Gabrielle Cox, the co-ordinator of the Greater Manchester low pay unit, is concerned about one or two issues, including the possibility that under-25s might be paid a lower rate merely because of their age. In addition, there is no clause that states that the minimum wage will be uprated annually. There is no specific commitment to an overtime rate after a specified number of hours. However, this is still a good Bill. I have no doubt that the issues raised by the Greater Manchester low pay unit will be aired in Committee.

I wish especially to refer to the problems in the fastest growing sector in the economy—tourism, leisure and hospitality. For about five years, until the general election, I was the Opposition spokesman on sport and tourism—as the House knows. I was concerned about the low pay in that sector, especially hospitality. With that in mind, with my right hon. Friend the Member for Copeland (Dr. Cunningham), who is now the Minister of Agriculture, Fisheries and Food, I persuaded my right hon. Friend the Prime Minister, when Leader of the Opposition, specifically to pledge a place on the Low Pay Commission for a representative of the tourism and hospitality industries. That person, in the form of Stephanie Monk of the Granada group, is a capable voice on the commission for those industries.

While giving the Government due credit for honouring their pledge, perhaps I may say how commendable it is that within 90 days of taking office they established the Low Pay Commission. Today, we have a Bill to discuss which, when enacted, will give much comfort and relief to many low-paid workers. Of course, the level at which the minimum wage is set must be sustainable, but that must not be any reason for appeasing the worst of employers, all of whom would be willing to accept the barest increase.

Mrs. Virginia Bottomley (South-West Surrey)

Will the hon. Gentleman give way?

Mr. Pendry

I shall not give way because of the shortage of time.

I am pleased that in the tourism sector most employers have welcomed the Government's proposals. Peter Moore, the managing director of Center Pares and a member of the English tourist board, has publicly stated that paying low wages in the service sector is a "false economy". Michael Jolly, the chief executive of the Tussauds group, is also a proponent of a minimum wage. David Quarmby, the chairman of the English tourist board and the British Tourist Authority, also believes that the time has come for a sensible minimum wage to be introduced.

Others in the industry think likewise—such as Garry Hawkes, the chief executive of Gardner Merchant and president of the British Hospitality Association. He referred to a survey that showed that 84 per cent. of hospitality staff and, more important, 65 per cent. of their employers, support a statutory minimum wage. Mr. Hawkes went on to say: This is not about altruism—it makes sound business sense to pay high wages because I get good quality, highly motivated people". Gary Crossley, in an editorial comment in Caterer and Hotelkeeper, stated: Employers that are worried about staff shortages yet are unable or unwilling to increase basic rates of pay would benefit from taking a closer look at what the more enlightened employers say about pay and related awards. Doing nothing could cost you the best staff and hurt you professionally in the long run. These comments come from people at the sharp end of the industry, which in the past has been described—by one of my hon. Friends, among others, but wrongly—as a Mickey Mouse industry. When the Bill becomes law, that will be seen as an inaccurate description.

There are those in tourism who are still not convinced of that to which I have drawn attention. They should look to New Zealand, for example, following implementation of a minimum wage. The effect on travel and tourism was almost immediate. Its introduction increased the status of the service sector and there was increased investment in remuneration and training of the work force. Levels of productivity and customer awareness have also increased.

Low pay in the tourism industry is probably best summed up by the English tourist board, which states: A well remunerated, well motivated and well trained workforce is of key importance in achieving the level and consistency of quality of service necessary to compete successfully in today's competitive markets. It seems that the tourism industry, long seen by many as a bad payer, recognises that to compete with our major competitors to maintain and improve its global position it has to create a wages and conditions structure that will assist in that endeavour. By backing the Government's minimum wage policy, it will be able to do just that.

My earnest desire is to see the public employees I used to represent in local government and the health service improve their lot. I want the same for people in my constituency who work in the tourism and hospitality sectors, such as the 23-year-old woman working as a waitress and bar worker earning £1.60 an hour after one year's service, the 27-year-old male waiter earning £2.92 an hour—the wages council rate in 1993 when it was abolished—and the 32-year-old kitchen porter earning £2.50. There are many more like them.

As from the autumn of last year, no fewer than 1,500,000 of the 2,300,000 employees in the north-west were earning less than £4 per hour. That is the scale of the problem we are discussing. When the Bill is passed, as surely it will be, I hope that for these people, in the words of our campaigning song, things can only get better.

6.50 pm

Mr. David Chidgey (Eastleigh)

The key issues that we should debate tonight are as follows. Do the Government's proposals start to address the injustice of poverty wages, which are trapping millions in benefit dependency, and the ever widening gap between the rich and the poor? Do they tackle the lack of regulation that allows cowboy employers to undercut competitors by paying poverty wages, topped up by benefits at the expense of the taxpayer? Do they provide a route for legislation to put a floor under poverty wages without running the risk of creating instability in local and regional economies and job markets?

In that final area, the Government's proposals are deficient. They appear to be refusing to consult on the dangers that many people consider inherent in imposing a rigid and inflexible national minimum wage.

We welcome the Government's decision to set up a Low Pay Commission. The Liberal Democrats have argued for some time—certainly far longer than the Labour party—that a Low Pay Commission should be set up. We welcome the concept of its having statutory powers and being able to act independently of government. Although the Government have recognised the good sense of setting up a Low Pay Commission, they seem to insist on handcuffing it to the masthead of a rigid national minimum wage.

The Government have excluded examination of regional variations from the Low Pay Commission's deliberations—for all sorts of reasons. If they are so confident in their argument, surely they would welcome an independent endorsement from the Low Pay Commission. What are they afraid of?

There are some proposals that we welcome. The Liberal Democrats have long believed that part-time and home workers should be protected in a similar manner to full-time employees and we welcome the part of the Bill that deals with that. We believe that that protection should apply in particular to women, who form the largest proportion of workers who suffer from poverty wages.

However, there seems to be an air of confusion about the Government's proposals for excluding workers under 26. Although there is a case for paying workers who are undergoing subsidised training less, there is no case for paying those who are just as productive as their peers less because they happen to be younger. The abiding principle, surely, should be that equal work deserves equal pay.

The case for putting a floor under poverty wages is clear. The scourge of low pay exists in every corner of the United Kingdom. More than 5 million people earn less than £4 an hour. Of those, nearly 3.5 million earn less than £3.50 an hour and close to 2 million earn less than £3 an hour. Britain is the low pay capital of Europe. The Organisation for Economic Co-operation and Development reports that while in most European cities around 13 per cent. of employees are on low pay, in the United Kingdom the figure is 20 per cent. That is not a record of success; it is a shameful record of economic failure.

Mr. Fallon

If the hon. Gentleman is saying that Britain is the low-pay capital of the world, is it the Liberal Democrats' position that rates in Cornwall should be even lower?

Mr. Chidgey

May I correct the hon. Gentleman? I said Europe, but I take his point. That is why we are putting the argument as strongly as we possibly can to persuade the Government to consider regional variations throughout our economy and to take account of them in the Low Pay Commission's deliberations.

During the past 25 years, the gap between the rich and the poor has grown dramatically. It is now greater than at any time at least since the second world war. The gap is continuing to grow—faster than in almost every other industrialised country.

The Rowntree inquiry on income and wealth found that the wages of the lowest paid 10 per cent. of men in the 1990s were lower in real terms than they had been in 1975. Between 1979 and 1990, income growth for the richest family type—childless couples—was three times that of the poorest, the lone parent families. One in five of the population now live in households with less than half the average income. One in four children live in poverty.

Hon. Members will know only too well the effects of wage poverty, which we see every week in our constituency surgeries—people trapped in poverty, living in squalid housing, struggling to survive on benefits, yet unable to escape into work that pays enough to lift them out of the benefit trap. It does not affect just lone parents and those with low skills. The recession under the previous Government has left tens of thousands of casualties: people whose jobs disappeared and people whose homes were repossessed, leaving them with massive negative equity and the misery of a life on benefits.

I shall give just one example—I am sure that hon. Members will have many others in mind. My constituent, Mr. Taylor, in Eastleigh, was paid £36,000 a year—a good salary—as a financial services adviser. He is in his 30s, is happily married with four children and lived in his own three-bedroom home. That was before his job disappeared, before his home was repossessed and before he was left with negative equity of £33,000, forcing him into bankruptcy and the trauma of moving his family into two rooms in a hostel for the homeless—but not with the family pets, of course, because they are not allowed in hostels. Try explaining to the children why their pet dog and cat cannot come with them and have to be put down. That was Mr. Taylor's lowest point.

Mr. Taylor did not give up. He is a worker—a trier. After six months, he found a full-time job as a night security guard. Working up to 16-hour shifts at a rate of £3 an hour, he managed to bring home £157 a week to support a family of four children—but of course it does not, and his entitlement in income support and housing benefit added another £150; just about the same as he brought home in pay.

As hon. Members will know, there are tens of thousands of families like Mr. Taylor's who are caught in the poverty trap. The cost to the taxpayer for family credit, income support, housing and council tax benefits is running at almost £3 billion per year. Every taxpayer is paying the equivalent of £120 a year to subsidise low-pay employers. It cannot be right for cowboy firms to pay poverty wages, knowing that they will be topped up by state benefits at the expense of the taxpayer.

The case for tackling the injustice of poverty wages and reducing the burden on the taxpayer is clear. The Government are right to seek to introduce regulation to put a floor under poverty wages. Without regulation, cowboy firms will continue to pay poverty wages and undercut the cost of their competitors. Without regulation, millions will find no escape from the poverty trap and the taxpayer will continue to pick up the bill.

Mr. Prior

Will the hon. Gentleman please tell the House what he thinks the minimum floor should be?

Mr. Chidgey

The whole point of the Low Pay Commission is to assess independently those minimum rates. I thank the hon. Gentleman for giving me the opportunity to emphasise that to those of his hon. Friends who do not fully grasp what the Bill seeks to achieve.

The classic example of the effect of removing low pay protection came after the Conservative party's abolition of the wages councils in 1993. We were told that their abolition would create jobs. A year before their abolition, 17,800 new jobs were created in wages council sectors; the year after their abolition, only 5,000 jobs were created. Average wages grew only 1.7 per cent. in the wages council sectors, compared with a 3 per cent. rise in the non-wages council sectors. In the hotel sector, wages have fallen in real terms since 1993. The wages of women workers in particular have fallen the most and they are now £180 a year worse off.

It is clear that the minimum wage rates established by wages councils revealed no evidence of job losses or an increase in unemployment. The United Kingdom—

Mr. Damian Green (Ashford)

Will the hon. Gentleman give way?

Mr. Chidgey

No, I have already given way many times.

The United Kingdom is the only country in western Europe without some form of minimum wage protection. In many countries, minimum wage rates are flexible by sector or region, and where they are flexible there is little or no evidence that they impact on wage inflation or unemployment.

The experience in America has already been mentioned. Time is short, so I shall not repeat it, but it is clear from research there that there is no evidence that a minimum wage rate has led to an increase in unemployment. In six out of seven studies undertaken in regions as diverse as New Jersey, Texas and California, employment in the low wages sector increased—in one case by as much as 20 per cent. More than 100 eminent American economists have given strong support to a fair minimum wage. They specifically reject the argument that jobs will be lost. They conclude that a fair minimum wage has a positive effect on the market, on workers and on the economy.

The key factor is the level at which the rate is set and whether regional variations are necessary to avoid the risk of destabilising local economies. The Government are right to establish the independent statutory Low Pay Commission, but they are wrong to exclude the analysis of regional variation from its terms of reference, turning down the request of the commission chairman himself.

There is a clear case for regulation to attack the growing gap between the rich and the poor; to stamp out cowboy firms paying low wages, knowing that they will be topped up by benefits at the taxpayers' expense; and to put a floor under poverty wages, providing minimum wage protection, not just for full-time workers but for part-time workers, home workers and, in particular, for women.

Ignoring the widespread and genuine concern that a national minimum wage, rigidly imposed, will destabilise the economies in our poorest regions smacks of arrogance or dogma. The Government claim that there is no significant variation across the regions in the proportion of workers on low pay. If they are so sure, why will not they release their data to the Low Pay Commission and let it review the case independently?

It is important to take account of concerns raised about rigid national minimum wage rates. Warwick university's analysis of regional variations in pay and the cost of living caused it to come out strongly in favour of regionally varied minimum wages. It found that a surprisingly high number would be affected by a national minimum wage. As many as 25 per cent. of workers in some areas would be affected by a minimum wage of £3.50.

Mr. Blizzard

Will the hon. Gentleman give way?

Mr. Chidgey

No, I must press on.

A national minimum wage as low as £3 would still affect 10 per cent. of workers. The Warwick university study was particularly concerned about the threat to youth unemployment if training costs of younger workers were not accommodated—a point which the Government appear to concede. The study also found that in small firms a national minimum wage of £4 would increase staff costs by as much as 18 per cent. in some areas, whereas in London staff costs would increase by only 7 per cent.

If hon. Members are not prepared to accept the economists' figures, let us consider the TUC's analysis. It found that 2.5 million full-time workers earn less than £4 an hour and that 1.5 million earn less than £3.50 an hour. Its figures show that around 7 per cent. of full-time workers in the south-east earn less than £4 an hour, but that across the other regions the figure was 14 per cent.—twice as high as in the south-east.

If hon. Members are not happy with the TUC figures, they can consider the data provided in answer to my parliamentary questions, the accuracy of which surely no one would doubt. According to the new earnings survey data provided by the Office for National Statistics, about 6.4 per cent. of full-time workers in the United Kingdom earn less than £3.50 an hour, which is close to the TUC's figure of 1.5 million.

The ONS figures show that, in the south-east, twice as many workers as in London earn less than £3.50 an hour. In Wales, the west midlands and Yorkshire and Humberside, the figure is three times as high. In the north-east, it is 3.5 times as high. One has to conclude that there is more than a suspicion of a regional variation in those wage rates.

Anyone who is still not convinced has only to look at the differences between the lowest rates of pay in Government Departments in London and in the regions. Answers to my parliamentary questions show that, for 11 Departments, the average lowest rate of pay in the regions is £3.50—in the Department of the Environment, Transport and the Regions, it is £3.25—yet the average lowest rate of pay in London is £4.30. In the Ministry of Defence it is £4.03. In 11 Departments, the lowest average rate of pay in London is 25 per cent. higher than in the regions. In some cases, the difference is more than a third. Those differences clearly reflect differences in living costs between London and the regions. Moreover, with seven out of 11 Departments paying the lowest rate of less than £3.50 an hour, the Government are a low pay employer. I trust that the Government will exercise their mind on that.

From the economists' studies, the TUC reports and the Government's own pay structure, it is difficult to see how a rigid national minimum wage can lift all the low paid out of poverty without creating instability in the poorer regions where living costs are less—unless the Department of Trade and Industry has some extensive research that proves beyond doubt the Government's claim that a regionally varied national minimum wage is unnecessary. If they have and if they are so confident that regional variation is unnecessary, why did not they give the data to the chairman of the Low Pay Commission for him to consider? Why, instead, did they issue a blanket prohibition?

Why, when I asked the DTI what representations had been made to the Low Pay Commission for the introduction of a regionally varied minimum wage, did I receive a reply stating: The Low Pay Commission is an independent body. The representations it receives are a matter for the Commission."— [Official Report, 2 December 1997; Vol. 302, c. 163.] Why did I receive that reply when the DTI was clearly restricting its inquiries? Is that the mark of a Government committed to consulting before breakfast, before lunch and before dinner? Or is this a Government still driven by dogma, but now fuelled by arrogance?

The Liberal Democrats support moves to put a floor under poverty wages, moves to tackle the growing gap between the rich and the poor and efforts to curb rogue firms paying poverty wages subsidised by the taxpayer, but we believe that the Government are throwing caution and flexibility to the winds by refusing to allow the Low Pay Commission to test regional variations in low pay. In due course, we shall seek to amend the Bill, but in the meantime we reserve our position on Third Reading.

7.8 pm

Mr. Peter L. Pike (Burnley)

I am pleased to have the chance to speak in this debate, because the Bill is very important and long overdue. The regional low pay statistics published by the labour force survey in spring 1997 show that in the north-west, excluding Greater Manchester and Merseyside, one in 24 employees earn less than £2.49 an hour; one in 13 earn less than £2.99 per hour; one in six earn less than £3.49; and one in four earn less than £3.99. The figures for my constituency are far worse than that: north-east Lancashire is an extremely low-paid area. Many of my constituents receive appalling levels of poverty pay, and it is time that something was done about it.

That poverty pay is reflected across the economic spectrum in Burnley. House prices are low, the house market is sluggish, and trade in the shops is at a lower level than in areas of greater prosperity.

The right hon. Member for Wokingham (Mr. Redwood) accepted the principle of a minimum income, but was not prepared to say what the minimum level of pay should be. I have discussed the issue with representatives of industries in my constituency. They ask why decent employers who pay their work force a good wage must compete with employers who pay poverty wages. Not only must they compete with employers who pay unrealistic and unfair wages, but they subsidise those wages through their taxes, which pay for family credit and housing benefit for those on low pay.

Mr. Bercow

Will the hon. Gentleman give way?

Mr. Pike

I shall give way to the hon. Gentleman, as long as he is quick.

Mr. Bercow

I am grateful to the hon. Gentleman for giving way. Does he believe that young people should be entitled to receive the full, national minimum wage?

Mr. Pike

I shall come to that later, but I want to make a few other points first.

Given the low pay and poverty in my area, the council has an anti-poverty officer, Steve Watson, who has written to me to make a number of points. He says: The Minimum Wage needs to be set at a level which offers a reasonable return for labour, helping people out of the poverty and benefit trap". That is extremely important. The Chancellor, in his green Budget, referred to the need to eliminate the conflict between benefits and tax. Some people who go into work lose out, and that will still occur to some extent, whatever level of minimum wage the commission sets.

It was nonsense for the right hon. Member for Wokingham to slam the commission. It is right to introduce the legislation now, alongside the work of the commission. If we were not carrying out consultation, we would be attacked and criticised.

There is no justification for or advantage in regional or age variations. Clause 3 provides that those aged under 26 may be excluded. If that provision is implemented, there must be adequate job protection to ensure that young people who are about to reach that age are not suddenly thrown out of work. I have grave doubts about the need for an age differential, and in any case I think that 26 is too high. We shall see what the commission recommends in due course, and it is sensible to include that option in the Bill.

On regional variations, we should try to eliminate the differences between the more prosperous and the poorer areas. I accept that we shall not eliminate those differences overnight, particularly in London, but London weighting need not be affected by the national minimum wage. Employers in London will be able to pay the national minimum wage and London weighting so as to attract staff. People do not have to start on the minimum level: we are fixing not a normal wage, but a wage that should be used as a base.

When wages councils were abolished, pay levels in Blackpool, which had not previously been at the bottom, immediately dropped to the lowest in Lancashire. Many people in the hotel and catering trade had been protected by wages councils, and their pay dropped as soon as the councils were abolished.

Burnley borough council, supported by the North West and North Wales Anti-Poverty Forum, of which it is a member, believes that there should be an annual uprating. One of the problems in the United States is that its minimum wage is not annually uprated. It has been uprated in the past 12 months, but it was a long time before that was done. Our national minimum wage must keep up with the rate of inflation, and should not be allowed to fall behind.

We should provide adequate powers and sanctions to ensure that this measure is enforced. Too often in the past, wages council decisions were not enforced. I introduced a ten-minute Bill, which, like most such Bills, fell by the wayside. It proposed local publicity, so that everyone would know which employers were not paying the wages council level. We must ensure that employers cannot avoid paying the national minimum wage.

My union, the General, Municipal, Boilermakers and Allied Trades Union, is a long-time supporter of a national minimum wage. I was a shop steward before I became a Member of Parliament. My pay was based on a number of factors, because I worked a continental shift system. I changed shift every three days, and my basic pay was very different from my take-home pay.

We must ensure that the national minimum wage is uprated, enforced and fair. This is an important step towards a fairer and better society, and I support the Bill 100 per cent. I know that other hon. Members want to speak, so I shall not delay the House any longer.

7.18 pm

Mr. David Willetts (Havant)

The earlier exchange between the President of the Board of Trade and the hon. Member for Gravesham (Mr. Pond) was very revealing. They discussed the extent to which the national minimum wage will lead to job losses. The right hon. Lady correctly said that it depended on what criteria were used for the calculations. The hon. Gentleman, who has studied this subject carefully for many years, rightly said that the most important criterion was differentials. If we assume the restoration of half differentials with a minimum wage of £3.50 an hour, we get the figure of 800,000 job losses. If we assume much lower effects on differentials, we get a lower figure. Lord Healey was right on this subject, when he said in 1994: Don't kid yourselves. The minimum wage is something on which the unions will build differentials. Therefore the minimum wage becomes the floor on which you erect a new tower. In order to claim that there will be no significant impact on jobs, the Government must also claim that there will be no significant impact on differentials. If they can say that they do not believe that there will be an impact on differentials, they can come up with a low figure. I do not consider that claim plausible—but not only is it wildly implausible; it sits very oddly with what I hear from the Secretary of State for Education and Employment in my role as Opposition employment spokesman. I hear members of the ministerial team say all the time that they want to encourage people to obtain more qualifications, to go out and be trained. What argument do they use? They say that those people will receive better pay as a reward for staying at college and securing that City and Guilds or national vocational qualification.

Judy Mallaber

Will the hon. Gentleman give way?

Mr. Willetts

I will give way once.

Judy Mallaber

Is the hon. Gentleman arguing that differentials will be increased because they will be restored across industries? Is he suggesting that a skilled engineer will retain the differential between him and a poorly paid hotel worker in the tourism industry, or does he accept that anything to do with differentials is more likely to take place within an industry? We are talking about whole industries in which there is low pay.

Mr. Willetts

I accept that the main effect is within individual industries. Let us take the example that the hon. Lady has given—the catering industry. Let us suppose that an untrained person is working as a kitchen assistant earning £3 an hour, which perhaps goes up to £4 an hour. The person working alongside him, who has a City and Guilds qualification in catering, currently earns £4 an hour. Will that person accept that there was no point in his obtaining a City and Guilds qualification, and that he might as well be untrained? If the Government want to encourage people to go out and obtain City and Guilds or national vocational qualifications, they must accept that the person who is currently working for £4 an hour will feel a bit of an idiot if he is working for exactly the same pay as the untrained person alongside him.

Mr. Pond

Will the hon. Gentleman give way?

Mr. Willetts

I am sorry; as the 10-minute rule is in operation, I should like to proceed with my speech.

If the person who is earning £4 an hour and has a qualification is to feel that obtaining that qualification was not a complete waste of time, he or she will expect some increase in pay to compensate.

We have all just received a letter from the Secretary of State for Education and Employment urging people to go to university and to college. What is the underlying message of that letter? It praises differentials; it argues that people should stay and obtain qualifications, because they will be able to increase their lifetime earnings. What we hear from the President of the Board of Trade and her team at the Department of Trade and Industry is completely inconsistent with the message that we receive from the ministerial team at the Department for Education and Employment. I sometimes wonder whether they communicate with each other.

We also hear a good deal from the Prime Minister and the Chancellor of the Exchequer about the importance of targeting. When they are put under pressure about their plans for cutting benefits, we are told that we must target the welfare state on people in poverty. I wonder whether the DTI team has any understanding of the concept of targeting. The one thing that we know about the minimum wage is that it is extremely ill targeted.

The Institute for Fiscal Studies says that the most affluent third of households will receive a higher income as a result of the minimum wage than the poorest third. We know that of the 10 per cent. of lowest earners 95 per cent. are not in the 10 per cent. of poorest households. We know—we are told often enough by the new Government—that there are a variety of ways of living: there are households in which some people may be on low incomes and others on higher incomes. My right hon. Friend the Member for Wokingham (Mr. Redwood) was quite right to say that family credit is very well targeted to deal with poverty wages. If wages cause a household to be in poverty, family credit will kick in.

Mr. Blizzard

Will the hon. Gentleman give way?

Mr. Willetts

I am afraid that I have only a few minutes left.

Family credit is aimed at dealing with poverty wages—wages that hold a whole family down in poverty. However, if someone is earning a low wage but is in a household with a high income, the minimum wage will be ill targeted and family credit unnecessary. The figures are dramatic. Let us say that, in a one-earner household with a young family, one person is in work and earning £3 an hour for a 40-hour week. That household will be entitled to another £55 a week in family credit. We do not expect people to keep a family on £3 an hour, and family credit deals with that.

Mr. Blizzard

Will the hon. Gentleman give way?

Mr. Willetts

I will, very briefly.

Mr. Blizzard

I thank the hon. Gentleman.

The hon. Gentleman's entire case has been based on the minimum-income family credit system. What does he think that system does for the self-respect and dignity of a man or woman who, after working hard for a week and doing everything that his or her employer wants, must go cap in hand to the state and ask for a handout?

Mr. Willetts

I will respect that intervention, on one condition. I hope that, when the Government introduce such a scheme for 18 to 24-year-olds as part of their welfare-to-work programme, the hon. Gentleman will intervene on his own Minister and make the same point.

What do we know about family credit, which is systematically rubbished by the Government? The Government say that people get stuck as a result of the payment of low wages by unscrupulous employers, but we know that only 12 per cent. of people receive family credit for more than a year. As my right hon. Friend the Member for Wokingham rightly explained, once someone is in work, even if it is low paid, he can then move on and up.

Another thing we hear about family credit is that somehow it is exploited by employers. We hear an ingenious argument in favour of the minimum wage—that it will save money, and will stop employers paying below-market rates and exploiting family credit. That has been researched. The completely independent Institute of Employment Studies carried out research into employers and family credit. I sometimes wonder whether Ministers are aware of that research, which concluded: Employers did not have adequate knowledge of family credit or sufficient information about potential recruits to adopt such practices"— that is, the practices that people are worried about. Nor, said the institute, did employers have the freedom to set wage levels. Only 9 per cent. of the employers surveyed agreed that the availability of family credit affected the wages that they paid. The research concluded that family credit has little impact on employers' employment practices in terms of their recruitment practices, the hours employees work, and their wage-setting strategies". Family credit is simply not exploited by employers in the way that has been claimed.

If, however, we adopt the measures proposed by the Chancellor in his green Budget, employers will know all about the wages that their employees receive. The Chancellor proposes that, instead of family credit being delivered through the benefits system, a wage subsidy should be delivered in the form of a withdrawable tax allowance through the PAYE system. If the Chancellor introduces such a system, everything that the Government have been saying about family credit will apply in spades to that system.

At that point, employers will indeed have the crucial information. They will be doing the PAYE calculations; they will be working out exactly what an employee earns. I wonder whether members of the DTI team have discussed the Chancellor's idea with him. I wonder whether they have put to him all their rhetorical arguments against family credit—for which, as we know, there is no empirical support—given that those arguments apply to the very measure that their own Government recently announced as part of the Budget consultation.

Mr. Deputy Speaker

Order. Time is up.

7.28 pm

Dr. Doug Naysmith (Bristol, North-West)

Thank you, Mr. Deputy Speaker, for allowing me to contribute to a debate on the national minimum wage. It is a subject of great importance to the country, and I am convinced that it will bring benefits to many of my constituents.

As this is my somewhat belated maiden speech, I shall begin by thanking the electors of Bristol, North-West for their patience, as well as for electing me on 1 May—not just as a Labour Member, but to represent the Co-operative party in the House. After a lifelong involvement as a Co-operator, I look forward to working with the other 24 Labour Co-op Members throughout this Parliament for co-operation in general, and for a Co-operatives Act in particular.

Bristol, North-West is a fascinating constituency. It is made up of six electoral wards in the city of Bristol and three electoral wards in the neighbouring unitary authority of South Gloucestershire. Although, as many hon. Members will be able to imagine, that dichotomy can on occasion cause tensions, the drive and energy in the constituency overall produce great benefits for the area.

Bristol is a wonderful city, and I have been amply rewarded for living and working there for the past 25 years. Its overall beauties and pleasures were well lauded on a previous occasion by my hon. Friend the Member for Bristol, West (Valerie Davey), but, for the record, in contrast with a description by my immediate predecessor in this place, I should like to say that Bristol, North-West contains numerous blades of grass. In fact, it has some fine open spaces and its share of historic buildings, such as Kings Weston house and Blaise Hamlet. Shirehampton, the part of the constituency where I live, was mentioned in the Domesday book.

It is also true that Bristol, North-West provides a large part of the economic engine that drives industry and commerce in the Greater Bristol area. We depend heavily on aerospace and defence industries and on related forms of manufacturing. Therefore, I look forward to the outcome of the current defence review, particularly what it says about defence diversification.

Bristol, North-West has a highly skilled work force, a tradition of invention and technical development and a variety of enterprises along Severnside, which have contributed greatly to Bristol's prosperity over the years. Also with its headquarters in Bristol, North-West is the Bristol Port Company, an enterprise with which I have had some involvement. It is highly successful and underpins much of the industry in the area. It still has the newest and largest lock in the United Kingdom, enabling it to take Cape-size ships. Although the lock is, "unfortunately", located in the constituency of the hon. Member for Woodspring (Dr. Fox), no one in Bristol ever forgets that it was built entirely by Bristol ratepayers without a penny of Government assistance.

Also to be found in Bristol, North-West is the university of the West of England, one of the finest of the new universities, and recognised for its teaching quality by independent assessors. It appears that that quality has been recognised by potential students, too—the number of applications is up this year compared with last, a somewhat unusual circumstance.

We also have Abbeywood, the Government's defence procurement headquarters and probably our largest employer, and Southmead, a large and distinguished district hospital with associated teaching status. It is well known for high standards of care and for innovation and research, and it was one of the first hospitals in the UK to pioneer work with neonates, which took place in the much loved, so-called SCBU, the special care baby unit, which is now known as the neonatal intensive care unit. We also have large Rolls-Royce and British Aerospace plants at Filton, just outside Bristol

As hon. Members will have realised, Bristol, North-West is a varied and exciting place, and an equally varied cast of characters has represented it at Westminster since 1945. The constituency has something of a reputation as a weather-vane seat—it is said that it changes in line with public opinion and generally votes for the party that forms the Government. It did that, although only just, in 1992, when, after many recounts, we lost by 45 votes for it to become the most marginal seat in England.

My immediate predecessor was Michael Stern and, although our relations were conducted in a civilised and polite manner, we disagreed, sometimes in public, quite a lot. Much of that was due to his tendency to blame all the ills of his constituents on Bristol city council, a body on which I was an active member, whereas I was much more inclined to blame the previous Government. Perhaps that is understandable. However, we agreed on some of the larger matters, including the battle against a commercial airport at Filton, a heavily populated area, and the improbability of a Severn barrage ever being built.

Michael Stern was very much a House of Commons man and is remembered for his skills in Committee. Although he did not reach great heights in government, he did serve as a parliamentary private secretary to two Ministers and was a vice-chairman of the Conservative party. He was for some time, I am told, captain of the House of Commons chess team, and was in charge of the team that lost 13–3 to Westminster school. However, he fought hard for many of his constituents on an individual level and, since 1 May, I have come across many people who have told me of his tenacity in confronting various bureaucracies. He will be a hard act to follow. He has said that he does not intend to return to politics, and I wish him well in his future interests and activities.

Perhaps Ron Thomas, the hon. Member for Bristol, North-West from 1974 to 1979, will be an even harder act to follow for a Labour Member. Ron is a man of high principles, who is remembered here with respect. I am sure that the minimum wage cause is dear to his heart and something for which he would have fought hard.

I support the introduction of a national minimum wage because it is essential to create a "floor" to the labour market to tackle the exploitation of people with least bargaining power. The Trades Union Congress has produced figures that show that one in five employees earn less than £4 an hour, that nearly 1 million employees earn less than £2.50 an hour, that one in five of the population live in households with less than half the average income, that inequality in this country has grown faster over the past decade than in any other developed country, with the possible exception of New Zealand, and that since 1977 the number of people living well below average income has increased sevenfold.

Such figures should be unacceptable in a civilised, developed nation such as ours, and I fully support the Government's intention to begin to put things right. It is, however, essential to realise that the minimum wage is not just about justice—it also makes economic sense. We cannot compete on low cost alone. We must also compete on quality. Much evidence shows that low wages correlate with lack of training and failure to invest.

Despite the relative prosperity in some parts of my constituency—relative to previous times over the past 18 years and to other parts of the south-west—the national minimum wage is of direct application to many of my constituents in Bristol, North-West. There are estates where unemployment is unacceptably high. If welfare to work is to be successful, it is crucial that wages are high enough to attract people. Together with reform of the tax and benefit systems and our new deal, the national minimum wage should help the Government's strategy to promote work incentives and to provide people with the skills and opportunities to move into work.

The introduction of a national minimum wage provides an opportunity to reduce the unacceptable gap that remains between women's and men's pay. Far more women than men are low paid and that has many adverse affects for women and the economy. It makes it harder for women to be economically independent and to earn enough to escape from dependence on the social security system, and it reduces women's retirement incomes. For those reasons and because of the simple need to have equality between the sexes in the labour market, it is essential that the national minimum wage is calculated in relation to the distribution of male earnings, which can then be applied to female earnings.

I am glad, therefore, that the President of the Board of Trade has said that there will be a single rate, which will apply to all regions and sectors and all sizes of firms. When enacted, the Bill will have far-reaching effects, so I am both excited and pleased to be able to support it.

7.37 pm

Mr. Alasdair Morgan (Galloway and Upper Nithsdale)

I congratulate the hon. Member for Bristol, North-West (Dr. Naysmith) on his maiden speech. It was thoughtful and well delivered. He described the qualities of his constituency to such an extent that I think we all understand why he is proud to represent it. He also paid humorous and generous tribute to his predecessors and I am sure that we will hear more of him; in fact, I cannot understand why we have not heard from him already.

The hon. Member supported the Bill's principle, which I also welcome. That principle was well established in this country for many years, until the previous Government decided to discontinue all the wages councils except the agricultural wages council. It is the principle that, in a civilised society, there is surely a minimum wage below which anyone who works for a living does not deserve to fall. I would go so far as to say that it encapsulates a moral imperative: people should be paid a wage that is capable of supporting them in their daily existence, after they have given their work to earn that wage.

In examining the background to the Bill, I looked at a document in the Library showing rates of pay by constituency. I was surprised to find a column for people who are paid less than £2.50 an hour. To that extent, it was an educational exercise. I was even more surprised to see how many people were in that column. It is a tragedy that in a society which is moving into the new millennium far too many people receive a wage that cannot support them or their families.

Obviously, costs are involved in the introduction of a minimum wage, but I suspect that no social advance was ever achieved in this country or anywhere else without cost. Perhaps it will be a cost to employers in this case. That was certainly the case with equal pay for women, and I suspect that Conservative Members' arguments against this Bill were used in the 19th century when Wilberforce and others tried to abolish slavery. The amounts being paid to some people are nothing short of slavery wages.

Many employers pay low wages because they know that the state will pick up the tab and will effectively pay to run their enterprises and subsidise their profits. Many arguments against the legislation fail because they look at only one side of the equation—the side that deals with the cost to employers. They do not consider the income that is generated by employees; the extra cash that will be put into the economy by people who benefit from a minimum wage.

Mr. Fallon

Will the hon. Gentleman be happy with a British rate or would he like the Scottish Assembly to have power to vary a rate with which he is unhappy?

Mr. Morgan

I am sure that an independent Scotland will be much more prosperous and will be able to afford a fairly high minimum wage. I look forward to that day.

Mr. Fallon

Will there be much difference?

Mr. Morgan

I am talking about an independent Scotland, which I am sure we shall see in the near future. I must press on.

Mr. Redwood

My hon. Friend asks an extremely good question. Does the Scottish National party think that the Scottish Parliament will and should have the power to vary the rate? Would he wish to set a Scottish rate whatever is done in the United Kingdom?

Mr. Morgan

My answer was quite clear. I was talking about the possibility of a minimum wage in an independent Scotland because it is clear that it is only in an independent Scotland—and not under Labour's devolution proposals—that the Scottish Parliament will control the Scottish economy. If the right hon. Gentleman is asking whether I am in favour of the Scottish Parliament taking control of the Scottish economy and all that goes with it, the answer is a clear yes. Perhaps I can now return to my original point about the benefits to the economy of a minimum wage.

By definition, a minimum wage is paid to those who are on the lowest incomes, and those are the people who spend the largest percentage of their incomes buying necessities. That creates a demand for goods; people who complain about the cost of a minimum wage fail to realise that extra money will be put into the marketplace to buy goods.

Mr. Graham Brady (Altrincham and Sale, West)

Will the hon. Gentleman give way?

Mr. Morgan

No. My time is limited.

That extra spending applies particularly to rural areas such as the one that I represent. There is simply not enough money circulating in the economy, and one of the knock-on effects of the Bill will be to increase that, especially in the rural economy. It is not just that people in rural areas have lower wages than people in other areas: they also have disproportionately higher living costs.

The hon. Member for Eastleigh (Mr. Chidgey) spoke about the high cost of living in urban areas and especially in London. He should buy a bag of groceries in London and then come to Stranraer to try to buy the same groceries at the London price. He will find that difficult. There is no future for the United Kingdom as a low-wage economy or one in which there is a large disparity between the lowest and the highest wage. Low-wage jobs are usually those that are most easily substituted by the introduction of new technology. Low wages do not engender industrial competitiveness. They may be a season ticket to long-term industrial decline and increased unemployment.

I am concerned about some details in the legislation. The first relates to the protection of employees and the enforcement of the minimum wage. We must ensure that the Bill's provisions are enforced and that the Government allocate sufficient resources to do that. One of the problems that we have inherited from the previous Government is that although there are regulations aplenty, there are not enough employees to enforce them. It would be a tragedy to pass legislation that gives so much hope to people and not put in place inspectors or mechanisms to enforce it.

Secondly, I am concerned about young people. If the level set for them is lower than the national minimum wage, so that there is a separate minimum wage for the young, older people in employment will be replaced by young people to whom employers can pay a lower rate. There should be a rate for the job, regardless of age. The needs of 20 to 26-year-olds are no different from the needs of those who are over 26. I hope that the Government will not introduce a separate rate for those under 26.

I again welcome the Bill's principles. It is a step forward in introducing better financial conditions for many of our workers. Just as the 19th century factory Acts were a step forward in introducing better physical conditions for workers, the Bill is a step forward in introducing better financial conditions. It will be opposed by precisely the same sort of people who opposed the 19th century factory Acts, and for precisely the same reasons.

7.46 pm

Mr. Chris Pond (Gravesham)

I congratulate my right hon. Friend the Secretary of State on introducing the Bill. It is a long-overdue measure which will begin to bring to an end the poverty pay that has scarred the lives of so many. I pay tribute to the Minister of State, Department of Trade and Industry, my hon. Friend the Member for Makerfield (Mr. McCartney). As the House knows, he has been committed to getting the Bill before the House and making a minimum wage a reality.

As my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) kindly said, before I came to the House in May, I spent 17 years working for the Low Pay Unit, an organisation with which I am still proud to be associated. During that time, I saw the effects of the previous Government's policies at the sharp end. The number of those in poverty increased threefold during the Conservatives' term of office, and that led to low wages being the largest single cause of poverty. Britain has a larger proportion of its adult work force earning below the Council of Europe's decency threshold than any other European Union state. In my constituency, a third of the work force are in that category.

Each Christmas, the Low Pay Unit makes a "Scrooge of the Year" award. When I was at the unit, I was always a little anxious that the Conservative Government might take over the award. As my hon. Friends will understand, the unreformed Ebenezer Scrooge was to be pitied and reviled, but we were always fearful that the Conservative Government might decide to include him in the new year honours list for services to British industry in helping to turn Britain into the sweatshop of Europe. As we have heard, previous nominees for the award included the employer of a woman who worked in a residential nursing home. In a letter to her, that employer stated: I would like you to work 5pm to 9am Monday to Sunday inclusive. That is 112 hours of night work. The letter goes on: Salary will be paid in arrears at a rate of £150 a week", which is about £1.34 an hour. Other nominees for the award included a clothing workshop in which staff are paid 59p an hour, and another in which staff are paid 1p for each petticoat and 5p for each dress sewn. Those rates were being paid not in the time of Dickens or in what we once called the third world but in the early 1990s in the United Kingdom—which, until May, was Tory Britain. I have this year's nominations.

Mr. Redwood

Will the hon. Gentleman give way?

Mr. Pond

No, I have very little time. I apologise. I have this year's nominations, although I am sure that the right hon. Gentleman will have his own.

The nominations include a machinist earning 8p for each pair of trousers sewed; a worker in a residential care home earning £1.66 an hour; and a skilled needlewoman earning £1.25 a day for making puppets at home. As the House will appreciate, even this year, the judges are faced with a difficult decision. Such examples have convinced me of the Bill's importance and of the fact that, in this day and age, no one should be required to work for such pitiful pay and conditions.

Britain is the only country in the industrialised world without some form of legally enforceable pay protection. Since the previous Government abolished wages councils in 1993, no UK citizen, with the exception of those working in agriculture, has been entitled to any basic pay level. That is in contravention of the universal declaration of human rights, which states: Everyone who works has the right to just and favourable remuneration ensuring … an existence worthy of human dignity". Too many of our citizens are denied that basic human right and dignity. It is a matter of basic social justice.

Mr. Brady

Will the hon. Gentleman give way?

Mr. Pond

I am sorry, but I will not give way. Time is limited for all hon. Members, and especially for those on the Back Benches.

A minimum wage is an essential part of the Government's welfare to work strategy, which is designed to ensure that work pays. It is also a matter of equity. As my hon. Friend the Member for Bristol, North-West (Dr. Naysmith) said, a minimum wage will be of greatest importance to women. It is no coincidence that Britain is the only country without a minimum wage and the country in Europe with the widest pay gap between men and women. A minimum wage will do more to close that gap than equal pay legislation—important as that is—could ever achieve.

As we have also heard in the debate, in addition to justice and equity arguments, there is a sound economic and business case for a minimum wage. The Secretary of State reminded us of Churchill's words in establishing the minimum wage in 1909. He described the situation in which people earned less than a living wage as a "serious national evil". The previous Government and Conservative Members consider that not as an evil but as an instrument of economic strategy.

Many small firms—70 per cent. of them—are in favour of a national minimum wage precisely because of concerns such as those that Churchill expressed—that, without some form of minimum wage, good employers are undercut by the bad, and bad employers are undercut by the worst. Those firms believe that a national minimum wage will establish a fair playing field and ensure that cowboy employers are not able to undercut responsible firms in wages. A minimum wage will also ensure that responsible firms are able to invest in training and in better production techniques that will help the United Kingdom to compete more effectively in the modern world.

We know also that a minimum wage will help to stimulate employment, economic growth and consumer confidence by increasing the spending power of several million of the poorest workers, allowing them to buy the goods and services that other people produce. Moreover, as several hon. Members have already asked, why should taxpayers be contributing between £3 billion and £4 billion annually to subsidise the low-wage and inefficient cowboy firms that are dragging down responsible employers? The net revenue effects of a minimum wage—in its benefits and tax implications, and even taking into account public sector cost—will certainly bring a smile to the face of my right hon. Friend the Chancellor of the Exchequer.

We have heard much from Conservative Members in the debate, and we will hear much more, about the supposed employment effects of a minimum wage. As the Secretary of State reminded the House, however, at each general election estimates of the impact of a minimum wage become ever more extravagant. The supposed employment effect was initially set at 60,000 lost jobs, but the number quickly rose to 600,000 under Norman Tebbit, who was then Secretary of State for Employment. The estimate then rose from 750,000 to 1 million and, before the 1992 general election, to 2 million. Immediately afterwards, it was revised downwards to 1 million.

Those estimates were based on assumptions that the Treasury has said were wholly arbitrary and without any empirical basis. All the evidence that we have available from this country, from the European Union and from the United States suggests that a minimum wage, if sensibly set, could enhance employment growth.

The cheap labour policies of the previous Government were justified on the basis that it was thought that the policies would create employment. The costs were very high, leaving us in a situation in which, last year, a South Korean manufacturer reported that he was paying two thirds as much to his staff employed in south Wales as he was to those doing the same job in South Korea. As we have also heard, the pay gap is wider now than it was in 1886, when figures were first collected. However, evidence on job creation in the years in which the previous Government's policies were pursued show that, proportionately, Germany created four times as many jobs as we did, Italy six times as many, and France twice as many.

What has happened since the 1992 general election, and the abolition of wages councils shortly afterwards? I am grateful to Professor Patrick Minford, former adviser to the Chancellor of the Exchequer in the previous Government, who said: there has been no job creation, measured in extra hours worked, since 1992". The Bill is a good Bill. It is comprehensive and, therefore, its enforcement is likely to be effective. I am grateful to the Secretary of State for dealing with concerns about clauses 3 and 4 and suggestions that they somehow mean that there will be an exemption or different treatment for those under 26. It is clear from her clarification that the Bill is an enabling measure to allow her to consider recommendations from the Low Pay Commission.

7.56 pm

Mr. Philip Hammond (Runnymede and Weybridge)

There is complete agreement among Conservative Members that achievement of a high-wage and high-productivity economy is a desirable objective. The way of achieving that objective is through labour market flexibility and sustainable economic growth. The Bill will deliver neither of those. It is an ill-conceived piece of legislation and a hangover from Labour's past. It is an IOU—

Mr. Desmond Turner (Brighton, Kemptown)

Will the hon. Gentleman give way?

Mr. Hammond

So soon!

Mr. Turner

If the hon. Gentleman thinks that the previous Government's proposals were such a wonderful way of promoting a high-wage and high-productivity economy, why did they not create one?

Mr. Hammond

We have prepared the ground—as economic growth continues—to generate just that: a high-wage and high-productivity economy.

The Bill is an IOU to the Government's paymasters in the trade unions—an IOU which, I suspect, many senior Ministers would love to tear up but dare not.

It is difficult to imagine a debate that will necessarily be as ill-informed as this one. It is ill-informed because we lack the vital piece of relevant information properly to debate the subject: the level of the proposed national minimum wage. Nothing could show us more clearly that the Government do not want to debate the issue properly than the fact that they are depriving us of that information.

Will it be a minimum wage with teeth—one that really bites? If so, the consequences could be significant, and the economic damage could be massive. Will it be a political gesture, and set at a level that will cover few workers and have few consequences for the economy? Will it be set at a level that is irrelevant in the south-east, or at a level that will cost thousands of job and hundreds of businesses in the north and in Wales?

I can see no reason why the Bill could not have been postponed until the Low Pay Commission had reported, so that we were able to debate the matter in a common sense manner, knowing the proposed initial level of the national minimum wage. Instead, we are forced to address ourselves to abstract theory.

The key to sustainable higher pay is increased productivity. That is the only way we can develop the high-wage, high-skill economy to which we all aspire. Workers who can upgrade their skills, and employers who can improve the productivity of their labour will survive the impact of the minimum wage. However, in the vast majority of cases, those employers and employees are already moving down that route as a result of the pressures of a tightening labour market in a growing economy.

Those who will be hurt by the national minimum wage include those who are unable to improve their productivity to cover the increased costs of their labour, employees who lack the ability or the inclination to reskill and employers who lack access to the necessary capital or technology.

The small business sector will be hit hardest. In many small businesses, the working proprietor already works very long hours for a low rate of return. The cost of a minimum wage will fall wholly on him. Increasing the effective hourly rate for his employees will, necessarily, reduce his own effective hourly rate. Very small businesses often do not have the ability to change the ratios of capital and labour within their business.

I predict that, at the margins, the result of minimum wage legislation, set at any effective level, will be to drive some small businesses into the black economy.

Mr. Huw Edwards (Monmouth)

The hon. Gentleman may recall that many of these arguments were used against the Equal Pay Act 1970. Will he tell the House whether he now supports the repeal of that Act?

Mr. Hammond

Of course I do not support the repeal of that Act.

As I have said, I believe that the legislation may force some small businesses into the black economy—I am thinking of businesses with only one or two employees such as the examples given earlier—where employers and employees will conspire together to protect their jobs and their businesses.

Small businesses were promised proper representation on the Low Pay Commission, but that did not happen. Once again, we see the prospect of small businesses being the principal victims of the deliberations of so-called representative bodies, which primarily represent large business, organised labour and academic interests.

My hon. Friend the Member for Havant (Mr. Willetts) said that the evidence suggests that the minimum wage will have little impact on poverty. The households in the greatest poverty are generally without income from employment. The phenomenon of the working poor, while important, is a minor component of the overall poverty problem.

As the President of the Board of Trade indicated, the Government intend to make substantial savings from reductions in means-tested in-work benefits after the introduction of the minimum wage. That transfer of costs from the social security budget to employers represents yet another tax on business. One can argue the merits of the case, but the economic impact will be to impose yet another tax on business.

My right hon. Friend the Member for Wokingham (Mr. Redwood) drew attention to the impact on our public services, the enhancement of which has been set by the Government as one of their great priorities. How will a minimum wage help primary schools in my constituency to employ additional classroom assistants or special needs assistants? How will it help social services departments to provide better care for the elderly or the infirm? How will it help hospitals to shorten their waiting lists? Can the Government give us an assurance that, in every case, budgets will be increased to compensate for the impact of the minimum wage, not just for employees paid at the minimum level but for the very many in the public sector who are paid just above any likely level of the minimum wage, as differentials are restored?

Mr. Woolas

Is the hon. Gentleman aware that in local government there is already a minimum rate of pay, which is set at about £4 an hour, and that those arguments have not applied there?

Mr. Hammond

The hon. Gentleman is speculating about what the minimum wage level will be. Perhaps he knows something that we do not. Perhaps the Minister would care to come to my constituency and explain to the dedicated mothers who work as classroom assistants in the primary schools—

Mr. Woolas

Will the hon. Gentleman give way?

Mr. Hammond

I will not give way.

Will the Minister explain to those mothers why their jobs should be put at risk? The legislation does not concede that there is a gradient between purely voluntary work and work motivated entirely by earning power. Many thousands of people in this country work for mixed motives, including many pensioners. They will no longer be able to take pin money jobs doing work they enjoy or which serves their communities. That shows me—if I needed to be shown—that the nanny state is alive and well under this Government.

This is an ill-conceived measure which will cause most damage to those it seeks to protect. It will cost the jobs of the most marginal employees and will destroy the most vulnerable businesses. If it is set at a level that bites, the minimum wage will push some employees into the black economy where they will not enjoy the benefit of a minimum wage and will lose the protection of much other employment legislation. It will damage the front-line capability of our public services. It would be better if it were not done, but the Labour party's debts to its paymasters have to be paid.

If the Government are determined to have the Bill, we must ensure, by debate and argument, that the minimum wage is set at a level where it applies only to those workers who are paid at a very low level. We must ensure that it is set by reference to total pay and not to some hourly rate of nominal pay, and we must ensure that those earnings are averaged over a period which reflects industry or employer custom and practice, and are not just imposed by the Government.

One of Britain's most striking successes of the past two decades has been the restoration of flexibility in its labour market. That achievement has insulated us from the worst experiences of our European neighbours over the past few years.

8.6 pm

Mr. Roger Godsiff (Birmingham, Sparkbrook and Small Heath)

I join many other hon. Members in congratulating the Minister of State, Department of Trade and Industry, my hon. Friend the Member for Makerfield (Mr. McCartney) on the production of the Bill. I wish to thank him for the enormous amount of work that he has put into it.

The Bill will be particularly welcome in my constituency. I should tell the hon. Member for Runnymede and Weybridge (Mr. Hammond) that this is an IOU; it is an IOU to the people of this country, particularly low-paid workers, who have been desperate to see this legislation on the statute book. In three of the four wards in my constituency, there is an unemployment rate of well over 20 per cent. The majority of those who are employed work in the hotel, catering, retail and garment industries. Those are the very sectors of the economy in which low pay is concentrated. The excellent House of Commons Library document, which many hon. Members have, shows that 41 per cent. of those employed in the distribution, hotel or restaurant industries earn less than £4 an hour.

In my constituency—I am sure that the same is true in many others—the majority of those affected by low pay are part-time working women and young people. Perhaps unusually, in my constituency many of them come from the Asian community. In the sweatshops in my constituency, young Asian girls earn just over £1 an hour. If they are paid £1.50 an hour, that is considered to be a lot of money. That is at a time when the average gross wage in the United Kingdom is £8.75 an hour.

In many ways, it must be amazing to many hon. Members that we are even having this debate as we come to the end of this millennium and look forward to the next. Here we are debating decency in society and whether we should set a safety net below which people should not be allowed to fall.

Some of the comments that I have heard this evening from Opposition Members have been staggering. I did not know until now that the Tory party was officially in favour of subsidising poverty pay and I am grateful that that position has been made clear tonight. I thought that Conservative Members were more surreptitious about it, but tonight they have made it clear that that is their position.

I also found it interesting that a number of Opposition Members were proud of the fact that the wages councils were abolished. The right hon. Member for Wokingham (Mr. Redwood) crowed at their abolition and claimed that the abolition had created a great deal more employment. As has been said by other hon. Members, the one wages council that was not abolished was the Agricultural Wages Board. I should be interested to hear whether Opposition Members, most of whom since 1 May represent rural, rather than urban, constituencies—I say that with no disrespect—support the Agricultural Wages Board's minimum wage, which it has now laid down at £4.12 per week—[Laughter.] I mean an hour. I think that that Freudian slip makes my point. I should like to know whether Conservative Members support the board's decision of £4.12 an hour or whether they believe that the farm workers living in their constituencies are overpaid. I should be interested in their answers.

In the discussions on the subject that I have had with business—I was with the Confederation of British Industry in Birmingham only last week—it has expressed its concern, not at the Bill's principle, but at the level at which the minimum wage will be set. Of course, that level must take into account all the factors and it must be sensible and realistic. When I consider the chairmanship of the Low Pay Commission and the other members who have been appointed to it—they are knowledgeable and eminent—I have no doubt that all the factors will be taken into account. I am sure that the commission's recommendation will be one with which industry can live comfortably. It will also be one which the low-paid people of this country will greatly welcome.

Mrs. Gorman

How will the hon. Gentleman make his views known to those people who he alleges are earning only £1.50 an hour if, as he hopes, the Government introduce a wage of £4.50 an hour and those people lose their jobs? How will that help those people to climb up the skills ladder that will enable them to earn better wages?

Mr. Godsiff

I hear what the hon. Lady says, but all I can tell her is that if I walked into some of those sweatshops and told the employees that they were to be paid £4.50 and hour, my majority would immediately go up from 19,000 to 29,000. I cannot answer the hon. Lady's question because we shall have to wait and see. I have heard the argument that if we set the minimum wage level too high we will produce a certain number of job losses and I have also heard the counter argument that if we set it at another level it will have no effect on job losses. I cannot give the hon. Lady the answer because I cannot look into a crystal ball, but I can look at the weekly pay packet of someone walking home with £70 or £80 to live on. I know that the hon. Lady would be mindful of the problems involved in trying to do that.

When the Low Pay Commission considers the subject, it must be very conscious of young people. It would be wrong to adopt the principle that people under the age of, for example, 25 should be treated differently from those over the age of 25 when they are doing exactly the same job. That principle cannot be right, but it can be right if the person is learning the job or is being trained. But once the other person has attained the skills and is doing the same job as the person standing next to him, it cannot be right, purely on the basis of age, to pay those two people different rates of pay. That would be a perverse sort of agism—agism turned upside down—and I hope that that will not happen.

I believe that the legislation will have a lasting, historical impact on the people and economy of this country. I believe that the legislation will be wholly to the good and that the millions of low-paid people of this country who looked to the Labour party to introduce such legislation will be pleased that the party has kept its promises and, as the hon. Member for Runnymede and Weybridge (Mr. Hammond) said, paid its IOU.

8.15 pm

Mr. David Maclean (Penrith and The Border)

The Bill shows the Government's arrogance, naivety and cack-handedness. It shows the Government's arrogance in setting up a Low Pay Commission and giving its members high salaries before having parliamentary approval to do so. I know that the new terracotta soldiers—

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney)

May I correct the right hon. Gentleman: for the record, Low Pay Commission members are not being paid salaries. Unlike the previous Government, who had quangos full of Tory party members, the commission's members are prepared to work for nothing.

Mr. Maclean

I am delighted to hear that comment from the Minister of State, but the commission has been set up without parliamentary approval and the taxpayer is incurring costs. Those hon. Members who have been here since before 1 May used to pay high regard to the precedent that a Government did not act until they had the statutory approval to do so. That is the first example of the Government's arrogance.

Another example of their arrogance is the fact that although the Bill is now before the House, we are not to be told about its guts. We are being asked to agree in principle a pig in a poke. The only people whom it will satisfy will be the Liberal Democrat Members, each of whom will be able to go home—they seem to have gone already—and tell his constituents that he voted for the principle, but not to worry as the rate that will be set will probably be perfect for the constituency. When, inevitably, the level turns out to be either too high or too low, the Liberal Democrats can blame the Government.

Mr. Brian Cotter (Weston-super-Mare)

Perhaps we can be allowed to speak for ourselves on that subject and not have words put into our mouths.

Mr. Maclean

I shall remember not to bother to give way to the hon. Gentleman in future if that is the only sort of remark that he can make.

The Bill is one of the most important planks of the Government's legislation, but neither we nor the Labour Members have the slightest idea what the wage level will be. Will it be set at a very low level, as the President of the Board of Trade wants, or at a much higher level, as the Treasury wants or at a level that the Scottish Nationalists want? The one answer that I do want from the Minister of State tonight—if he would care to pay attention for a moment—is whether the Scottish Parliament, when it is set up, will be responsible for setting the minimum wage for Scotland or whether that responsibility will remain with the President of the Board of Trade. Will she be responsible for setting the minimum wage applied to the Scottish nation? We want a clear answer to that question. Either the power to set the minimum wage will remain with the President of the Board of Trade in England, and Scotland will fall into line with the United Kingdom national minimum wage, or the level will be set by the Scottish Parliament.

Mr. Ian McCartney

The national minimum wage is exactly that; it is a national minimum wage for all workers in Scotland, in Wales, in England and in Northern Ireland. There are no Tories left in Scotland who can argue the case for or against the national minimum wage.

Mr. Maclean

I am, however, Member of Parliament for a constituency on the Scottish border. That is why—

Mr. McCartney

Will the right hon. Gentleman give way?

Mr. Maclean

I will not give way again to the Minister.

It is important for my constituents to know whether we shall have a national minimum wage and whether a distortion will be caused by there being a different level in Scotland. I am relieved that the Scottish Parliament will not have the right to set a separate minimum wage which would be a great distortion in my constituency.

The Government are naive in another way. If they think that no distortions will be caused by a minimum wage, they clearly have no experience in the real industrial world. We have already heard that wages and living costs in different parts of the United Kingdom are fundamentally different. Our wages in Cumbria are, of course, lower than they are in the south-east, but so are our housing costs and our travel-to-work costs. Our schools and many other facilities are better and in the lake district, we have a better environment. We have all the competitive advantages.

Mr. Ian McCartney

Will the right hon. Gentleman give way?

Mr. Maclean

No; the Minister can make his own speech when he winds up the debate.

Mr. McCartney

Will the right hon. Gentleman give way, just once more?

Mr. Maclean

I will give way then.

Mr. McCartney

Will the right hon. Gentleman confirm that when he worked in industry, he worked for Securicor? Will he also confirm that Securicor is in favour of a national minimum wage and an agreement with the trade unions in its work force?

Mr. Maclean

The Minister seems to think that he makes an awfully telling point, but I fail to see it. Yes, I used to work for Securicor. If I did not like the wages it paid, I had the choice of working for someone else. I cannot see for the life of me what point the Minister is trying to make. I am fighting for my constituency and not for Securicor or any other employer. My constituency will be severely affected by a national minimum wage.

The national minimum wage will cause distortions which will harm labour in Cumbria, which already has the disadvantage of being one of the more remote parts of the United Kingdom. It will remove one of our most competitive advantages. Our cost of living is lower and, as I have told the House, many of our other costs are lower. Yes, our wages are lower. At the end of the day, however, the quality of living is every bit as good—

Mr. Desmond Turner

On a point of order, Mr. Deputy Speaker. The right hon. Gentleman should have said that his constituency is largely covered by the only minimum wage board, the Agricultural Wages Board.

Mr. Deputy Speaker

That is not a point of order for the Chair. It is clearly a matter for debate.

Mr. Maclean

The point made by the hon. Member for Brighton, Kemptown (Mr. Turner) is not a matter for the Chair. In addition, if that is the best point with which the Minister can prime his Back Benchers, he is even more feeble than I thought.

Miss Geraldine Smith (Morecambe and Lunesdale)

Will the right hon. Gentleman give way?

Mr. Maclean

No, I will not give way because I wish to conclude my remarks.

Many parts of the United Kingdom will be disadvantaged by the minimum wage, whatever it may be. There is no doubt that Cumbria's main competitive advantage will be removed. We shall be forced to pay proportionately higher hourly wages than other parts of the United Kingdom. That will remove our competitive advantage and that is why many of my constituents will suffer as a result of the Bill.

It is no good for the Government to pretend that everyone will be a winner and that there will be no losers. Once the Low Pay Commission reports, all the happy faces on the Labour Benches will suddenly change. Some Labour Members will be desperately unhappy that the wage is far lower than they expected, whereas others will be unhappy because it is higher than they expected and they will feel that their constituents will not get the protection they want.

The one thing that we can be certain about is that the House has been deprived of the opportunity to make a decision tonight on the real contents of the Bill. The House is giving the Government the power to impose a minimum wage when we do not have the faintest idea what that wage will be. That is treating the House with contempt and is typical of this Government's arrogance so far.

8.24 pm

Ms Candy Atherton (Falmouth and Camborne)

I represent probably the lowest-paid constituency in the country. It would be fair to say that the people of Falmouth and Camborne are crying out for a national minimum wage. So important is the issue that I want to describe some of the problems that my constituents face.

At present, unemployment stands at 10 per cent. and is falling, but we are losing many of our traditional industries and replacing them with small companies which generally pay lower wages. Across Cornwall, our traditional industries are in decline. The problems of farming, fishing and mining are well known to the House.

The last tin mine in Cornwall—and, indeed, in Europe—is located in my constituency near Camborne. South Crofty provides employment for 200 to 300 people. Many development miners earn good wages and that is just one reason why we are fighting so hard to save the mine and the 900 jobs in the wider economy. Increasingly, our economy relies on tourism. Despite our best efforts, it is predominantly a seasonal industry and it is notorious for low pay. I will return to the implications of that later.

Against the background of a declining economy, the gross domestic product for Cornwall generally is 69 per cent. of the national average. As a county, we could qualify for objective 1 status in Europe and we are fighting for it. In Falmouth, Redruth, Penryn and Camborne, many thousands of my constituents are forced to rely on family credit to live. Survey after survey has found levels of poverty among the highest in the country. My constituency is designated a semi-urban area, yet it does not get urban relief and it does not qualify for rural assistance. We are caught not between a rock and a hard place, but between poverty and the sea.

Hon. Members might assume, given all those factors, that we enjoy lower prices, but that is far from the truth. Our water charges are among the highest in the country. Food costs are high, as our produce leaves the county for a song and is reimported at significantly higher rates.

Extraordinarily, we have some of the highest car ownership rates in the country. Public transport is scarce and, to get a job, people have to own a car. We are a pathfinder area for the new deal. The Employment Service correctly identified the fact that one of the biggest obstacles to the young people of Cornwall obtaining employment was the lack of transport. It is marvellous that a pool of mopeds is being bought to enable young people to get to jobs. People need transport to get to jobs. We are so reliant on the car that the county council has a real problem with second-hand car traders from Birmingham who bring down their wrecks which are then sold at inflated rates in the local economy.

In that context, cheap pay is a nightmare for my constituents. I will inform hon. Members of the levels we are talking about. The rate that sticks in my mind comes from a card I saw in the Penryn jobcentre. Among the advertisements for care workers at £2.20 an hour and kitchen porters at £2 an hour, one said: Skilled car mechanic required for village garage. Must have own transport, 40 hours, weekends and nights. 1.80 an hour. Just this Saturday, a man from Falmouth came to my surgery to ask for assistance. For a number of years, he and others have worked for a prestigious leading hotel in Falmouth, but they have been laid off; I understand that the management have brought in workers from France and Spain to work for £1 an hour.

The Government are absolutely right to bring in a national minimum wage. In my visits to companies throughout Cornwall, I have found that the companies that are doing well are the ones that pay their staff decent rates of pay, are investors in people and see training and quality as the key to the future. I am the daughter of a journalist and a hairdresser. My mother had three hairdressing salons, employing up to 30 staff. She was competitive—as I remember, a shampoo and set cost two and sixpence in old money—but she paid above wages council rates. She welcomed the wages council, as it stopped fly-by-night operators and prevented them from moving into her area and—no pun intended—undercutting her. That is as true today as it was when I was a child.

Hon. Members might think that, with the experience of low pay in my constituency, we have been overwhelmed by companies beating their way into the county; in fact, the opposite is true. We have low pay and high unemployment, and the larger employers are actually relocating up country, out of Cornwall, to higher wage areas. I do not want to hear Conservative Members' nonsense that low pay brings employment, because our experience is the opposite. The Bill is both morally and politically right. If my constituents are to be lifted out of poverty, the sooner it is in force, the better.

8.31 pm

Mrs. Teresa Gorman (Billericay)

I am tempted to deal with one or two of the points raised by Labour Members that were rooted in cliches about unemployment, because such points sometimes go unanswered.

The subject of women's pay and the Equal Opportunities Commission was raised by the hon. Member for Oldham, East and Saddleworth (Mr. Woolas). The Equal Opportunities Commission has itself bewailed the fact that since equal pay was introduced and it began pursuing employers in courts over wages, the number of women in high-skilled occupations—especially in the teaching and nursing professions, where women previously had niche employment opportunities—has been seriously undermined.

Mr. Woolas

indicated dissent.

Mrs. Gorman

I simply put that point to the hon. Gentleman, whether he approves or disapproves of it. The commission has said that equal pay has had an adverse effect on employment opportunities for women.

On the point that the hon. Gentleman made about his local council having a policy of paying £4.50 an hour, I can only say that, well, councils can pay that much. They are paying wages out of the public purse, so to speak—they draw the money that they use to pay people from rates and taxes and not from profitability in the marketplace. It is that profitability which drives up minimum wages, through competition for labour.

Miss Geraldine Smith

Will the hon. Lady give way?

Mrs. Gorman

No, the hon. Lady can have her own time a bit later.

The hon. Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) talked about women who were earning £1.50 an hour and how delighted he was that they were going to get £4 an hour and that he would be able to go down and tell them that that wonderful news was brought to them by the Labour party. According to that doctrine, the employer will have to find another £3 an hour for each person working in his factory—but the hon. Gentleman did not tell us where the employer was to get that money. The employer can get it only out of the profitability of his product.

What paying wages boils down to is the productivity of the individual person and that person's skills. Young people in my constituency aged 18 working as highly skilled bricklayers are not earning £1.50 an hour—they are taking home £800 or £900 a week. That may be the same rate or even a better one than older people receive, but it is dependent on their skills and productivity. That is the essence of the wages that employers can afford to pay.

I commented earlier on the composition of the Low Pay Commission. There are nine people on it, three of whom are academics who are on the state payroll and therefore not necessarily in need of supplementary income, as my right hon. Friend the Member for Penrith and The Border (Mr. Maclean) pointed out. Three others are trade union leaders—or senior executives—who are on the payroll of their unions, so the issue of whether or not they are being paid for sitting on the commission is not especially significant. Only three members of the commission represent some aspect of the employment world. One comes from the Confederation of British Industry, which represents large companies; one comes from the Scottish Grocers Federation, which is dominated by the large multiples; and the other comes from the Granada Group.

All those are large employers—not that they all pay high wages. Many employers in the security industry, which is dominated by large companies, pay relatively modest wages. The point is that if firms are in competition for business and they cannot pay more, the Bill will not mean that their employees will go home with a larger pay packet; it means that they will go home with no pay packet at all.

Miss Geraldine Smith

Will the hon. Lady give way?

Mrs. Gorman

No, I have only 10 minutes and I am sure that the hon. Lady will make a marvellous contribution when she is called to speak.

I asked two business men in my constituency—real employers who provide real jobs—about the implications of the Bill. One of them is a respectable local builder who does lots of work for the local council, who has been a member of the council and who does splendid work. I asked him about wages in his industry, which is still controlled by the Construction Industry Training Board. I asked what would persuade him to pay higher wages and he told me that, to begin with, it was a matter of what the contractor would pay him. His contractors include the local council, which asks him to submit bids for jobs. He has to be competitive in the wages he can offer, because 90 per cent. of his outgoings are wages. To get work for his employees, he has to be competitive. It is not a question of whether he wants to be benevolent and double his employees' wages overnight—any employer would like to be able to do that—but in the real world employers have to compete for jobs.

That local builder tells me that the industry's training programmes have been largely destroyed by the trade unions, which insisted on apprenticeship schemes paying uneconomic rates to young people. He said that when they were facing deadlines his tradesmen were not going to slow down to train a young person when that young person was being paid almost as much as they were. It is not logical. In the building industry, hardly anybody—not even the big companies or local councils—take on trainees and apprentices because the market is competitive and the trade unions have set minimum rates.

Dr. Lynne Jones (Birmingham, Selly Oak)

Will the hon. Lady give way? Does she know the rates?

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order.

Mrs. Gorman

The trade unions have set minimum rates for young people.

The great majority of people on low wages are youngsters who are unskilled, women returning to the labour market with out-of-date skills, or people who are adding to a family budget. We keep hearing the cliché about all wages being a living wage or we talk about wages that support a family, but many people are bringing home a wage which contributes to a family budget and that bit of extra money means a lot to many families. The Labour party will not shed any tears if people cannot bring in that extra money, which means the difference between buying a pair of plimsolls for the children or getting them a prized pair of Reeboks, or taking the children to Disneyworld rather than to the local funfair. People go to work for all sorts of reasons, not just the wages—[Interruption.]

Mr. Deputy Speaker

Order. There is far too much noise in the Chamber. The hon. Lady is entitled to be heard.

Mrs. Gorman

Thank you for your support, Mr. Deputy Speaker.

Another group on modest wages are people with disabilities of various kinds, including intellectual disabilities, who cannot produce work at a rate or with the skills that will command high wages. It is quite right that the Government should step in to supplement their incomes. We should not throw the entire burden on the employer. The employer will simply say, "I cannot make enough money out of this person's labour to support the wages the Government are inflicting on us."

Several hon. Members, especially the hon. Member for Falmouth and Camborne (Ms Atherton), have mentioned the south-west. I have put it to the hon. Lady that the problem there also has to do with relatively low skills. As she says, it is an area which has traditionally relied on tourism, which accounts for many low-skilled jobs. There is no reason to denigrate those sorts of jobs. We are talking about highly competitive seasonal work.

The same applies to agriculture. It is no coincidence that the board presiding over agricultural wages oversees a low-paid industry. Almost without exception, the wages councils presided over industries with relatively low rates of pay; indeed, the rates set by the wages councils became not the minimum but the maximum for those industries. It was only when we abolished the wages councils for, say, the retail trade that wages in it started to rise. So the councils' effect was the opposite of that intended—

Several hon. Members

rose—

Mrs. Gorman

I will not give way, since the points I am making are all fascinating—

Mr. Deputy Speaker

Order.

8.41 pm

Mr. Douglas Alexander (Paisley, South)

I am grateful for this opportunity to make my maiden speech in a debate on the national minimum wage, for it is a subject of the greatest importance to many of my constituents.

It is a convention of the House that a new Member should pay tribute to his predecessor. Even if there were no such convention, I would be determined to pay tribute to Gordon McMaster, the Member of Parliament for Paisley, South from 1990. I did not know Gordon well, although it is a matter of pride to me that on the day in 1990 when Margaret Thatcher resigned as Prime Minister I was campaigning for his election on the streets of Paisley. Christmas came early for the voters of Paisley that year, but it was to be another seven years before they had a Government who reflected their will and the will of the people of Scotland. During those years, Gordon came to be viewed throughout the constituency with real pride and affection for his concern and commitment to his constituents.

Like his father before him, Gordon was a gardener by trade. Before entering the House, he played a significant role in establishing a highly successful initiative, Growing Concern, which combined his love of gardening with providing opportunities for disabled people to learn about horticulture. When he entered the House, Gordon's long-standing commitment to disability issues was reflected in his parliamentary life. He served both as Front-Bench spokesman on disabled people's rights and as secretary to the all-party disablement group. He was a credit to his parents, Willy and Alison, to his constituency and to the House.

In his work in Parliament and the constituency, Gordon upheld the tradition of service of my first Member of Parliament, Norman Buchan—Gordon's predecessor. During my childhood, Norman was a frequent visitor to my home. His inspirational conversation and his commitment to socialism in part explain my presence in the House today.

My constituency, which both men represented in their day, is in the county of Renfrewshire. Having grown up and lived there for almost 20 years, I was especially honoured to be chosen by the Labour party to contest the seat and to be given so much support by so many.

The constituency that I have the privilege to represent is proud of its industrial heritage and the hard work of its people: the mills of Paisley, the carpet factory at Elderslie, the town of Johnstone, where the first machine tool foundry in the world was established. The people of my constituency embody many of the best qualities of the west of Scotland—a willingness to work hard, a sustaining sense of humour and an instinctive sense of community at all times.

I am proud of those traditions from the past, but I know that it is the future that matters. In this new economy, all that my constituents ask is to be given the chance to contribute their talents and skills to the work of the nation. Certainly, there are already successes. Paisley university faces the new century as a proud and ambitious institution. Renfrewshire continues its success in manufacturing; indeed, the county produces a third of all Scotland's manufactured exports. This is the pattern for the 21st century, when we shall have to produce the highest quality goods and services and sell them in an ever more competitive global market.

While traditional industries in the constituency have largely gone, many people in the work force are not equipped with the skills to contribute to, and benefit from, these new successes. To attempt to compete from a position of low skills and low wages offers not a route forward but a route back—back to unemployment, poverty and social division. I must report that more than 2,300 people in the constituency are officially unemployed, almost 600 of them under the age of 25. When they look for work at the local jobcentre, they see positions with hourly wages as low as £2.50 an hour for a cleaner, or £2.80 an hour for a kitchen assistant.

That is why the Bill matters urgently to the people of Paisley, South. For my constituents, it is a matter not of wanting a national minimum wage but of needing one. For 18 years, we had a Government who advanced the idea that the price of greater prosperity was greater inequality and who tried to frighten people out of their commitment to fairness. I am therefore impelled to speak my mind, not solely by anger but by a sense of urgency, to end injustice and to give opportunity to people who have had to wait too long for a Government who are on their side.

The new Government's proposals offer hope to the people of my constituency. Our victory on 1 May offers an historic opportunity to end the centuries old injustice of poverty pay. I was reminded of just how old the struggle to win decency in the workplace is when, on the night of my election, I entered Paisley town hall to await the result. As I entered the building, I passed the statue of Robert Tannahill, the weaver poet of Paisley. Almost two centuries ago, he was forced to leave the town in search of a living wage. My constituents know all too well that the evil of poverty pay is still with us as we approach the 21st century.

When people look back at our time, let the national minimum wage be the monument by which they remember our commitment to dignity and decency in the workplace. The Government's Low Pay Commission will bring together businesses, large and small, with employees' representatives to settle the level of the minimum wage. There will, of course, be a debate about that level, but let there be decisiveness about the principle for the national minimum wage is not an exercise in compassion. It is an investment in our future. It forms an essential part of the Government's strategy to provide opportunity to work, to ensure that work pays, and to allow advancement through the acquisition of skills. It is a strategy based on the understanding that in the new global economy prosperity is not won at the price of social justice. I am reminded that many of the countries with higher per capita incomes have achieved their success on the foundation of a national minimum wage.

At the age of 15, I joined the Labour party in Renfrewshire because I believed in the values and ideals which had for generations taken members of my family into the Labour movement: a commitment to the belief that while we cherish our individuality we are part of a community with shared responsibilities and linked destinies, and the belief that wealth, power and opportunity should be in the hands of the many and not the few. The Bill advances those historic ideals in the modern economy, and that is why I and my constituents will support it.

8.48 pm

Mr. Shaun Woodward (Witney)

I congratulate the hon. Member for Paisley, South (Mr. Alexander) on his maiden speech. The House remembers his predecessor with considerable affection and his death with much sadness. Tonight, however, we heard a maiden speech that was made with a judicious balance between dignity, wisdom and generosity. I am sure that all hon. Members look forward to listening to the hon. Gentleman in the future.

This evening's subject has the capacity to excite high moral tones and to have all those in favour of the Bill reaching urgently for the pulpit. To some, it may seem like a debate about slavery all over again; one can ban slavery, but not poverty. The argument is about fair pay, but it should also be about whether pay can be realistic. Nobody is arguing that we should remove the importance of justice from employment. The question is what kind of justice the Bill will create. The President of the Board of Trade spoke of making work pay, but the danger of the Bill is that it will make the workers pay for it with their jobs.

My constituency will be badly affected by the measure. I cannot say how badly, because, like other hon. Members, I do not yet know at what level the minimum wage will be fixed. Some 11 per cent. of the work force in my constituency are engaged in tourism, and many people own small and medium-sized businesses such as newsagents. Hon. Members may have seen the survey recently published by the National Federation of Retail Newsagents. The evidence was startling: it figured that a minimum wage fixed at £3 would mean that 22 per cent. of jobs in the newsagents business would be lost, and that a minimum wage fixed at £3.50 would mean that half the jobs would be lost.

I have listened to hon. Members this evening, particularly the hon. Member for Gravesham (Mr. Pond), whose work at the Low Pay Unit I respect and have followed over the years. We are all discussing poverty and, as the President of the Board of Trade said, the scandal of poverty. Nobody wants poverty in our society, but we must recognise that it is relative. There is a huge difference between poverty in the United Kingdom and poverty in India. It can be argued that we must improve the lot of everybody in our country, which is the duty of all Members of Parliament. Nobody disputes the fact that some people are badly off; the question is what we should do to make their lives better.

Would the Bill remove the "scandal of poverty", as it has been termed? I do not believe that it would, because many of the poorest households have no earners. How would the Bill help them? Low pay is concentrated among many married people and young adults, many of whom are part of households where the other partner earns a good living. The Bill would do little to help them, but the people who may need help and on whom our resources should be targeted would not be helped. How would the Bill help those caught in the poverty trap—those for whom benefits would be reduced if their earnings increase? My worry is that the Bill would transfer responsibility from the state to the employer. But who will look after people when they are laid off because of the minimum wage?

The devil in the Bill is in the detail. At best, the Bill is disingenuous; at worst, it is irresponsible. Members of Parliament will have to answer in the future for those whose hopes are dashed if the figure is fixed too low or for the lengthening dole queues if it is fixed too high. The hon. Member for Eastleigh (Mr. Chidgey) cited the importance of the United States, which is a comparison worth considering for a moment or two. The US minimum wage system is littered with exemptions. A few years ago, I had the good fortune to spend a year or so teaching at Harvard university, and experienced what life was like for Americans under the minimum wage system. It was not a panacea to cure all ills. The danger of the minimum wage in America is the way in which it has been continuously amended to create more exemptions.

As my hon. Friend the Member for Buckingham (Mr. Bercow) pointed out, firms in the US with a turnover of less than $500,000 a year are exempted. If one considers the level at which the minimum wage is fixed in the US—currently $5.15 or about £3.20—and compares average earnings in America with those in the United Kingdom, the level is fixed at the equivalent of about £2.70.

Has a minimum wage eliminated the scandal of poverty in the US? Hon. Members may be aware of a conference that took place yesterday in the United States—the conference of mayors. The report on the conference was startling. Hunger and homelessness, both symbols of poverty, are rising dramatically in the US; requests for food stamps and shelter rose by 16 per cent. this year, and 70 per cent. of cities reported turning away people who desperately needed help. That is a "scandal of poverty", and it is not a good model to follow.

Low pay may be relevant to explaining away those problems, but we must be clear about one thing: a national minimum wage will not eliminate poverty. What kind of justice will we have if there are no regional variations? It sounds right, but will it work in practice? Small businesses will find it hard—21 per cent. of businesses in the UK turn over less than £37,000 a year and in Wales the figure is £31,000, so Wales is being asked to bear a particular burden in the course of implementing the Bill.

The Government speak of "flexibility plus". They aim to achieve high and stable growth and employment, but the recently released James Capel study found that that if the minimum wage is fixed at £3.50 it will add 1.5 per cent.to the UK wage bill. It will also cost 250,000 jobs. I do not want to become involved in an auction about the number of jobs involved, but all the studies agree that if the level of the minimum wage is to be meaningful it will have an impact on employment. We would be foolish, however we vote tonight, to deny such an impact. There will also be an impact on interest rates and on the economy's growth.

This subject excites strong views. The Bill is well intentioned, but I believe that it is wrong. In the name of justice it will create injustice; in the name of making work pay it will make the workers pay with their jobs. In wanting to tackle the scandal of poverty, it will do little or nothing to clear up that scandal, except shift responsibility from the state to the employer. Having sent those employers bust in some cases, it will have created unemployment. The unemployed—the very people whom Labour Members want to be liberated from the state—will then come back and make their demands on the state.

The Government's language is high handed and moralising, but I fear that the Bill will do little to get people from welfare to work and much to get them out of work and on to welfare.

8.57 pm

Judy Mallaber (Amber Valley)

In reply to the hon. Member for Witney (Mr. Woodward), may I say that of course the Bill is about poverty and justice, but it is a central plank of our economic policies. We cannot compete internationally on the basis of paying the lowest wages. We can never win that battle. Our future lies in developing a highly skilled productive work force competing on the basis of quality and innovation.

I have made those arguments over many years. I am very emotional about the debate because, I am proud to say, I was employed by the National Union of Public Employees when we were advancing the arguments for a minimum wage. I wrote many of the documents that made that case. We saw it as a moral argument about justice, but now we see it as an economic argument about a measure that will get the country on its feet again.

I shall give the example of an industry that is important in my area and is often regarded as one in which a minimum wage might lead to job losses—the textiles industry. Jobs have been lost in the textiles industry—because we cannot compete in the global race to the bottom with Morocco, Sri Lanka and the far east. The idea that we can do that is nonsense. We can never pay low enough wages to compete with those areas. That is not the way forward for the textiles industry.

In this country, there is a market for our local textiles. A company such as Marks and Spencer may take standard goods from overseas, but when it needs a new line or an unusual product quickly, it needs speedy, flexible, quality producers based in UK plants. That is the basis on which we must compete.

There are already minimum earnings agreements in the industry that have permitted the reconsideration of payment structures, individual piecework and so on, which can militate against the flexibility, quality and efficiency that we need for our companies to compete and win orders. A minimum wage could provide payment structures that enable us to be more efficient and more competitive.

Two companies in my constituency, Courtaulds and Coats Viyella, already have national minimum earnings levels. Colin Dyer, the chief executive of Courtaulds, was recently quoted in The Guardian as saying that the company was preparing itself for the minimum wage by becoming more efficient.

Decent employers do not need to be undercut by cowboys and sweatshops seeking competitive advantage. We heard earlier the quotation from Winston Churchill about bad employers undercutting the good and the worst employers undercutting the bad. That is not a route we can afford to go down.

Tourism is another important industry in my constituency and it has been mentioned by several hon. Members. Is tourism advanced by a high staff turnover, which we have partly because of low wages? In our three-star hotels, there is a staff turnover of 33 per cent. How will those hotels attract visitors compared with France, with a turnover of 19 per cent., or Germany, which has a turnover of 16 per cent?

Low pay is connected with a low level of investment and training in the skills that we need. We must compete on the high ground of skills and productivity, so I welcome the Bill.

I have two practical suggestions. First, I hope that there will be common procedures to tie up implementation of the minimum wage legislation with equal pay legislation. This is the second stage of equal pay legislation; we must co-ordinate those measures. Secondly, we must consider procedures for the annual review and continuing monitoring of the minimum wage, preferably through the Low Pay Commission.

In reply to earlier comments, I find it extraordinary that Opposition Members consider us arrogant. We are trying not to be arrogant in the way the previous Government were; they introduced legislation drawn up without consultation or consideration and with no mechanisms for making it work properly. Our Low Pay Commission will do that and it will be a good and honourable way of ensuring that the Bill works well.

After arguing for such legislation for many years, it gives me enormous pleasure to support it tonight. It is a matter of morality, social justice and equality, and it is another plank in our modernisation of Britain and building an economy fit for the future. I shall be extremely proud to vote for the Bill.

9.2 pm

Mr. David Prior (North Norfolk)

I begin by congratulating the hon. Members for Paisley, South (Mr. Alexander) and for Bristol, North-West (Dr. Naysmith) on their excellent maiden speeches. I was particularly struck by their references to the high levels of unemployment in their constituencies.

I, too, am aware of the great damage that long-term high unemployment does to individuals, society and family life. It is against a background of high unemployment that we consider the Bill.

In my constituency, I have many small firms engaged in the tourism and leisure industries. I have spoken to four or five companies over the past two weeks, all of whom cited cases of people who would not be working for them now if there was a national minimum wage. I think of a barman who was taken on on a casual basis. He worked almost for pocket money, but, because he was living at home with his parents, he could afford to do that. That casual barman is now the hotel manager.

I think of the thousands of casual and seasonal employees who work in the tourism industry—boys and girls doing holiday jobs, getting training and work experience; women who are topping up their husbands' income; pensioners who are doing extra work to top up their pensions. A variety of people are prepared, for all kinds of reasons, to work for relatively low wages.

I know of two people who work in a local care home. They work part time and receive a low wage, but they spend time talking to the residents of that care home, making coffee and doing jigsaw puzzles. Those sorts of jobs will not exist if there is a national minimum wage. There are many small firms in north Norfolk, and they will be hit hardest by a national minimum wage. It will apply not just to big firms in big towns but to small companies that operate in rural areas. I was struck by the plight of one constituent, who wrote: We … have a requirement for some seasonal staff, and were the above level"— that is, the minimum wage— applied to them, I am sure that … the subsequent adjustment to all staff rates would be … injurious to the viability of the business. Labour Members should not forget the impact that a national minimum wage will have on differentials. The Food and Drink Federation has said: It should be clearly recognised, however, that the Potential Pressure for Maintenance of Differentials, and the Implications for Cost and Competitiveness, will be very considerable where the lowest rates of a grading structure have to be increased as a result of a national minimum wage. All the evidence is that more Government intervention in the labour market, the social chapter and the national minimum wage will lead to higher levels of unemployment.

9.5 pm

Mr. David Lepper (Brighton, Pavilion)

Thank you, Mr. Deputy Speaker, for calling me to speak in this debate. I also thank the hon. Member for North Norfolk (Mr. Prior) and my hon. Friend the Member for Amber Valley (Judy Mallaber) for their concise speeches, which have permitted me to participate.

We have heard much about the attitude of employers—particularly small businesses—to the minimum wage. I am glad to have this opportunity to remind my hon. Friend the Minister for Small Firms, Trade and Industry—who is on the Front Bench—of her visit to my constituency before the general election, during which representatives of small businesses volunteered the view that no responsible employer would have any problem with a national minimum wage.

I can also tell my hon. Friend that several of my colleagues from Sussex constituencies, some Opposition Members and I met representatives of the Sussex branch of the Confederation of British Industry in Crawley just 10 days ago. They also told us that they envisage no problems with the national minimum wage policy. That is my experience of reactions to a national minimum wage, which is not based on reports from elsewhere.

I must draw attention to the situation in my constituency. I have said before that, although Brighton, Pavilion appears to be prosperous, it suffers from very real deprivation. Research conducted by the local council and the Low Pay Unit—I pay tribute to the work of my hon. Friend the Member for Gravesham (Mr. Pond) in this area—found that, in 1995, 43 per cent. of those in full-time work in East Sussex were living below the Council of Europe's decency threshold. It found also that 74 per cent. of those in part-time work were below that threshold. That is unacceptable.

The examples from the Brighton, Pavilion jobcentre that I shall now give are equally unacceptable. The jobs offered on a typical day included a chef, with three years' experience, working until 3 am for £3.25 an hour. That is the highest rate that I shall quote. A position for a qualified, full-time hair stylist was offered at £2.66 an hour. The position of care assistant, working 12 hours per night, was offered at £20 a night. The responsibilities of that care assistant are calculated to be worth £1.66 per hour. The Bill will do much to alleviate such degrading pay offers in my constituency. I congratulate my right hon. Friend the President of the Board of Trade on establishing the Low Pay Commission and introducing the Bill so quickly.

I remind the House that many people in my constituency work in the retail, hotel and catering trades and that nearly a quarter of employment in my constituency is provided by them. They are jobs that were once protected by the wages councils.

Many surveys have been mentioned; I shall refer to one more. A nationwide survey was undertaken by the low pay network in 1995. It revealed that 10 per cent. of the jobs in hotels and catering in 1995 paid less than in 1993 when the wages councils were abolished. Again in 1995, 20 per cent. of jobs in retail and hairdressing—major areas of employment in my constituency—were being paid at below the levels in 1993 when the wages councils were abolished.

I am sure that my constituents will welcome the Bill, as I do. It will have my whole-hearted support and the whole-hearted support of those hard-working people of the Pavilion constituency who far too often are paid far less than they deserve for the work they do.

9.11 pm

Mr. Damian Green (Ashford)

Many of my right hon. and hon. Friends have made powerful economic cases against the Bill. Instead, I shall take a few minutes to make the moral case against it. Having listened to the debate, I am aware that Labour Members feel sincerely that they are on the moral side of the argument. They have had a few uncomfortable nights recently, with the more loyal or ambitious of them being dragged through the Lobby supporting Government policies that they think are fundamentally immoral. That being so, they clearly feel good about themselves tonight. They feel that they are on the side of good. I want to puncture that illusion.

The Bill is actively immoral because its implementation will knowingly cause people to lose their jobs. It is—[Interruption.] I am glad that Labour Members find it amusing that people will lose their jobs; that is not the impression that they have tried to give to their constituents.

The Deputy Prime Minister has recognised, famously, that the minimum wage will cause some people to lose their jobs. Professor Bain has said that he would be surprised if there were not some job losses. The question is whether these jobs—

Miss Geraldine Smith

Will the hon. Gentleman give way?

Mr. Green

No. I am sorry. At this stage of the debate I cannot give way to the hon. Lady.

The professor's question is whether the jobs that would be lost would be better lost anyway. I observe in passing that those who take that view are seldom referring to their own jobs. Which people will lose their jobs? We know the answer precisely: the young and the unskilled will bear the principal brunt of these job losses. I do not find it moral that the Government are introducing a policy that will specifically make it more difficult for young people and the unskilled to find jobs.

A continuing debate is centred on exemptions. For example, should there be exemptions for trainees, for under-26-year-olds and perhaps for under-21-year-olds? What is so great about a policy that means that a policy that means that the Government are trying to find exemptions for the most vulnerable groups in society? It is clear that the level at which the national minimum wage will be set will be vital.

Broadly speaking, in other European countries where there is a minimum wage, the higher the percentage of the average wage at which the minimum wage is set, the higher is the level of youth unemployment. Many Labour Members have mentioned with pride the sectors that will be affected by the Bill if it is enacted, such as textiles, tourism and hotels. All of these—

Miss Smith

Will the hon. Gentleman give way?

Mr. Green

I shall not give way to the hon. Lady because we are approaching the replies from the Front Benches.

Miss Smith

rose—

Mr. Green

No. I am under pressure of time and unable to give way to the hon. Lady.

The Bill is immoral because it will affect certain sectors that are staffed by some of the most dedicated people in society. I have been approached in my constituency by teachers and administrators in nursery schools who say that they employ people on very low wages precisely because those people know that jobs are not available at a higher level and because they feel a vocation for such work and are quite prepared to do it on low wages. If the minimum wage is introduced, those jobs will simply disappear and some nursery schools will close.

Another reason—it has not yet been mentioned—why the Bill is immoral is the fact that there will be so much detail at the margin, which will go some way to re-create the culture of fiddling at the edges that incomes policies introduced in the 1960s and 1970s. The Secretary of State mentioned the problems with bonus payments, benefits in kind and deductions from earnings. With all those bits and pieces around—

Mr. Alasdair Morgan

Will the hon. Gentleman give way?

Mr. Green

I am not giving way. I am sorry, but time is limited.

All those areas brought incomes policies into disrepute and led to novel forms of payment. All that will be reintroduced in certain sectors of the economy if the minimum wage is introduced. That will make this country a less moral place as well.

The Bill is immoral because Parliament is being invited to take this decision blind. It is absurd to debate the Bill's Second Reading when we do not have its central feature—the minimum wage itself. It is bad that Parliament is asked to discuss the Bill at this stage. We should discuss it after the Low Pay Commission has reported. The Government's attitude is rather like the famous company involved in the south sea bubble that invited people to invest in it and said that they would be informed in due course of the purpose of their investment. That is effectively what the Government are asking the House to do this evening.

The Bill is immoral because it deludes people into thinking that it is an attack on poverty. It will not reduce poverty. Many of my hon. Friends produced figures that show that the people who will be affected by the minimum wage are the groups in society who are most affected by poverty.

The Bill will increase unemployment, especially for the young and unskilled. It will discourage workers from taking low-paid, socially useful work. It will re-create the culture of rule bending that surrounded incomes policies in the 1960s and 1970s. Parliament is being asked to take a decision when it has not been given the central piece of information that it requires to take that decision. The Bill also fails to address the problem of poverty.

This is not a morally uplifting Bill; it is a half-baked measure. It is a bad Bill and it deserves to be voted down.

9.17 pm

Mr. Russell Brown (Dumfries)

I realise that we are on a very tight schedule. I shall make one or two extremely important points.

Opposition Members have commented on the arrogance of the Government in setting up a Low Pay Commission before we have even debated the Bill. It is only common sense that we set up the Low Pay Commission which, despite the arguments of Opposition Members, is very representative.

The Conservatives say that what we are doing is nothing more than asking businesses to pay a wage that in turn will save the payment of benefits. I hope that Opposition Members do not think that there is anything to be gained by, or that people take any pride in, claiming benefits. It is degrading. People do not want to claim benefits. The argument is not simply about a decent living wage, but about people exploiting the system. The argument that businesses will have to shed jobs and that they will go to the wall is nonsense. The Bill plugs a loophole whereby people have exploited the system for many years.

I am not sure whether the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan), who represents my neighbouring constituency, mentioned that we both come from an area which, if it is not the lowest paid, is the second lowest paid in Scotland. The argument about having a minimum wage that is not national and about there being different rates in different areas just does not hold water. I take great exception to the fact that, in some of its documentation, our local enterprise company in Dumfries and Galloway boasts that it can encourage inward investment because the area has competitive rates of pay—in other words, we pay scandalously low wages. I can tell some horror stories about that.

The cornerstone of the family is broken down when parents try to hold down two or, in many cases, three jobs to make ends meet. People have to work 50, 60 or 70 hours a week, and their children never see them. They rush backwards and forwards in and out of the house trying to hold down jobs to make ends meet to avoid joining the benefit system, which Conservative Members think is the right way to act.

Thank you, Mr. Deputy Speaker, for the couple of minutes that I have had to make my points this evening. I hope that hon. Members will feel that it is appropriate to support the Bill.

9.20 pm

Mr. Michael Fallon (Sevenoaks)

It is a duty and a pleasure to congratulate the hon. Members for Bristol, North-West (Dr. Naysmith) and for Paisley, South (Mr. Alexander) on two of the most eloquent maiden speeches that I can remember. Both paid due tribute to their predecessors. We echo their tributes, and we look forward to hearing from both of them again.

It has been a singular feature of the debate that while Labour Members have welcomed the Bill in principle, not one was prepared to argue for the exemption or lower rate for younger people that the Government themselves have invited the Low Pay Commission to recommend.

The Opposition oppose the Bill. We believe that it is damaging for jobs and for the economy and that it will not help the lowest-paid in our society, points eloquently made by my hon. Friends the Members for Havant (Mr. Willetts), for Runnymede and Weybridge (Mr. Hammond), for Billericay (Mrs. Gorman), for Witney (Mr. Woodward) and for Ashford (Mr. Green).

The story of the minimum wage is typical of the Government's first seven months. We have seen U-turns, inconsistency, deception, ministerial rows and even, as I shall come to later, the threat of a ministerial resignation. Above all, we have seen deep unease throughout the Government about the effects of the minimum wage in practice.

The Government cannot even decide what the minimum wage is all about. The Minister of State tells us that it is about ending poverty pay. The President of the Board of Trade, launching the Bill, said that it was economically sensible. The Chancellor of the Exchequer, in his pre-Budget statement, said that it could have adverse effects on employment or inflation. I invite the Minister to tell us which of those aims is the Government's aim tonight.

Miss Geraldine Smith

Will the hon. Gentleman give way?

Mr. Fallon

I shall give way later.

The Government cannot even make up their mind about the status of the Low Pay Commission. First, they set it up, then they rig its membership. It does not contain a single person who has run a small business in this country. Representing small business men is a single trade association worthy from Scotland who represents but 500 members.

Having boasted of setting up the commission within 90 days of taking office, 60 days later, the Government change its terms of reference. The Chancellor instructs the President of the Board of Trade to write to the commission inviting it to consider exemptions for young people and those in training.

We see exactly the same inconsistency when it comes to the level of the minimum wage.

Miss Smith

I find it ironic that for 18 years I watched the Conservative party, which was supposed to roll back the nanny state, foster unemployment in Britain, causing millions of people to live in poverty through benefit dependency. During those 18 years, we had the poll tax, North sea oil revenues were squandered, and old-age pensions were eroded. Some people still live on welfare in poverty and misery. [Interruption.] We are trying to do something about that. We want to get people back into employment through our welfare-to-work programme. [Interruption.] Conservative Members may heckle: they do not like it.

Mr. Deputy Speaker

Order. I think that the hon. Lady has made her point.

Mr. Fallon

I hope so, because she had long enough.

We see the same inconsistency from the Government on the level of the minimum wage. At the election, Labour's employment spokesman, now our Prime Minister, said that it should be half male median earnings, which is currently £4.61. We learn from The Sunday Telegraph that the President of the Board of Trade and her Minister of State favour a rate of £4 an hour. We read that the Chancellor and his senior advisers are opposed to a minimum wage much above £3.50 an hour. Perhaps the Minister of State could assist us when he winds up the debate in the style of the pocket Cicero, to which we have become accustomed, by telling us exactly what level he favours for the minimum wage. In its evidence, the Confederation of British Industry told us that the range should be between £3 and £3.20 an hour. Does the Minister agree with that?

When it comes to the coverage of the minimum wage, we find the same indecision. At the Amsterdam summit, the Prime Minister endorsed the presidency's conclusion that wage agreements across Europe should take more account of differences in qualifications and between regions to facilitate job creation. The Minister of State told us on 20 November that there should be no regional, no sectoral and no company derogations. Exactly one week later, the Bill exempts share fishermen, makes special arrangements for agricultural workers, and excludes every 16 to 25-year-old.

Clause 39 makes special provision for some of the lower-paid in, I assume, Jersey or Guernsey. The clause is entitled, Power to apply Act to offshore employment. The Government are showing touching concern for the lower-paid bankers, lawyers and trustees who reside on the islands of Jersey and Guernsey.

More seriously, the Minister of State, who said that there would be no exemptions, has clearly forgotten that, in a written answer on 28 July, he guaranteed that the Bill would not penalise occupational training activity, including … training as child-carers as part of the Government's welfare-to-work scheme."—[Official Report, 28 July 1997; Vol. 299, c. 64.] We shall deal with that issue in Committee.

The President of Board of Trade was careful to invite the commission to consider a wider definition of an hourly rate. She took the trouble to mention precisely what the CBI has called for, which is that the rate should include consideration of benefits in kind, such as board and lodging, meals, tips and pension contributions. I wonder whether she agrees with the CBI, which wants all new employees to be exempted from the minimum wage for the first six months of their employment. Does she agree with the Engineering Employers Federation, which wants all modern apprenticeships and all training to be exempted?

Mrs. Beckett

I think that the hon. Gentleman has been misinformed. That is not what the CBI said. If the hon. Gentleman looks at the full text of what Mr. Turner said, he will see that Mr. Turner was talking about training. I am not criticising the hon. Gentleman, because that is how what was said was reported in the press, but I understand that it is not what Mr. Turner said or what he meant to convey. He was talking about people in training.

Mr. Fallon

The President of the Board of Trade is a busy lady, but may I invite her to read the CBI's full evidence to the Low Pay Commission? I think that it puts the matter beyond all doubt.

There is one Minister who, for all his many faults and other characteristics, sees the dangers of an inflexible national rate, and the unemployment that may well result. Throughout the autumn, he argued for the power in the Bill to vary the rate according to region, according to sector and according to size of business. When his advice to the President of the Board of Trade was leaked to The Guardian, he hastily wrote to that newspaper to explain why such a power was needed. He wrote: The point I raised in correspondence … was a practical one, as to whether the draft Bill as worded allowed Ministers sufficient flexibility to refine policy in the light of experience of the actual functioning of the national minimum wage. He knows perfectly well that hundreds of thousands of jobs could be lost if an inflexible rate was insisted on, but that was not the view that was finally taken. We now learn of a furious dispute between the Minister without Portfolio and the Minister of State, Department of Trade and Industry.

Mr. Denis MacShane (Rotherham)

Will the hon. Gentleman give way?

Mr. Fallon

Let me finish. I quote from The Independent on Sunday, which carried the headline: Labour covers up minister's revolt … McCartney tried to resign". I have to give the House some rather sad news. The Prime Minister, we understand, would happily have accepted Mr. McCartney's resignation". That was "suggested at Westminster", not by Conservative Members. We look forward to the Minister's continuing to fight his battles.

Mr. MacShane

I am glad that the hon. Gentleman has given way at this point, when he was talking about resignation. Surely he could have mentioned at the beginning of his speech that, according to the Register of Members' Interests, he is a director of a nursery school organisation. He has remunerated employment as an adviser to nursing homes, which are among the worst employers in terms of low pay. If it comes to resignation, the hon. Gentleman has no right to stand at the Dispatch Box tonight.

Mr. Fallon

Interventions such as that are not worthy of comment.

I now come to the biggest deception visited on the debate by the Government. They have claimed, month after month, that business organisations are in favour of the Bill. Those who look at the evidence supplied to the Low Pay Commission—and we have looked at it—will see that not a single business organisation supports the principle of a statutory minimum wage. Indeed, most business organisations see it as entirely the wrong way in which to tackle poverty.

Mr. Allan Rogers (Rhondda)

On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Rotherham (Mr. MacShane) raised a point earlier, and I now wonder whether it would not have been appropriate for the Opposition spokesman to declare his interest at the beginning of his speech. As we know, nursing homes pay very low wages. I suggest that the hon. Member for Sevenoaks (Mr. Fallon) has a direct vested interest in the debate, and that he should have declared it.

Mr. Deputy Speaker

The hon. Member for Sevenoaks (Mr. Fallon) has acted entirely properly. This is not a matter for the Chair.

Mr. Fallon

I am sorry that Labour Members are not prepared to address the argument.

The Engineering Employers Federation says that it does not support the introduction of a national minimum wage because of its effect on differentials and the increased cost of subcontracted services.

Several hon. Members

rose—

Mr. Fallon

I have given way generously.

The CBI says: Business opposes a national minimum wage, which would undermine flexibility and is a poor way to tackle poverty. Indeed, the CBI makes it clear that a minimum wage could result in rising prices, business closures and unemployment.

Mr. MacShane

It is a disgrace.

Mr. Deputy Speaker

Order. The hon. Member for Rotherham (Mr. MacShane) cannot behave in that manner. He must give the hon. Member for Sevenoaks a hearing.

Mr. Sheerman

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. I have ruled on the previous point of order, so I hope that it is not on the same matter.

Mr. Sheerman

On a separate, but related matter, those of us who have been in the House for some time always understood that, before one made a speech, one declared one's interest, if there was a specific interest. Have the rules changed, so that Opposition Front-Bench spokesmen do not have to declare any interest?

Mr. Deputy Speaker

The declaration of interest rule is clear. That is what the Register of Members' Interests is for, and hon. Members know their responsibilities. I am saying that that is not a matter for the occupant of the Chair and that the speech of the hon. Member for Sevenoaks is perfectly in order.

Mr. Fallon

The CBI has made it clear that Even a modest minimum, set around the £3 mark, could lead to job losses unless wage differentials are squeezed. I pointed out to the President of the Board of Trade that the Federation of Small Businesses, too, is opposed to a statutory minimum wage in principle. It is no use the Minister for Small Firms, Trade and Industry—who is covering up the fact that she has failed to exempt small firms from the legislation—saying that she once attended a conference at which the federation said that it would like a sensibly negotiated minimum wage. It may have supported a sensibly negotiated minimum wage. The point is that it wanted to negotiate it and, in its manifesto, it remains opposed to a statutory minimum wage.

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche)

Will the hon. Gentleman give way?

Mr. Fallon

No. I have given way generously. I am taking up the time of the Minister of State.

Business is clear that jobs will be lost. The CBI is clear that even if—

Mrs. Roche

rose—

Mr. Fallon

I give way.

Mrs. Roche

I was privileged to speak at the annual meeting of the Federation of Small Businesses. It had a debate on the issue and, by a resounding majority, it passed a resolution in favour of a sensibly negotiated minimum wage. Why cannot the hon. Gentleman accept the democratic position? Why cannot he accept that fact, even if he does not like it?

Mr. Fallon

The hon. Lady has walked straight into the trap. Immediately after that vote by the federation, Mr. Bill Knox, chairman of its employment affairs committee, reminded delegates that the federation opposed the imposition of a statutory minimum wage, but advised that the motion as it stood was not a proposal for such. That deals with that point.

Business is clear that jobs will be lost. The CBI is clear that jobs will be lost. The North-East chamber of commerce says that 50 per cent. of employers will cut their work force, that 61 per cent. of employers believe that higher-paid employees will seek to maintain differentials and that 63 per cent. of employers want different rates by region.

In the KPMG study that it commissioned, the British Hospitality Association, which represents the important hotel and tourism industry, says that at a rate of £3.50 an hour, 32,000 jobs will be destroyed in the industry. The Department of Trade and Industry's report, which the President of the Board of Trade was rather coy about, and which was prepared by Mr. Paul Lanser, an official in her Department—

Mr. Rogers

On a point of order, Mr. Deputy Speaker. As you know, it is not for me to argue with the occupant of the Chair or to dispute your ruling in any way, but, as I understand it, an advocacy rule was passed in a resolution of the House on 6 November 1995. It extended an earlier resolution prohibiting hon. Members from engaging in advocacy on behalf of outside bodies or persons from whom they receive payment. The hon. Member for Sevenoaks (Mr. Fallon) is a director and heavily involved in the nursery

Mr. Deputy Speaker

Order. There is a Parliamentary Commissioner for Standards, and the House has decided that any complaint of the nature that the hon. Gentleman raises should be referred to him. I refer the hon. Gentleman to the Commissioner.

Mr. Fallon

A Department of Trade and Industry study, which was prepared by Mr. Paul Lanser, an official in that Department, estimates the employment losses from a minimum wage set at various rates. At a rate of £3.50, assuming a half restoration of differentials, the job loss was 974,000. There is no point in Ministers saying that that was before the election, because we are living now with their proposals, and that estimate is as valid now as it was then. If the Minister does not think that 1 million jobs are at risk, perhaps she could give us the latest estimate that has been provided for her.

Mr. Peter Bradley (The Wrekin)

Will the hon. Gentleman give way?

Mr. Fallon

No. I am already eating into the Minister's time.

My right hon. Friend the Member for Wokingham (Mr. Redwood) has already said how the Deputy Prime Minister admitted that there would be some shake-out. He said: any silly fool knew that". Those words remain true.

Several hon. Members

rose—

Mr. Fallon

I am not giving way again.

The Prime Minister has commented on the potential job losses from the minimum wage. He wrapped it up in rather weasel language. I think that when he wrote to The Independent, he was courting the left. He stated: I have not accepted that the minimum wage will cost jobs … I have accepted that econometric models indicate a potential jobs impact". That is exactly the point.

Several hon. Members

rose—

Mr. Deputy Speaker

Order. The House must come to order. The hon. Gentleman does not intend to give way.

Mr. Fallon

It is no comfort to those who will be thrown out of work by the Bill to be told that an econometric model has been measuring the potential impact on their jobs. It is no comfort to those whose low-skilled jobs will disappear, and such jobs are often the first to start up the ladder. Through the Bill, the Government are kicking that ladder away for those who are least able to compete—the unskilled, the young, the elderly, the most vulnerable in our society. The Bill will be deeply damaging.

The Chancellor accepts that the Bill will increase inflation; add to public spending; hit school and hospital budgets; damage competitiveness; hammer small businesses, which are exempted in other countries from the minimum wage; and discourage people from adding to their training and seeking higher qualifications. Above all, it will cost jobs. That is why we oppose it. Even if business had negotiated the amount of the minimum wage and if there were some flexibility for small businesses, which there is not, and regional variations, which there are not, we would still oppose this attack on jobs.

We warn the Government that if unemployment rises—and we think that it will as a direct consequence of the Bill—they will bear the responsibility for pricing the most vulnerable people in our society out of jobs and destroying their lifeline to a better future. That is why we oppose the Bill.

9.44 pm

The Minister of State, Department of Trade and Industry (Mr. Ian McCartney)

The hon. Member for Sevenoaks (Mr. Fallon) has eaten considerably into the time available for my speech. Consequently, I intend to put the Government's case forcefully without interventions from him or from other Opposition Members.

However, the hon. Gentleman paid a very eloquent tribute to the maiden speech of my hon. Friend the Member for Bristol, North-West (Dr. Naysmith), for which I thank him. My hon. Friend not only made a very thoughtful speech but paid tribute to his predecessor, whom I knew and occasionally disagreed with. I welcome that tribute. I am also absolutely sure that my hon. Friend will be a significant player in the House on behalf of his constituents and on behalf of business in Bristol, North-West.

My hon. Friend the Member for Paisley, South (Mr. Alexander) showed his mettle in a very difficult by-election. He paid tribute to his predecessor who was lost in tragic circumstances. I am absolutely sure that my hon. Friend will make his mark in this place and will prove himself one of the best representatives that Scotland has ever sent to the House.

My hon. Friend the Member for Amber Valley (Judy Mallaber) was, as usual, eloquent and knowledgeable on minimum wage issues. She shared her original views on the issue and told the House how she has contributed over the past few years to the minimum wage debate. I look forward to working with her during the Bill's passage.

My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry), as usual, made an eloquent and well-argued case. He explained why employer after employer in the British hospitality industry supports the principle of a minimum wage.

My hon. Friend the Member for Burnley (Mr. Pike) clearly explained how vulnerable workers were damaged when the previous Tory Government withdrew basic rights to minimum wages by abolishing wages councils.

My hon. Friend the Member for Gravesham (Mr. Pond) has for more than two decades been one of those who have kept the flag flying on behalf of tens of thousands of low-paid workers in Britain. I look forward to the announcement of the Scrooge of the Year.

My hon. Friend the Member for Birmingham, Sparkbrook and Small Heath (Mr. Godsiff) explained again just what happens in an inner-city constituency after 18 years of Tory Government hammering away at low-paid workers, isolating them, and refusing both to accept the necessity of minimum wages and to do something about poverty pay.

My hon. Friend the Member for Falmouth and Camborne (Ms Atherton) spoke eloquently about problems of poverty in Britain's lowest paid constituency. I look forward to working with her in the campaign.

My hon. Friend the Member for Brighton, Pavilion (Mr. Lepper) spoke of business's support for the minimum wage in his constituency.

I shall now deal with the speech of the hon. Member for Sevenoaks and his remarks about me. May I point out that the only hon. Member I know of who quit politics because he could not reach agreement with his leader is the former Secretary of State for Wales? He is the quitter, not me. He is also the loser. He fought for the leadership of his party, and he lost. He fought to become Leader of the Opposition and lost. He is the loser, not me. As for visiting the Prime Minister at No. 10 Downing street, he always left his Prime Minister without agreement. When I leave my Prime Minister, I always have an agreement.

Mr. Redwood

I am grateful, Mr. Deputy Speaker.

Mr. McCartney

I am not giving way. The right hon. Gentleman will have plenty of time to speak in January, if he wants to join us in the Bill's Committee stage.

This has been one of the happiest days of my life—[Interruption.] Hon. Members may laugh, but for almost three decades—

Mr. James Gray (North Wiltshire)

On a point of order, Mr. Deputy Speaker. Is it in order for the Minister at the Dispatch Box to give way one moment to an Opposition Front Bencher and then—the next moment, under instructions from the Secretary of State—to turn round and say, "No, I don't give way after all"?

Mr. Deputy Speaker

That is a matter for the hon. Gentleman who has the Floor, not for the Chair.

Mr. McCartney

Perhaps I can help the hon. Gentleman, who is a new Member. When one is only 5 ft tall, it is difficult for people to know whether you are standing or sitting. For the record, I am standing.

I want to place on the record my thanks to those who worked with me in opposition in formulating this policy, campaigning in the country and managing the fat-cat campaign, which is probably one of the most successful campaigns in British political history. There was a mammoth consultation with business—more than 200 individual meetings and discussions—in advance of our publishing proposals for the Low Pay Commission and the national minimum wage. That culminated in a Labour victory on 1 May.

Today's debate has been characterised, as usual, by the Tory suspects in the low-pay brigade. They are smug, self-centred and complacent in the extreme. I want to talk about the real-life issues of low pay. Nearly 1 million of our fellow citizens earn less than £2.50 an hour, and 750,000 families receive in-work benefits such as family credit. They have a full-time job all week and still cannot afford to live. Eighteen years of Tory rule has left the gap between the poor and rich at its largest since the 1880s.

I shall return to the plight of low-paid workers and their families in a moment, but I want to allow myself a little cheer. As a former low-paid worker, I never dreamt that I would ever be a Member of Parliament, let alone a Minister standing at this Dispatch Box replying to an historic debate that would lead to Britain's first truly national minimum wage. Many low-paid workers in Britain are unsung heroes every day of the week. They seek to gain justice.

I know what happens. I lost count of the number of jobs I lost or from which I was sacked. I used to be known as DCM McCartney—don't come back on Monday. Only last week, I was at a seminar on the national minimum wage and there was an employer in the audience who had sacked me. He was there to support the introduction of a minimum wage. That is real progress. That is new Labour and a new minimum wage.

Low-paid workers never have a voice; they are powerless and isolated. Throughout this debate, there has not been a clear understanding of what it means to be low paid. Some people work from home and have caring responsibilities, but are exploited for having those responsibilities. The low paid are fearful of speaking out and fear being given the sack. They are frightened of not being able to pay their own way or provide for their children—they come first and the parents go without.

We do not have to tell low-paid workers about low pay because they live it seven days a week, 365 days a year, year in, year out.

Opposition Members never acknowledge that some low-paid workers have more than one job in a day. Some women work early morning, afternoon and evening because they earn only £1 an hour. To help their family out of poverty, they work hour after hour in undignified circumstances. With a national minimum wage, the Labour Government are coming to the rescue of those women.

The low paid are excluded from the mainstream. They cannot afford school trips for their kids, family outings or days out and sometimes cannot afford a present for their children on their birthday. That is the reality—that is what it is about. This is about feeling valued and having personal dignity when an employer is treating you no better than a dog. We want to introduce respect and fairness. [Interruption.]

Mr. Deputy Speaker

Order. We cannot have prolonged conversations in the House while someone is addressing hon. Members. The House must come to order.

Mr. McCartney

I do not expect to receive respect from Opposition Members, but I expect them to respect the low paid.

The minimum wage is vital to ending the scandal of poverty pay; it is not only social justice, but it makes good economic sense. My right hon. Friend the President of the Board of Trade set out eloquently the economic case for the introduction of a national minimum wage.

It has been said that setting up the Low Pay Commission without consultation was arrogant. The policy was in our manifesto and was overwhelmingly endorsed by the British people. The commission's members were selected by the Nolan public appointments procedure; advertisements were placed in the national press. They have been appointed for their knowledge, skills, business backgrounds and understanding of labour market activity. I strongly object to Opposition Members impugning the character of many of those people who have given their time to the Low Pay Commission for the public good, at the expense of their own time and companies to ensure the successful launch of a national minimum wage.

The commission is an independent organisation which will report on the initial rate for the minimum wage; it will consider exemptions for young people who are in training, the methods of calculation, the economic circumstances at the time and the impact on small and medium-sized businesses.

We have been consulting nationwide and have received more than 500 responses, which are overwhelmingly in favour of the principle of a national minimum wage. When the commission has concluded its report, we shall report back to the House, which will debate the regulations. This Government are happy not only to consult, but to carry out their election promises at the earliest opportunity.

Mr. Redwood

Will the hon. Gentleman give way?

Mr. McCartney

No, I shall not give way.

After 18 years of Tory control in this country, low pay is everywhere—in rural areas, in urban areas, in the north, south, east and west. That is the Tories' legacy. In London, 87,000 people earn less than £2.50 an hour. In the south-west, 87,000 people earn less than £2.50 an hour. In London, 55,000 families require in-work benefits at the end of the week. The figure is the same for the south-west. It is not regional rates that we need, but the quick introduction of a national minimum wage to help end poverty in the workplace.

The hon. Member for Sevenoaks said that there was no support among business for the minimum wagep—[Interruption.]

Mr. Deputy Speaker

Order.

Mr. McCartney

It is okay—I am standing.

The hon. Member for Sevenoaks kept trying to say that the Federation of Small Businesses did not vote in support of the minimum wage, but I am pleased to give him the result of the ballot. There were 23,757 in favour of the motion; there were 18,473 against—a majority of 57 per cent. over 43 per cent. The problem is that Opposition Members are not good at democracy and cannot accept the decision.

Yesterday, I received a letter from the head of Bass, which stated: Bass supports the principle of a minimum wage". It is interesting to note why it says that. It has admitted that in certain parts of its business it has a staff turnover of 100 per cent. a year. That means that 50,000 people a year leave the company's employment. The purpose of the national minimum wage is to ensure quality investment in training and education and the ability for people to earn a good wage so that they can remain in employment.

The Rank organisation wrote to me yesterday and said: Rank are responsible employers and, in principle, are not opposed to a national minimum wage". Tesco wrote to me this morning and said: Tesco has stated for several years that it does not see any problems with a National Minimum Wage. As an example of good employment, employers and trade unions can work together in a modern, progressive and evolving way to further the interests of staff and shareholders.

There is one company that has not written: Asda, the company of the hon. Member for Tunbridge Wells (Mr. Norman). It is no wonder, as he is the man who says that the minimum wage will cost 350,000 jobs. As chairman of Asda, last year he received £2.2 million, made up of a £551,000 salary, plus performance-related bonuses. The Asda group's pre-tax profit was just over £400 million. There is hypocrisy and double standards. Business survey after business survey supports the minimum wage.

The right hon. Member for Wokingham is isolated. Few businesses support him; they have all deserted the Tories. Businesses want to get on and succeed, and to produce quality goods and services. They are sick and tired of being undercut by the cowboys. I ask my hon. Friends to go into the Lobby tonight on behalf on low-paid workers and to make sure that the Tories do not get away for even another hour with the concept that employers should pay people £1 an hour. My hon. Friends should support the Bill.

Question put, That the Bill be now read a Second time:—

The House divided: Ayes 387, Noes 145.

Division No. 120]	[10 pm
AYES
Abbott, Ms Diane	Clwyd, Ann
Adams, Mrs Irene (Paisley N)	Coaker, Vernon
Ainger, Nick	Coffey, Ms Ann
Ainsworth, Robert (Cov'try NE)	Cohen, Harry
Alexander, Douglas	Coleman, Iain
Allan, Richard	Colman, Tony
Anderson, Donald (Swansea E)	Connarty, Michael
Anderson, Janet (Rossendale)	Cook, Frank (Stockton N)
Armstrong, Ms Hilary	Cooper, Yvette
Ashdown, Rt Hon Paddy	Corbett, Robin
Ashton, Joe	Corbyn, Jeremy
Atherton, Ms Candy	Corston, Ms Jean
Atkins, Charlotte	Cotter, Brian
Austin, John	Cousins, Jim
Banks, Tony	Cranston, Ross
Barnes, Harry	Crausby, David
Battle, John	Cryer, John (Hornchurch)
Bayley, Hugh	Cummings, John
Beard, Nigel	Cunliffe, Lawrence
Beckett, Rt Hon Mrs Margaret	Cunningham, Rt Hon Dr John
Begg, Miss Anne	(Copeland)
Benn, Rt Hon Tony	Cunningham, Jim (Cov'try S)
Bennett, Andrew F	Cunningham, Ms Roseanna
Benton, Joe	(Perth)
Bermingham, Gerald	Dalyell, Tam
Best, Harold	Darling, Rt Hon Alistair
Betts, Clive	Darvill, Keith
Blears, Ms Hazel	Davey, Edward (Kingston)
Blizzard, Bob	Davey, Valerie (Bristol W)
Blunkett, Rt Hon David	Davidson, Ian
Boateng, Paul	Davies, Rt Hon Denzil (Llanelli)
Borrow, David	Davies, Geraint (Croydon C)
Bradley, Peter (The Wrekin)	Davies, Rt Hon Ron (Caerphilly)
Bradshaw, Ben	Davis, Terry (B'ham Hodge H)
Brake, Tom	Dean, Mrs Janet
Brown, Rt Hon Gordon	Dewar, Rt Hon Donald
(Dunfermline E)	Dismore, Andrew
Brown, Rt Hon Nick (Newcastle E)	Dobbin, Jim
Brown, Russell (Dumfries)	Donohoe, Brian H
Browne, Desmond	Doran, Frank
Buck, Ms Karen	Dowd, Jim
Burgon, Colin	Drew, David
Byers, Stephen	Drown, Ms Julia
Caborn, Richard	Dunwoody, Mrs Gwyneth
Campbell, Alan (Tynemouth)	Edwards, Huw
Campbell, Mrs Anne (C'bridge)	Efford, Clive
Campbell, Menzies (NE Fife)	Ellman, Mrs Louise
Campbell, Ronnie (Blyth V)	Ennis, Jeff
Campbell-Savours, Dale	Etherington, Bill
Canavan, Dennis	Ewing, Mrs Margaret
Cann, Jamie	Fearn, Ronnie
Caplin, Ivor	Field, Rt Hon Frank
Casale, Roger	Fisher, Mark
Caton, Martin	Fitzpatrick, Jim
Cawsey, Ian	Fitzsimons, Lorna
Chapman, Ben (Wirral S)	Follett, Barbara
Chaytor, David	Foster, Rt Hon Derek
Chidgey, David	Foster, Michael Jabez (Hastings)
Chisholm, Malcolm	Foster, Michael J (Worcester)
Clapham, Michael	Foulkes, George
Clark, Rt Hon Dr David (S Shields)	Fyfe, Maria
Clark, Dr Lynda	Galbraith, Sam
(Edinburgh Pentlands)	Galloway, George
Clark, Paul (Gillingham)	Gapes, Mike
Clarke, Charles (Norwich S)	Gardiner, Barry
Clarke, Eric (Midlothian)	George, Andrew (St Ives)
Clarke, Rt Hon Tom (Coatbridge)	George, Bruce (Walsall S)
Clelland, David	Gerrard, Neil

Gibson, Dr Ian	Lawrence, Ms Jackie
Godman, Norman A	Laxton, Bob
Godsiff, Roger	Lepper, David
Goggins, Paul	Leslie, Christopher
Golding, Mrs Llin	Lewis, Ivan (Bury S)
Gordon, Mrs Eileen	Lewis, Terry (Worsley)
Gorrie, Donald	Liddell, Mrs Helen
Graham, Thomas	Linton, Martin
Grant, Bernie	Livingstone, Ken
Griffiths, Jane (Reading E)	Livsey, Richard
Griffiths, Nigel (Edinburgh S)	Lloyd, Tony (Manchester C)
Griffiths, Win (Bridgend)	Llwyd, Elfyn
Grocott, Bruce	Lock, David
Grogan, John	Love, Andrew
Gunnell, John	McAllion, John
Hain, Peter	McAvoy, Thomas
Hall, Mike (Weaver Vale)	McCabe, Steve
Hall, Patrick (Bedford)	McCafferty, Ms Chris
Hamilton, Fabian (Leeds NE)	McCartney, Ian (Makerfield)
Hanson, David	McCartney, Robert (N Down)
Harman, Rt Hon Ms Harriet	McDonagh, Siobhain
Harris, Dr Evan	Macdonald, Calum
Heal, Mrs Sylvia	McDonnell, John
Healey, John	McFall, John
Heath, David (Somerton & Frome)	McGuire, Mrs Anne
Henderson, Doug (Newcastle N)	McIsaac, Shona
Hepburn, Stephen	McKenna, Mrs Rosemary
Heppell, John	Mackinlay, Andrew
Hesford, Stephen	McNulty, Tony
Hewitt, Ms Patricia	MacShane, Denis
Hill, Keith	Mactaggart, Fiona
Hinchliffe, David	McWalter, Tony
Hodge, Ms Margaret	McWilliam, John
Hoey, Kate	Mahon, Mrs Alice
Home Robertson, John	Mallaber, Judy
Hoon, Geoffrey	Mandelson, Peter
Hope, Phil	Marek, Dr John
Howarth, Alan (Newport E)	Marsden, Gordon (Blackpool S)
Howarth, George (Knowsley N)	Marshall, David (Shettleston)
Howells, Dr Kim	Marshall, Jim (Leicester S)
Hoyle, Lindsay	Marshall-Andrews, Robert
Hughes, Ms Beverley (Stretford)	Martlew, Eric
Hughes, Kevin (Doncaster N)	Maxton, John
Humble, Mrs Joan	Meale, Alan
Hurst, Alan	Merron, Gillian
Hutton, John	Michie, Bill (Shef'ld Heeley)
Iddon, Dr Brian	Michie, Mrs Ray (Argyll & Bute)
Illsley, Eric	Milburn, Alan
Jackson, Ms Glenda (Hampstead)	Miller, Andrew
Jackson, Helen (Hillsborough)	Mitchell, Austin
Jenkins, Brian	Moffatt, Laura
Johnson, Alan (Hull W & Hessle)	Moran, Ms Margaret
Johnson, Miss Melanie	Morgan, Alasdair (Galloway)
(Welwyn Hatfield)	Morgan, Ms Julie (Cardiff N)
Jones, Barry (Alyn & Deeside)	Morgan, Rhodri (Cardiff W)
Jones, Mrs Fiona (Newark)	Morley, Elliot
Jones, Helen (Warrington N)	Morris, Ms Estelle (B'ham Yardley)
Jones, Ms Jenny	Morris, Rt Hon John (Aberavon)
(Wolverh'ton SW)	Mountford, Kali
Jones, Jon Owen (Cardiff C)	Mudie, George
Jones, Dr Lynne (Selly Oak)	Mullin, Chris
Jones, Martyn (Clwyd S)	Murphy, Denis (Wansbeck)
Jowell, Ms Tessa	Naysmfth, Dr Doug
Keen, Alan (Feltham & Heston)	Norris, Dan
Keen, Ann (Brentford & Isleworth)	Oaten, Mark
Kelly, Ms Ruth	O'Brien, Bill (Normanton)
Kemp, Fraser	O'Hara, Eddie
Kennedy, Jane (Wavertree)	Olner, Bill
Khabra, Piara S	O'Neill, Martin
Kidney, David	Öpik, Lembit
Kilfoyle, Peter	Osborne, Ms Sandra
King, Andy (Rugby & Kenilworth)	Palmer, Dr Nick
Kingham, Ms Tess	Pearson, Ian
Kirkwood, Archy	Pendry, Tom
Kumar, Dr Ashok	Perham, Ms Linda
Ladyman, Dr Stephen	Pickthall, Colin

Pike, Peter L	Steinberg, Gerry
Plaskitt, James	Stevenson, George
Pond, Chris	Stewart, David (Inverness E)
Pope, Greg	Stewart, Ian (Eccles)
Pound, Stephen	Stoate, Dr Howard
Powell, Sir Raymond	Stringer, Graham
Prentice, Ms Bridget (Lewisham E)	Stuart, Ms Gisela
Prentice, Gordon (Pendle)	Stunell, Andrew
Prescott, Rt Hon John	Sutcliffe, Gerry
Primarolo, Dawn	Swinney, John
Prosser, Gwyn	Taylor, Rt Hon Mrs Ann
Purchase, Ken	(Dewsbury)
Quin, Ms Joyce	Taylor, Ms Dari (Stockton S)
Quinn, Lawrie	Taylor, David (NW Leics)
Radice, Giles	Thomas, Gareth (Clwyd W)
Rammell, Bill	Thomas, Gareth R (Harrow W)
Rapson, Syd	Tipping, Paddy
Raynsford, Nick	Todd, Mark
Reid, Dr John (Hamilton N)	Tonge, Dr Jenny
Rendel, David	Touhig, Don
Robertson, Rt Hon George	Trickett, Jon
(Hamilton S)	Turner, Dennis (Wolverh'ton SE)
Roche, Mrs Barbara	Turner, Desmond (Kemptown)
Rogers, Allan	Turner, Dr George (NW Norfolk)
Rooker, Jeff	Twigg, Derek (Halton)
Rooney, Terry	Twigg, Stephen (Enfield)
Ross, Ernie (Dundee W)	Tyler, Paul
Rowlands, Ted	Vaz, Keith
Roy, Frank	Wallace, James
	Walley, Ms Joan
Ruane, Chris	Ward, Ms Claire
Ruddock, Ms Joan	Wareing, Robert N
Russell, Bob (Colchester)	Watts, David
Russell, Ms Christine (Chester)	Webb, Steve
Savidge, Malcolm	Welsh, Andrew
Sawford, Phil	White, Brian
Sedgemore, Brian	Wicks, Malcolm
Shaw, Jonathan	Wigley, Rt Hon Dafydd
Sheerman, Barry	Williams, Rt Hon Alan
Sheldon, Rt Hon Robert	(Swansea W)
Shipley, Ms Debra	Williams, Alan W (E Carmarthen)
Simpson, Alan (Nottingham S)	Williams, Mrs Betty (Conwy)
Skinner, Dennis	Willis, Phil
Smith, Angela (Basildon)	Wilson, Brian
Smith, Rt Hon Chris (Islington S)	Winnick, David
Smith, Miss Geraldine	Winterton, Ms Rosie (Doncaster C)
(Morecambe & Lunesdale)	Wise, Audrey
Smith, Jacqui (Redditch)	Wood, Mike
Smith, John (Glamorgan)	Woolas, Phil
Smith, Llew (Blaenau Gwent)	Worthington, Tony
Smith, Sir Robert (W Ab'd'ns)	Wray, James
Smyth, Rev Martin (Belfast S)	Wright, Anthony D (Gt Yarmouth)
Snape, Peter	Wright, Dr Tony (Cannock)
Soley, Clive
Spellar, John	Tellers for the Ayes:
Squire, Ms Rachel	Mr. David Jamieson and
Starkey, Dr Phyllis	Mr. Graham Allen.

NOES
Ainsworth, Peter (E Surrey)	Bruce, Ian (S Dorset)
Amess, David	Burns, Simon
Ancram, Rt Hon Michael	Butterfill, John
Arbuthnot, James	Cash, William
Atkinson, David (Bour'mth E)	Chapman, Sir Sydney
Atkinson, Peter (Hexham)	(Chipping Barnet)
Baldry, Tony	Chope, Christopher
Bercow, John	Clappison, James
Beresford, Sir Paul	Clark, Rt Hon Alan (Kensington)
Blunt, Crispin	Clarke, Rt Hon Kenneth
Body, Sir Richard	(Rushcliffe)
Boswell, Tim	Clifton-Brown, Geoffrey
Bottomley, Peter (Worthing W)	Collins, Tim
Brady, Graham	Colvin, Michael
Brazier, Julian	Curry, Rt Hon David
Brooke, Rt Hon Peter	Davies, Quentin (Grantham)
Browning, Mrs Angela	Davis, Rt Hon David (Haltemprice)

Day, Stephen	Malins, Humfrey
Dorrell, Rt Hon Stephen	Maples, John
Duncan, Alan	Mates, Michael
Duncan Smith, Iain	Maude, Rt Hon Francis
Emery, Rt Hon Sir Peter	Mawhinney, Rt Hon Sir Brian
Evans, Nigel	May, Mrs Theresa
Fabricant, Michael	Moss, Malcolm
Fallon, Michael	Nicholls, Patrick
Flight, Howard	Norman, Archie
Forth, Rt Hon Eric	Ottaway, Richard
Fowler, Rt Hon Sir Norman	Page, Richard
Fox, Dr Liam	Paice, James
Fraser, Christopher	Paterson, Owen
Gale, Roger	Prior, David
Gamier, Edward	Randall, John
Gibb, Nick	Redwood, Rt Hon John
Gill, Christopher	Robathan, Andrew
Gillan, Mrs Cheryl	Robertson, Laurence (Tewk'b'ry)
Goodlad, Rt Hon Sir Alastair	Roe, Mrs Marion (Broxbourne)
Gorman, Mrs Teresa	Rowe, Andrew (Faversham)
Gray, James	Ruffley, David
Green, Damian	St Aubyn, Nick
Greenway, John	Sayeed, Jonathan
Grieve, Dominic	Shephard, Rt Hon Mrs Gillian
Hague, Rt Hon William	Shepherd, Richard
Hamilton, Rt Hon Sir Archie	Simpson, Keith (Mid-Norfolk)
Hammond, Philip	Soames, Nicholas
Hawkins, Nick	Spelman, Mrs Caroline
Hayes, John	Spicer, Sir Michael
Heald, Oliver	Spring, Richard
Heathcoat-Amory, Rt Hon David	Stanley, Rt Hon Sir John
Hogg, Rt Hon Douglas	Steen, Anthony
Horam, John	Streeter, Gary
Howarth, Gerald (Aldershot)	Swayne, Desmond
Jack, Rt Hon Michael	Taylor, Ian (Esher & Walton)
Jackson, Robert (Wantage)	Taylor, Sir Teddy
Jenkin, Bernard	Townend, John
Johnson Smith,	Tredinnick, David
Rt Hon Sir Geoffrey	Trend, Michael
Key, Robert	Tyrie, Andrew
King, Rt Hon Tom (Bridgwater)	Walter, Robert
Kirkbride, Miss Julie	Wardle, Charles
Laing, Mrs Eleanor	Waterson, Nigel
Lait, Mrs Jacqui	Wells, Bowen
Lansley, Andrew	Whitney, Sir Raymond
Leigh, Edward	Whittingdale, John
Letwin, Oliver	Widdecombe, Rt Hon Miss Ann
Lewis, Dr Julian (New Forest E)	Wilkinson, John
Lidington, David	Willetts, David
Lilley, Rt Hon Peter	Wilshire, David
Lloyd, Rt Hon Sir Peter (Fareham)	Winterton, Mrs Ann (Congleton)
Loughton, Tim	Winterton, Nicholas (Macclesfield)
Luff, Peter	Woodward, Shaun
Lyell, Rt Hon Sir Nicholas	Yeo, Tim
MacGregor, Rt Hon John	Young, Rt Hon Sir George
MacKay, Andrew
Maclean, Rt Hon David	Tellers for the Noes:
McLoughlin, Patrick	Mr. John M. Taylor and Mr. James Cran.
Madel, Sir David

Question accordingly agreed to.

Bill read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).