HC Deb 09 March 1998 vol 308 cc200-10 3.45 am
Mr. Boswell

I beg to move amendment No. 55, in page 3, line 20, after 'regulations', insert '(or where it seems appropriate to him any subsequent regulations)'.

Mr. Deputy Speaker (Sir Alan Haselhurst)

With this, it will be convenient to discuss the following amendments: No. 1, in page 3, line 32, leave out 'and'.

No. 2, in page 3, line 36, at end insert '; and (f) the extent to which the single hourly rate which the Commission recommends should be prescribed under section 1(3) above will have different economic effects in different areas of the country.'. No. 75, in page 3, line 36, at end insert— '(2A) The Secretary of State shall issue to the Low Pay Commission at the time of making the reference referred to in subsection (1) above a statement of objectives indicating to the Low Pay Commission any effects which the Secretary of State wishes to achieve and any effects which he wishes to avoid as a result of regulations to be made under section 1(3) or (4) or 2 above and the Low Pay Commission shall take such objective of the Secretary of State into account in making its report as prescribed by subsection (3) below.'. No. 57, in page 3, line 39, after 'Prime Minister', insert 'the Chancellor of the Exchequer.'. No. 58, in page 3, line 40, at end insert 'and the Commission may make such recommendations ancillary to their main recommendations as may seem to them to be appropriate.'. No. 49, in page 3, line 40, at end insert— '(3A) The Secretary of State shall lay before both Houses of Parliament a report made under subsection (3) as soon as possible after it has been made.'. No. 78, in page 4, line 4, at end insert— '(ca) to prescribe under section 1(3) above a single hourly rate which exceeds the average wage paid to the lowest-paid decile of workers (whether or not the Commission so recommends), or'. No. 59, in page 4, line 9, after 'State' insert 'promptly and not less than one month in advance of the laying of such regulations'. No. 60, in page 4, line 14, at end insert ',subject to the laying of a report before each House of Parliament containing a statement of the reasons for the decision in respect of matters contained in these regulations'. No. 61, in clause 6, page 4, line 15, leave out 'at any time'.

No. 62, in clause 7, page 5, line 25, after '(a)', insert 'within one month of its receipt.'

Mr. Boswell

1 judge from your tone, Mr. Deputy Speaker, that you have correctly spotted that this is something of a rag-bag collection of amendments, all of which are key to the operation of the Low Pay Commission. I make no apology for such a collection, not least because some of the amendments should properly have been debated in Committee. Owing to the breakneck pace of our consideration, and despite the fact that the amendments had been tabled, they were not able to be debated because we caught up with ourselves. However, like a bad penny, they come back and will be discussed. I shall briefly summarise the amendments tabled in the names of official Opposition Front-Bench spokesmen, without adding any particular spin to them. I could leave my remarks at that—not least because I suspect that the House wishes to make progress.

Amendment No. 55 provides that it will not simply be in making the first regulations under sections 1 or 2 of the Act that the Secretary of State shall refer matters specified to the Low Pay Commission for its consideration. Any subsequent regulations would be included. That is a sensible provision. I hope that the Low Pay Commission will be consulted and have important things to do.

Of course, I understand that strategic recommendations must be made at the beginning, but they may need revisiting from time to time. The Low Pay Commission should not feel inhibited from doing that. I suspect that Ministers will say that, under subsequent clauses, such as clause 6, it is open for the Secretary of State to refer any subsequent matters to the Low Pay Commission. It would be interesting if the Low Pay Commission's recommendations were overturned by the Secretary of State. She would have to give reasons to the House for that decision.

Amendment No. 57 would add the Chancellor of the Exchequer to those luminaries, the Prime Minister and the Secretary of State, to whom the Commission must deliver its recommendations. That is, in a sense, a rewrite of new clause 14—which I shall not re-debate—about the role of the Chancellor in economic management and the central importance of all that to the impact on the economy.

In amendment No. 58, we provide that the Low Pay Commission may make ancillary recommendations as may seem appropriate to it. That is simply to prevent the commission from feeling that it cannot go any further than its very limited terms of reference in order to say anything useful about anything else. It may well have something useful to say.

The Under-Secretary was kind enough to say that I had said that the Low Pay Commission was doing a good job. That was a slight embellishment on what I said—although it is certainly going about its work with a will and it should not be prevented from saying anything interesting that it might have to say.

Amendment No. 49 and amendment Nos. 59 to 62 are about dilatoriness. We do not want the Secretary of State to sit on a report when she has it; we do not want her to be slow to bring forward her recommendations to Parliament. We need a reasonable time to consider them.

Amendment No. 61 is slightly different. It relates to clause 6(1), which provides: The Secretary of State may at any time refer to the Low Pay Commission such matters relating to this Act as the Secretary of State thinks fit. The amendment deletes the words "at any time". It is a probing amendment, because we want to know the Government's intentions toward the Low Pay Commission; so far, we have failed to discover them. We should very much like to know how the Government want to use the Low Pay Commission in future. It would be helpful if the Minister of State placed that on the record. [Interruption.]

Mr. Deputy Speaker

Order.

Mr. Ronnie Campbell (Blyth Valley)

Three pounds fifty an hour.

Mr. Deputy Speaker

Order.

Mr. Boswell

I resume, when calm is restored, by moving on to amendment No. 78, which is qualitatively different from the preceding amendments. It provides that if the Secretary of State comes up with a rate that exceeds the average wage paid to the lowest-paid decile of workers—whether or not the Low Pay Commission had so recommended—she must lay a report before each House of Parliament, containing a statement of the reasons for the decision.

I return to the importance of rates, and the important implications of any escalation in the rate of the national minimum wage for wage costs generally. It is not a simple matter. The figures escalate alarmingly as the national minimum wage increases, as we have shown in relation to the public sector. I shall refresh hon. Members' memories, using the House of Commons research paper for convenience.

At £3 an hour, 7 per cent.—I round the figures—of the working population would be affected; at £3.50, 13½per cent; and at £4, 20 per cent. There is a sharp escalation from a quite small impact—which, as the CBI has suggested, may be more or less manageable in the economy—at the £3 rate, depending on what happens to differentials, to a very major impact indeed, with or without differentials, at £4.

The implication of amendment No. 78 is that the Secretary of State should be obliged to give reasons for any significant impact of the national minimum wage so far as it is in excess of the bottom decile of earnings. If the Minister of State is sincere in his wish to help poverty wages, he must target his activities, and it seems a reasonable target, within the parameters of what the Minister of State and the Government wish to do, to concentrate on those in the bottom 10 per cent. of earnings.

I apologise for the wide-ranging nature of the amendments. I believe that they raise important points, which deserve a brief Government response, and I commend them to the House.

Mr. Chidgey

I hope that I shall not detain the House long. I shall speak especially to amendments Nos. 1 and 2. They provide for the Secretary of State to refer to the Low Pay Commission for consideration the extent to which a single hourly rate of the national minimum wage may have different economic effects in different parts of the country.

The amendments arise from robust and lengthy debate in Committee and on Second Reading, and reflect the fact that the Government have long argued that, for equity—as they see it—of the national minimum wage, there should be a single rate throughout the United Kingdom. Obviously, the Government intend to lift all those who are on poverty wages out of poverty wages, wherever they arise. Most of us would share and support that sentiment.

The Government also argue that the number of people on poverty wages does not vary much from region to region. If I remember correctly, the Minister gave us the figures earlier—it is about 55,000 in the south-east and about the same in the north-east.

I do not wish to replay the debate in Committee, but the proportion of those on poverty wages varies in different parts of the country. The difference between the proportion of the low-paid working in the south-east and in other parts of the country is particularly significant. That is supported by much evidence from, for example, the new earnings survey, the Low Pay Commission and the Trades Union Congress, and I do not think that it could be questioned or disagreed with. The ratio is substantial. As a proportion, it is about three times as many on poverty wages of less than £3.50 an hour in the north-east as in the south-east. Those facts and statistics are pretty robust.

We have debated at great length the cases for and against regional variations in the national minimum wage. The Government have made clear their position, which is well understood. However, it is important to examine the issue without setting up hypothetical cases that could be knocked down to support the argument, which was a tendency earlier in the passage of the Bill.

I want to address the Government's mind to the fact that there are those concerns—there are changes and variations. If, as we are told and as will no doubt happen if the Bill becomes an Act, there is to be a single national minimum wage rate, determining its economic impact on different parts of the country is a key factor. Because of the nature of the work of small businesses and how they operate, they have a preponderance of the low-waged within their work force. We may argue at length about whether that is a good or a bad thing, but it is a fact and the House would be doing the nation a disservice if it ignored the fact.

That is why I want to press the matter a little further and try to get a response from the Government, who are in danger of setting the Low Pay Commission on the horns of a dilemma. They have decided on a national rate, but if it is to lift the lowest-paid out of poverty in the south-east, it must be significantly higher than the lowest wages paid in other regions. On the other hand, the rate set helps those in the lower-waged parts of the country—

Mr. Ronnie Campbell

Liberal fudge.

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Member, but it would be helpful if the hon. Member for Blyth Valley (Mr. Campbell) would conform to the rules of order of this House and allow the debate to continue in the orderly manner that has been its characteristic so far.

Mr. Chidgey

Thank you, Mr. Deputy Speaker. I was pointing out the difficulties that may arise through setting a national rate because of the impact on different economies in different parts of the country.

The Government have made firm statements about setting great store in supporting a new social partnership in terms of industrial relations and our economy—surely something about which few of us would argue. It is to be a partnership between business, employers and Government—all stakeholders in a stakeholder society. My concern is to ensure that that partnership lasts, grows and develops. If that is to happen, we have to take account of the justifiable concerns of small businesses in less prosperous areas.

As the Minister will probably realise, small businesses are concerned about balancing increased labour costs with investment in staff training and increased productivity and against the comfort of knowing that cowboy firms will no longer be able to undercut their competitors by paying poverty wages. Those are the issues at stake.

To achieve and maintain that balance, to reassure small businesses throughout the country and to strengthen the social partnership, it is essential for the Low Pay Commission to tackle the problem of the different economic impacts in different areas of the country as a result of the introduction of a single national minimum wage. As we know, the Low Pay Commission is an independent body. The Government cannot pre-empt its judgment, instruct it to come to certain conclusions or preordain the results of its deliberations. However, to reassure and comfort those who feel threatened or uneasy about the impact of the national minimum wage in their region, the Government can instruct the Low Pay Commission what it may and may not consider.

I do not expect the Government to make any admission tonight of the different impacts, but I should like them to reassure the House that the Low Pay Commission will include in its deliberations a report on the different economic impacts that will occur in different areas. The Government say that the Bill is enabling legislation, and that the detail will emerge from the report of the Low Pay Commission to form the basis of secondary legislation. As we know, the devil is always in the detail. The House needs the details from the commission's report to scrutinise effectively that secondary legislation. I look forward to the Minister's response and, I hope, some reassurance on this issue.

Mr. Hammond

As hon. Members may have noticed, when we come to the end of this group of amendments, we shall be halfway through the selection paper. It will be appropriate to accelerate the pace of debate, so I shall attempt to be brief in my remarks. I shall look forward to hearing what the Minister has to say in reply.

4 am

I shall speak briefly to my amendment No. 75, which would require the Secretary of State, when making a reference to the Low Pay Commission, to give it guidance on the objectives…which the Secretary of State wishes to achieve". The Bill requires the Low Pay Commission to take into account the impact of the minimum wage on the United Kingdom economy as a whole and on competitiveness. It avoids the issue that many hon. Members believe to be the most important—the minimum wage's sectoral or regional impact. That issue should be addressed.

There will inevitably be a trade-off between jobs and other objectives behind the minimum wage. The Low Pay Commission should not have to make essentially political judgments and decisions. It is perfectly legitimate to ask it to report on the appropriate level of the minimum wage within parameters that Ministers have set, but unless the minimum wage is set at any but the very lowest level, it will cost jobs. In considering their wider objectives, the Government may have contemplated what cost to jobs they would find acceptable. The amendment would require the Government explicitly to spell out their aims and the relative weight that they give to their different objectives.

I do not want to be unduly controversial, but I take it as read that the Government would rather that the introduction of the national minimum wage had the lowest possible cost to jobs. It was suggested in the financial memorandum that if the national minimum wage was set at a sensible rate, it might have no impact on employment. Both the chairman of the Low Pay Commission and no less a person than the Deputy Prime Minister have publicly stated that that is not the case and that there will, of course, be a cost to jobs. I tabled the amendment to ensure that the Government explain how many jobs they are prepared to see lost and the other objectives that they want to achieve.

To illustrate the point, I set out my prescription for the statement of objectives that the Government would be obliged, if the amendment were accepted, to give to the Low Pay Commission.

One objective might be that the minimum wage should be set at a level that would not have a significant negative effect on jobs. The Secretary of State could also ask the commission to minimise the impact on the most vulnerable regions and sectors, as opposed to the economy as a whole. A single rate, across regions and sectors with different employment characteristics, will clearly affect some more badly than others.

Mr. Letwin

My hon. Friend has listed what he thinks the Government should try to avoid. What would he expect them to include as positive objectives?

Mr. Hammond

I would expect them to list poverty reduction as one of the principal objectives, but there is plenty of evidence to suggest that the introduction of a minimum wage will not have a great impact on poverty, because in-work poverty is a relatively small component of total poverty. I do not suggest that any erosion of poverty is not warmly to be welcomed.

The Government's statement of objectives might include some reference to disproportionate cost, and a cost-benefit analysis. The evidence suggests that the impact on poverty might be quite small. Most commentators have accepted that there will be an impact on jobs. The statement suggested in amendment No. 75 should give the commission an idea of what trade-off between job losses and the reduction of in-work poverty the Government would regard as acceptable.

The commission could then go about its work in a technocratic way, with the political parameters already defined. It could make recommendations that it believed would give effect to the objectives set by the Secretary of State.

Mr. Ian McCartney

Good morning, Mr. Deputy Speaker. I do not believe that anyone has wished you good morning since you came in to chair our proceedings.

The hon. Members for Daventry (Mr. Boswell), for Eastleigh (Mr. Chidgey) and for Runnymede and Weybridge (Mr. Hammond) should know that the subjects of the amendments have been covered extensively in many hours of debate in Committee, including two all-night sittings. That is not to say that we should not discuss them here. I shall deal with each amendment in turn, but without extensive debate, given our previous discussions.

The amendments fall mainly into the category of unnecessary, although not harmful. The hon. Member for Runnymede and Weybridge said two things that should not go unchallenged. First, there is no evidence that a sensibly set minimum wage will cost jobs. Secondly, no survey among employers during the passage of the Bill has been anything but positive.

The Income Data Services survey shows that employers are already moving to increase wages in advance of a national minimum wage, especially for their lowest-paid employees. Already, and even before the introduction of the national minimum wage, employers are beginning to move towards the Government's strategy of preventing and eradicating low-paid employment.

Mr. Hammond

rose—

Mr. McCartney

I will give way to the hon. Gentleman, because he was such a help to me in Committee.

Mr. Hammond

I accept the Minister's point, but does he agree that the issue is not whether the national minimum wage will reduce low pay but whether it will reduce poverty? Evidence suggests that low wages are not typically paid to heads of households and that the reduction of poverty by the national minimum wage will be relatively limited.

Mr. McCartney

It will do both. The hon. Gentleman's point reveals the heart of the Conservatives' sometimes sexist language. They think it is fine if a husband is well paid, but they think that a wife, by virtue of marriage, should remain badly paid. That is not acceptable. We want to eradicate poverty and to create fairness in the workplace.

Mr. Boswell

rose—

Mr. McCartney

I would be grateful if the hon. Gentleman will give me a chance to say something about the amendments before I allow him to intervene.

Amendment No. 55 would require the Secretary of State to consult the Low Pay Commission after the initial setting of the minimum wage and before making any further regulations—for example, to uprate the minimum wage—but only where it seems appropriate to him". That is neither fish nor fowl and is certainly unnecessary. Clause 6(1) already allows the Secretary of State to refer matters to the commission at any time. The Bill does not need another provision saying effectively the same thing.

Amendment No. 61 would delete the words "at any time" in relation to the Secretary of State's power to make further referrals to the Low Pay Commission. That is contrary to the proposals in new clause 8, also tabled by the hon. Member for Daventry. It is also unnecessary, because the deletion would make no difference to the meaning of the provision except perhaps to make it less clear.

Amendments Nos. 1 and 2 would add to the matters that the Low Pay Commission must consider. They would make the commission take into account the different economic effects of the minimum wage in different regions. I can assure the hon. Member for Eastleigh that the amendments are unnecessary. The remit of the Low Pay Commission already covers that issue. My right hon. Friend the President of the Board of Trade sent a letter to Professor George Bain, chairman of the commission, on 23 September 1997, which stated: the Low Pay Commission should have regard to the wider economic and social implications; the likely effect on the level of employment and inflation; the impact on the competitiveness of business, particularly the small firms sector; and the potential impact on the costs to industry and the exchequer. It is clear that any consideration of the wider economic implications would include the differing circumstances around the country and that is exactly what the Low Pay Commission has done.

The hon. Member for Eastleigh, in his short contribution to the debate, made an important point and I do not disagree with it, but I shall approach it from another angle. It is right to say that the percentage of the work force that suffers from low pay differs between the regions—significantly in some cases. However, that percentage is irrelevant to the individuals who suffer from low pay. That percentage does not pay their bills or put money in their children's pocket. It does not pay the rent or the electricity and gas bills, and it does not enable them to put money aside for pensions, holidays, Christmas or all the other things that many families take for granted.

After 18 years of Tory government, the level and intensity of low pay is almost identical in each region—north, south, east and west. For example, in the south-west, 87,000 people earn less than £2.50 an hour and more than 55,000 families receive family credit. In London, the figures are the same—87,000 people earn less than £2.50 an hour and more than 55,000 families receive family credit. In Yorkshire and Humberside, 89,000 earn less than £2.50, with more than 85,000 families receiving family credit. It is the same across the country, in region after region.

Mr. Chidgey

Does the Minister accept that the amendment was not intended to dispute those figures? It dealt with whether a single national minimum wage would have different impacts on different regional economies. I agree about the effects of poverty on individuals and about the number of people in poverty.

Mr. McCartney

The hon. Gentleman, in most of what he said on Second Reading, in Committee and now, has supported the concept and principle of the minimum wage, unlike official Opposition Members who have mostly tabled proposals that attack the heart of the Bill. Except for one amendment in Committee, he has rightly chosen not to do that. He believes in the principle of a minimum wage. I accept that his strength of feeling on the matter is no less than mine.

4.15 am

Hon. Members know that the commission has gone far and wide in its pursuit of evidence. It has visited a number of regions in England as well as in Scotland, Wales and Northern Ireland. It has been as thorough a piece of consultation as I can imagine, and has been warmly welcomed by business, employee organisations, trade unions and low pay organisations. Across the country, it has been appreciated that the commission has carried out its work thoroughly.

The hon. Member for Eastleigh need not worry, although I suspect that I may be not be able to stop him. Veterans of the Committee know that this is not the first time that we have heard those points from him. If he is still not convinced that the Low Pay Commission is paying full regard to regional differences, I have further good news for him. The Government's evidence to the commission deals with variation between regions. Paragraph 22 states: The Commission have been asked to recommend a single national rate. However, this rate will need to apply in a range of different local circumstances. The evidence goes on to provide a wealth of data analysing pay in different geographical areas. Nowhere does it attempt to gloss over variations in the cost of living, labour market and industrial composition of various regions. Those are important matters that need to be considered by the commission, and it will do so.

I emphasise again what some hon. Members have heard me say before: low pay exists in all regions. There is poverty pay everywhere in the country and it will take a national minimum wage to end it. I hope that what I have said will mean that the hon. Member for Eastleigh will not press his amendments. If not, I must urge the House to vote against them.

I apologise to the hon. Member for Daventry, whom I invited to intervene earlier.

Mr. Boswell

I am grateful to the Minister for his courtesy in remembering. In a sense, the occasion has passed. As he accused Conservative Members of being in a degree sexist, will he confirm that he will oppose any proposals to rescind the major social advance created by the Conservative Government of independent taxation for husbands and wives?

Mr. McCartney

I may have an accent similar to that of the Chancellor but I am not my right hon. Friend and the hon. Gentleman will have to wait. It was a previous Labour Government who introduced equal pay legislation in the teeth of opposition from Conservative Members. I remember the arguments from when I was a small lad. I am still a small lad, but slightly older.

That reminds me that I recently went to a function to talk about social partnership. Just before I went on stage, a helpful gentlemen told me that the podium was large and that they had got me a box to stand on. I thought that it was a joke until I got out there. The good news was that there was a box; the bad news was that it had wheels.

Conservative Members used to argue that equal pay would lead to hundreds of thousands of job losses among women. Not only was that not true; more women are in the labour market than ever before. That trend will continue with the Labour Government's proposals for assisting with pre-school and after-school facilities that will allow many women who are carers to take opportunities in the labour market that did not exist under the Conservative Government.

Amendment No. 75 focuses on the remit of the Low Pay Commission. It would require the Secretary of State to set objectives for the outcome he or she wished to achieve as a result of the minimum wage, which the commission would have to take into account. The commission would also have to take into account any objectives the Secretary of State did not wish to achieve.

Given those dictatorial requirements, I wonder why the Secretary of State would want to refer matters to the commission in the first place. The amendment would, in effect, dictate to the commission what its report and recommendations should say. It would undermine the commission's independence and be entirely counter-productive. I have said many times how much I value the commission as a source of advice to the Government. There would be no better way of impeding the commission and its works than by putting it in the straitjacket proposed by the amendment. The amendment falls into the "harmful" category and I ask the House to reject it.

Amendment No. 57 would require the commission to report to the Chancellor of the Exchequer, as well as to the Prime Minister and the Secretary of State. We have already covered this issue in Committee. The Bill reflects the dual reporting arrangements established for the school teachers pay review body. That does not imply that only the Prime Minister and one Secretary of State will be involved. The amendment falls into the "unnecessary but slightly irksome" category, because it is plain to me that the commission's report will be considered collectively, as part of the good administrative practice of the Government. The Government will put a collective effort into presenting evidence to the commission; no doubt it will come to a collective view on what emerges. There is no need for an amendment that seeks to single out individual members of the Cabinet in this respect.

Amendment No. 58 falls into the "slightly obscure" category, even after the explanation offered by the hon. Member for Daventry. It seems to suggest that the commission could downgrade its recommendations on the key factors referred to it by the Secretary of State—for example, the rate for the minimum wage—by comparison with other recommendations. It is, of course, open to the commission to set out its recommendations as it wishes, so the amendment is unnecessary. In addition, it remains open to the Secretary of State to determine the outcome. Amendments Nos. 49, 59, 60 and 62 have to do with various reporting requirements and they are all unnecessarily overprescriptive.

I invite the hon. Member for Daventry to indicate whether he wishes to press the amendments to a vote. If he does, I shall ask Labour Members to resist them. I hope that hon. Members on both sides of the House will be reassured by the answers I have given in respect of the issues raised by the hon. Members for Eastleigh, for Daventry and for Runnymede and Weybridge.

Mr. Boswell

This has been an interesting debate that has ranged across many different issues. I do not entirely accept what the Minister has said, especially in respect of amendment No. 58. I should be tempted to take the mind of the House on the amendments. Given the width and breadth of the group, some of my colleagues might feel more strongly than I do. To borrow a phrase, perhaps we should just see how it goes.

Amendment negatived.

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