Wages Bill

HL Deb 26 June 1986 vol 477 cc423-70

3.41 p.m.

The Minister of State for Defence Procurement (Lord Trefgarne)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, that the House do now again resolve itself into Committee.—(Lord Trefgarne.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the chair,]

Clause 12 [Continued existence of wages councils after repeal of Wages Councils Act 1979]:

Lord Dean of Beswick moved Amendment No. 71: Page 14, line 5, after ("effect") insert ("other than in relation to the clothing industry").

The noble Lord said: I move this amendment on behalf of the National Union of Tailors and Garment Workers. I place it in isolation though I know that a great number of other sections of the working community are affected by this legislation. This group thinks that because of the peculiarities of the industry it affects it perhaps more than some of the others. I shall try to be as brief as possible because I realise that in the time available the Committee will wish to discuss a great number of other amendments.

A viable and competitive economy cannot be created by cutting wages and worsening terms of employment. I contend that the Government are wrong in attempting to maim the wages councils. The clothing industry is the only major manufacturing industry within the wages council system. It is there because the industry faces problems which, as I said, probably do not apply anywhere else in manufacturing. The industry has an extremely diverse structure ranging from modern factories to production in the home. The census of production for 1983 suggests that there are some 6,000 clothing factories and workshops, half of them employing fewer than 10 people. I have no wish to read the extensive figures I have on this problem because of the time factor, but any figures from the census of production must also be treated with caution as they do not include thousands of unregistered establishments.

The extent of non-registration was well illustrated in a recent report by the factory inspectorate on 300 clothing factories in the West Midlands, Leicester and East London. The inspector discovered nearly 200 previously unregistered factories. Even excluding factories where there had been only a change of occupier, there were still 100 new factories previously unknown to the inspector. The inspectors were visiting premises only where they knew of a clothing factory. It is certain that the proportion of unregistered factories in the area concerned was higher than those figures show.

I contend that there are two sets of workers who, when the Bill becomes an Act, will be more adversely affected. First, I should like briefly to deal with the question of young workers in the clothing industry. In many areas of the country the clothing industry is traditionally a major employer of female school-leavers. Many women leave the industry when they have children, though a number of them return when their children go to school. Workers up to the age of 21 form a high proportion of the industry's workforce. The age of 21, certainly in the post-war period, has never been regarded as the adult age for women. There are no figures for the proportion of the clothing workforce which is under the age of 21 but the union estimates that it is at least 25 per cent. of the total workforce and probably in excess of that. The Government's proposals would deem young workers not fully productive for five years. Anybody—not only in the clothing industry but in the industry to which I belonged—with knowledge of these industries would tell you that this is complete nonsense.

Another two groups of people could be extremely vulnerable under this proposed legislation. I refer to the ethnic minorities and home workers. Statutory protection combined with effective enforcement, which unfortunately is lacking at present, is vital in an industry such as clothing. This is illustrated by the two groups of workers most subject to exploitation—the ethnic minorities and home workers. The Wages Bill now before noble Lords ignores the realities of the clothing industry in, for example, parts of London and the West Midlands. There many clothing workers are required to work excessive hours in poor conditions, often for very low wages. It is a scandal that workers, many of them women with a poor command of English, should be dealt with in that way. More statutory protection, not less, combined with proper enforcement is urgently needed.

Home workers are particularly vulnerable to exploitation and even the Government's consultative paper recognised the need for provisions of some kind for their protection. Unfortunately the proposals in the Wages Bill contradict that. The clothing wages councils at present have a home worker holiday allowance. It would be a tragedy if this were to disappear as is required by the Bill. This would affect adversely tens of thousands of workers in the clothing industry.

The Government adopt, at least in public, the position that the Wages Bill is a job-creating measure, but in the clothing industry it is far more likely to destroy jobs. As I have already stated, the clothing industry is extremely diverse. It can be divided into two sectors. One is advanced and is capable of offering its employees conditions which are comparable with those elsewhere in manufacturing; the other is backward and can offer its employees little more than the historical role of sweat shop conditions. The Wages Bill combined with the removal of the protective legislation which applies to women's hours of work proposed in the Sex Discrimination Bill would lead to workers in the backward sector being forced to work longer hours with fewer holidays and probably for less pay. That will certainly have no beneficial effect on employment.

I have tried in a few minutes to illustrate how two or three sections of the community could be seriously affected by this Bill. Perhaps the Government can look at it again and give the clothing industry some special consideration. I beg to move.

Lord Murray of Epping Forest

I rise to support my noble friend, not so much in the sense of arguing that clothing is a special case as arguing that it is a case which graphically illustrates the need for protection for workers of the kind to whom the noble Lord has referred. I think in particular of the East End of London and of the area around Brick Lane where even the most casual observation will show the dangerous, dilapidated and appalling conditions in which mainly Bengali women are working. It was the area where the word "sweating" first entered the industrial vocabulary. It was the area that gave rise to the trade boards themselves. If this Bill is passed, the state of those workers will be even more degrading. That is why I share my noble friend's view that the Bill, which is a licence to exploit people in that situation, should not commend itself to the Committee.

Lord Trefgarne

Our proposals for the reform of the wages councils system are based on the responses that we received on the consultation exercise that we conducted last year. They showed that the majority of employers and employers' organisations favoured retention and reform of the system. I acknowledge that most employers in the clothing industry favoured retention with minimal change, but it remains the case that employers overall wanted reform, and that is what we have provided.

We can have some industries regulated by wages councils and others not, but what we cannot have are two different wages councils systems in existence at the same time, which is what the new clause and the amendments that go with it would achieve if they were adopted. What is much more important is that they would deny the benefits of increased employment opportunities, which we are convinced will arise from the proposed reforms, to the vast majority of employers and workforces in the industries concerned.

As far as concerns Clause 22, I appreciate that noble Lords opposite would be reluctant to lose it, since it is wider in its application than the corresponding provisions of the 1979 Act. Perhaps its presence will prove to be of some small consolation when the Bill comes into force. I hope that the noble Lord will not press his amendment.

Lord McCarthy

I must ask the Minister, in the light of what he has just said, what his answer would be in relation to the Agricultural Wages Board. The Minister says that one cannot have selectivity; that one cannot have two systems. However, he has two systems, because the Government are not designing to do away with the Agricultural Wages Board or to impose upon it that which they are proposing in respect of all the other wages councils in this Bill.

Lord Dean of Beswick

I should not want to develop the line of argument so ably and well put by my noble friend on the Front Bench, but having heard the Minister's reply, I should like to study some of his comments, bearing in mind that he clearly indicated that the employers in clothing factories certainly did not want to go as far down the road as this Bill will take them. On that basis, I beg leave to withdraw my amendment, but I shall consider what the Minister has said and perhaps return to this point at a later stage.

Amendment, by leave, withdrawn.

The Chairman of Committees (Lord Aberdare)

I have to point out that if Amendment No. 72 is agreed to, I cannot call Amendments Nos. 73, 74 or 75.

Lord McCarthy moved Amendment No. 72: Page 14, line 23, leave out subsection (3).

The noble Lord said: In rising to move this amendment I should like to couple with it Amendments Nos. 73 and 106. This amendment is designed to put young workers back into the wages councils regulations. The present Bill proposes that they be taken out. I must make it clear that if this amendment and the consequential amendment were passed, it would not mean that there would be nothing left of the Wages Bill. The Wages Bill, so far as concerns Part II, would still include, for example, the direction to the wages councils, which would now be considering also the position of young workers, to consider the employment effect of what they did. There would still be the limitation to a single rate and to a single overtime rate. We are not suggesting at this point, by this amendment, that we should tamper with those parts of the Bill. So the Bill would still represent a considerable modification so far as concerns Part II and the present system. Nevertheless, young workers would be back in the Bill.

There are three broad arguments that we would suggest to the Committee today for putting young workers back into the Bill. The first is that the position of young workers is particularly weak in the labour market vis-à-vis employers. The second argument is that any justification that there may have been at certain times in the past—for example, in the early 1970s—to suggest that youth rates were pricing people out of jobs because they were advancing faster than adult rates is no longer the case in effect. The situation was the result of developments that are no longer in existence and affecting the labour market. So it is not an argument for today. The third argument is that the Government continue to make confused claims about the overall effect of the Bill, and in particular about the employment effect, especially, the employment effect of taking young workers out of the Bill.

So far as concerns the special weaknesses of young workers, I cannot see how any reasonable person could doubt that weakness. It is already clear that the majority of wages councils workers and the great majority of young workers covered by wages councils are below the decency threshold fixed by the EC. In hairdressing, the youth rate starts at £31.16 per week. The average youth rate in wages councils industries is under £50 per week. The rate of entry of youth employment to wages councils is much lower than that and has been calculated at somewhere in the region of £35 per week. The overall level of unionisation in the wages councils trades is about 15 per cent., and among young workers, especially among very young workers of 15 or 16 years of age, it cannot be more than a few per cent.

So that is a group of workers who are badly paid, underpaid, weakly unionised, and who are relatively more badly paid and badly unionised than even adult workers in the wages councils industries. We would say that without regulation there is no chance for that group of workers to maintain what they have at the moment in respect of, for example, holiday pay or even in respect of holidays themselves, or even in respect of Bank Holidays, overtime premiums, protection against exorbitant living-in charges, and so on.

The weakness of young workers is widely accepted, at least outside the ranks of the Government, and it is always justified in virtually every other country of the world—certainly in every country that has minimum wages regulations and specific regulations to defend young workers.

I turn to the Government's argument that youth rates have been pricing the young themselves out of employment. I suggest to the Committee, as I said on the Second Reading of the Bill, that that is essentially an argument from the early 1970s. It was true then that a combination of factors significantly narrowed the youth differential, and it was for a short time reasonable to suggest that the youth differential had perhaps narrowed to a point where there was a disincentive to employ young workers.

We can now see that that situation was the result of more or less one-off events. It was partly the result of the introduction by successive governments of flat low pay incomes policies that disproportionately supported the badly paid and particularly supported, therefore, young workers. It was due also to the collapse of training provisions for the young and the collapse of training rates. The fact was that the overwhelming majority of young workers, and particularly those in wages councils industries, were, within a few months or so of entering an industry, doing, for all intents and purposes, adult work. For that reason they tended to receive something nearer to the adult rates. The situation was due also to the implications of equal pay regulations and to the very high levels of inflation at that time, which undoubtedly persuaded some independent members of wages councils to take the view that they had to do something about paying young workers something approaching a living wage at a time when inflation was moving upwards in double figures.

Nevertheless, all those arguments, tendencies and trends are now much weaker, and many were reversed in the late 1970s and 1980s. Meanwhile, youth unemployment has doubled since 1979, and without the youth training scheme it would be nearer the rate of 20 per cent. The youth differential widens every year, and since 1979 the male youth rates of pay have risen by 30 per cent. less than the average and female rates by 24 per cent. less than the average. Therefore, if there ever was an argument about the unusual youth differential, both as between youths and adults and youths in this country and in other countries, I suggest that the Government cannot have this argument today.

I come, therefore, to the third heading of my approach to this amendment—the confused claims that Government spokesmen have made about what they expect to happen if this amendment is defeated and the Bill is passed unamended. These relate to three aspects of what they have said. First, how much employment will this Bill actually create among young workers? They refuse to tell us. Secondly, how much must the pay of young workers fall to produce this employment effect? They refuse to tell us. Thirdly, let us suppose that the rate of pay of young workers falls and that the employment of young workers does rise. How much of that rise will be compensated for and disallowed because there will be an equal fall in the employment of adults?

That, after all, is the logic of the Government's argument. That is the experience we have had with previous attempts to shift pay in this way. If it be argued that as pay falls relative to other pay, people are priced into work, then if you take action through legislation to push down the rates for young workers, they will become cheaper and more advantageous to employ; and, if the labour market works in the way that the Government think it does in so far as employers do employ more young workers, then they will not employ so many old workers. Therefore, will it in fact be a shift from one section of the population to another?

It is because the Government accept that there is a great deal in this alternative argument, and it is because they accept that the more one accepts a price effect on employment, then the alternative argument becomes coercive, that we have these constant shifts in their statements as to what they think the level of employment will be among young workers if the Bill is passed.

On Second Reading I tried to clear up the position. At that time I referred to a statement for which I only had the authority, as I said, of a report by the Low Pay Unit. As I remember, the Minister spoke to the Secretary of State who was sitting by him and then told the House that the Secretary of State did not remember such a statement being made. That is understandable because it was not made by that Secretary of State. The statement was made by the previous Secretary of State, Mr. King.

On 17th July, as reported in col. 334 of Commons Hansard, the then Secretary of State said, when he was announcing his intention to introduce this Bill: We believe that the measures will lead to increased job opportunities for youngsters, but it is impossible to predict how many will be affected".

He then held a press conference and spoke to journal-ists. According to the distinguished correspondent of the Daily Express, Mr. Barrie Devney, he said: Between 50,000 and 100,000 young people overall could get jobs as a result of the changes".

Between 50,000 and 100,000 young people, said the then Secretary of State. This was also reported by Mr. David Thompson, the distinguished Daily Mirror industrial correspondent, who said in his paper: The Government hopes an extra 50,000 to 100,000 jobs will be provided".

The Daily Telegraph's even more reputable Mr. Maurice Weaver said that it, could produce between 50,000 and 100,000 jobs".

Finally, of the papers to which I have had access, the doyen of industrial correspondents, Mr. John Lloyd, who has received awards for his veracity, said in his column: Mr. King said the Government's overriding concern was to create more jobs—and that a drop in wages of young recruits in the councils' sector could mean the creation of somewhere between 50,000 and 100,000 jobs".

These are my questions to the Minister. Was this an over-estimate? Was it an under-estimate? Was it an estimate which the Minister has subsequently abandoned? Was that why he did not say it in Parliament? Surely it will not be denied that he said it to those distinguished journalists. If that was the figure, is it a net figure or a gross figure? What will the level of wage reduction have to be in order to create between 50,000 and 100,000 jobs?

I suggest that even if we take that figure, that minute figure, and if we allow for roughly the same amount of displacement as was discovered by the Government in their research paper concerned with previous attempts to operate policies in this way, then we find that we are considering a reduction in unemployment of about 25 per cent. of one month's rate of increase in the present level of unemployment. Is that what this is about? Is that what the Government say? Are the Government going to produce this dangerous, unjust, unsubstantiated, implausible and tenuous set of arguments in order to make the group of workers in this country who are most liable to be exploited certainly exploited by the efforts of the labour market and small employers? We say that there is no case for this subsection to be in the Bill and I move that it be deleted. I beg to move.

Lord Rochester

I support this amendment. As Amendment No. 75 implies, young people aged under 18 are now largely taken care of by allowances under the youth training scheme. At least, that is what I thought until I read in the press this morning (I hope that indirectly the noble Lord the Minister will have had some notice of what I am about to say) that Ministers are considering plans to abolish legislation restricting the hours and times of work of young people aged between 16 and 18 and that the Government are seeking the views of the Manpower Services Commission on the proposals.

I must therefore ask the noble Lord, Lord Trefgarne, whether that is the case. Among other statutes, the Factories Act, the Shops Act and the Employment of Women, Young Persons and Children Act now protect the working hours of young people. They cannot at present work for more than 48 hours a week in shops, factories and mines. Overtime of more than six hours a week in factories and 12 hours in shops is banned, as is all work in factories between 10 p.m. and 6 a.m. Young workers are also prohibited from working on Saturday afternoon and on Sunday in factories and other industrial undertakings.

There may well be a case for reviewing some of this legislation; but in doing so it is, in my view, imperative that at a time of high unemployment—particularly in industries covered by wages councils where employees are largely unprotected by trade unions—we ensure that unscrupulous employers do not exploit young people. Therefore, I hope the Minister will be able to make some response to that point.

The Government's case for removing the shield of wages councils from those aged between 18 and 21—as I believe the noble Lord, Lord McCarthy, was saying at one point—is that the high minimum rates set by councils for them have damaged their job prospects in the past and that this reform will substan-tially improve their prospects of getting that vital first foothold on the ladder of employment.

However, a substantial number of reputable organisations think differently. The National Economic Development Office—a body which is representative of government, employers and trade unions—set up a working group to examine the employment effects of wages councils. It concluded: The research that has been examined has, in the group's view, left largely unproven the assertions that the wage rates determined by wages councils are substantially reducing the employment prospects of young people". The CBI carried out a survey of its members on this subject, and they reported little evidence that wages councils had priced young people out of jobs. It added that among its members, There was little enthusiasm for the suggestion that all young workers should be excluded from coverage of wages councils". The Institute of Personnel Management also carried out a survey of its members' attitudes to wages councils, and stated: Many respondents argued against removing young workers from the purview of the machinery, stating that they doubted if they would be able to recruit at rates lower than those now in force". The fact is that evidence on this point is inconclu-sive. Nevertheless, the Government claim that the wages of young people should be freely negotiated with their employers. But how free is that negotiation likely to be in the present state of unemployment and in circumstances in which so many of those concerned are unprotected by trades unions? The contrast between them and the after-tax position of people enjoying high salaries is such that many people known to me who are highly paid are feeling increasingly uncomfortable about the situation. I was interested to learn that that feeling appears to be shared by a majority of Conservative Party supporters, to judge from the findings of an opinion poll that was published earlier this week.

In the past I have gone out of my way to support, and on occasion to advocate, the view that in the interests of our international competitiveness young people should receive a lower percentage of the adult wage rate than has often been the case. Under too many wages councils even now, as I understand the position (and I am open to correction) the full adult rate is payable at the age of 18. In my view that is not a sufficient reason for allowing the pay of people in this age group to be altogether unregulated.

I believe that there is a strong case for empowering wages councils to make orders for graduated scales of payments to be made to people aged between 18 and 21; hence my support for Amendment No. 73. Yet there is more to it than that. What is to happen under the Government's present proposals when someone reaches the age of 21? The young person concerned may indeed have a foot on the first rung of the employment ladder but that will not be any consolation when he or she is thrown off the ladder and replaced by some other young person on what may be a much lower rate of pay.

I have consistently allied myself with those who consider that a slower rise in real pay for all in employment would enable more jobs to be provided for the unemployed; but I do not believe that such a situation will come about by placing the power of determining wages solely in the hands of employers. In our free society it will only be achieved when government, employers and trade unions become sufficiently aware of their responsibilities to make it happen.

Lord Sainsbury

I should like to speak very briefly in support of my noble friend. As we all know, one of the justifications for the Bill is the claim made by the Government that the existing wages councils have hindered job creation and caused unemployment. I support Amendment No. 72 because in my opinion there is no evidence that can be produced to support that claim. However, if minimum rates do not operate until the age of 21, in some cases there will certainly be a substitution of younger workers in place of those aged 21 or over, especially if they have not worked for their employer for a period of two years and therefore are not covered by employment protection rights.

Rather than having one rate at 21, surely a graduated incremental scale operating, say, between 18 and 21 would be much more satisfactory. The 16 and 17 year-olds are of course effectively governed by the Youth Training Scheme. I think that the whole Bill shows little concern for the low paid and there is plenty of evidence that there are too many in that category.

4.15 p.m.

Lord Murray of Epping Forest

In addition to the reasons for supporting this amendment that have been so ably advanced by my noble friend Lord McCarthy and other noble Lords who have spoken, there are the implications that this clause carries for Britain's standing in the world. Historically, other countries have looked to Britain to set and maintain decent and civilised standards of employment, not least by way of the conventions established by the International Labour Organisation, which is a body composed of governments, employers' associations and trades unionists.

I am sure that the noble Lord the Minister will bear out my statement that in this organisation the standing of Britain has historically been pre-eminent. Indeed, other countries have looked to Britain to give a lead and set a standard. Sadly, that is now no longer true and the change has come about not least because of Britain's denunciation of ILO Convention No. 26 on minimum wage-fixing machinery.

One of the main reasons for the Government's denunciation of that convention was the need to avoid what had always been regarded as their responsibilities—our responsibilities—towards young workers. It would not have been possible for the Government to implement this particular change and at the same time maintain their obligations in respect of the ILO. Convention No. 26 has been ratified by 94 other countries including the overwhelming majority of Western industrialised countries, but not one country—not a single other country—has joined Britain in denouncing the convention or suggesting that the removal of minimum wage protection should be regarded as a means of helping to reduce unemployment or that it will in fact help to generate employment. Not one of those countries has seen fit to support Britain's action.

The ILO, which is an independent body of impecca-ble standing in the world, has said: Almost all countries in the world now operate minimum wage systems, and none to our knowledge exclude young workers. The latter are more vulnerable to possible exploitation due to their inexperience and perhaps because of their very desire to earn a living by finding a first job". In supporting the amendment the Committee will also signify its disapproval of, and indeed its distaste for, the Government treating their ILO conventions as mere scraps of paper to be torn up at a whim.

Lord Vinson

I am sure that on all sides of the Committee we share a deep concern to try to improve the job prospects of young people. That must be completely common ground. I wonder whether it would be helpful if I gave an example of the adverse working of the law as it stands at the moment, and how in many instances it prices young people out of work.

At 16, and not particularly skilled or bright, my neighbour's daughter did not have a job. Her next-door neighbour worked in a shop and thought that it would be possible to get her fixed up. She was told that if she came down to the village shop it may be possible to find her a job. "What is more", she was told, "I will give you a lift each morning and bring you back". That is what they arranged. She worked in the shop. It was her first job, and she was extremely happy. The shop even gave her lunch free.

About three months later along came the wages inspector. He accused the shop—and technically within the law he was right—of underpaying that young person to the extent of about £7 a week. The shop owner said, "I am sorry if we do, but our margin in this business is so thin that if we have to find another £350 a year we simply cannot employ the child. We just do not make that margin". As a result the girl had to be dismissed. She was in tears; the father was furious; and the wages inspector knew that he had not helped the world go round.

Somehow we have to ease the rigidities which in many instances are pricing young people out of work. The market used to work quite naturally, and young people were absorbed into it. Of course sometimes on the margin there is the problem of displacement and additionality, but overall more jobs are created. I think that the Government are right to bite the bullet in that difficult area, and I am convinced that the provision will lead to more jobs, not less.

Lord Trefgarne

A central purpose of this part of the Bill is to promote employment, particularly employment for young people. The Government are convinced of the link between pay and jobs. I am grateful to my noble friend Lord Vinson for his intervention. No one could have explained the position more graphically.

Evidence can be found in all the studies on the effects of wages councils that they have inhibited employment prospects. We believe that in wages council industries employment of young people has been inhibited by rates set too high in relation to those for competing adults. All the pay protection in the world is worthless to the young person who cannot get a job because it is illegal to pay him at a rate which he is prepared to accept. Employers will not offer employment to anyone unless they are confident that the workers will at least add their own value to the business. Most young people would rather have a job at a starting rate of pay which is somewhat lower than they would have hoped than no job at all.

We accept that some of the additional jobs for young people may be at the expense of adults, but it is our overriding concern to help young people gain access to the crucial first rung of the employment ladder, and that is why the Government are proposing to remove them from regulation by the councils. This vital measure will be achieved by Clause 12 (3).

I have been asked about the number of jobs that would be created by these arrangements. The Committee will understand that there can be no certain answer to such questions. Pay is not the only matter which determines the level of employment, and we have never maintained or supposed that it was. I can only repeat to the Committee that research has shown that pay is a significant factor, although estimates of its effect vary widely, as the Committee knows. If research did not exist, common sense would surely tell us the same thing.

Lord McCarthy

If we rely on common sense we could have it any way we liked. The question that I ask the Minister is whether he will cite that research.

Lord Trefgarne

I made it clear during Second Reading and on our last Committee day that a lot of research had been done. I have recited it, and I dare say that the noble Lord recalls that.

Lord McCarthy

Which research?

Lord Trefgarne

There was a Gallup poll, for example, last summer which showed clear evidence that young people preferred low paid jobs to no jobs at all.

There was a proposition by the noble Lord, Lord Rochester, that young people might be sacked at age 21, but that is not borne out by the young workers scheme report, which states that at least 90 per cent. of young workers have continued or have been expected to continue in their current jobs beyond their period of eligibility for YWS support.

The noble Lord asked me about press reports that he had seen today to the effect that the Government were planning to abolish legislation on young people's hours of work. I assure him that the Government have no current plans to abolish the legislation controlling the hours of work of young people aged 16 to 18, or to issue a consultation document on the subject. However, as is made clear by the White Paper, Building Businesses not Barriers, we are looking at that legislation, some of which parallels the legislation on women's hours which is being repealed in the Sex Discrimination Bill. The review is not yet complete, and it is too early to anticipate conclusions. But Ministers will consider its report later this year and will decide whether the legislation serves a useful purpose nowadays.

The noble Lord referred, too, to the attitude of the CBI. Following publication in March 1985 of the Government's consultative paper on the future of wages councils, the CBI consulted again, this time seeking only the views of those companies and employer organisations most affected by the operation of the wages councils. It was those views that were the basis of the CBI's response to the consultative document, which was approved by its council in May 1985. That response, which shows a certain shift in opinion, states: Current youth rates should be frozen and young people should be excluded from the wages council remit". Incidentally, following up the remarks made by the noble Lord, Lord McCarthy, the typical minima for young workers (that is to say, 16 to 17 year-olds) in wages council trades are £47 to £57 per week and may indeed reach the full adult minimum of about £75 to £80 a week at the age of 18.

In the light of those difficulties which I have explained about the amendment, I hope that the noble Lord will not wish to press it.

Baroness Phillips

I find the arguments of the Minister and the noble Lord, Lord Vinson, almost Dickensian. They were advanced many years ago about the employment of women. Women were cheaper—we all know that—particularly in the clothing and catering trades. They were the only labour that the employer could afford. The danger to the older worker must be obvious. The shop that the noble Lord cited would not be able to employ somebody beyond the age of 18. There would have to be a constant supply of young people. What, then, of the young person who had been working there?

Lord Trefgarne

I do not think that the noble Baroness has fully taken the point on board. The problem is that younger people are less experienced and less skilful. It is inevitable that they are not able to earn so much.

Baroness Phillips

If I may say so, the Minister has not taken the point on board. Young people are of course not as experienced. But the noble Lord, Lord Vinson, said that the shop owner could not afford to pay more, and so he would not be able to continue to employ the young person when she became more experienced. That is an ingenuous argument. It is the basis of many of the reforms that we have had over the years. It will be a backward step if we accept such an argument in relation to the Wages Bill.

4.30 p.m.

Lord Vinsonn

The point I am trying to make is that in this instance the introduction of a statute destroyed a small job. There are hundreds and thousands of half jobs with half-skilled people at half rates. That is inescapable. If we deny or frustrate that market, it will not operate properly. I object to people who brand everyone else as taskmasters wishing to grind down the faces of young people. None of us in this chamber is like that. We are trying to get young people started. We are trying to make the market operate sensibly, reasonably and fairly. We believe that this reform will do that. Leaving things as they are will continue to price people out of the jobs that they would like to have at the rate the job can afford.

Viscount Massereene and Ferrard

I support my noble friend. I have come across many such instances. A young person of 16 is not experienced and the wage for him laid down by statute is too much. The wage depends upon the individual and his ability. The statute definitely prices a great many people out of jobs. With due respect to Members opposite, I often wonder how many of them employ people and pay them directly out of their own pockets. I do not know whether the noble Lord, Lord McCarthy, employs many people. It has been a fact for years that if someone is paid a high wage for doing a small job, he will be priced out of a job.

Lord McCarthy

The Committee will not be surprised to find that I am not convinced by the Minister's arguments. Let us make clear what we are saying. We are not saying, and I have never said, that there is no employment effect. I am not saying that we can double and treble people's wages and there will not be an employment effect. I am not saying that if their wages are cut in half there will not be a reverse employment effect. Of course there is an employment effect. Somewhere, out there, there is an employment effect. I keep asking the Government what they say the employment effect is, and they keep refusing to answer the question.

No one should say that we say that there is not an employment effect. I stress that what evidence there is, is evidence of where wages councils have been abandoned. The Department of Employment has done a series of research studies where wages councils have been abandoned. The result of wages councils being abandoned is that the wages go down but the declining employment trend is not reversed. There is not an employment effect big enough to reverse the overall level of decline in the industry and the general employment level in the economy. That is the evidence from studies done by the Department of Employment.

The studies that go the other way are, for the most part, done by those who put such assumptions into their econometric models. Anyone can have an econometric model and make an assumption that there is a positive employment effect and a positive elasticity so that a 1 per cent. reduction in wages produces a 50 per cent. increase in employment. Anyone can put that in the model. There will then be a tremendous employment effect. That is what Professor Minford does every day of the week. But that is not evidence. The only evidence is of what has happened when wages councils have been abandoned. The general trend is that that has reduced pay but has not significantly increased employment. The overall level has continued to be down.

I do not deny, as the noble Lord, Lord Vinson, says, that we can find people—he clearly has—who will employ other people only if they can pay them £8 less than the minimum rate. Of course there are such people. It is most remarkable for the wages councils inspectorate to find them because the inspectors get round to the average employer only once in 17 years. Even if they do find them, nothing happens. Nothing would have happened in the example given by the noble Lord, Lord Vinson, because there were only two prosecutions last year. At the present rate of decline there will be no prosecutions. The penalties at the moment for those who pay under the rate are weak, but the Government want to get rid of them altogether.

Lord Vinson

Something did happen. In that instance, that young person lost her job. She was extremely happy in her job. In relative terms, because she had a free meal and free transport, she was probably doing rather better than she would have done had she been on the statutory minimum and not had free transport and a free meal. Jobs are relative to one another. I know that we do not have to argue that among ourselves. Severe damage was done. In that instance, the girl was happier to have a job at marginally less than the statutory rate than not to have a job. The problem with leaving matters as they are is that we shall cause great damage to the economy.

Lord McCarthy

I do not deny that that is an example. I do not deny that such things happen. I do not deny anything that the noble Lord has said, but that is not the general trend. Of course there are individuals who will not employ people unless they can pay them less than the wages council rates. There are many people now who are employing people below wages council rates and they are very unlucky to be caught. If that girl walked down the street she would probably find an employer who would pay her less than the wages council rate, and he would not get caught.

We are not saying that there are no indications of such things. We are saying that it is not a general trend and that what evidence there is goes against that. The closer the Government get to the introduction of the Bill—the Minister has done it again today—the more they back off from giving us any figures. They do not just back off from giving the figures of the employment effect; they back off from telling us what the elasticity is—how much we would have to drive down pay to make it 50,000 or 100,000. Since the Government will not put any figures on that and they stick to their position out of prejudice and in defiance of the evidence, we intend to divide the Committee.

4.36 p.m.

On Question, Whether the said amendment (No. 72) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 110.

DIVISION NO.1
CONTENTS
Airedale, L.	Lockwood, B.
Alport, L.	Lovell-Davis, L.
Amherst, E.	McCarthy, L.
Aylestone, L.	McNair, L.
Banks. L.	Meston, L.
Barnett, L.	Milford, L.
Birk, B.	Mishcon, L.
Brockway. L.	Molloy, L.
Bruce of Donington, L.	Morton of Shuna, L.
Burton of Coventry, B.	Murray of Epping Forest, L.
Caradon, L.	Nicol, B.
Carmichael of Kelvingrove, L.	Northfield, L.
Cledwyn of Penrhos, L.	Oram, L.
Crawshaw of Aintree, L.	Parry, L.
David, B. [Teller.]	Phillips, B.
Dean of Beswick, L.	Ponsonby of Shulbrede, L.
Denington, B.	[Teller.]
Diamond, L.	Rathcreedan, L.
Elwyn-Jones, L.	Rea, L.
Ennals, L.	Rochester, L.
Fisher of Rednal, B.	Sainsbury, L.
Foot, L.	Seear, B.
Gallacher, L.	Sefton of Garston, L.
Graham of Edmonton, L.	Serota, B.
Grey, E.	Shepherd, L.
Hampton, L.	Silkin of Dulwich, L.
Hanworth, V.	Simon, V.
Harris of Greenwich, L.	Stallard, L.
Hatch of Lusby, L.	Stewart of Fulham, L.
Hirshfield, L.	Stoddart of Swindon, L.
Houghton of Sowerby, L.	Strabolgi, L.
Hughes, L.	Taylor of Blackburn, L.
Hunt, L.	Tordoff, L.
Irving of Dartford, L.	Turner of Camden, B.
Jeger, B.	Underhill, L.
Jenkins of Putney, L.	Wells-Pestell, L.
John-Mackie, L.	White, B.
Kaldor, L.	Williams of Elvel, L.
Kilmarnock, L.	Willis, L.
Kirkhill, L.	Wilson of Rievaulx, L.
Leatherland, L.	Winterbottom, L.
Listowel, E.	Ypres, E.
Lloyd of Kilgerran, L.

NOT-CONTENTS
Alexander of Tunis, E.	Caccia, L.
Ampthill, L.	Caithness, E.
Auckland, L.	Cameron of Lochbroom, L.
Bauer, L.	Campbell of Alloway, L.
Beaverbrook, L.	Carnock, L.
Belhaven and Stenton, L.	Cottesloe, L.
Beloff, L.	Cowley, E.
Belstead, L.	Cox, B.
Bessborough, E.	Craigavon, V.
Birdwood, L.	Cullen of Ashbourne, L.
Boyd-Carpenter, L.	Davidson, V.
Brabazon of Tara, L.	De Freyne, L.
Braye, B.	De La Warr, E.
Brookes, L.	Denham, L. [Teller.]
Brougham and Vaux, L.	Digby, L.
Broxbourne, L.	Dilhorne, V.
Bruce-Gardyne, L.	Dundee, E.

Ellenborough, L.	Merrivale, L.
Elliot of Harwood, B.	Molson, L.
Elton, L.	Monk Bretton, L.
Fanshawe of Richmond, L.	Montgomery of Alamein, V.
Fisher, L.	Murton of Lindisfarne, L.
Foley, L.	Napier and Ettrick, L.
Fortescue, E.	Norfolk, D.
Gainford, L.	Norrie, L.
Gardner of Parkes, B.	Nugent of Guildford, L.
Glenarthur, L.	Orr-Ewing, L.
Greenway, L.	Pender, L.
Gridley, L.	Polwarth, L.
Hailsham of Saint	Porritt, L.
Marylebone, L.	Portland, D.
Hardinge of Penshurst, L.,	Rodney, L.
Harmar-Nicholls, L.	Rugby, L.
Hayter, L.	St. Aldwyn, E.
Hives, L.	St. Davids, V.
Home of the Hirsel, L.	Sandys, L.
Hooper, B.	Savile, L.
Hylton-Foster, B.	Sempill, Ly.
Ilchester, E.	Shannon, E.
Killearn, L.	Skelmersdale, L.
Kimball, L.	Stodart of Leaston, L.
Kinnaird, L.	Strathspey, L.
Kitchener, E.	Sudeley, L.
Lane-Fox, B.	Swansea, L.
Lauderdale, E.	Swinton, E. [Teller.]
Layton, L.	Teviot, L.
Long, V.	Thomas of Swynnerton, L.
Lucas of Chilworth, L.	Trefgarne, L.
McFadzean, L.	Trumpington, B.
Macleod of Borve, B.	Vaux of Harrowden, L.
Malmesbury, E.	Vickers, B.
Mancroft, L.	Vinson, L.
Marsh, L.	Vivian, L.
Marshall of Leeds, L.	Whitelaw, V.
Massereene and Ferrard, V.	Young, B.
Maude of Stratford-upon-
Avon, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.44 p.m.

[Amendment No. 73 not moved. ]

Lord Stoddart of Swindon moved Amendment No. 74: Page 14, line 24, after ("workers") insert ("other than homeworkers").

The noble Lord said: It may be for the convenience of the Committee if we also discuss Amendment No. 108. We have just had quite a long debate on Amendment No. 72 which sought to retain young workers within wages councils. If that amendment had been carried, the amendment that I am now moving would not have been necessary. However, as the Committee, in its wisdom, decided not to support the previous amendment, we have to move this one to try to retain some protection for the most exploited group; namely, young home workers. It may be the case that there are not great numbers of young home workers. Most are aged over 21. A large proportion are aged between 25 and 44. They are women with young children to look after who take in homework not for pin money but because that money is needed to sustain the family. But there are some young home workers, a proportion of them disabled. They need some protection against exploitation by unscrupulous employers.

Rates of pay for home workers are abysmally low, as most noble Lords, I believe, will know. A survey carried out for the Low Pay Unit in 1983 found that one-third of the sample earned less than 50 pence an hour while three-quarters earned £1 an hour or less. It is doubtful whether these rates have increased very much, if at all, since then. There is clearly a need, therefore, to retain protection for young home workers who are, in any event, the most vulnerable to exploitation because of their youth. They are least able to stand up to an employer, as already pointed out by my noble friend Lord Murray of Epping Forest who has great experience in these matters.

The prospect of home workers being exploited will be increased if they are removed from the protection of wages councils. I hope therefore that the Government will not only accept the amendment but will also give an undertaking that an adequate number of wage inspectors is available to see that wages councils' decisions are enforced. Again, as my noble friend Lord McCarthy pointed out, the number of wages inspectors is much too low. Indeed the number of enforcements is ludicrously low. I hope that the noble Lord will be able to give a sympathetic reply. I beg to move.

Lord Trefgarnen

During our discussion on the last amendment I deployed at a little length the argument against the proposition that the amendment contained; namely, that wages councils arrangements should remain in place for young people. The Committee was able to agree that the amendment should not be accepted. I hope that the Committee will likewise agree that this amendment should not be agreed to. The case for home workers is no different. While it is true that the earnings of piece workers—and virtually all home workers are piece workers—are governed by their productivity, that does not mean that there is no point in removing young piece workers from scope. If they remained within the ambit of the councils their pay would be related to the rates set by the councils for the ordinary worker. If they were as fast as adults, they would then be entitled to be paid the same amount. But the whole point of the Government's stance is that young workers should be given a competitive edge over their adult counterparts in their search for employment. In essence, therefore, the arguments against this amendment are the same as the arguments against the previous amendment, which Members of the Committee decisively rejected.

Lord Stoddart of Swindon

I understand perfectly well what the noble Lord has said. Of course it is true that most home workers, whether they are aged over or under 21, are piece workers. But my understanding is that wages councils, at least until now, have set out the minimum rates of piece work. That is what we are seeking to continue. That is the protection that this amendment would give.

I do not know whether the noble Lord has any further information about that. Before I withdraw the amendment—which I intend to do—perhaps he would like to comment on that.

Lord Trefgarne

I do not think that I can add to what I have already said. As I mentioned just now, if young people were as fast as adults then they would be entitled to be paid the same amount. However, the whole point of the Government's stance is that we should give them a competitive edge to enable them to do a little better than adults in this situation. I cannot therefore accept the amendment.

Lord Stoddart of Swindon

I do not accept the logic of the noble Lord, Lord Trefgarne. However, whether or not I accept it, I still intend to withdraw the amendment. I beg leave to do so.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 75: Page 14, line 25, leave out ("21") and insert ("18").

The noble Baroness said: I beg to move Amendment No. 75 standing in the names of my noble friends, and to couple with it Amendment No. 107.

Noble Lords have just voted on the amendment which would have given all young people protection from the age of 16 and above. This amendment is a variant of that. It accepts the argument that for the ages of 16 to 18 YTS schemes are in place, and therefore there may be some argument for not including workers of those ages. However, we do not believe that there is any reason whatsoever for excluding from the scope of protective legislation of this kind, young adults between the ages of 18 and 21. In this group we are talking of people who very often have chosen to live independently and are doing so. Sometimes they have had no choice but to do so. Often they have started families of their own. There is absolutely no reason for discriminating against them by exempting them from the scope of the legislation.

Nor do I accept the arguments already advanced this afternoon that one of the reasons for youth unemployment—including youth unemployment in these age groupings—is because wages council restrictions are pricing the young people out of the labour market. My noble friend Lord McCarthy has already referred to the fact that since 1979 youth unemployment has doubled. But during that period of time the relative pay of young people in this age grouping has fallen sharply. Young males have received 30 per cent. less in pay rises than the average increases for adult males. Young women's pay—and I believe this was mentioned earlier—has fallen 24 per cent. behind the equivalent increase for adults. There has been no indication whatsoever that these changing relativities with regard to salaries have affected employment opportunities for young people.

As has already been stated there is very little research data available to support that argument. Indeed, I think that the argument of the Government in these respects is a somewhat disingenuous one. The answer is not given to the question: to what level would pay rates have to be reduced on the Government's logic in order to create more employment? Indeed, the Government have been very silent on that point. Do the Government believe, for example, that cutting the current rate of £70 a week or thereabouts for a skilled hairdresser would lead to a call for more hairdressers? Quite obviously extra employment in this field depends on other factors. It depends on the skill of the hairdresser, the rate of growth of hair, and probably the general economic climate which enables more women to go to hairdressers than did so a number of years ago. I do not think that those arguments hold water.

I do not think that the Minister has effectively answered the argument of my noble friend Lord Murray of Epping Forest on the matter of the ILO Convention No. 26 on minimum wages. I recently attended an international trade union conference as a delegate. I can confirm that there are questions being asked in international labour circles about exactly where the British Government are going. I was asked: what do the British Government think they are doing? They are denouncing this convention, which has been in operation since 1928. They are the only Government that have done so and they will be the only Government in the western world, so far as I can see, which have no kind of minimum protection for young adults at all. For all these reasons, I would commend Amendment No. 75 to noble Lords, and Amendment No. 107, with which it is coupled.

With regard to the point raised by the noble Lord, Lord Vinson, in connection with the young woman who failed to keep a job because of an inspectorate, and so on, I am sorry if this sounds harsh but if it is a burden on business to pay more than a sweat shop rate the individual running that business should be doing something else. It has always been possible to find people desperate enough to accept low pay. It is because of those reasons that we have to have protection, and wages councils. It seems to me that the argument put forward was not on the side of the Government but in favour of retaining basic protection. I beg to move.

Lord Vinson

I wonder whether I may return to this subject, and in particular the question of young people's wages differentials. The noble Lord, Lord McCarthy, has rightly said that these differentials are beginning to open out again. Historically it might be valuable to go back to the point where we on this side of the Committee believe that most of these problems began. When the age of majority was lowered from 21 to 18, that effectively meant that somebody leaving school at 16 had two years as a junior before he or she began to pick up an adult wage. The trade unions—as one can understand perfectly well—were always anxious to get rises at the bottom, as it pushed up the rates for everyone else at the same time. When young people were adult at 21—and in those days very often they left school at 15—there were then six years between starting work and reaching adulthood and an adult wage. This gave six years in which people gradually learnt, and improved their skills. By the time they reached 21 their earning power was the equivalent of an adult at 21. Therefore they were absorbed into the labour market so much more easily.

I believe I am right in saying that youth unemployment in this country—particularly if one rebalances the figures of the YTS scheme—is probably higher than anywhere else in Europe. One of the reasons for that is that the payment to young people relative to older employees of 21 or more is far too high. I think there is every indication that we have priced young people out of the market. This is reinforced by the fact that the highest consumer spending group with the greatest disposable income is in that bracket as well. It seems to me rather crazy for any society to give people almost their maximum earning power in terms of disposable and discretionary income at 18 or 19—for those lucky enough to be in work—and as a consequence price out many hundreds of thousands of young people who would like work.

Therefore, I am sure that the Government are right to try to open up the period through which people can learn and through which, quite sensibly, they can reach a level at which they can genuinely earn a full adult wage at the age of 21. It is for that reason, and for no other reason, that I am sure the Government are right to stick to their principles, and I wholly support the Bill as it stands.

5 p.m.

Lord Boyd-Carpenter

I should like to take up the general proposition which the noble Baroness, Lady Turner, made when she said, in connection with the case which my noble friend Lord Vinson, so vividly described to us on a previous amendment, that if people could run their businesses only by paying sweatshop rates, they should close down their business. If that is really the policy of the party opposite, it is a very revealing observation indeed.

The case which my noble friend quoted was the case of a young person who, as I understand it, very desperately wanted to do this job and who, in fact, was in tears when the wages inspector stopped it. At the same time as that was happening the business was struggling, as many businesses are, to keep going. Is the Labour Party really saying that someone who wants to work should by law be stopped from doing so because the rate of pay is below that which has been fixed by some official body, and, equally, that someone who can keep a business going by employing that willing worker should be forced to give up that business and himself become unemployed?

If that is the policy of the Labour Party, it casts a very illuminating light on the statements that that party has made that a Labour government would deal with unemployment. Quite plainly it means that a Labour government would inflate unemployment.

Baroness Turner of Camden

Perhaps I may respond to that point. Personally I do not believe in the "Koreanisation" of the British economy. Is that the policy of the party opposite?

Lord Trefgarne

I very much share the view of my noble friend Lord Boyd-Carpenter that the remarks of the noble Baroness, in response to the description of the particular situation offered by my noble friend Lord Vinson, were quite extraordinary and I feel certain that, on reflection, the noble Baroness will regret that she made them.

The decision to exclude under-21s rather than under-18s, or any other age, reflects our desire to provide the flexibility needed if people in the younger age groups are to compete successfully with more mature and experienced workers. It really is no good imposing full adult rates at the age of 18 or 19, as many wages councils currently do, unless the youngsters concerned are in all cases fully competent to earn the full rate.

One of the messages that we received through the consultative exercise was that the steady reduction in the age at which the adult rate was payable had contributed to employers' reluctance to employ young people. It must surely be more sensible that employers should be free to pay increases in stages and to work up to the full rate as the young workers' value to the business increases. I believe that it was the noble Lord, Lord Rochester, who suggested that while we were discussing an earlier amendment. Again, for very similar arguments to the ones I deployed at some length earlier this afternoon, I would wish to resist this amendment.

Baroness Turner of Camden

I have to say that I do not regret the comments that I made. I do not believe in a low-wage economy. At the age of 18 young people are regarded as having attained majority; people mature much earlier now than they used to many years ago, and it is generally recognised that that is so. Many of them have families at quite a young age. I do not regret anything that I have said in defence of reasonable living standards and a living wage for people between the ages of 18 and 21.

We have only to look at the recent figures which have been issued in the new earnings survey and which appear in the TUC's consultative response to the Government's consultative paper to see the decline. Incidentally, when the noble Lord said that he had consulted a number of organisations prior to the introduction of this Bill, I notice that he did not mention the trade unions. Of course, the trade unions have made quite detailed responses to the consultative document.

As a percentage of adult pay, pay for men is only at 100 per cent. at 21 and over. In 1979 between the ages of 18 and 21 it was 61 per cent. of the adult rate and in 1984 it was 55.7 per cent. of the adult rate In 1979, for women in the age group 18 to 20, it was 74.6 per cent. of the adult rate and in 1984 it was 67.9 per cent, of the adult rate. Therefore, there has been a decline between 1979 and 1984 in the percentages of the adult rate earned by these groups of young people. I do not think that the case has been made out for excluding them from protection and I therefore wish to press my amendment.

5.6 p.m.

On Question, Whether the said amendment (No. 75) shall be agreed to?

Their Lordships divided: Contents, 81; Not-Contents, 98.

DIVISION NO.2
CONTENTS
Airedale, L.	Dean of Beswick, L.
Amherst, E.	Denington, B.
Annan, L.	Diamond, L.
Attlee, E.	Elwyn-Jones, L.
Aylestone, L.	Ennals, L.
Banks L	Falkender, B.
Barnett, L.	Fisher of Rednal, B.
Birk, B.	Foot, L.
Bruce of Donington, L.	Gallacher, L.
Caradon, L.	Graham of Edmonton, L.
Carmichael of Kelvingrove, L.	Gregson, L.
Cledwyn of Penrhos, L.	Grey, E.
David, B. [Teller.]	Hampton, L.

Hanworth, V.	Parry, L.
Hatch of Lusby, L.	Phillips, B.
Hirshfield, L.	Ponsonby of Shulbrede, L.
Houghton of Sowerby, L.	[Teller.]
Hunt, L.	Rathcreedan, L.
Irving of Dartford, L.	Rea, L.
Jeger, B.	Rochester, L.
Jenkins of Putney, L.	Sainsbury, L.
John-Mackie, L.	Seear, B.
Kaldor, L.	Sefton of Garston, L.
Kilmarnock, L.	Serota, B.
Kirkhill, L.	Shepherd, L.
Leatherland, L.	Silkin of Dulwich, L.
Listowel, E.	Simon, V.
Lockwood, B.	Stailard, L.
Longford, E.	Stewart of Fulham, L.
Lovell-Davis, L.	Stoddart of Swindon, L.
McCarthy, L.	Strabolgi, L.
McNair, L.	Tordoff, L.
Meston, L.	Turner of Camden, B.
Milford, L.	Underhill, L.
Mishcon, L.	Wells-Pestell, L.
Molloy, L.	White, B.
Morton of Shuna, L.	Williams of Elvel, L.
Mulley, L.	Willis, L.
Murray of Epping Forest, L.	Wilson of Rievaulx, L.
Nicol, B.	Winterbottom, L.
Oram, L.	Ypres, E.

NOT-CONTENTS
Alexander of Tunis, E.	Kinnaird, L.
Auckland, L.	Kitchener, E.
Beaverbrook, L.	Lane-Fox, B.
Belhaven and Stenton, L.	Lauderdale, E.
Beloff, L.	Layton, L.
Belstead, L.	Long, V.
Bessborough, E.	Lucas of Chilworth, L.
Birdwood, L.	McFadzean, L.
Boyd-Carpenter, L.	Macleod of Borve, B.
Brabazon of Tara, L.	Malmesbury, E.
Braye, B.	Mancroft, L.
Brookes, L.	Marshall of Leeds, L.
Brougham and Vaux, L.	Massereene and Ferrard, V.
Broxbourne, L	Maude of Stratford-upon-
Bruce-Gardyne, L.	Avon, L.
Caccia, L.	Merrivale, L.
Caithness, E.	Molson, L.
Cameron of Lochbroom, L.	Monk Bretton, L.
Carnock, L.	Monson, L.
Colwyn, L.	Montgomery of Alamein, V.
Cox, B.	Murton of Lindisfarne, L.
Craigavon, V.	Norfolk, D.
Cullen of Ashbourne, L.	Norrie, L.
Davidson, V.	Nugent of Guildford, L.
De La Warr, E.	Orr-Ewing, L.
Denham, L. [Teller.]	Pender, L.
Digby, L.	Porritt, L.
Dilhorne, V.	Portland, D.
Dundee, E.	Rodney, L.
Ellenborough, L.	Rugby, L.
Elliot of Harwood, B.	St. Aldwyn, E.
Elliott of Morpeth, L.	St. Davids, V.
Elton, L.	Savile, L.
Fanshawe of Richmond, L.	Sempill, Ly.
Foley, L.	Shannon, E.
Fortescue, E.	Skelmersdale, L.
Gainford, L.	Stodart of Leaston, L.
Gardner of Parkes, B.	Strathspey, L.
Gisborough, L.	Sudeley, L.
Glenarthur, L.	Swinton, E. [Teller.]
Hailsham of Saint	Teviot, L.
Marylebone, L.	Teynham, L.
Hardinge of Penshurst, L.	Trefgarne, L.
Harmar-Nicholls, L.	Trumpington, B.
Hives, L.	Vaux of Harrowden, L.
Home of the Hirsel, L.	Vickers, B.
Hooper, B.	Vinson, L.
Hylton-Foster, B.	Vivian, L.
Ilchester, E.	Whitelaw, V.
Kimball, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.14

On Question, Whether Clause 12 shall stand part of the Bill?

Lord McCarthy

We naturally wish to oppose that this clause stand part of the Bill. We have opposed various bits of it, tried to improve it in various ways and we have failed. If we defeat the clause we shall not defeat the Bill, as I said in moving our first amendment. This clause takes young workers out of the Bill. We shall still have the single rate, we shall still have the employment test and we shall still have removal of all kinds of rates, premia and holiday arrangements which can be set under the existing wages council legislation.

The noble Lord has said that he has the evidence. He said that he quoted it to us. I have been looking at his speech on Second Reading and I find no evidence; I find no figures. I find assertions. If the Government have evidence and if the evidence is convincing we have to ask why the Government have convinced so few people? Why have we had the doubts of a Conservative-controlled employment committee in another place? Why have we had the doubts of the Institute of Personnel Management, of the CBI, of the Association of Small Employers and the Citizens' Advice Bureaux? Why have we had the publications of the NEDO office and the research papers of the Department of Employment? They do not prove the case that the noble Lord has submitted to us.

The empirical studies done by Wilkinson and Craig do not support the Minister. The general study by Christine Craig, Labour Market Structures: Industrial Organisation and Low Pay, does not support him. The report which the department authorised but did not publish until it could produce its own correction of the econometricians does not support him. The American work by Atkinson, Bazen and Poire on the American experience does not support him. The only evidence (and it is not evidence) is the notorious Treasury paper on the relationships between employment and wages. Messrs. Nicol and Leyard, who are the two economists whose work was the basis of that, have written to the Treasury and published letters denouncing the conclusions which the Treasury drew from their work.

Therefore the evidence does not support the Minister. There is no evidence that there is any significant employment effect. In the absence of convincing evidence there is no evidence in support of this part of the Bill and we oppose the Motion that the clause stand part.

Lord Trefgarne

Noble Lords and noble Baronesses opposite have, if I may say so, a remarkable capacity for ignoring the obvious and flying in the face of sensible pragmatic propositions. The sensible pragmatic proposition which I bring before your Lordships in this clause is that by ensuring that young people do not price themselves out of the market they will make the best of the employment opportunities that there are available to them. I ask your Lordships to hearken to the example proffered by my noble friend Lord Vinson a few moments ago, which graphically demonstrated, if the Committee will allow me to say so, the proposition enshrined in this section of the Bill.

The noble Lord, Lord McCarthy, is anxious to have statistics to back up the sensible proposition which I have offered. I have provided a number of statistics at various moments and now offer him another, if he is not yet convinced. He will have heard of the young workers' scheme, where some financial inducement is provided to employers to lower the cost of taking on young people. We estimate that that scheme has generated about 120,000 jobs for young people, of which at least 90,000 were brand new jobs and a quarter or less represented substitution. The 120,000 people who have taken advantage of that scheme would strongly resist the proposition offered by the noble Lord that the cost of their employment had no bearing on their futures.

Lord McCarthy

Will the Minister not accept that other studies have been quoted in this Committee which indicate that eight out of ten jobs were substitutions? If it is such a wonderful scheme why are the Government not continuing it?

Lord Trefgarne

Because we are bringing forward this legislation.

5.18 p.m.

On Question, Whether Clause 12 shall stand part of the Bill?

Their Lordships Divided: Contents, 93; Not-Contents, 74.

DIVISION NO.3
CONTENTS
Airey of Abingdon, B.	Halsbury, E.
Alexander of Tunis, E.	Hardinge of Penshurst, L.
Auckland, L.	Harmar-Nicholls, L.
Beaverbrook, L.	Hives, L.
Belhaven and Stenton, L.	Home of the Hirsel, L.
Beloff, L.	Hooper, B.
Bessborough, E.	Hylton-Foster, B.
Birdwood, L.	Ilchester, E.
Boyd-Carpenter, L.	Kimball, L.
Brabazon of Tara, L.	Kinnaird, L.
Braye, B.	Lane-Fox, B.
Brookes, L.	Lauderdale, E.
Brougham and Vaux, L.	Layton, L.
Broxbourne, L.	Long, V.
Caithness, E	Lucas of Chilworth, L.
Cameron of Lochbroom, L.	McFadzean, L.
Carnock, L.	Macleod of Borve. B.
Colwyn, L.	Malmesbury, E.
Cox, B.	Mancroft, L.
Craigavon, V.	Marshall of Leeds, L.
Cullen of Ashbourne, L.	Massereene and Ferrard, V.
Davidson, V.	Merrivale, L.
De La Warr, E.	Molson, L.
Denham, L. [Teller.]	Monk Bretton, L.
Digby, L.	Monson, L.
Dilhorne, V.	Montgomery of Alamein, V.
Dundee, E.	Mottistone, L.
Ellenborough, L.	Murton of Lindisfarne, L.
Elliot of Harwood, B.	Norrie, L.
Elliott of Morpeth, L.	Nugent of Guildford, L.
Elton, L.	Orr-Ewing, L.
Erroll of Hale, L.	Pender, L.
Fanshawe of Richmond, L.	Rodney, L.
Foley, L.	Rugby, L.
Gainford, L.	St. Aldwyn, E.
Gardner of Parkes, B.	Saint Brides, L.
Gisborough, L.	St. Davids, V.
Gray, L.	Savile, L.
Hailsham of Saint	Sempill, Ly.
Marylebone, L.	Shannon, E.

Skelmersdale, L.	Trumpington, B.
Stodart of Leaston, L.	Vaux of Harrowden, L.
Strathspey, L.	Vickers, B.
Sudeley, L.	Vinson, L.
Swinton, E. [Teller.]	Vivian, L.
Teynham, L.	Whitelaw, V.
Trefgarne, L.	Young, B.

NOT-CONTENTS
Amherst, E.	Lovell-Davis, L.
Annan, L.	McCarthy, L.
Attlee, E.	McNair, L.
Aylestone, L.	Meston, L.
Banks, L.	Milford, L.
Birk, B.	Mishcon, L.
Bruce of Donington, L.	Morton of Shuna, L.
Burton of Coventry, B.	Mulley, L.
Caradon, L.	Murray of Epping Forest, L.
Carmichael of Kelvingrove, L.	Nicol, B.
Cledwyn of Penrhos, L.	Oram, L.
David, B. [Teller.]	Parry, L.
Dean of Beswick, L.	Phillips, B.
Denington, B.	Pitt of Hampstead, L.
Diamond, L.	Ponsonby of Shulbrede, L.
Elwyn-Jones, L.	[Teller.]
Ennals, L.	Rochester, L.
Falkender, B.	Sainsbury, L.
Fisher of Rednal, B.	Seear, B.
Gallacher, L.	Sefton of Garston, L.
Graham of Edmonton, L.	Serota, B.
Grey, E.	Shepherd, L.
Hanworth. V.	Silkin of Dulwich, L.
Hirshfield, L.	Simon, V.
Howie of Troon, L.	Stallard, L.
Hunt, L.	Stewart of Fulham, L.
Irving of Dartford, L.	Stoddart of Swindon, L.
Jeger, B.	Strabolgi, L.
Jenkins of Putney, L.	Tordoff, L.
John-Mackie, L.	Turner of Camden, B.
Kaldor, L.	Underhill, L.
Kilmarnock, L.	Wells-Pestell, L.
Kirkhill, L.	White, B.
Leatherland, L.	Williams of Elvel, L.
Listowel, E.	Willis, L.
Lloyd of Kilgerran, L.	Wilson of Rievaulx, L.
Lockwood, B.	Ypres, E.
Longford, E.

Resolved in the affirmative, and Clause 12 agreed to accordingly.

5.28 p.m.

Lord McCarthy moved Amendment No. 76:

After Clause 12, insert the following new clause:

(" Establishment of Wages Councils.

. —(1) The Secretary of State may by order establish a wages council to perform, in relation to the workers described in the order and their employers the functions specified in relation to wages councils in this Part of this Act.

(2) An order establising a wages council may be made by the Secretary' of State after either—

1. (a)a recommendation made to him by the Advisory Conciliation and Arbitration Service ("the Service"); or
2. (b)an application to him by a joint industrial council, conciliation board or other similar body constituted by organisations representative respectively of such workers and their employers; or
3. (c)an application to him jointly by any organisation of workers and any organisation of employers which appear to him habitually to take part in the settlement of remuneration and conditions of employment for those workers.

(3) In deciding whether to establish a wages council the Secretary' of State shall have regard to—

1. (a)the extent to which the existing machinery for the settlement of remuneration and conditions of employment for those workers is likely to cease to exist or is adequate for that purpose;
2. (b)the current levels of remuneration and the level of employment among those workers;
448
3. (c)the current levels of remuneration and the level of employment among workers in the same trade or industry who are under the age of 21; and
4. (d)Such other matters as appear to him to be appropriate. —and he shall consult such persons or organisations as appear to him to be appropriate.

(4) Where an organisation of workers or an organisation of employers notifies the Secretary of State that it is desirable to establish a wages council, he shall refer that notification to the Service which shall within six months report to him upon the desirability of so doing.").

The noble Lord said: In moving Amendment No. 76,1 want to take with it and to speak to Amendments Nos. 78 and 79. This amendment is designed to remedy a situation which is there as a result of the Bill, where, under Clause 13, the Secretary of State is taking a power to abolish or vary the scope of a wages council but, so far as we can see on our reading of the Bill, has no power to create a new one. This must be nonsense. It must be nonsense unless—and I am reluctant to assume that this is the case—the present Bill is a preparation, a dry run, for abolition and that what the Government are doing, because so many employers did not want to see the abolition of the wages council system, is to let the wages councils wither on the vine. If that is the case, then I consider that the Minister should say so tonight.

If that is not the case and if the Government believe that the attenuated wages council system should continue, then—while they may not like our amendment and our amendment may be badly drafted, though no doubt the Parliamentary draftsman could improve on it in many ways—if they like to give us some indication that they will take this away and look at the problem, naturally enough we shall be pleased to withdraw the amendment.

However, I must say just a little about what the amendment is designed to do and what it proposes should be the procedure for the creation of a new wages council, and why we believe it is particularly important that there should be a way of creating new wages councils, given what the contents of the Bill imply.

The procedure that we propose is to some extent a new one: that there should be a recommendation process and that the recommendation for the creation of a new wages council should be from bodies such as ACAS or any voluntary joint bargaining body, joint industrial council, a trade union or an employers association. All these people could recommend the possibility of a new wages council for a new category of workers who are unprotected by the dependent position of themselves in the market in relation to the employers.

There should then be an investigation process and the obvious people to do this, where the investigation does not come from ACAS, would be ACAS itself. There would be criteria, cited in the Bill, whereby you could decide whether there was a case for creating a new wages council. You would look at the state of the existing joint determination machinery and at the existing system for collective bargaining, if one existed. In many areas there might not be any system of collective bargaining. You would look at the levels of remuneration among adults affected by a new wages council. You would compare them, say, with the general earnings level, about which I shall have more to say later; or you would look at the level of remuneration of young workers and see whether there was any indication that, in general terms, there was a case for a new wages council. Unless it is the Government's job to let the wages council system wither on the vine, as I say, I do not see why in principle they should not accept a move of this kind.

My second argument would be that it is particularly important to do this, given what is being done in the rest of the Bill and given what is being said about some of the reasons—admittedly subsidiary reasons—why wages councils should be dealt with in this way. Government spokesmen and their supporters on the other side are very fond of saying that they have to simplify the scope of wages councils because they are too complicated or too rigid and because small employers cannot understand the wages orders.

As I said on Second Reading, if wages councils orders are complex (and I wonder how many people in this Chamber have read such orders) they are complex for the most part because the wages council itself is trying to combine a whole series of things which might be better separated into different wages councils. So if one is saying they are too complex, too rigid and too general, it may be that what is required is a more tailor-made and specialised approach. But if there is no possibliity of creating new wages councils and if one can simply break up one wages council into two, three or four, but never extend it to fit into new groups, the chances are that the wages councils we have left will be felt by employers to be increasingly irrelevant, increasingly rigid and increasingly anomalous if the Government deny themselves any generous measure of reform. And without the possibility of new wages councils within the existing structure—for example, in a very large wages council like the Retail Wages Council—the insistence upon a single rigid rate must produce a very low minima, must squeeze out premium payments, overtime, differentials and that kind of thing, so far as the enactment of statutory regulation is concerned. On the other hand, within a system of a single rate which is itself rigid, to break up the wages councils and create new ones might be thought to be one way in which one might make the system more flexible.

Finally, of course we know that, in comparative terms, in this country we have a very bad minimum wage regulation system. It is not to the credit of previous governments that they did not reform this system. There are many low-paid workers, for example, in engineering or launderettes or in large parts of the public sector, who are low paid on any objective measurement and who are not covered by wages councils. Some people have calculated that about one-third of workers in the lowest decile of the earnings survey are not covered by wages councils, so we have what is very far from a perfect system. And if we are to put a lid on it and say that it is only to produce a single rate, only to decline and never to renew itself, spread itself or try to bring itself up to date, then indeed the Government will be creating the kind of rigidity which they say they want to remove. I beg to move.

Lord Trefgarne

As the Government have repeatedly made plain—and indeed I said this on several occasions earlier this week when we were considering earlier parts of this Bill—we believe that the terms and conditions of employment are best left for agreement between employer and employee without statutory intervention. Where this results in difficulty—for instance, among workers who have heavy domestic responsibilities which are difficult to maintain on low pay—there is support such as family income supplement and, in due course, there will be the much improved family credit system. It must be abundantly clear that we do not see the extension of regulation as furthering our aims of promoting enterprise and employment. For this reason we are not prepared to extend the system by creating new councils. These arguments apply equally to all the circumstances specified in the amendments which we are addressing in this group.

The continuation of the existing wages council system rests on the outcome of the consultative exercise we conducted in March last year. This indicated a preference among employers and unions in most of the trades concerned where there is a history of this form of trade regulation for the system to continue.

The majority of employers favoured the reforms proposed in the consultative paper, which are reflected in Part II of the Bill. It is of major importance to everyone concerned that we simplify procedures in connection with wages councils, including the way we deal with changes which become necessary in the scope of operation of wages councils. At present the Secretary of State may refer to ACAS for a report before making an order to abolish or to vary the scope of operation of a wages council. This is part of a complex and convoluted procedure (which, incidentally, took three pages of type to describe in summary) which we intend to avoid in the new legislation. However, the Bill provides for the Secretary of State to confer with such organisations as appear to him to be appropriate. Therefore he may continue to refer to ACAS as at present if he considers it appropriate to do so.

Amendment No. 78, which would require reference to ACAS before an order could be made to abolish or vary the scope of operation of a wages council, would defeat the purpose of the revised procedures which are intended to simplify the processes of abolition and variation of scope when these are appropriate.

The requirements the Secretary of State must observe before making an order, as set out in Clause 13, are substantial and do not allow him to use his powers capriciously. They rely on a commonsense interpretation of the circumstances of each case which comes up for consideration. They do not preclude consultation with ACAS, if that would be helpful. The best protection for the workers who are affected is that orders abolishing wages councils, made under the new legislation, which do not transfer any of the workers concerned to another council, would require approval by affirmative resolution of both Houses of Parliament. The requirement proposed by the amendment is therefore superfluous and I hope the noble Lord will not persist with it.

Lord McCarthy

The noble Lord the Minister says that these things are best left to the employer and the employee, even when the employee is in a dependent situation without a trade union in which all the power in effect in the labour market is with the employer. As I say, the Minister says that these things are best left to the employer and the employee. Of course, I do not expect him to say that they are best left to the employer and the trade union. That is the last thing that this Government would say. It is a mystery—but perhaps it is just a question of time—why we do not get rid of the Factories Acts, because that is best left to the employer and the employee. It is a mystery—but perhaps it is just a question of time—why we do not get rid of unfair dismissal, because that is best left to the employer and the employee. Even this Government, at this moment, believe that some things are not best left to the employer and the employee, but every time they want to get rid of something they trot out this argument.

The Minister says that people can use family income supplement and social security. He says that they can go to the DHSS when they cannot get decent pay. This Government cannot see the difference between pay which you put into your pocket and spend as you like, and dole for which you go round to the social security. If people are getting starvation wages it does not matter, says the Minister, they can always go on the dole. We think that this is disgraceful.

If the Government are saying that they want simplicity but go on to perpetuate complexity, we can come to only one conclusion—the conclusion that I sought to avoid in moving this amendment. This Bill is a precursor to the withering away of wages councils. Because of the degree of resistance by employers, we cannot have that just yet. But that is what the Government want. Because of the time, and because of the number of amendments still to come, I must now beg leave to withdraw the amendment. But that should not be seen as meaning that we agree with the Government.

Amendment, by leave, withdrawn.

[Amendment No. 77 not moved.]

Schedule 2 [Constitution etc. of wages councils]:

Lord Trefgame moved Amendment No. 77A: Page 34, line 26, leave out ("3") and insert ("5").

The noble Lord said: This amendment will enable the Secretary of State to appoint up to five independent members to sit on a wages council instead of a maximum of three as at present. This does not of course mean that the Secretary of State is going to rush to appoint five independent members on each council. Three members may well continue to be adequate for many councils, especially the smaller ones. The purpose of the amendment is simply to make it easier to achieve a reasonable degree of attendance of independent members on councils, where this has sometimes proved difficult in the past with only three members to draw on.

I am sorry that this amendment appeared on the Marshalled list rather late. The amendment is in response to representations from many of those involved in the work of wages councils and we did not envisage that it was in any way controversial. I hope, nonetheless, that the Committee will feel able to agree to it. I beg to move.

Lord McCarthy

I have three points to make about this late amendment, but first—and I do not like doing this—I must protest at the lack of notice that we have had not only in relation to this amendment, which is the first new amendment that we have had to protest about, but also in relation to the other late amendments which the Government have put down. In some ways the case against the lateness is worse on this amendment, because I think I am right in saying that this is the first time in my period in the Committee—but other Members go back much longer than me—that an amendment has been printed not as an amendment but in a Marshalled List; and not even in the first Marshalled List, but in the second Marshalled List. This amendment first appeared in the second Marshalled List this morning. I think that that is something to complain about. The advantage is that it is at least a simple amendment.

That brings me to my second objection. The amendment is contrary to what the Government led us to expect. Far from what the Minister said about people suggesting it to the Government, and people sayng that they would like to have the numbers of independent members of wages councils expanded, I do not remember the Secretary of State in this Chamber, or the Minister responsible in another House, mentioning that on Second Reading. If that had come about in the consultative process, surely it would have been reasonable to expect something to be said at Second Reading. Indeed, it might have been introduced in another place if it had come out of the consultative process.

I do not believe that it came out of the consultative process. I believe that it came out of Standing Committee K. If Members of the Committee read the report of the 18th sitting of Standing Committee K in another place of Tuesday, 15th April, they will see that the Conservative Back-Benchers were complaining at that stage about the composition of the present wages councils. Many nasty things were said at that stage about the mixture of lawyers, academics and businessmen, with the very occasional trade unionist, who now operate wages council systems at the princely rate of £64 a day; and, if they read the papers and participate in the decisions, that works out at about £5 an hour.

Many nasty things were said about those distinguished people and Conservative Back-Benchers moved a number of amendments. They wanted to insist that certain people who are employed and sit on many wages councils, such as the distinguished arbitrator, Sir John Wood, should only be allowed to serve on one wages council. They wanted to say, in all kinds of ways, that there should be a restriction on the extent to which people could work on one wages council or another. They wanted to say that these people should have practical experience of business. They wanted to say that they should be small businessmen—the smaller the better. They wanted to ensure that if there were any who were not small businessmen, they should have practical experience of small businessmen's problems.

Mr. Trippier, for the Government, in Standing Committee K rejected all these proposals and he rejected them on various grounds. The ground on which he rejected them which is of most concern to us is at col. 604 of the Official Report of 15th April for Standing Committee K. He said: We have difficulty in finding people who are prepared to devote time to the wages councils". Now they are going to have to find more. He went on: It is not easy to get such people whatever the fees may be". They are £64 a day— They are still only a drop in the ocean". Then he went on, almost as if he knew what the Minister was going to say today and wished to contradict him. He said at col. 605: We have received few letters about the composition of wages councils". He was obviously referring to the consultative process. There does not seem to be dissatisfaction with their composition. That in itself is compelling". On 15th April it was compelling, but it is not compelling today. He went on: I wish to see independence". The Government do not necessarily wish to see independence any more. I suppose that they wish to pack the wages councils with their friends. I suppose we must assume that, in addition to the present three members of the wages councils, they will be asked, "Can we have two people, each one of which is one of us?", and they will pack the wages councils. Otherwise there would appear to be no reason why at this late stage we have this amendment without consultation.

The CBI knew nothing of this change, the TUC knew nothing of this change and ACAS knew nothing of this change. This change was never mentioned until this amendment was published today. So it is not enough to take young people out; it is not enough to abolish holiday minimums; it is not enough to direct them to beware of creating unemployment; we must also tamper, in a most suspicious and devious way, with those who sit on wages councils. We oppose this amendment.

Lord Rochester

I feel that I must join the noble Lord, Lord McCarthy, in registering a protest about the tabling of this amendment. As he fairly said, it was available to us only this morning. The noble Lord, Lord Trefgarne, has apologised for that and he has explained why it is that the amendment has been put down. The concept lying behind this was not available to us when the Bill was debated in principle at Second Reading, as the noble Lord, Lord McCarthy, has said. There has been no consultation about it. What is now said—and I, too, have in my hand the minutes of the relevant Standing Committee—appears to be at variance with what the Under-Secretary of State said on that occasion. It is unfortunate, to say the least, that we are required to take a decision on this today at such short notice.

Lord Trefgarne

I am very sorry that the noble Lord, Lord Rochester, takes that view. One would think that I was proposing some cataclysmic change to the arrangements. What I am actually proposing is that the independent members be increased from three to five, because out of the three there are at present some of them have occasionally had difficulty in attending all the meetings of the council and we wish to ensure that they are not put to undue inconvenience.

This proposal did not arise out of Standing Committee K. The inspiration for it came from employers in the retail trade with, we understand, the support of the workers' side of the council. The noble Lord, Lord McCarthy, may not be aware of that. But in the light of the modest and sensible nature of the amendment, I hope the Committee will agree to it.

Lord Sainsbury

I heard a different version. I heard a version from the retail trade body that it wanted five because the existing three so often sided with the workers.

Lord McCarthy

I have heard that story, too. We can all retail stories. What is remarkable is the way the Minister keeps changing his reasons. I must congratulate him. He now says—he did not say it before—that they are doing it because people do not turn up. If people do not turn up, you sack them. It is only £64 a day. You would not be sacking them from anything they would not want to be sacked from.

If wages councils have meetings and they cannot get quorums and there are people who do not attend at stated meetings of wages councils, then you should just say to them, "I am afraid we cannot continue because you do not attend". You do not get more people who also may not attend; you get people who can attend, and you let people know that one of the conditions of membership of a wages council is that you do attend. I say quite frankly that I do not believe the Minister when he says they do not attend. This is just the latest excuse, and we are not having it. We are going to divide.

5.53 p.m.

On Question, Whether the said amendment (No. 77A) shall be agreed to?

Their Lordships Divided: Contents, 91; Not-Contents, 71.

DIVISION NO.4
CONTENTS
Airey of Abingdon, B.	Dilhorne, V.
Aldington, L.	Eccles, V.
Auckland, L.	Elliot of Harwood, B.
Belhaven and Stenton, L.	Elton, L.
Beloff, L.	Erroll of Hale, L.
Belstead, L.	Fanshawe of Richmond, L.
Boyd-Carpenter, L.	Foley, L.
Brabazon of Tara, L.	Gainford, L.
Braye, B.	Gardner of Parkes, B.
Brookes, L.	Gisborough, L.
Brougham and Vaux, L.	Gray, L.
Broxbourne, L.	Hailsham of Saint
Caithness, E.	Marylebone, L.
Cameron of Lochbroom, L.	Halsbury, E.
Carnock, L.	Hardinge of Penshurst, L.
Colwyn, L.	Hives, L.
Craigavon, V.	Home of the Hirsel, L.
Craigmyle, L.	Hooper, B.
Cullen of Ashbourne, L.	Hylton-Foster, B.
Davidson, V.	Kinnaird, L.
De La Warr, E.	Lane-Fox, B.
Denham, L. [Teller.]	Lauderdale, E.

Lawrence, L.	Pender, L.
Layton, L.	Rodney, L.
Long, V.	Rugby, L.
Lucas of Chilworth, L.	St. Aldwyn, E.
Lyell, L.	Saint Brides, L.
McFadzean, L.	Saint Oswald, L.
Macleod of Borve, B.	Savile, L.
Malmesbury, E.	Seebohm, L.
Mancroft, L.	Sempill, Ly.
Marshall of Leeds, L.	Shannon, E.
Massereene and Ferrard, V.	Skelmersdale, L.
Maude of Stratford-upon-	Stodart of Leaston, L.
Avon, L.	Sudeley, L.
Molson, L.	Swinton, E. [Teller.]
Monk Bretton, L.	Teviot, L.
Monson, L.	Teynham, L.
Montagu of Beaulieu, L.	Trefgarne, L.
Montgomery of Alamein, V.	Trumpington, B.
Mottistone, L.	Vaux of Harrowden, L.
Munster, E.	Vickers, B.
Murton of Lindisfarne, L.	Vinson, L.
Norfolk, D.	Vivian, L.
Norrie, L.	Young, B.
Nugent of Guildford, L.	Zouche of Haryngworth, L.
Orkney, E.

NOT-CONTENTS
Airedale, L.	Lovell-Davis, L.
Amherst, E.	McCarthy, L.
Attlee, E.	McGregor of Durris, L.
Aylestone, L.	McIntosh of Haringey, L.
Birk, B.	McNair, L.
Bruce of Donington, L.	Meston, L.
Caradon, L.	Mishcon, L.
Carmichael of Kelvingrove, L.	Morton of Shuna, L.
Cledwyn of Penrhos, L.	Mulley, L.
David, B. [Teller.]	Nicol, B.
Dean of Beswick, L.	Oram, L.
Denington, B.	Parry, L.
Diamond, L.	Phillips, B.
Elwyn-Jones, L.	Pitt of Hampstead, L.
Ennals, L.	Ponsonby of Shulbrede, L.
Falkender, B.	[Teller.]
Fisher of Rednal, B.	Rochester, L.
Foot, L.	Sainsbury, L.
Gallacher, L.	Seear, B.
Graham of Edmonton, L.	Sefton of Garston, L.
Gregson, L.	Serota, B.
Grey, E.	Shepherd, L.
Hanworth, V.	Silkin of Dulwich, L.
Hatch of Lusby, L.	Simon, V.
Houghton of Sowerby, L.	Stallard, L.
Howie of Troon, L.	Stewart of Fulham, L.
Hunt, L.	Stoddart of Swindon, L.
Irving of Dartford, L.	Strabolgi, L.
Jenkins of Putney, L.	Tordoff, L.
John-Mackie, L.	Turner of Camden, B.
Kaldor, L.	Underhill, L.
Kirkhill, L.	Wells-Pestell, L.
Listowel, E.	White, B.
Lloyd of Kilgerran, L.	Williams of Elvel, L.
Lockwood, B.	Willis, L.
Longford, E.	Wilson of Rievaulx, L.

Resolved in the affirmative, and amendment agreed to accordingly.

Schedule 2, as amended, agreed to.

6.2 p.m.

Clause 13 [Abolition, or variation of scope of operation, of wages councils]:

[Amendments Nos. 78 and 79 not moved.]

Clause 13 agreed to.

[Amendment No. 80 not moved.]

Clause 14 [Wages orders]:

Lord McCarthy moved Amendment No. 81: Page 15, line 34, at end insert— ("and such separate rates for different occupations as appear appropriate to the council").

The noble Lord said: In Clause 14, we are moving a series of amendments, each one of which is designed to put back into the Bill something that has been taken out by the Government, thus reducing the scope of wages councils' awards in relation to what they were under the 1979 legislation. The first amendment is to insert at the end of line 34 on page 15 the words: and such separate rates for different occupations as appear appropriate to the council".

In other words, the Government are now saying that there should be one single basic rate and that one cannot have rates for different occupations. We are suggesting that one should do so, and that would be the effect of voting for this amendment. The justification is that it is necessary and sensible to have different rates for clearly-defined occupations and not a cause of complexity or rigidity. The justification is that the wages councils know their job; whether or not they all attend, they know their job. Indeed, in the case of most wages councils, so far as I can tell—and I do not claim to have inspected the awards of all wages councils but I have examined quite a few—there are not different occupational rates.

There are no different occupational rates that I can see in laundries, hairdressing, toy manufacture, in the button wages council, in the hat and cap wages council, or in my favourite wages council—and it is my favourite because I do not know what it does—which is the sack and bag. They do not have separate occupational variations in the sack and bag wages council; they do without them in sack and bag.

In cases where there are occupational variations, those variations are simple. They are divided into two. There is an interesting differentiation in the licensed non-residential trade. There is a rate for club stewards and a rate for the club steward's spouse. That seems to be a reasonable differential, and it appears to represent a reasonable difference in the rate, because the function and job of a club steward is quite different from that of the club steward's spouse.

In boot and shoe they have a variation. They have a rate for foremen and managers and a rate for all other workers, because in boot and shoe they wish to improve the differentials; they want a decent rate for managers and they believe that in that way they will attract better people into the industry.

The most complex of all is in retail food. It is not really a vast and complex differential, and it should not cause difficulty to anybody who is in the industry. There are effectively only three different rates. There is the manager's rate, a street vendor's rate, and a number of other rates that are extremely close together—for general assistants, transport workers, roundsmen, and so on.

All of that is related to the need to have reasonable differentials. It is related to the requirements of the employers and the unions in those industries. There is no indication or sign, and certainly the Government have never argued, that one or another of those differentials—for example, that between the club steward and the club steward's spouse—is misused, prices people out of work, or provokes one of the Government's other famous myths.

Therefore, why should those differentials not remain? Why should there not be those distinctions? If they have stood the test of time among the parties and independent members who introduced them for what seemed to them to be valid reasons, then why should they not remain? The Government may say—I suppose because it is the only argument they could cobble together—that it should be left to the parties concerned, to the employers and the employees, and that it can all be done by voluntary regulation. Once again, we say what we have said repeatedly in this Chamber: that in those industries, and for those workers, voluntary regulation is not enough. It will not protect differentials. It will not protect the manager's rate. It will not protect the reasonable differences between general assistants, transport workers, street vendors and roundsmen. Those differentials have been decided by the parties concerned and there are good reasons for them. We propose that that provision should go back into the Bill. I beg to move.

Lord Trefgarne

Current wage orders are lengthy and complex and, despite what the noble Lord has said, they tend to deal with all pay and related conditions of employment. Employers and workers can have great difficulty in interpreting them. Responses to the consultative papers show almost universal support for simplifying wages orders.

Pay differentials for different grades of worker imposed by orders can be expensive and can deter employers from providing jobs. In future, there will be only one minimum basic rate and one minimum overtime rate for workers undertaking different types of work. The Bill does not remove workers' rights to differential pay rates. The majority of workers are likely to continue to be entitled to their current rates under the terms of their contracts of employment. Limiting councils to setting a single basic and overtime rate is central to the Government's policy of reform.

If the amendment were carried it would undo one of the prime objectives of the Bill; that is, releasing employers from unnecessary burdens and enabling them to give more time to running their businesses. I hope that the Committee will reject the amendment.

Lord McCarthy

The noble Lord is better than he was; his response is better than saying that people do not attend wages councils, but still it will not do. Wages councils' orders are not all lengthy and complex. Most are very short and are only a few pages long. In the case of orders that are lengthy, one does not have to read all of them because they are the same year after year after year. You need only read the parts where the rates change. Sometimes the orders are in different colours. The Government would be doing something much more useful if they said that the orders ought to be in different colours; then even the smallest or dwarfest of businessmen could understand a wages council order.

The Minister does not give any reasons why people should not be doing what they have been doing for years—an argument which has always been useful for previous Conservative governments. We cannot agree with the noble Lord, but we do not intend to divide the Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rochestermoved Amendment No. 82: Page 15, line 41, after ("(ii)") insert ("save as provided below").

The noble Lord said: This is a paving amendment to Amendment No. 84 which, as the Committee will see, seeks to insert in this part of the Bill a provision for a single minimum hourly overtime rate of remuneration in respect of time worked on a Sunday.

I should first say that in proposing this amendment, designed to enable a wages council to make an order fixing a single rate for work done on a Sunday, it is not my intention to minimise the importance of other amendments which are to follow dealing with, for example, annual holidays. Indeed, much of what I have to say on this amendment could equally be applied to others. It may cheer the Committee a little to learn, therefore, that I shall not be constantly rising to my feet to say much the same thing time after time.

In view of our recent discussions on the Shops Bill it seems appropriate to draw special attention to the need for Sunday working to be adequately rewarded. For a long time I worked in the chemical industry where it was necessary to have a continuous process of work. However, there were elaborate shift rotas designed to ensure that people were not obliged to work on more than one Sunday in three or four. What is more, they were protected by strong unions, as I know from experience in having had to deal with them in these matters. Invariably, the people concerned were paid at the double-time rate when they worked on a Sunday.

The position of people who work, for example, in the clothing, hotel and catering industries, on the other hand, is quite different. They are largely unorganised. They depend on wages councils for protection and, in the case of retail workers, on the Shops Act. Of course, Clause 14 of the Bill—the clause we are now discussing—was drafted in the expectation that the Shops Bill would be enacted. The employment and conditions of shop workers would then have been even worse than they now will be. It was intended that the two Bills should run together. Events did not work out quite like that in practice, but that does not help the people—many of them women working part-time who have family responsibilities—who will be affected by this Bill. If they work on a Sunday, that will not necessarily be because they want to do so, but because they need a job and have to work.

I know that people who are currently employed under a contract incorporating the terms of existing wages orders can expect their employment to continue on that basis unless the terms of their contract are changed by agreement; indeed, the noble Lord, Lord Trefgarne, said as much on the previous amendment. I know, too, that if an employer seeks to change the terms of an employment contract unilaterally, remedies are available to the worker, in theory; but under present conditions of unemployment it must be very doubtful as to how far they will be utilised in practice.

However, in my view that is beside the point. We are legislating for the future. People who work on a Sunday should be adequately paid for so doing. That is what this amendment is designed to achieve. I beg to move.

6.15 p.m.

Lord Sainsbury

I support this amendment because I believe that workers who work unsocial hours on Sunday, which may keep them away from enjoying the company of their families, are entitled to a special rate. I understand that in Scotland where, as the Committee know, Sunday trading is not against the law, under existing wages council legislation retail employees who work on a Sunday as an additional day are paid double time.

Baroness Turner of Camden

I rise from these Benches to support both amendments of the noble Lord, Lord Rochester. As he rightly says, the principle of higher rates for antisocial hours or for an awkward shift pattern is one that has been accepted for a long time throughout industry. In many places, of course, the workers are covered by union-negotiated agreements. It is accepted that if people work these hours, they should have a premium rate for doing so.

The Government proposals in the Bill, however, would remove such entitlement for many of the lowest paid. As we have said many times in this Committee during discussion of the Bill, we are talking about vulnerable people who are, generally speaking, not unionised. In industries such as the hotel and catering trades, as the noble Lord, Lord Rochester, said, the very nature of the trade requires antisocial hours and shift patterns of working. As the Committee knows, we had a discussion about this on the Shops Bill and despite the fact that the Bill was not enacted there is still the situation in many places where there is Sunday working for people in the retail trade. It does exist. For those reasons it seems to us that it would not be appropriate to remove from such people the right to some kind of premium arrangement in regard to antisocial hours, particularly for Sunday working.

Paradoxically, it seems to me that the removal of the right to shift premia and the reduction of overtime provisions could have a directly negative effect on the number of jobs available, with employers being encouraged to rely on job cover, through long and exploitive hours, with existing staff rather than with realistic staffing levels by offering work to other people who are available. For all those reasons we support the amendments tabled by the noble Lord, Lord Rochester.

Lord Trefgarne

I have listened carefully to the arguments which have been adduced in support of these amendments which would, as has been explained, have the effect of maintaining the power of wages councils to set special higher minimum rates for work done on Sundays. However, I am afraid that I have heard nothing to persuade me that a departure from the course on which we are set would be justified.

The Bill already recognises the claims of those who have already worked a full week for some special higher payment for work done beyond their normal hours. These amendments would restore the power of councils to provide for extra payment simply because the work is done on a particular day of the week. It would mean that even those who work only on Sundays would also be entitled to a higher rate.

This Bill is about a basic level of protection. That is what the employers in the trades concerned wanted us to retain. Very few of the respondents who replied to our consultative exercise were prepared to countenance more than that. Ministers have frequently received complaints about the levels of pay which councils such as the retail councils have set as minima for Sunday work. At least double pay is required for the great majority of Sunday workers in these trades and the rules are such that a worker who attends even for only one hour on a Sunday must be paid for nine hours.

It is no part of our policy to support such dubious propositions in this way. We have no mandate from employers responding to our consultative paper to do more than provide a minimum level of protection. That is what the Bill does and I hope that the Committee will reject the amendment.

Lord Rochester

I did not really expect to hear anything else from the noble Lord, so I can hardly claim to be disappointed. If I may respectfully say so, I thought that part of his brief was scarcely relevant to the amendment. However, it is only one of a series under Clause 14 that we are now debating. I do not want to be constantly driving members of the Committee in and out of the Division Lobbies. If we are to have a vote it may be that it would be better to take it under the Question whether Clause 14 should stand part of the Bill; but that procedure should not be taken as an indication of satisfaction with the Government's response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 83 and 84 not moved.]

Baroness Turner of Camden moved Amendment No. 85: Page 15, line 43, at end insert— (" ( ) a single minimum hourly rate of remuneration in respect of time worked by a piece worker (to be known as a piece work basic time rate; ").

The noble Baroness said: In moving this amendment I should like to speak also to Amendment No. 98, because both amendments cover the same point. These amendments seek to ensure that piece-rate wage systems cannot be used to undermine that statutory minimum rates. The first amendment allows wages councils to continue to set higher piece-work rates, as is the long-standing practice in the clothing and made-up textile sectors. The second amendment states that no piece worker shall be allowed to fall below the minimum time rate set by the relevant wages councils. Again, this is the current protection in the clothing and made-up textile sectors.

It seems to me that the Bill, as at present drafted, provides a weaker form of minimum wage protection for piece workers than it does for those on time rates. Instead of using the time rate as a floor above which employers and employees are free to negotiate piece-work rates, as is the current practice in wages council industries where piece work is important, the Bill will mean that many piece workers will fall behind the minimum rate. This is because, while Clause 15(2) brings piece-work earnings into line with time rates, this is only the case in relation to a hypothetical ordinary worker, who is referred to in the clause as "a worker of ordinary competence".

In our view, this provision will have two damaging effects. First of all, it will introduce unnecessary legalism into the wages council system. The notion of an ordinary worker is subjective and will inevitably be the basis of dispute. It will open the door for piece-work structures to be set at levels that will undermine the time rate, thus driving a coach and horses through the legal minimum protection. The ordinary worker concept will enevitably be applied to the average worker and so large numbers of people will be paid below the minimum rate.

The wages council sectors where piece-rate working is most common are the clothing and made-up textile industries. In both these sectors the ordinary worker notion is incorporated in the wages council order, but within a structure of rates that allows for a higher minimum piece-work basis time rate than the general time rate. Thus the minimum earnings yardstick for an ordinary piece worker under the wages councils at present is higher than for time workers, thereby minimising the danger that significant numbers of workers will fall below the minimum hourly rate of pay. Even so, the problems outlined in respect of the use of the ordinary worker concept have still emerged and as a result the wages councils for clothing and made-up textiles have both ruled that no piece worker should fall below the minimum time rate. It is with a view to continuing to have that protection that we are moving these two amendments. I beg to move.

Lord Trefgarne

I had hoped that by now I would have been able to assure the Committee that we were not seeking to abandon piece workers to their fate. I think that the noble Baroness would have us introduce a universal fallback rate for piece workers in terms of a minimum earnings limit. Were we to do so, we should be extending protection beyond the basic protection which this Bill seeks to provide. I do not believe that we should depart from this fundamental principle. The consequences could be serious in terms of opportunities for employment.

The degree and nature of the protection that we have retained for this group essentially reflects that which has obtained for many years. We have adopted in the primary legislation the concept of the ordinary worker which has been used by the wages councils themselves over many years. We do not claim that the concept is perfect. But we have not come up with a better way of seeking to protect their interests. Had there been one, I am sure the councils themselves would have found and developed it. I must say to the Committee that despite anxieties the concept has proved workable, and by and large experience has shown piece workers to be less vulnerable to statutory underpayment than those employed on time rates.

I believe that the mischief which the noble Baroness seeks to correct by means of this amendment is largely imaginary. I hope that she will not press the amendment.

Baroness Turner of Camden

I am disappointed to hear what the noble Lord has said because it seemed to me that he was agreeing with me that there was or could be a problem about piece workers, and of course the amendment seeks to ensure that those workers will be adequately protected. The two Amendments, Nos. 85 and 98, seemed to be a very simple and easy way of doing that. However, at this stage I shall not press the amendment. I shall look carefully at the noble Lord's reply in Hansard and I may come back to this point at Report stage. For the time being I shall not press the amendment.

Amendment, by leave, withdrawn.

Lord Trefgarne moved Amendment No. 85A: Page 16, line 1, leave out ("section 17(4)") and insert ("section (Computation of remuneration) (2)(a) and (3)(a)").

The noble Lord said: I rise to move Amendment No. 85A and with the Committee's permission I shall at the same time speak to Amendments Nos. 99 A and 100A. I should also like to speak to the Motion that Clause 17 stand part of the Bill, which, the Committee may be surprised to hear, I shall oppose because we intend to suggest an alternative.

These two new clauses replace Clause 17 and subsections (3) and (4) of Clause 25 of the Bill, which deal with the calculation of the amount the employer has paid the worker and how that sum is to be apportioned where a worker's employment is not wholly in scope of a wages council. Some expansion of the Bill has resulted—we now have an extra clause—and I concede that the drafting appears complex, but our objective is to ensure that the amount the employer has paid to the worker can be fairly and properly assessed in all circumstances, for the purpose of comparison with the remuneration due under the relevant wages order or orders, in order to ensure that the legal entitlement has been paid to the worker.

In the great majority of cases there will be no difficulty in judging how much the employer has paid for work done—it will be the gross pay that the worker has received—but it is necessary for the Bill to be clear in circumstances where doubt may arise. It may help the Committee if I begin by setting out briefly the principles on which the clauses are based and then explain the steps by which those principles are brought into play.

First, as I am sure all sides of the Committee recognise, the amount to be taken as paid has necessarily to include deductions of various kinds, the obvious ones being tax and national insurance. We all know that a salary of £5,000 per annum does not mean that £5,000 is paid over. The bill does not spell out all the deductions which it would be appropriate to count as pay, but starts from the opposite position; in other words, it specifies those which are not to count for the purposes of assessing the remuneration the employer has paid.

Secondly, it is obviously appropriate that expenditure which the worker must necessarily incur in order to do this work should not count as part of the remuneration paid to him. The new clause makes it plain that that principle applies regardless of whether the expenditure takes the form of a payment to the employer himself or of a payment to a third party. In doing so it meets a criticism levelled by the Opposition in another place.

The new clause embraces these principles in setting out a series of logical steps which involve adding together the money payments the employer has made and the allowable deductions and then removing from that aggregate any necessary expenditure the worker has incurred. It also provides for the further deduction from that aggregate of any payments made by the worker to the employer and which need to be taken into account in computing the amount to be regarded as paid. For example, if the employer has charged the worker more for living accommodation than the amount allowed by the wages order, it is right that the excess should be deducted from the aggregate.

The new clause rounds off the provisions of the other clause by specifying what is to happen where a worker's employment is only partly within scope of a wages order or within scope of more than one such order. Essentially this is a matter of apportioning the remuneration calculated as paid between the in-scope and out-of-scope work. The apportionment is to be made according to the proportion of time spent on work of each type unless the contract provides otherwise. In the event that any element of the remuneration is attributable wholly to work of one type the calculation of the apportionment has to take account of that fact.

These amendments improve the present terms of the Bill by clarifying its intentions and I commend them to the Committee. I beg to move.

6.30 p.m.

Lord McCarthy

The Committee will not be surprised to hear that I have not yet understood the clause and the amendments. What is surprising is that my noble friend Lord Wedderburn of Charlton, who is unfortunately not in his place, tells me that he has not yet understood them. They are extraordinarily complicated. I can say without fear of contradiction that we are frequently told that Sir Humphrey Appleton is in the House and that he has done this, that or the other. Sir Humphrey was not responsible for this. He would have done it much more simply. In fact, he might have done it much in the way that the Minister did it: money plus justifiable deductions and payments minus unjustifiable deductions and payments equals minimum pay entitlement. Had it been done like that, we might have known where we are, but what we have is a formula.

I should ask the Minister whether I have the correct formula if I thought that he could understand it. I make it: la + lb (-2a and 2b + 4abc) - li = pay. I do not know whether that is right. I do not claim to understand it and I do not believe that the Minister understands it. I do not even believe that the parliamentary draftsman is sure. But if la + lb, and so on, is correct, certain things about the formula give us cause for concern.

We shall come back to this on Report when we have understood it. It cannot defy all understanding if one works long enough. But at this level of our comprehen- sion several things worry us. The provision seems to us to some extent to go against what Mr. Trippier in another place wrote to the general secretary of the tailor and garment workers union about necessary expenses. It seems somewhat narrower. It seems to go against what the same Minister told Miss Short at col. 788 on 14th May about the ability to challenge illegal underpayment in industrial tribunals.

As a result of leaving in subsection (4)(a), (b), (c) and (d), it seems to be allowing for a certain species of truck. I do not believe that the Government want to bring truck back in while they are abandoning the Truck Acts. They say that they do not.

We are worried, for example, about subsection (4)(c): any goods or services supplied by the employer (whether in connection with the worker's employment or not)". If that can be allowed as part of pay, we see that as a sign of truck. Similarly, subsection 4(a) states: any conduct of the worker or any other event in respect of which he (whether together with any other workers or not) has any contractual liability". That seems to bring fines in again and to bring fines in whether or not it is in the contract. The Government told us throughout Part I of the Bill—and we accepted it as being right—that it was not their intention to go beyond contract. They would not put reasonability in but they put contract in, and you could not make a deduction without it being in the contract.

I could go on. On the present level of our understanding there are certain things about this series of amendments which bother us. That is why we put down our amendment. I thought that the Minister was to speak to that, too. I am in fact speaking to our Amendment, No. 99B, which was drafted in the early stages of our misapprehension of the clause, late in the night, when we thought that probably the main thing wrong with it was subsection (4)(b) and if we could get the reference to truck out, we could say that the amendment was fair. But it seems much more complicated and difficult than that.

I ask the Minister whether he can comment on the objections that I have so far raised. But we shall have to look at this again and come back to it on Report.

Lord Rochester

I cannot add much to the sum of the knowledge of the Committee. I do not understand this provision either. The Minister gave every indication that he did, but I am not quite sure about that. In my case I think that it has to do with, in part, the complexity of the amendment and in part no doubt with my slow wittedness. But it seems to me important that we should have an opportunity to study closely what the Minister has said and will again be saying in a moment, read it in Hansard, and have the facility to come back on Report when perhaps we can discuss it a bit more sensibly.

Baroness Seear

Since we are repeatedly told that wages councils are manned by men and women with many other occupations and who are certainly not lawyers, does the Minister agree that they should attempt to draft provisions in language which is reasonably comprehensible to reasonably ordinary people?

Baroness Phillips

Can the Minister explain a small point of procedure? Did 1 get it wrong? He said that he would be moving that the clause did not stand part of the Bill. What is the point in discussing the amendment and making a decision on it if he is to move that the clause does not stand part of the Bill anyway? It is an unusual procedure. I have never seen it before in all my years in the Chamber.

Lord Trefgarne

I hope that I did not inadvertently mislead the Committee. I am seeking to put a new provision into the Bill to replace an old one. Having persuaded the Committee, if I can, to agree to the new provision, I shall not want to insist on the old one staying in the Bill.

In replying to the noble Lord, Lord McCarthy, I at once confess that this is not straight forward. I am sorry if I did not explain it carefully. The noble Lord's amendment is an amendment to my amendment. Subsection (4)(c) of the new clause in Amendment No. 99A provides that where an employer supplies goods or services to a worker, the amount paid for them, whether by deduction from wages or paid by the worker to the employer, is not to be treated under subsections {2)(b) or (3)(b) as an amount retained by the employer for his own use and benefit. The amount deducted or paid has therefore to be included as remuneration paid. The practical effect of that is that if a worker buys groceries from his employer, the payment made for them is solely a matter between the employer and the worker. The transaction cannot in itself lead to the worker being paid less than the statutory minimum.

If subsection (4)(c) were left out, as proposed by Amendment 99B, the effect would be that an employer could not charge a worker for goods or services supplied if by doing so the worker's remuner-ation fell below the statutory minimum due. I am sure that such a provision is not one which the noble Lord would wish to see part of the Bill. I hope that he will not persist with it. If the Committee were willing to agree to the amendment that I propose, and the noble Lord, Lord McCarthy, were willing not to move or to withdraw his, we could return to this matter at a later stage of the Bill.

Lord McCarthy

I cannot quite follow what the noble Lord said. Surely in that situation the employer would be able to ask for payment for anything he has supplied. If the worker agreed that that payment should be made in the form of a deduction, that would not be illegal. It would be wrong to do that whether or not the worker agreed and then to say "You have your minimum". That would be wrong, but let us not go into that.

I meant to ask the Minister earlier whether he would undertake to give us some further information about the meaning of this clause. After all, the Government were good enough to issue Notes on Clauses which were extremely useful in finding our way through the Bill. There were no notes on this clause; there was merely the clause. Will he consider issuing Notes on Clauses on this clause?

Lord Trefgarne

I am very willing. Perhaps I may do that by writing to the noble Lord and giving him further clarification of the clause. There were more points that I should have wished to make, particularly on the point that he raised just now about the need to ensure that we are not returning to the provisions of the old Truck Acts.

Lord McCarthy

It is one thing to write to me, but many other Members of the Committee are interested in the clause and I think it should be published.

Lord Trefgarne

I should be happy to place a copy of that letter in the Library.

On Question, amendment agreed to.

[Amendment No, 86 not moved. ]

Lord McCarthy moved Amendment No. 87: Page 16, line 9, at end insert— ("( ) fixing a minimum period of annual holidays and the minimum remuneration payable during such holidays".).

The noble Lord said: The amendment brings back annual holidays and the minimum remuneration payable for such holidays. Typically, in wages council trades, there are four weeks' holiday after one year's service. That compares quite well with the average of holidays in industry generally for manual workers, both in the private and the public sector. It does not compare favourably with many of the provisions made for executive, management or some other higher paid groups. Nevertheless, it is considerably better than those of many low-paid workers who are not covered by wages councils and who cannot be covered by them now because the Government have shut the door on new wages councils.

For example, in the mushrooming security industry, where there is no wages council, there are few guaranteed holidays. The mushrooming launderette industry is not covered by a wages council and there are virtually no paid holidays. A recent survey shows that three out often instant print workers have no paid holidays.

Those workers have no statutory, regular or contractual holidays. They get what they can and what the employer allows them, according to the business. That is not fair or reasonable. Even this Government, so far as I know, do not say that if a minimum period of holidays is abolished that will price people into work. Even they have not given us figures, or they refused to give us figures or refused to tell us what the elasticity assumption is for pricing people into work if they are not to be given statutory holidays. Even this Government have not yet said (of course the Minister may say) that the smallest of small businessmen is so small-minded and stupid that he cannot read a wages council order and understand that he must give people four weeks' holiday. Surely that is not beyond him.

Surely the Government could allow their new wages councils, which will be full of their friends, to give minimum-period holidays and put that provision back into the Bill. I beg to move.

Lord Rochester

I support the amendment. I am impressed by the argument that the United Kingdom is apparently almost alone among European countries in not providing an overall statutory entitlement to a minimum holiday.

In this country there are legal holiday rights only in industries, as I understand it, which are covered by wages councils. If those are withdrawn, there will be no such entitlement in future. Far from creating new jobs, abolition of the holiday provision may even produce a net job loss in industries covered by wages councils by encouraging unscrupulous employers to make do with fewer people on the payroll.

Viscount Massereene and Ferrard

I should like some clarification. We always give agricultural workers four weeks' holiday. I also give them—I understand that this is the law—an extra £25 a week for their holidays. I have always understood that that applied to agricultural workers. Does it apply to all workers?

Lord Trefgarne

No.

Viscount Massereene and Ferrard

It applies to agricultural workers. They receive their full wages plus £25 a week.

Lord McCarthy

I agree with the point made by the noble Viscount. As I said earlier, the Government will not touch the Agricultural Wages Board because they have too many friends among the farmers. They will be all right. It is the the industrial workers who are for the dark.

6.45 p.m.

Lord Trefgarne

I hope that the noble Lord will forgive me if I resist the temptation to fight the social battles of the last century when discussing the amendment. If this amendment were accepted it would enable wages councils to continue setting the complex rules about holidays and payment for holidays which bedevil the present wages orders.

We strongly believe that this is a matter which should be left for agreement between employers and workers, and that it is indefensible for such matters to continue to be the subject of detailed statutory prescription. There was almost universal support among employers for the view that the wages council system must be drastically reformed if it is to remain. Many of the underpayments which occur are attributable to misunderstanding, and miscalculation and payment for holidays figure prominently among these underpayments. We really cannot continue to put businesses in a straitjacket in which they are breaking the law if, for instance, they pay a higher rate than that fixed by a wages order in exchange for fewer holidays than the order requires.

If this amendment were carried it would undo one of the prime objectives of the Bill—releasing employers from unnecessary burdens and enabling them to give more time to running their businesses. I must ask the Committee to reject it.

Baroness Seear

Is the noble Lord asking us to believe that to write into the Bill that people must have four weeks' holiday is so complicated that it will put industry into a straitjacket? That stretches our belief beyond endurance. The noble Lord keeps on telling us that such matters must be left to negotiations between employer and employed. Surely he knows that to be fair negotiations must be between evenly weighted parties. That is what makes for respectable collective bargaining—people of even strength negotiate quite properly and come to a proper decision.

But negotiation between people who have all the strength and people who are weak is not negotiation between evenly weighted parties. It is this that collective bargaining has come into existence to redress. I find myself unconvinced on being told that in the survey that the Government have done the employers have told them that they want the matter greatly simplified. We have not heard what other people have told the Government they want in respect of the reform of wages councils. Of course, the Government get this kind of advice from employers. But the employers are not the only interested parties.

Lord Harmar-Nicholls

I find frustrating the lack of realism shown by the noble Baroness whom I so much admire, in respect of this matter. Was she being told, the noble Baroness asked, that by putting in statute that there should be four weeks holiday, this was putting it in a straitjacket. If this was the only worry that small employers had to contend with, there would be no problem. The noble Baroness has to remember the innumerable other instructions in statute or near statute that have to be takan into account. When we consider all of these, we find that it is the straw that breaks the camel's back. It works much better when employer and employee have a relationship which means that they can make a mutual arrangement and dispense with statute especially when that statute may not accord exactly with the type of work they perform. I hope that my noble friend will not be diverted. This is another example of statutory obligations that make it almost impossible to run many small businesses. I am certain that it can be dispensed with, without any hardship to anyone. I am convinced that people in employment nowadays are well aware of their rights and that they are capable of negotiating a mutual agreement that will be much more suitable than a quickly drawn up statute passed through this House.

Lord McCarthy

It almost takes one's breath away. I am prepared to make an offer to the Government if they will read our amendment. If they are serious, they have delivered themselves into our hands. The amendment states, fixing a minimum period of annual holidays and the minimum remuneration payable during such holidays". Almost everything that the Minister said dealt with the second half of the amendment. The noble Lord dealt with the complexity of remuneration. He spoke about the poor, small employer who does not understand whether it is time and a fifth or double time, or for how long it is double time, and so on and so forth. All right, let us concede that for the purposes of the amendment: What is wrong with the first half of the amendment? Let us suppose that the amendment was to stop at fixing a minimum period of annual holidays. Would the Government object to that? Are the Government seriously saying, as the noble Baroness, Lady Seear remarked, that giving people a holiday bows down business and puts it out of account? If the noble Lord, Lord Harmar-Nicholls, says that this is not the only thing, what is he saying? It is the only thing we are asking for in the amendment.

We are not talking about VAT. That is what the small businessman complains about in most of the surveys. If the noble Lord brings forward a Motion on VAT, we will vote for it. We are talking about fixing a minimum period of annual holidays and the minimum remuneration payable. We would be willing to remove the amendment and to come back on Report with another that dealt with fixing a minimum period of annual holidays—full stop, end of message. If we did that, can the Minister say whether the Government would oppose it with the same vehemence with which they oppose the amendment now being discussed? If so, I just do not understand it. The noble Lord, Lord Harmar-Nicholls, said that there would be no hardship—no hardship with no holidays. I consider no holidays a hell of a hardship. We are saying that people should not be allowed to give no holiday.

Lord Harmar-Nicholls

I am not saying that we should have a statute that says people cannot have a holiday. I am saying that they can have a holiday that they have mutually negotiated. They know more about it than anyone else.

Lord McCarthy

What the noble Lord will not let them have is a statute that says they must have a holiday. I am saying that British industry, God above, can stand and can understand, and will not fall down, if a few workers have a statute that says that they can have a holiday. I want to know what the Minister would say if we came back with that proposal.

Lord Trefgarne

The noble Lord, on more than one occasion during the passage of the Bill, having heard some of the shortcomings of his amendment, has then sought to seek my views on some other amendment, not that on the Marshalled List. The amendment to which the noble Lord invites our agreement retains the whole mish-mash of arrangements regarding payment and minimum period for holidays. As I said earlier, this has been one of the main difficulties encountered on wages council orders. The detail has been such that even large firms have had difficulties sometimes in understanding the orders and a number of errors have inadvertently occurred. It is this inordinate detail that we do not think should stand between an employer and employee and that we seek to sweep away by this measure. This amendment would prevent us doing so. I invite the Committee to reject it.

Lord McCarthy

I am sorry to keep going on this, but we are due to stop at seven o'clock anyway. I am not saying that the amendment is a bad amendment. It is a very modest amendment. What I am saying is that the Minister seems to object to the second half, and only the second half, of the amendment. Does he really want to be Mr. Gradgrind? Is that how he wants to go down in history, saying that there will be no minimum period of annual holiday? Is he asking us to believe that if that is what we were saying, he would oppose it? Of course, we shall come back on Report. Of course, that is what we are going to say. I want the Minister to tell me what he will say.

Lord Trefgarne

I am again answering the amendment on the Marshalled List. The amendment does not have one part; it has two. The second part in particular I find most objectionable.

Viscount Massereene and Ferrard

If a worker does not want to take his holiday but would rather have the money, as frequently happens, where do we go from there? Does the noble Lord agree that that is all right?

Lord McCarthy

If that is what the worker wants and if the worker is in a position to influence the employer as to what he wants and is not so dependent on the employer that he has to take what the employer gives him, I have nothing to say about it. I beg leave to withdraw the amendment, but we shall come back to the matter on Report.

Amendment, by leave, withdrawn.

Viscount Long

I feel that this is the moment for a little light refreshment. In moving that the House do now resume I suggest that we do not return to consideration of this Bill in Committee until eight o'clock.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.