HC Deb 05 June 1997 vol 295 cc545-6
16. Mr. Bennett

To ask the President of the Board of Trade what assessment she has made about the impact of low wages on the competitiveness of British industry. [670]

Mr. Ian McCartney

The introduction of the national minimum wage will encourage industry to compete on the quality of the goods and services they provide rather than by a downward spiral of low pay. By raising morale, it will lead to greater employee commitment and reduced absenteeism, staff turnover and recurring training costs.

Mr. Bennett

Does my hon. Friend share my concern for a constituent who is faced with the sack because he would not work two weekends of overtime? Due to his low pay, had he worked those two weekends, he would have lost his entitlement to family credit, housing benefit and council tax benefit. Is not that appalling? Would not it be far better to force employers to pay a decent wage so that people could be floated off such benefits?

Mr. McCartney

My hon. Friend describes exactly why the in-work benefit system has become a grotesque subsidy to employers instead of assistance to low-paid workers and their employment opportunities. For my hon. Friend's constituent, the subsidy means that the employer does not pay to a level on the sure-or-not basis of knowing that the state will pick up his or her labour costs. I reassure my hon. Friend that, from day one of employment, wherever his constituents work, they will be entitled to a national minimum wage.

Mr. Streeter

I genuinely understand the concerns about low pay, but is not the Minister aware that in the west country especially there are many small businesses, particularly hotels and guest houses, where the owners make a very modest profit and could not afford the hourly rates of pay that the low pay commission is talking about? What will the Minister say to the thousands of young people in the west country who lose their jobs when the Labour Government introduce a minimum wage?

Mr. McCartney

The low pay commission is not discussing any rates, and it has not yet met or even been established—but watch this space. Increasingly, small business organisations support in principle the concept of a minimum wage. Many companies in the catering industry, such as Whitbread, now publicly support the concept of a national minimum wage in principle. Across all sectors of the economy, survey after survey shows support from employers for the minimum wage. The only people who oppose the minimum wage are Tory Members and their fat cat supporters.