Welfare-to-work Strategy (Hansard, 10 July 1997)

§ 1. Mr. David Taylor
To ask the Chancellor of the Exchequer if he will make a statement on the role of a minimum wage in his welfare-to-work strategy. [6177]

§ The Chancellor of the Exchequer (Mr. Gordon Brown)
As my Budget made clear, there are three elements of our welfare-to-work strategy and our reform of the welfare state: first, encouraging the long-term unemployed into work; secondly, providing opportunities for men and women to gain skills; and, thirdly, making work pay. Set at a sensible level, a minimum wage is an essential element of making work pay. It ensures that family credit paid by the taxpayer goes to low-paid employees who need it, not to low-paying employers who do not.

§ Mr. Taylor
Is my right hon. Friend aware that, in former mining areas such as mine, the void left by thousands of lost jobs has often been filled by the arrival of firms paying poverty wages? Does he share my view that the fact that nearly 4,000 people in my area are paid less than £3 an hour is an indictment of the party of exploitation—the Conservative party? Does he agree that, in a fair society, the setting of a decent national minimum wage must be the cornerstone of any welfare-to-work strategy?

§ Mr. Brown
My hon. Friend is absolutely right about the need for a decent minimum wage. Under the last Government, hundreds of thousands of working men and women were earning less than £2.50 an hour. Many were earning less than £2 an hour, and some less than £1.50 an hour. It is precisely to sort out some of those problems that the Low Pay Commission has been set up, and will report in due course.
It is interesting that, increasingly, large numbers of employers are coming to support the minimum wage. The only group in society that appears to be completely against it is the Conservative party.

§ Mr. Lilley
Is the Chancellor aware that, however sceptical we may be about his welfare-to-work proposals, we hope that they will be at least as successful in getting people back to work as our measures, which have reduced youth unemployment by 100,000 over the past four years?
1054 If, however, the Chancellor believes that reducing the cost of employment through job subsidies will persuade employers to increase the number of people they employ, does he also accept that the cost of employing people through a statutory minimum wage or the importation of European social costs will reduce the number of people employed? As the latter measures apply to millions of people and are permanent—unlike the Chancellor's windfall tax, which is temporary and applies to only 100,000 people—does the right hon. Gentleman accept that the net effect of his measures is work to welfare?

§ Mr. Brown
It is interesting that, in the shadow Chancellor's first question—I welcome him to his post, and to Treasury questions—he should mention Europe, and reveal that the position of Conservative Treasury spokesmen in regard to Europe has changed fundamentally since his appointment. Let me, however, answer directly his question about welfare to work. We have had to introduce our proposals not because the last Government succeeded but because they failed. At present, 20 per cent. of households have no wage earner. It is precisely to deal with such problems that we are introducing the welfare-to-work strategy.
As for the minimum wage, I should have thought that the Conservative party's period of reflection— which may be long indeed—would allow its members to look at what is happening around the world. America has a minimum wage; our European competitors have a minimum wage; Japan has a minimum wage. Every country that is ahead of us in the world prosperity league has a minimum wage. When will the Conservatives realise that, when Winston Churchill and Harold Macmillan supported a minimum wage, they were in the mainstream of society? The present Conservative party is on the fringes.

§ Mr. Sheerman
When my right hon. Friend considers his welfare-to-work proposals, which were tremendously popular at the general election where we achieved a real mandate to deliver them, will he consider the construction industry, not only in terms of the impact of the minimum wage, which can be nothing but healthy, but in respect of the way in which the previous Government allowed that industry to get away with bogus self-employment which cost the Exchequer millions of pounds that could have been used for welfare to work to provide decent training and get young people back into work?

§ Mr. Brown
I am grateful to my hon. Friend. First, we shall deal harshly with tax avoidance in any sector of the economy. That is why we have set up a review within the Treasury to examine the very issues that he has raised. [HON. MEMBERS: "Oh."] It is interesting that the Conservative party now does not want to deal even with tax avoidance. I should have thought that the Conservatives would support us at least in those efforts.
We have already had a number of offers from construction employers who want to be part of the welfare-to-work strategy and are offering training places on the programme. That shows, once again, that British employers are willing to support our new welfare-to-work programme. I believe that it will enjoy a higher status as a result.