HC Deb 09 March 1998 vol 308 cc169-91

'. The Chancellor of the Exchequer, acting in consultation with the Secretary of State, shall include in the Financial Statement and Budget Report an assessment of the cost of the national minimum wage to Her Majesty's Government in respect of employment costs in the public sector.'.—[Mr. Boswell.]

Brought up, and read the First time.

Mr. Boswell

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

It is interesting that we are now making excellent progress, and coming to the end of the new clauses. It is always right to end with a bang not a whimper, and this is an important new clause.

The concerns expressed in new clause 14 may seem some way from those that have just been expressed about agriculture, because the clause provides for something different. It provides for something topical, which I would loosely call seasonal. It imposes a duty on the Chancellor of the Exchequer. Some of us like the idea of imposing a duty on him slightly more than that of his doing so on us, as I fear he may do shortly.

The Minister need not feel left out, because the duty is to be performed in consultation with the Secretary of State. It is to include in the "Financial Statement and Budget Report", or Red Book, as we used to call it before it unaccountably changed colour, an assessment of the cost of the national minimum wage to Her Majesty's Government in respect of employment costs in the public sector. That is obviously important for the overall implications of the minimum wage.

It was clear when we at last sighted the Government's evidence to the Low Pay Commission, two thirds of the way through the Committee, that they were also somewhat exercised about the matter. The extent of their concern is the only logical explanation for the fact that, while 600 other organisations had got round to doing their submissions to the commission in the six months after its establishment last July, the Government were unable to. Like the apostle Paul, the Government regarded themselves as born out of due time, but in the end they got their submission in.

I defer to my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), in his detailed knowledge of Whitehall-speak, of which he has even more experience than me, but it is possible by looking at the Low Pay Commission to see storm cones being hoisted, expressions of distress being rehearsed and very clear messages being transmitted in the most opaque Whitehall language.

If I were the chairman of the Low Pay Commission, who is no doubt doing an excellent job—and, even at this hour of the morning, I am glad that it is he and not I who has that task—I should be able to pick up those signals which say, "Whatever the Low Pay Commission recommends, please do not set a rate too high." The whole thing depends on a moderate rate being set for the national minimum wage. That will, of course, disappoint some Labour Members, but too bad—the interests of the economy demand that the rate should not go too high.

Mr. Hammond

May I remind my hon. Friend that, with the financial memorandum that appeared with the original draft of the Bill that was considered in Standing Committee, the Government spoke of setting a sensible rate, which would have no effect on the level of employment? Would he care to comment on that?

Mr. Boswell

Yes—the short answer is, I do not think that that was a starter then, and it certainly is not now. It is virtually impossible for the national minimum wage legislation to do something without doing some harm.

That fact emerges clearly from the Government's evidence to the commission in relation to what is described as the "Exchequer implications". That category is a wide one, and the implications are set out extensively on pages 19 and following of the Government's evidence, but I shall start by quoting the reference at the beginning to their concern. Their evidence states: However, for a given inflation target and assuming the underlying productive potential of the economy remains unchanged, then there will be an offset from reductions in the tax take elsewhere. That is understandable.

If the minimum wage were set at a level which resulted in a fall in productive potential, then we would expect an adverse effect on net tax revenues. That is a storm cone—one that is hoisted even more explicitly in paragraph 97, which is the final paragraph dealing with the impact on the Exchequer. It states: If the national minimum wage is sensibly set at a level where real GDP and employment are left unchanged, then the net effect on the public sector borrowing requirement is likely to be relatively small. At higher levels of the minimum wage, the potential for adverse effects on tax revenues and public expenditure increases, with the risk of an adverse effect on the PSBR.

Mr. Ian Bruce

I have been lent a copy of the financial memorandum, which is apparently not reprinted for debate on Report. One reading suggests to me that the Government have decided to set the minimum wage at the lowest rate paid to anybody they currently employ, which is an extraordinarily low rate in comparison with what was talked about previously. Have the Government indicated that that is precisely what they are trying to do?

Mr. Boswell

If there were to have been such indications, they would have been suppressed, because that would not meet the political objectives of Labour Members. As an ex-Education Minister, I know that, whereas the Department for Education and Employment pays £4.91 in London, the lowest rate paid in the provinces—probably in Darlington or Sheffield, where it has major establishments—is £3.59. That shows the differential between London and the provinces, and I leave the House to speculate which of those two rates is likely to be nearer the rate set for the national minimum wage.

It is clear that any upward movement is likely to have an effect, both directly on the costs to the Exchequer of employment, and indirectly through its effects on differentials.

Mr. Lansley

Before my hon. Friend moves on from that point, has he observed that the Government present in their evidence to the Low Pay Commission a graph illustrating the cost impact?

Mr. Boswell

indicated assent.

Mr. Lansley

My hon. Friend indicates that he has seen it. Although it takes no account of differential implications, is it not significant that the gradient on that graph begins to sharpen substantially at £3.60? That is precisely the rate that the Government are trying to spin should be the appropriate rate, which would presumably serve their own purposes in respect of public sector and Exchequer implications.

1.45 am
Mr. Boswell

I am sure that my hon. Friend would not be so unworthy as to suggest that the Government would put a spin on anything, or would seek improperly to influence opinion. I was about to refer to that graph, because it is germane to our discussion.

I commend the Government on their record on public sector pay. Perhaps I should commend the previous Government, as the regime was set by them. A comparatively small proportion of the public sector is paid at a rate below £3.50 an hour. Only one in 10 of the labour force at that lower level are employed in the public sector.

The legislation will have an impact in various ways. There will be a direct tax impact, and there will be savings on in-work or out-of-work benefits, which is a sensitive subject. Differentials must also be considered. There are consequences for the Government's activities, which centre on the national health service. The Government say in their evidence that the Department of Health is undertaking a survey of NHS earnings, and will submit cost estimates. Those estimates have not yet been sighted, and I dare say that the Chancellor will not find them very congenial.

There will also be indirect effects. Charities and other not-for-profit organisations carry out important social care activities on behalf of Government. The residential care sector is one of the low-paying sectors of the economy. The Government's evidence shows that 142,000 cases in the United Kingdom have preserved rights to specific help with charges, and the median wage for care assistants was £4.29 an hour in 1996. Apart from those specific preserved rights, other elderly residents of care homes will expect to face higher charges as private sector homes have to meet the costs of the national minimum wage. That will in turn generate demand for further benefits.

There will be a knock-on effect on benefits if the Government are minded to improve benefits for child care. That is also referred to in the Government's evidence. It is suggested that over 30,000 cases already receive extra benefit to help with child care charges. The average wage in the child care industry, excluding nursery nurses, was £3.85 an hour in 1997.

The appendices to the Government's evidence give an overall figure of two thirds of a million people employed in various aspects of the care industry. Not all are low paid, but one would expect wages in that industry to rise. Given that it is largely publicly financed, directly or indirectly, there will be a significant impact on public revenues.

Mr. Ian Bruce

Is my hon. Friend as confused as I am by the way in which the Government give out statistics? When they want to show that any rise will cost industry and the Government very little, they say that hardly anybody is being paid below the figure they are considering for a minimum wage. However, in the rest of their rhetoric, they tell people that the greatest scourge of British industry and commerce is that literally millions of people are rushing about for £1 or £1.50 an hour. Has my hon. Friend been able to get to the bottom of why the Government are so schizophrenic, so Jekyll and Hyde, on this issue?

Mr. Boswell

Up to a point, I have not been able to get to the bottom of that. Perhaps the Low Pay Commission will do that for us. The facts that I am setting before the House are incontestable. The general impact on tax revenues will depend on what happens in the economy generally. We think that the legislation will make the economy less competitive and will have a long-term effect on the gross domestic product. That will tend to increase the net cost of the operation.

I acknowledge that the changes are speculative, and I shall return to the table to which my hon. Friend the Member for South Cambridgeshire referred. It shows potential national minimum wage rates of between £2.50 and £4.75 an hour plotted against the increase in total labour costs and the number of workers who will be affected. It would not be feasible, and would probably be out of order to display the chart in the House, so I shall do no more than say that the two curves tend to move more or less in step: they are not widely divergent.

I shall concentrate on the cost curve rather than the number curve. The impact starts to accelerate at a minimum wage of about £3.50 to £3.75 an hour. An interpolation from the table shows that a hypothetical minimum wage of £3.75 will cost £220 million a year in direct labour costs alone. However, if the minimum wage were edged up by only 25p an hour to £4, that cost would almost double, to more than £400 million. There is a huge escalator effect, or, as it was elegantly put earlier, the steep gradient on the economic curve kicks in at that minimum wage range.

The calculation makes no significant allowance for pay differentials. When we add those, the figures become even more horrendous. One can thoroughly understand why, according to the bits of the Whitehall debate that are revealed one way or another in the newspapers, the Chancellor has been campaigning for a modest rate, and is very concerned at the suggestion by what might be termed the traditional wing for £4, or a half-male median earnings rate, which is interpreted most accurately as about £4.61. The Chancellor is dead worried about that.

Evidence from the Department of Trade and Industry, no doubt influenced or sanitised by the Chancellor, shows that it is saying, "Please do not set a rate that is too high, because, if you do, the escalator, the cost impact, will rise dramatically." It is also expressing grave reservations about a substantial rate for those under the age of 26. We shall come to that later.

Mr. Syms

So far, the Government have not said what the rate will be, or whether there will be annual rises or rises every two, three, four or five years. The legislation will have a major impact on the public sector, which is why the amendment is well judged.

Mr. Boswell

I am grateful to my hon. Friend for his intervention.

What is becoming clear, even from my limited researches into the matter, is that we cannot have the final answer, because we do not have the rate. The commission will not be able to estimate the results until it has considered the evidence, and produced its estimate and then its recommendation. However, matters will change over time. They will change with the course of the economy, with the interaction between the various effects that I have mentioned, and as a result of tax changes.

For example, if the Chancellor introduced a somewhat different regime for child care in his forthcoming Budget, it would have an immediate repercussive effect if it cost much more than it was thought to. Conversely, any concession might be worth much less than was claimed, because the whole cost of child care would be influenced by whatever rate was chosen.

The new clause says that this should be run by the House and by the electors, annually, as part of the Budget process. The "Financial Statement and Budget Report" has been refined over the years. It is a useful working document, explaining much statistical information about the conduct of the economy. The Government influence their figures directly. It is, as it were, an internal loop, where Government decisions about the national minimum wage, albeit based on advice, feed directly into some of their costs, which then have to be catered for and met.

We think that it is entirely appropriate that the calculations that Whitehall will carry out for itself internally as part of the discussion on the rate to be chosen, should be made explicit and public, so that we can all understand, both this year and in coming years, what is going on and what the Government have done for themselves and their finances.

Mr. Collins

New clause 14 has particular importance in the light of an important story relating to the Chancellor of the Exchequer and his responsibilities, which is to appear on the front page of The Guardian this morning, which will inform a no doubt startled world that the Chancellor has been in the habit of sending four-page glossy leaflets to senior Labour party figures throughout the country, and which quotes a friend of the Chancellor as saying that of course he does not expect the Prime Minister to resign, but thinks that, at some point, he may decide to step down in his favour.

That is why new clause 14 is so important. It would help to focus the Chancellor's attention on the role that he is supposed to be discharging: propagating not his career at the expense of his erstwhile Cabinet chum the Prime Minister, but the future of the British economy and, in particular, employment prospects in that economy. New clause 14 will serve an important purpose in not just focusing his attention on those things, but requiring the whole Government machine to assess each year the Bill's implications.

We all know how important the Treasury is to the running of central Government. It is the focus, the hub and the humming machine at the centre of the British Administration, and it is important that it should be able to have the locus, whether it be through the annual public expenditure round or the Budget process, as required in new clause 14, to assess every 12 months the impact of the national minimum wage. There are several ways in which the national minimum wage can impact substantially on Budget assessments.

Mr. Hammond

Does my hon. Friend agree that, in view of speculation that the annual spending round may be consigned to history, it would be infinitely preferable for the assessment to be done by means of the Budget report, as proposed in new clause 14?

2 am

Mr. Collins

I am most grateful to my hon. Friend, who has made a helpful point. Indeed, I was intending to deal with the impact of some of the stories in the Sunday newspapers, which underline the importance of new clause 14.

Clearly the newspapers were heavily briefed by people high up in the Treasury and close to the Chancellor. One imagines that Mr. Charlie Whelan was once again on his mobile phone in the Red Lion. The relevance of this to new clause 14 is that the stories said that the Chancellor was likely to announce in his Budget not only the abolition of the public spending round, but that there would be below-inflation increases in public expenditure across all Departments for the entirety of this Parliament.

The point about new clause 14 is that, in the light of that commitment, the Chancellor would have to assess how he could possibly reconcile the commitment to a national minimum wage—with pressure from the Low Pay Commission for it to be uprated year in, year out—with a policy announcement to keep to below-inflation increases in public expenditure in every Department.

There are only two ways in which the Chancellor could do that. The first is to decide to keep the minimum wage up, but public expenditure as a whole down by sacking people in the public sector. Many of the people we are used to being advertised in Labour party propaganda as the principal beneficiaries of the Bill—cleaners in hospitals and other people doing important and valuable, but low-paid, work in the public sector—would find the immediate effect of the Bill to be the loss of their jobs.

Mr. Lansley

Does my hon. Friend agree that, without new clause 14, there is a danger that the Treasury would simply treat additional sums of money spent in the health service to meet compliance costs associated with the national minimum wage as additional spending on health services? It would be much to the advantage of the health service and those affected by it to be able to isolate the costs of meeting the national minimum wage from the genuine increases in resources available to provide additional treatments for patients.

Mr. Collins

My hon. Friend makes an excellent point, and all the more excellent because it was to be my very next point.

As I said, there are two ways in which the Chancellor could try to reconcile the two differing elements. The second is, as my hon. Friend suggested, that the same number of staff are paid at the level of the minimum wage, but the Chancellor merely takes out of service provision funds that would otherwise have been available for that purpose. New clause 14 is important, because, if that is what the Chancellor intends to do, he should be required to say so, on the record, in his Budget statement.

Mr. Hammond

Has it occurred to my hon. Friend that there may be a third route? The Secretary of State for Health may be encouraged to follow the Secretary of State for Defence in seeking an opt-out from the Bill for the national health service.

Mr. Collins

My hon. Friend's ingenuity has exceeded mine. I admit that that route had not occurred to me. Of course, he is quite right. Given the importance that both sides of the House attach to staff in the NHS—sas we do to staff in the armed forces—there is some logic and force in his point.

New clause 14 would require all Departments—not just the Chancellor of the Exchequer, because, as he assembles the material for the Budget statement, he is acting on behalf of the Government collectively, and he collects information from all Departments—to focus on the serious impact of the minimum wage on their public spending plans.

Mr. Bercow

Does my hon. Friend agree that, if the Chancellor chooses to allow an increase—perhaps an annual increase—in the minimum wage, and then sacks people in the public sector in order to meet his other objective of containing overall public expenditure, he will not even succeed in that latter objective, for the simple reason that the increase in unemployment and the loss of tax revenue will mean that he overshoots his public expenditure and public borrowing targets anyway? He will have failed on all fronts.

Mr. Collins

My hon. Friend puts that point extremely well, as I would expect of him. The minimum wage is a naturally self-defeating system. It has an inbuilt vicious circle, and can act only to increase poverty and reduce job prospects. That is why new clause 14 is so important.

The Chancellor of the Exchequer should be required in the Budget statement to link the implications and impact of the national minimum wage to what the Government have said is at the centre of their economic strategy: the welfare-into-work idea. The minimum wage is a work-into-welfare engine, in some circumstances making it a criminal offence for an employer to give someone a job. That is a quite extraordinary proposition to be made by a Government who are committed to shifting people from welfare into work.

Mr. Ian Bruce

I am following, I hope, my hon. Friend's argument very closely. It seems that the Government are saying that they have a wonderful strategy, and will get people back into work if they can only implement those economic drivers, whereas the Bill's financial memorandum states that they really do not have a clue about the Bill's effects. Even if Ministers knew what the minimum wage rate will be, they do not know how it will affect the economy. Are the Government resisting new clause 14 because they do not have a clue about its consequences, or because, if it were included in the Bill, the truth will be out, especially among Labour Back Benchers?

Mr. Collins

My hon. Friend has put his finger on another interesting argument in favour of new clause 14. The Government's resistance to new clause 14, which we anticipate, may be based precisely on the new clause's annual requirement for clarification.

Many of our debates, yesterday and today, on the Bill have been based on the assumption that the Government are being opaque on the minimum wage only temporarily, and that, at some point in the future, they will clarify their views on it. At some point, they will have to set its introductory level. However, in successive months—as the debate continues on setting and uprating its level for the following 12-month period—Ministers may demonstrate a similar opacity and lack of clarity.

Perhaps Ministers resist the idea of an annual requirement to report on the minimum wage's impact and implications because that would require them to make up their minds at least once a year, whereas Ministers may well wish to keep Labour Back Benchers, public service unions and many other affected groups in darkness about the Government's intentions for as long as possible.

One might advance a deeply cynical thought—even at this late hour73x2014;by saying that the Government might wish to leave the minimum wage at a relatively low level for most of this Parliament, thereby assuring their friends in the Confederation of British Industry that they really are a new Labour Government, but then—perhaps shortly before the next general election—dramatically announce that new statistics have come to their attention that lead them to uprate the national minimum wage.

The hoped-for consequence would be that the Government would attract the votes of low-paid workers, not realising that many of those low-paid workers would lose their jobs if that policy were implemented. Nevertheless, by announcing such a policy a few weeks or months before a general election, they would hope to get the kudos for it, without having to suffer its economic consequences.

Mr. Leigh

Is not my hon. Friend doing an injustice to the Government? Surely new clause 14 is so obviously right that the Government will be bound to accept it. Although he is a young man, he will recall that the fate of previous Governments—such as the Heath and Wilson Governments—turned almost entirely on wages, and inflation on those wages. Wage levels obviously have a huge impact on the economy, as will the national minimum wage. It is therefore so obvious that the Government will have annually to review the minimum wage that they must accept the new clause, must they not?

Mr. Collins

I am most grateful to my hon. Friend. He may be right that I am being unfair to the Government—as I know that he never is. I try not to be unfair to them, and I shall take on board his admonition.

In raising the spectre of the Wilson Governments, my hon. Friend the Member for Gainsborough (Mr. Leigh) reminds me of an important point that is relevant to new clause 14. Although we have heard a great deal about the commitment to the minimum wage of the so-called modern, pro-business new Labour party, what did the old Labour party of Mr. Harold Wilson think of it when it was in charge of producing Budgets and Budget reports such as that described in new clause 14? It produced a White Paper—30 years ago, when Mrs. Barbara Castle was Secretary of State—that specifically ruled out a minimum wage, on the ground that it would have damaging consequences for employment and for the public finances. That might be another reason why Labour Members are a little reluctant to accept new clause 14. It would require them to examine the issue again and again.

The document to which I have referred was published back in 1967. Then, as now, the Labour party described itself as the natural party of government. Perhaps, once it had been in office for three years, it might find a rather large amount of information that would cause it to reassess its views. Its members are not in favour of new clause 14, because they fear that, the more facts they have, the more they will get in the way of their argument. They do not like facts getting in the way of their argument: they would much rather operate on the basis of prejudice, dogma and all the other elements that we have observed in the debate so far.

New clause 14 has so many advantages that, like my hon. Friend, I am surprised that the Government have not already indicated their willingness to accept it. Let us assume for a moment, however, that they will continue to oppose it.

We must consider what message the Government will send to public service unions that might have an interest, each year, in knowing the exact impact of the minimum wage on the public sector pay bill. What message are they sending to their great friend Mr. Rodney Bickerstaffe of Unison? Mr. Rodney Bickerstaffe of Unison is known for having forthright views about what the level of the minimum wage should be, and what it should be for his employees. We all know that what it would be for his employees would have a direct and important effect on the levels of public spending, and on the implications for the Budget assessment that the Chancellor would have to make each year.

Mr. Ian Bruce

My hon. Friend mentioned Mr. Rodney Bickerstaffe. I know that we are not allowed to refer to anyone who is in one of the Galleries, but my hon. Friend may have observed, as I did, that the spirit of Rodney Bickerstaffe was with us today. He was so disappointed by what he heard from Ministers that he left, because he knew that nothing would come from them.

Mr. Collins

I was not aware of that spiritual presence. Perhaps there will be further hauntings in times to come.

There may be another reason for the Government's resistance to new clause 14. We know that diplomatic relations between the Government and Mr. Rodney Bickerstaffe are in a slightly tricky state at the moment. Mr. Rodney Bickerstaffe, as leader of the largest trade union in the country, has warned against membership of the European single currency, and has pointed out that it would be damaging for his members.

We can imagine that the Treasury might resist new clause 14 on the basis that, at present, it does not want to do any favours to Mr. Rodney Bickerstaffe, who has dared to speak what is the unspoken and the unspeakable under the current Government, by pointing out that inclusion in a European single currency in the foreseeable future would be demonstrably against the interests of a large number of British people—not least the low-paid people represented by Mr. Bickerstaffe and his trade union.

Mr. Bercow

May I put an alternative proposition to my hon. Friend? May I suggest that, by rejecting our proposal, the Government will gladden the hearts of Mr. Rodney Bickerstaffe and others? If they are not prepared to provide an assessment of the impact of the national minimum wage on the totality of the economy, the incentive for Bickerstaffe and others of his ilk to seek continually to bid up wages in an irresponsible fashion will be that much greater than it would have been if such a discipline had been included in the Bill.

Mr. Collins

My hon. Friend directs my attention to an important factor—although, as he and I may share a platform with Mr. Bickerstaffe before too long, perhaps we should not refer to "others of his ilk" in quite the way my hon. Friend did.

The important point raised by my hon. Friend enables me to turn to the next part of my argument in support of new clause 14. I refer to the impact on the national health service. In requiring the Chancellor of the Exchequer to report to the House each year on the impact on public service expenditure of the national minimum wage, the new clause would enable us, in our Budget debate, to give proper consideration to the impact on the NHS.

We hear a great deal from Ministers—and, indeed, from the Prime Minister, on the odd occasion when he favours the House with his presence—about the figure of £1.5 billion, which is the additional amount that the Government have supposedly put into the health service. We all know that that is a phoney figure, but none the less we know that, whatever the figure is—as my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) said—it will be appreciably eaten up by the introduction of a minimum wage, and could be increasingly eaten up if that minimum wage is steadily increased year in, year out.

What will be the implications for people in charge of NHS trusts who have had to cope with various changes in the way in which health service pay settlements have been reached in recent years? They have struggled with issues such as whether there should be local or national pay bargaining, and are trying to keep their budgets afloat.

Trusts throughout the country have received considerable publicity about whether they can balance their budgets. Under the provisions of new clause 14, they would be looking for guidance from the Chancellor of the Exchequer on a national pay strategy and the Government's central view on public sector pay. Without new clause 14, they may find themselves bereft of that guidance and negotiating with their staff with no clear guidance on how the Government view the implications of the minimum wage for their pay policy, if they have one, or the implications for overall public expenditure.

2.15 am

As we heard earlier, apart from the odd mention that he does not want above-inflation increases in public expenditure in any year from here to eternity, the only message from the Chancellor is an electioneering one—he would rather like to be Prime Minister. He has even dropped the part about the Prime Minister being president. That is not an argument for opposing new clause 14.

As the debate has continued, the Government have been extraordinarily reluctant to accept even the most modest amendments—including those that would give them more power than they had under the Bill and new clause 14, which would merely require them to report to the House, in which they currently have a huge parliamentary majority. Why are they afraid of reporting the implications of their policy to a parliamentary assembly that they control? Could it possibly be that, if new clause 14 were in place, they would be somewhat afraid of the reaction of their own parliamentary party to the full implications of the minimum wage and its knock-on implications for sacking people in the health service?

New clause 14 would require the Government to do no more than assess the implications of a policy that they tell us is flawless. If they are right about the absence of any imperfections in their policy, they should welcome the chance at least once a year to report to the House on its implications. If they do not, we must assume that, slowly but surely, they are beginning to think that perhaps Barbara Castle was right, and that a Labour Government should not support such legislation.

Mr. Keith Simpson (Mid-Norfolk)

I am grateful to be called to speak on new clause 14, which I regard as absolutely crucial to the Bill. At the start of his speech, my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) referred to the importance of the Chancellor of the Exchequer. As I speak in the wee small hours of the morning, making certain that the national minimum wage will not go quietly into the night, we should consider that the Chancellor of the Exchequer will not be in bed. He will be working hard on all aspects of Government policy.

I am a little concerned about the phraseology of the new clause, which the Minister might consider amending slightly, if it is acceptable to her. It refers to The Chancellor of the Exchequer, acting in consultation with the Secretary of State". The phrase "acting in consultation" is far too woolly. It does not define properly the responsibilities involved or the issue of leadership between the Chancellor of the Exchequer and the Secretary of State. I would prefer a phrase such as "The Chancellor of the Exchequer shall desire, request and direct the Secretary of State". My hon. Friend the Member for Westmorland and Lonsdale made it quite clear that the Treasury was the central Department in Whitehall. Indeed, the Chancellor of the Exchequer undoubtedly regards himself as the first Minister of State under the president—or rather, the Prime Minister. I should like that point firmed up.

Mr. Ian Bruce

My hon. Friend is understating the relative importance of Ministers in this Government. The importance of Ministers must relate to some extent to the amount of money spent on refurbishing their flats. As we all know—

Mr. Deputy Speaker (Mr. Michael Lord)


Mr. Simpson

I take on board my hon. Friend's comment. We must ensure that the Chancellor, who is the senior member of the Cabinet apart from the Prime Minister, can extract the relevant information from the Department of Trade and Industry. Many hon. Members present have considerable experience of working in the Government. They know only too well that, time and again, Departments do not hand over the relevant information.

My second point concerns which Treasury Minister should be responsible for working with the Department of Trade and Industry to obtain the necessary information about the national minimum wage. I assume that the Chancellor of the Exchequer, who works 24 hours a day, would not want to do that. I am not even certain that it would be the responsibility of the Chief Secretary. Either the Minister of State or the Paymaster General, who have considerable experience in business worldwide, might look after the issue. However, my preference is for the Financial Secretary to the Treasury. She has a proven track record and could gain the information required for an assessment of the national minimum wage.

Mr. Hammond

Has it occurred to my hon. Friend that there is a Minister who serves in both the Department of Trade and Industry and the Treasury who could provide an apposite conduit for such a conversation between the two Departments—the Minister for Trade and Competitiveness in Europe? As the impact of the minimum wage on our public sector finances will directly affect our competitiveness in Europe, might it not be for him to effect such liaison between Departments?

Mr. Simpson

My hon. Friend has opened up a fascinating area of debate. With deference to you, Mr. Deputy Speaker, I do not want to be drawn into it. I am almost overwhelmed by the possibilities. Perhaps it is a task for the Minister without Portfolio. If ever there was a misnamed Minister, it is the Minister without Portfolio. He seems to have too many portfolios.

Mr. Bercow

I have no desire to tempt my hon. Friend to misbehave at 2.21 in the morning. He is asking important questions. about which Minister should take responsibility for the report. Does my hon. Friend think that the Financial Secretary to the Treasury might be the most appropriate person, because of the immense experience, financial acumen and taxation expertise that she brings to bear in the performance of her duties—a fact on which I am sure that most hon. Members have remarked at some time?

Mr. Simpson

I have already said that the hon. Lady is my preference for the job. I know that some of my hon. Friends want to speak in the debate so I shall try to keep my comments to under an hour. We need to establish that the issue will be an important Treasury responsibility. The Chancellor will have general oversight, but my preference would be for the Financial Secretary to be given the task. It is not enough for the Treasury to act in consultation. The Secretary of State should be desired, requested and directed to provide the information.

Another point that perturbs me on the new clause—I am sure that the Minister will be able to reply to this—is the administrative and bureaucratic nature of acquiring such information. Conservative Members believe in minimal government; we do not believe in creating ever more government. Unless we are careful, we may open up a job creation scheme in the Department of Trade and Industry, with ever more civil servants collating the information.

As my hon. Friend the Member for Westmorland and Lonsdale made clear, it is crucial that an assessment of the cost of the national minimum wage is provided so that ordinary members of the public—let alone Members of Parliament—can see, year in, year out, the consequences of it.

The new clause does not go far enough. Many of us think that there should be not only an assessment of the cost of the national minimum wage to the Government in respect of employment costs in the public sector, but an assessment in respect of employment costs in the private sector. The Bill will bear down on many of our constituents.

The new clause is admirable; I really hope that the Government accept it. My own preference would be a much more direct requirement on the Secretary of State to provide information. I would also like an assessment of the impact on employment costs in the private as well as the public sector. The new clause is crucial, and I hope that the Minister will accept it in the spirit in which it is offered.

Mrs. Eleanor Laing (Epping Forest)

This new clause must surely be one of the most reasonable to be tabled in debates on this or any other Bill recently discussed. It does not even ask the Government to do anything that they are not otherwise proposing to do. All that it does is impose on the Government a duty to tell Parliament the result of their policy and how it is affecting the public sector. It is perfectly reasonable to ask the Government to do that, and hard to imagine what possible objection they could have to carrying out such a simple duty.

What has happened to open government? Have not we heard in recent weeks and months that the new Labour Government are an open Government, a people's Government, an accountable Government? However, as soon as they are asked to do something in the spirit of open government—simply to provide information—they refuse to do so. It is hard to understand why.

Let us examine the effect of the new clause. The one thing in it to which I take exception is the phrase the cost of the national minimum wage to Her Majesty's Government". We all know that Her Majesty's Government do not bear the cost of anything. The taxpayer bears the cost. The taxpayer pays income tax, council tax and all the other taxes which the Government are trying to hide. The people are starting to have to pay such taxes because they voted for a new Labour Government.

Mr. Keith Simpson

And an offshore tax.

Mrs. Laing

Indeed—even more so in the past week.

I am concerned most with those who pay income tax and council tax. It is clear that the Government's objection to the new clause must be on the ground that they want to give the impression that no one has to pay for the minimum wage and that the policy is one of motherhood and apple pie—one that can be only good and not bad, and can bring only benefits and no disbenefits. [HoN. MEMBERS: "Hear, hear."' That is simply not true.

Mr. Bercow

My hon. Friend is making an extremely powerful speech. Does she agree that the way in which Labour Members cheered with enthusiasm when she made that last point is proof, if there was any consistency in what passes for their brains, that they ought to be prepared to countenance—indeed, advocate—the publication of an assessment? If the effect of the Bill will be all benefit and no cost, of what exactly, in a published assessment, are they afraid?

Mrs. Laing

I could not agree more with my hon. Friend. As usual, he is absolutely right. What is it that the Government want to hide?

Mr. Jim Murphy (Eastwood)

Answer the question.

Mrs. Laing

Labour Members are only too happy to make a lot of noise from a sedentary position, but for the past hour or two, it has been noticeable that no Labour Back Bencher has got up to speak on this matter. Is that because they do not care? They are certainly not asleep at 2.29 in the morning. Why are they sitting here, saying nothing? They are making a lot of noise, but no one wants to intervene to answer my questions.

2.30 am

It would not be in order, would it, Mr. Deputy Speaker, for me to answer questions asked from a sedentary position? I assume, therefore, that Labour Members are afraid of new clause 14. [Interruption.] There is more noise from Labour Members. I can only assume that, as my hon. Friend the Member for Buckingham (Mr. Bercow) said, they are afraid of the information that would be published and set before the House if the new clause was accepted.

Labour Members are afraid because, as I was saying before my hon. Friend the Member for Buckingham wisely made a different point, they want the people to believe that the minimum wage is a policy for which no one must pay or that, if anyone must pay, it is the fat cats, as the Minister of State said earlier.

The Government want the people to believe that the fat cats are the only people in the United Kingdom who will ever have to pay for anything. There will be precious few fat cats left when the Government have imposed all their hidden taxes on everyone and anyone they can think of.

Mr. Keith Simpson

There will be some offshore fat cats left.

Mrs. Laing

As my hon. Friend says, there will be some offshore fat cats left.

Mr. Collins

Does my hon. Friend consider that there is significance in the fact that, in recent months, the fat cat of fat cats, Mr. Ecclestone, was welcomed at 10 Downing street, whereas Humphrey was too thin a cat to stay?

Mrs. Laing

Indeed. My hon. Friend tugs at the heartstrings with the thought of poor Humphrey, that most lovable of unfat cats of the—

Mr. Deputy Speaker

Order. I should be grateful if the hon. Lady would return to the new clause.

Mrs. Laing

I beg your pardon, Mr. Deputy Speaker. I will return immediately to the new clause.

I am anxious about the effect that the Bill will have on my constituents who, in their capacity as council tax payers, already face a huge increase, compared with recent years, in the council tax burden that they will have to bear. A very large amount of that council tax will help to pay public sector pay bills.

Mr. Swayne

I have been unable to get especially excited about new clause 14, but I wonder whether my hon. Friend would help me. Will she explain how the acceptance of new clause 14 will reduce her constituents' council tax bills?

Mrs. Laing

I appreciate my hon. Friend's question. The new clause would not reduce council tax bills, but it would explain to council tax payers why their council tax has risen so much as a direct result of the decisions of the new Government, who said that they would not impose new taxes. We have yet more hidden taxes, as I am sure my hon. Friend the Member for New Forest, West (Mr. Swayne) would agree.

If the Bill is not to raise council and income taxes even further to meet the public sector wage bill, the books will have to be balanced by cuts in the public sector bill. My constituents do not want less money to be spent on schools—[Interruption.] I do not understand why Labour Members find that amusing. My constituents do not want less money to be spent on schools and hospitals.

This morning, I visited a hospital just outside my constituency, which is used by my constituents, to witness the Secretary of State for Health opening a special care baby unit funded by charitable donations. People are concerned to put money into hospital care, not to see money taken out of it.

The Government are afraid that, if the new clause becomes part of the Bill, they will have to come clean with the people of Britain and tell them where their money, as taxpayers and council tax payers, is going. That is why Labour Members do not even want to participate in the debate on the new clause, which is disgraceful.

Mr. Hammond

I cannot and will not attempt to match the eloquence of my hon. Friend the Member for Epping Forest (Mrs. Laing). I have one or two more prosaic points to make. The proposal in new clause 14 is important and as the debate has progressed I have become more convinced that it should stand part of the Bill.

Essentially, we should be looking at the effect of the national minimum wage on public sector employment costs. There is a considerable body of relatively low-paid employees in that sector and there is no need for this legislation for that problem—if it is perceived as such—as they are Government employees in one or other of the Government's manifestations. If the Government were so concerned about the problem of low pay and low-paid jobs, they could have made a start on 2 May 1997 by tackling the problem directly, without legislation, in those areas for which they, as the employer or ultimate paymaster, have direct responsibility.

I am moved to wonder whether the Government, despite their rhetoric about the wholly beneficial effects of the Bill, already understand the serious implications for the public finances, which have not been quantified meaningfully in the annexes to their submission to the Low Pay Commission. As my hon. Friend the Member for Westmorland and Lonsdale (Mr. Collins) said, there has been no attempt to measure the impact of the restoration of differentials in presenting the expected cost to the public purse of the national minimum wage.

Mr. Ian Bruce

I wonder whether the spirit of new clause 14 would be met if the Government and the Chancellor stated how they deal with the low-paid—in other words, if they made a sweep of the public sector, through local councils and all the people who work for them through contractors, and worked out how much they would have to pay and put the money aside, which would prevent the need for additional money through the minimum wage.

Mr. Hammond

I thank my hon. Friend for that point. The important issue is that, without knowing the extent to which differential restoration will occur, it is difficult for the Government or anyone else accurately to predict the cost of the national minimum wage to the public purse or to any individual or company in the private sector. That is why it is so important to have a mechanism for reviewing the national minimum wage and putting it into focus after the event.

Mr. Bercow

Is my hon. Friend aware that, on page 21 of the Government's submission to the Low Pay Commission, it is stated that the national minimum wage may increase pressures on the public sector pay bill in some departments"? Does he agree that the use of the word "may" in that context is patently absurd? It is only a matter of time before the Government finally use the more accurate word "will".

Mr. Hammond

I thank my hon. Friend for his intervention. I suspect that the Government, if challenged on that point, would retreat behind their customary mask of saying that the Low Pay Commission has not yet recommended a rate and that it is impossible—as, indeed, it is—to estimate the impact of the national minimum wage on the public or private sector without knowing the rate at which it will be set.

I come back to the absence of any estimates of the impact of differential restoration in the Government's evidence to the Low Pay Commission. I submit that the public sector has a relatively rigid pay structure, which is perhaps unsurprising given the development over many years of a remuneration structure that is less flexible than is nowadays generally to be found in private sector companies—it is perhaps more akin to the structures that would have obtained in large private sector companies 20 or 30 years ago. That is not a criticism; it is perhaps inevitable that the extra requirements for accountability in the public sector will encourage more rigid and bureaucratic structures than can develop in private sector organisations.

Does the Minister think that the impact of differential restoration in the public sector may be more serious than in the economy as a whole? In other words, will there not be a disproportionately adverse effect on public sector finances, because of more rigidly locked rates of pay? Is it not also the case that at, or just above, the level at which the national minimum wage is widely expected to be introduced, there is a large cluster of pay rates in important public sector organisations, such as the national health service? That means that the impact of a national minimum wage that is set at a level just below the wages that a large number of employees earn will have a marked upward effect in terms of differential restoration.

Mr. Boswell

Does my hon. Friend agree that, in the public sector alone, setting the rate at £4 rather than £3.75, which seems innocuous, would in fact double the cost to the taxpayer?

Mr. Hammond

As I said, I think that it is difficult for anyone to estimate with any certainty the cost of any pay rate, because of the imponderable of differential restoration, although I am quite prepared to follow my hon. Friend's guidance that the cost would be of that order. The issue will be critical to the public sector.

The fact that the Chancellor of the Exchequer is reported to be considering long-term settlements below the level of inflation for spending Departments puts the matter into a particular context.

The minimum wage will increase cost pressures on spending Departments in a climate in which public spending—if the Chancellor's spin is borne out—is likely to be seriously constrained. I wonder whether the suggested report might give a breakdown of the cost of the minimum wage by Department, as the impact will not be uniform across Departments.

Some Departments have a higher proportion of labour costs in their total expenditure, and some have a far larger clustering of lower-paid workers who are more likely to be affected by the minimum wage.

2.45 am
Mr. Lansley

My hon. Friend will forgive me if I am unduly cynical, but would not it be an advantage if the report were to treat not April 1999 but April 1998 as its starting point? Otherwise, we may mysteriously find that Departments of their own volition settle pay at —3.60 an hour or above and subsequently say that they were planning to pay those rates through collective bargaining, regardless of the minimum wage.

Mr. Hammond

Indeed. How does one establish the base line against which to measure the cost?

Mr. Ian Bruce

I am a bit worried that my hon. Friend, in listening to the spin in the press, has missed the statements constantly made by the Minister of State, who tonight asked whether £1, £1.20, £1.40 or £1.60 an hour was too low, but did not mention the £1.80 at which minimum rates start in the agriculture sector. [Interruption.] The Minister of State's resistance to the new clause may stem from the fact that Ministers have decided to go that low and to abandon any idea of increasing minimum rates in the public sector.

Mr. Hammond

That is an interesting idea, but I listened to the Minister of State intently in Committee and I do not expect him to feel comfortable with any such low rates. [Interruption.] I accept that the decision will not ultimately be his, and that he may be leant on from much higher places—Hartlepool, perhaps.

Mr. Bercow

I suggest that my hon. Friend, although not a member of the Treasury team, might be a suitable future author of the assessment of the impact of the national minimum wage, not only because of his exceptional economic expertise, but because at 2.48 am he still looks extremely relaxed and refreshed. Nobody could accuse him of being tired and emotional, as other hon. Members clearly are.

Mr. Hammond

I assure my hon. Friend that I have had no dutiable refreshment.

The central point of the new clause concerns the impact that the national minimum wage will have on different Government Departments and the crucial question for the British people of whether those Departments will be compensated for the cost of meeting the national minimum wage. People are right to be concerned about that and their concern has been emphasised by the recent leaks that have suggested that, in the longer term, we face a public spending regime that envisages increases at or below the level of inflation. That would imply significant real cuts in spending for Departments such as the Department of Health, a significant part of whose budget is swallowed up by labour costs, including those of many lower-paid workers who will be caught by the Bill.

It is important that we remember that the Bill will not only affect those who are paid at a low rate. It may affect professional people, working in the health service or the education system, who work long hours for a salary that appears to be above any level for the national minimum wage. Because the national minimum wage will be defined in terms of earnings per hour, it is possible that people earning middle-ranking salaries could be caught by the Bill. That is not necessarily a bad thing, if those people are working very long hours.

Mr. Swayne

Is that not precisely why the Government exempted the armed forces from the Bill?

Mr. Hammond

My hon. Friend is right. We put that argument in Committee and the Government were minded to accept it. The Minister has repeatedly made the point that he accepted the exclusion of the armed forces because they have a pay review body. Is he thinking of excluding nurses and teachers because they have pay review bodies? I suspect not, but that would be one way to deal with the impact of the Bill on public sector finances.

Mrs. May

I am pleased to see that the Minister of State has returned to his place for part of this debate. From his comments on earlier new clauses, it was clear that the Government see the national minimum wage as a dogmatic policy that they will introduce regardless of the implications. New clause 14 is relevant to that point because it would ensure that the Government set out—not just to the House but to the public—the implications of a national minimum wage for public sector expenditure.

The paucity of figures for and proper analysis of the impact of the national minimum wage is telling. Whenever the subject has been raised in questions to Ministers, they have fallen back on the existence of the Low Pay Commission and the fact that they do not know the level of the national minimum wage. A Government determined to introduce a national minimum wage should have considered the cost implications for the economy, especially for public sector expenditure, for a selection of benchmark figures. We have no evidence to suggest that the Government have done that. They do not seem to care about the implications of their policy, because they will implement it as a point of dogma.

Mr. Letwin

Will my hon. Friend accept that the situation may be even worse than she describes? Page 23 of the Government's submission to the Low Pay Commission gives the estimates to which my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) referred and it states that the effect of the minimum wage would be greater if the differentials were restored above the minimum. However, it gives no estimate of the cost. Does not that suggest that the Treasury has concealed estimates that it must have calculated?

Mrs. May

I am grateful to my hon. Friend for pointing that out. That was a key point of the argument advanced by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). Differentials are crucial to the minimum wage's impact. The Government have failed to address that and constantly try to walk away from it. The Treasury has not been willing to estimate the impact of differentials, presumably because it is concerned about the effect on public sector expenditure and recognises that the figures would not be palatable to the House or the public if they were made generally available. That was also clear from the Government's evidence to the Low Pay Commission.

Several hon. Members spoke about the impact of the national minimum wage on the national health service but another aspect is mentioned in the Government's evidence: their policy for welfare reform. The evidence states: The potential impact of a National Minimum Wage on Social Security finances could in this context be very important. That was mentioned in passing by my hon. Friend the Member for Daventry (Mr. Boswell), who talked about the cost of residential care.

I refer hon. Members to the front page of the March edition of Disability Now, which has an article headed: Minimum wage will hit us hard, warn homes". It states: The national minimum wage could lead to job losses in care homes and day centres, the National Council for Voluntary Organisations (NCVO) has warned. Voluntary groups gave evidence to the Low Pay Commission in January which highlighted the problems facing funders and providers of community care… A rate above £3.40 an hour could impact on disabled people in residential accommodation and those employing carers in their own homes". I want to concentrate on that latter point.

New clause 14 is excellent because it requires the Government to identify the public expenditure cost in respect of public sector employment costs, but there are hidden knock-on effects that should be brought to general attention. I want to focus on the knock-on effect on disabled people who employ carers by using their disability living allowance to improve their quality of life through, for example, being able to get up and go out to work in the mornings. People are concerned about what will happen because of the comprehensive spending review, welfare reform and the operation of the benefit integrity project. Disabled people are worried about the future of their benefits because the Government refuse to guarantee that there will not be significant cuts.

Mr. Deputy Speaker

Order. The hon. Lady is straying rather far. Would she please return to new clause 14?

Mrs. May

I was just about to. The cost of employing a carer could affect the quality of life of people with disabilities. It is such figures that need to be identified by the Government in considering the implications of introducing the national minimum wage. That is why new clause 14 is so important. It will require the Government to produce proper estimates of the implications of introducing a national minimum wage and set out clearly the implications for public sector expenditure.

While new clause 14 is general, the Government should produce figures that differentiate between Departments, explain the impact of reinstating differentials and identify the knock-on effects, especially in respect of social security and benefits, on the cost of employing people in the public sector to help people with disabilities. We have not had enough information from the Government. It is essential that they own up to the implications of their policies and make them clear to the House and to the general public.

Mr. Syms

I have waited since 3.30 pm yesterday to make my speech on new clause 14, because it is important. The Government have been honest and honourable in their proposals for a minimum wage. They have made it perfectly clear that that is what they want, but I want them to be honest and honourable about its cost to the public sector.

New clause 14 would make a substantial contribution to the debate. When the rate is set, whatever it may be, I am perfectly sure that many will say it is too low and that many others will say it is too high and cannot be afforded. That debate, which will continue over the next few years—certainly beyond the next general election—ought to be informed by figures produced by the Treasury. If the Treasury does not produce figures, others have a tendency to make them up. The proposal in new clause 14 to set out the cost to the public sector in the "Financial Statement and Budget Report" will lead to a better and more informed debate on this subject, which is important to many families throughout the country.

3 am

The key point is that the minimum wage should be seen not on its own, but within the totality of the economic management of the nation. It is appropriate that the measure should be taken on Budget day and seen in the context of what the nation can afford in relation to all sorts of other areas. It is also important that, when the Government make submissions to the Low Pay Commission, the cost to the public sector is seen explicitly in the FSBR so that we know what information is being given.

I do not wish to detain the House by going on too much longer, because I know that many of us are anxious for the Adjournment debate—[Laughter] We are trying to make progress as rapidly as possible and, had the Bill been better drafted, our progress might have been more rapid.

Mr. Lansley

My hon. Friend said rightly that it is important to set the cost of the minimum wage to the public sector in employment terms in the context of the FSBR. In that respect, does he share my concern that one of the implications of the national minimum wage reflected in the next FSBR may be that, in order to offset the impact on employers' costs, the Chancellor may seek to reduce national insurance contributions by the lower-paid and to compensate for that by increasing national insurance contributions by higher-paid employees? That would directly put—

Mr. Deputy Speaker

Order. That is far too long for an intervention.

Mr. Syms

My hon. Friend has made a good point, which reinforces the need for new clause 14.

Gillian Merron (Lincoln)

On a point of order, Mr. Deputy Speaker. I read in the Register of Members' Interests that the hon. Member for Poole (Mr. Syms) has a number of family businesses, remunerated directorships and registrable shareholdings. Are those interests that he should have declared, given that they may influence his contribution to the debate?

Mr. Deputy Speaker

That is a matter for the hon. Member concerned, not me.

Mr. Syms

My interests are all fully declared, which is why the hon. Lady can read them. This is my first contribution to the debate.

New clause 14 would ensure that the Government made a full statement in the FSBR of the cost to the public sector. That is a clear and sensible proposal. I hope that the Government will take it on board, because that would be a sensible way of ensuring informed and transparent debate in future.

Gillian Merron

Further to my point of order, Mr. Deputy Speaker. I appreciate your point that declarations of interest are not a matter for you, but the hon. Member for Poole has not yet declared his interests and I feel it appropriate to the debate that he should do so. Given his directorships and shareholdings and his status as an employer, it is clear to me that he will have a view on how much he pays in wages—

Mr. Deputy Speaker

Order. I have already dealt with that point. Hon. Members are well aware of the rules of the House: it is for them to declare any interests that may be relevant to the debate.

Mr. Syms

I am glad that the hon. Member for Lincoln (Gillian Merron) takes an interest in my affairs.

Mr. Hammond

The new clause relates to the public finances. Like me, my hon. Friend is a taxpayer, so perhaps we should both declare an interest.

Mr. Syms

My hon. Friend makes a good point.

New clause 14 is an important proposal that would allow a more informed debate. I commend it to the House.

Mrs. Roche

We have had a fascinating hour and a half. I listened with great attention to the speeches made by Conservative Members, but it was difficult to establish what they had to do with the new clause.

As hon. Members will know, the "Financial Statement and Budget Report", as its name suggests, is primarily concerned with measures announced in the Budget. The minimum wage is not a Budget measure. The appropriate place to cover the potential costs to the Exchequer of non-Budget measures is the financial memorandum that accompanies the Bill. That is what we have done. We have also covered similar ground in the regulatory appraisal that we published with the Bill, as is quite proper.

Mr. Hammond

Will the hon. Lady give way?

Mrs. Roche

No. The hon. Gentleman knows from debates on the Floor of the House and from our detailed discussions in Committee that I give way extensively, but we have discussed the new clause for an hour and a half, and while it has amused Conservative Members, it has added nothing to the debate. It would not be right to detain the House any further.

The financial memorandum makes clear that Parliament will be given further details of the effects on the public sector when the relevant regulations are introduced in the light of the Low Pay Commission's recommendations. One of the matters that the commission has been asked to consider when formulating its recommendations is the cost to the Exchequer. That may include any impact on employment costs in the public sector. The commission is due to make its recommendations by the end of May, and the Government will respond shortly after.

Any employment costs of the minimum wage to the public sector will vary across different parts of the sector and will depend on the level at which it is set. A regular assessment as required by new clause 14 would not make sense, because such costs would be identifiable only at the introduction of or following an uprating of the national minimum wage. It would be inappropriate and unnecessary to include such costings in this or future FSBRs. If the new clause is pressed to a Division, I ask the House to oppose it.

Question put and negatived.

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