Wages Councils (Hansard, 16 October 1990)

§ The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater)
My Lords, the councils are empowered to set minimum rates of pay in certain industries. Compliance with their orders is running at a very high level

§ Lord Rochester
My Lords, I first wish the noble Viscount well on what I believe is his first appearance at the Dispatch Box as the Minister responsible in this House for dealing with employment matters.
What is the Government's response to the report published recently by the Low Pay Unit which claims that one in three companies covered by the wages councils are not paying statutory wage rates? The unit accuses the Government of seeking to abolish the system by the back door In particular, is there any truth in the allegation that the number of inspectors has been so drastically reduced that, on average, individual companies may now expect a visit from an inspector only once every 20 years?

§ Viscount Ullswater
My Lords, I thank the noble Lord for his kind words However, returning to the subject, I think that the report from which the noble Lord quoted uses the statistics in a way to highlight what it intends to highlight. The best yardstick of the general state of compliance is the proportion of workers found to be paid at least the statutory minimum in all checks carried out by the inspectorate, which embrace a fair cross-section of the establishments on the register This figure is consistently around 96 per cent. to 97 per cent.
In regard to the number of inspectors, since the Wages Act 1986 the number of inspectors has been reduced to 71. However, it has been found over the past three years that with the use of these inspectors —they inspect about 300,000 workers in 32,000 establishments—the figure of 96 per cent to 97 per cent remains consistent.

§ Lord Boyd-Carpenter
My Lords, I also congratulate my noble friend on his admirable maiden performance at the Dispatch Box Will he say whether, under the present situation, wages councils 723 have fully served their term and are now out of date in an era when one of our major problems is wage inflation?

§ Viscount Ullswater
My Lords, I thank my noble friend for his remarks. It is the Government's intention to keep the wages councils under strict review. A decision has been taken not to abandon them at present; but their usefulness is being regularly considered.

§ Baroness Turner of Camden
My Lords, I follow the noble Lords, Lord Rochester and Lord Boyd-Carpenter, in welcoming the noble Viscount to the Dispatch Box on this first occasion However, I should like to ask him whether he is aware that of over 5,000 companies found to be illegally under-paying, only eight have been prosecuted? Is that not a rather poor record of law enforcement? As for the noble Viscount's comment about the wages now being paid, is he further aware that in some instances workers are being paid as little as £1 an hour? Does not that refute what the noble Lord, Lord Boyd-Carpenter, had to say about wage inflation?

§ Viscount Ullswater
My Lords, the number of companies that have been prosecuted has remained at the sane level for a number of years. There has been no drop in the number of companies which have been prosecuted. The inspectorate sees its task as largely to inform and advise employers exactly what the wages council rates are and also to assist them in the employment of the workers in these industries. I do not think it is right to look at the number of prosecutions and say that there should be more. As I have said, 96 per cent. to 97 per cent. of those covered by the wages councils are paid at the minimum rate.

§ Lord McCarthy
My Lords, does the noble Viscount not agree that the Question asks whether the wages councils are operating effectively? That is asking the Government to say what they think those councils are for. Can the noble Viscount say whether the wage councils are to eliminate low pay? If that is the case, can he say why more and more British workers fall into a low-pay situation? Do not the Government really want to abolish the wages councils, but do not dare to do so because of the social consequences?

§ Viscount Ullswater
My Lords, the elimination of low pay is another matter. That problem is not necessarily addressed by the wages councils themselves. They are a hang-over from 1909 when they first started There are only 26 councils left They have not achieved the results that the noble Lord suggests in raising rates of pay.

§ Lord Mackie of Benshie
My Lords, is it not a fact that the wages councils normally apply in industries where there are low wages, but wage inflation comes from the industries which pay high wages?

§ Viscount Ullswater
My Lords, it is a fact that two-thirds of those involved in the trades covered by the wages councils are paid in excess of the minimum wage. Therefore, it is not true to think that all those covered by the councils are paid the minimum.