HL Deb 18 July 1991 vol 531 cc274-6

3.13 p.m.

Baroness Turner of Camden asked Her Majesty's Government:

How many prosecutions took place last year of companies paying below the minimum hourly rates set by wages councils.

Viscount Ullswater

My Lords, seven employers were prosecuted during 1990 for paying wages below the minimum hourly rates set by wages councils.

Baroness Turner of Camden

My Lords, I thank the Minister for that reply. Is he not aware that there were over 5,000 alleged breaches last year? Seven prosecutions out of 5,000 possible offences is a very low number. Is he further aware that in the past 10 years or so there have been only 67 prosecutions although, allegedly, over 100,000 breaches have taken place? Are the Government serious about applying the law as regards wages councils' rates?

Viscount Ullswater

My Lords, as regards the final point, the Government uphold the law. However, it has been the practice not only of this Government but also of the previous government—the average number of prosecutions each year under both governments has been the same—to seek compliance through advice and persuasion. If there is sufficient evidence of deliberate or repeated underpayment of workers, prosecutions are always considered. The level of prosecutions is higher than under the previous Labour government.

The Earl of Onslow

My Lords, is it not more to the point to abolish wages councils?

Viscount Ullswater

My Lords, wages councils should have no permanent place in the labour market. They are being kept under close review.

Lord Rochester

My Lords, is the noble Viscount aware that although the party I represent is opposed to the concept of a national minimum wage because of its adverse effect on employment and on account of the need to preserve differentials for skills, we want wages councils to continue? Is the noble Viscount further aware that we have grave doubts about whether there are enough inspectors to monitor the situation? We have doubts also about whether they have the means to ensure that the law is observed.

Viscount Ullswater

My Lords, I am grateful to hear the noble Lord's comments about the existence of wage; councils and the problems with setting a minimum wage. Following the passage of the wages Act 1986, the same number of investigations has been undertaken by the inspectors each year. They investigate some 30,000 establishments annually. The usefulness of the inspectors lies just as much in their advisory capacity as in their ability to bring prosecutions.

Lord Dean of Beswick

My Lords, as regards the question asked by the noble Earl, Lord Onslow, is it not a fact that some wages councils were set up under Conservative governments to protect the weaker end of the employment market? Do the figures that have been mentioned not indicate that a more rigorous approach is needed as exploitation is taking place on an increasing scale?

Viscount Ullswater

My Lords, that is not the interpretation I put on the matter. Many of those covered by wages councils are not among the lower paid. About two-thirds of workers who are in industries covered by the wages councils receive wages above the statutory minimum wages.

Earl Russell

My Lords, does the Minister agree that the payment of wages below the levels set by the wages councils may have the effect of tending to increase public spending through the social security budget? Are the Government able to quantify the cost, through family credit and housing benefit, of the payment of wages at levels below those set by the wages councils? If not, will the Government put themselves in a position to do so?

Viscount Ullswater

My Lords, low pay is not synonymous with low income. Many of those who receive low pay are young people working in the catering industry and other industries covered by the wages councils. That does not necessarily mean that their families receive family credit.

Lord Molloy

My Lords, is the Minister aware that some of us have had many years of practical experience with the wages councils? Both employers and trade unions acknowledge that the existence of wages councils means that discussions can be held and usually solutions found to disputes without workers resorting to damaging industrial action. That is the real value of wages councils. To destroy the wages councils would be to invite unnecessary industrial disputes.

Viscount Ullswater

My Lords, we believe the wages councils have outlived their usefulness.