HL Deb 27 July 1998 vol 592 cc1197-227

3.31 p.m.

Read a third time.

Baroness Miller of Hendon moved Amendment No. 1:

After Clause 5, insert the following new clause—


(" .—(1) The Secretary of State, after such consultation with the Low Pay Commission as may be reasonably practicable, may by order suspend the operation of this Act if he is satisfied that such suspension is required in the public interest by extreme economic circumstances.

(2) An order under subsection (1) may provide for the operation of this Act to be suspended in whole or in part and, in particular, may provide for the provisions of this Act to be suspended in respect of—

  1. (a) any area or description of area; or
  2. (b) any individual employer.

(3) No order shall be made under subsection (2)(b) above unless the employer has given the Secretary of State not less than 30 days' notice in such form as may be prescribed that, in the opinion of the employer, such an order is necessary in order to prevent the loss of jobs.

(4) A statutory instrument containing an order under this section shall be laid before each House of Parliament after being made.

(5) Unless an order under this section is approved by resolution of each House of Parliament before the end of the period of 28 days beginning with the day on which it is made, it shall cease to have effect at the end of that period.

(6) In reckoning the period of 28 days for the purposes of subsection (5), no account shall be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than four days.

(7) An order under this section which does not cease to have effect before the end of the period of three months beginning with the day on which it is made shall cease to have effect at the end of that period.").

The noble Baroness said: My Lords, in Committee, I withdrew this same amendment because of the lateness of the hour, which was 11 p.m. I did not move the amendment on Report because the time for that stage had been shortened by the two Ministerial Statements. However, I now wish to return to it because in Committee I asked the Minister to reconsider the position and I hope that he has now done so.

The detailed words of the amendment speak for themselves and I certainly shall not take up the time of your Lordships by going through them in detail. The margin note provides an adequate summary. The proposed new clause gives the Secretary of State power to suspend the national minimum wage in the event of local or national emergencies. I regret to say that I thought the Minister's response was inadequate and irrelevant. He complained that the circumstances in which the powers might be invoked were ill-defined. The Government claim to be expert at defining what is in the public interest. Indeed, they claim to be the sole arbiters of it. The Minister did not understand the phrase I used; namely, "extreme economic circumstances". At least he recognised that I was not referring to extreme uneconomic circumstances.

I suspect that we can all recognise extreme economic circumstances when they arise. But an order could not be made arbitrarily by the Secretary of State. Subsection (4) requires the order to be subject to the scrutiny of both Houses and to a positive resolution of both of them. That is a procedure in which I have considerable faith and I hope that the Minister has too. Subsections (5), (6) and (7) impose stringent and very short time limits on the operation of any order. The Minister suggested that the amendment could lead to what he called exploitation and suggested that unscrupulous employers—the bogeymen whom the Government see lurking round every corner—might try to take advantage of the situation. I consider that to be fairly far-fetched. I cannot imagine an employer bankrupting himself simply to avoid paying the national minimum wage. The example I gave was of a group of workers banding together to save their firm, possibly by investing their redundancy payments or forgoing their wages until the firm gets back on its feet again.

According to the Government's response to the amendment, those people would be better off going on the dole rather than breaching the Government's philosophy of universality for the national minimum wage. The Minister's response shows also a surprising lack of confidence in the Secretary of State's ability to spot an undeserving case; or to recognise an extreme economic situation; or to recognise an unscrupulous employer.

The provisions of that subsection do not come into effect automatically. They require the Secretary of State to investigate the matter. She must also consult the Low Pay Commission if it is reasonably practicable to do so. After all that, she still has a total discretion as to whether or not she will take any action. That is the nub of the clause.

Before anyone wrongly accuses me of introducing a wrecking amendment, I should point out to your Lordships that the clause simply gives the Secretary of State a reserve power to exercise if, and only if, she thinks it appropriate. On the previous occasion on which the amendment was debated, I said that I do not possess a crystal ball. But then, neither do the Government. They must allow for the possibility that the circumstances which the clause envisages may arise. It will then be too late for the Secretary of State to come to Parliament to pass a new Act.

This Bill has been described repeatedly by the Minister as an enabling Bill. I do not understand why the Government would wish to enable themselves to do some things but to disable themselves from doing others. I hope that the Minister will be able to give us some convincing reasons for rejecting the amendment, if that is what he is minded to do. Otherwise, he will be accepting on behalf of the Secretary of State a much needed reserve power to use in case of an emergency. I beg to move.

Lord Clinton-Davis

My Lords, I start by saying that I would not for a moment describe this as a wrecking amendment. But it is a totally uncharacteristic stance on behalf of the Opposition because everything else has been.

We have debated this issue quite substantially on previous occasions in the House. I should point out also that I have written to the noble Baroness about her concerns and a copy of that letter has been placed in the Library.

I apologise if I engage in some repetition but it is inevitable because the amendment has been debated before in substance. The new clause provides a power to exempt which in my judgment would be invidious. In that respect, it is very similar to the new Clause 2 which was put into the Bill as a result of your Lordships' decision to support that amendment on Report.

However, on that basis, this proposed new clause is unnecessary if the more general exemption power in Clause 2 remains. I hope your Lordships will understand that in debating this amendment on its own terms, I also make an assumption that the decision on Clause 2 may well be overturned in another place.

In the Government's judgment, this new clause would be extremely difficult to operate. It could open up a huge loophole in the Bill and would suggest—and this is most important—that workers' rights, and in particular the right to a national minimum wage, is simply for the good times and can be dispensed with when times are hard. I speak of that not only in terms of the economy in general but also in terms of the fortunes of a particular company.

The amendment makes the assumption that poverty wages can be reinstated by suspending the national minimum wage in the public interest because of some unnamed, unidentified emergency. The phrase used is "extreme economic circumstances". We inherited some fairly extreme economic circumstances from our predecessors. That is exactly why we need a national minimum wage and it is a matter of urgency as regards the interests of this country. People who are receiving poverty pay on a daily basis may be considered to be in extreme economic circumstances. That very fact has never for one moment been understood by the Opposition. It is in the interests of the people receiving that poverty pay that this legislation should be enacted as soon as possible. We do not want to have the power to suspend the Bill's provisions, and certainly not in the circumstances described by the noble Baroness.

It is simply not in the public interest for people to be earning poverty wages. The whole point of the national minimum wage is to tackle exploitation. The underlying discontent arising from exploitation and the lack of motivation compound to work against the public interest. So we are seriously at odds with the Conservative Opposition on the matter. Indeed, the public interest lies at the very heart of our approach. What we are really urging here is a partnership approach—in fact, that of the Low Pay Commission, which consulted extensively with all sections and all partners in industry and NGOs. We need to encourage firms to compete not on poverty but on quality. Part of that quality is the quality of the workforce and the need to respect the interests of the workforce. The drive towards greater decency and fairness in the workforce is what all this is about.

I ask the noble Baroness: how can all these things not be in the interests of the public? Quite apart from the principle, which is pretty bad anyway, the proposed new clause would not work in practice. I shall tell your Lordships why. Every time an individual employer got into financial difficulties, what would happen? That employer would come running to the Secretary of State requesting an order rather than exploring other ways of averting a crisis. If economic circumstances changed, the LPC could be called to review the rate at any time. That is the nature of the flexibility we have provided in the Bill.

Of course, there can be shocks to an economy and unexpected crises. Indeed, we know all about that and we have developed a mechanism that can deal with the situation. We certainly do not need the one incorporated in the proposed new clause. I am well aware that there is power in the Bank of England Act to cover action in extreme economic circumstances, but that legislation deals with macro-economic circumstances. That is not what this Bill is about. This Bill covers a relatively small part of the economy; it is a matter of proportion and a matter of fairness.

In the earlier debate and indeed in the correspondence in which I engaged with the noble Baroness, the subject of management buy-outs of ailing firms arose. I shall make two points in that respect so that our position is on the record. First, if a buy-out were to take the form of a group of former workers who, in some way, became the owners of a company, the Bill may no longer apply to them in any event because they might not have workers' contracts. Secondly, the Transfer of Undertakings (Protection of Employment) Regulations 1981 prevent employees involved in management buy-outs from agreeing to any worsening of their pay and conditions. The introduction of the national minimum wage will not affect that position.

The Opposition have again underlined the strength of their resistance to the very idea of a national minimum wage. Their approach challenges the very fundamentals of what we are seeking to do. It makes an implicit assumption that somehow or other a national minimum wage is something which is very revolutionary, dangerous and unacceptable. They want to guard against it. That is the very opposite of our approach and, I believe, the approach taken by the Liberal Democrats.

I hope that noble Lords will agree that the effect of the proposed new clause would be harmful to the entire principle of the Bill. If the noble Baroness persists with her amendment, I shall have to ask the House to reject it.

Baroness Miller of Hendon

My Lords, for the sake of the record, perhaps I may begin by saying that I do not accept that any of the amendments I proposed either in Committee or on Report were in fact wrecking amendments. As the Minister started off by saying that, it is only right that I should clarify the position. I can confirm that I received the letter from the Minister on this matter. I should also confirm that I did not accept then what he said and that, frankly, I do not accept what he says now.

The Minister made his position clear and said that I, too, had made mine clear. He says that we are totally opposed the national minimum wage. At the beginning of this Third Reading stage, perhaps I may say that yes, indeed, we are. However, the truth is that wherever there is a national minimum wage—that is to say, in other countries—there are always exceptions. All I have been trying to do right the way through these proceedings is to suggest that the Government might include the same exceptions and exemptions which are absolutely standard in all the other countries that have a national minimum wage.

However, having said that, the Minister talked at some length about poverty pay and said that I am in the business of trying to suggest that people should have poverty pay. That is not so. I was actually talking about the position of a management buy-out. However, I was glad to hear the Minister say that that might well be exempted because the workers who formed such a management buy-out might not have workers' contracts and might therefore fall outside the national minimum wage legislation. If so, that would give a defence for the position I had in mind. Nevertheless, in view of everything the Minister said and the fact that I have also made certain things clear for the sake of the record, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.45 p.m.

Clause 11 [Worker's right of access to records]:

Viscount Thurso moved Amendment No. 2:

Page 8, line 21, after ("notice") insert ("and during the paid contractual working hours of the employee").

The noble Viscount said: My Lords, before I speak precisely to my amendment, perhaps I may associate myself and my noble friends wholeheartedly with the remarks that the Minister made in respect of the principles of the Bill. I am an employer in an industry which has a problem with both low pay and recruitment. I have long felt that the proper way to deal with the situation would be to bring in a national minimum wage. In terms of principle, I wholly support that aim, as indeed do my noble friends on these Benches.

I return for the third time to this amendment. I should perhaps say, "third time lucky", because I drafted it incorrectly on both previous occasions and, therefore, was unable to put it before the House. However, this time I have managed to draft it correctly. I believe that I summed up on Report the core of the amendment, when I said: It really concerns the balance of unreasonableness which I feel should be placed on the employer rather than on the employee".—[Official Report, 20/7/98; col. 648.] Effectively, what I am seeking to do is to amend Clause 11(9). The clause provides for the production of "relevant records"; in other words, it gives the employee the right to receive relevant records. Subsection (9) provides the manner in which an employee should receive such records, set out in two paragraphs. Paragraph (b) takes care of the situation where everyone is being reasonable, and states that such relevant records can be produced, at such later time as may be agreed during that period between the worker and the employer". That assumes that the worker and the employer are both reasonable and come to a reasonable arrangement.

My amendment seeks to add to paragraph (a) the words, and during the paid contractual working hours of the employee", so that it would read: The relevant records must be produced— (a) before the end of the period of 14 days following the date of receipt of the production notice and during the paid contractual working hours of the employee". I am most grateful to the noble and learned Lord, Lord Falconer, for the time and trouble he has taken to speak to me in an effort to persuade me that my amendment is wholly unnecessary. In terms of principle there is nothing between us. Indeed, we both wish to see employees properly protected and looked after. I suspect that we both believe that the danger is liable to come much more from unreasonable employers than from unreasonable employees. The noble and learned Lord has drawn to my attention subsection (7) of the clause. I believe it is his contention that that subsection, which requires that, reasonable notice of the place and time", must be given for the production of the relevant records, is sufficient to cover the terms of my amendment and thus make it unnecessary. So far, the noble and learned Lord has failed to persuade me that that is the case, but I promise to listen most carefully to his response.

I am seeking to provide a means whereby a nightshift employee would be able to require his employer to produce such records while he is at work. As I argued in Committee and on Report, if an employer wishes to be unreasonable, I believe that he has the power to force the employee to return to work during his free time for such purposes, when he would normally be asleep. Not only would that cause the worker inconvenience; there would also be a cost involved. I believe that where there is a risk of that happening it is only right and proper that the duty should be placed on the employer, rather than on the employee, to try to be reasonable. In that regard I am wholly in sympathy with the Bill and everything that it seeks to do.

I believe the difference between us is that the noble and learned Lord, Lord Falconer, and his advisers have probably never had to work at the "bottom end". For the first five years of my working life I worked in kitchens washing up and doing various other tasks. I received a small allowance from my father of £50 a month in 1972. I had to survive on what I earned. I remember what it is like not to have enough money at the end of the week. I am thinking of those workers—not the highly paid ones—who are on the breadline. An unreasonable employer can make life difficult for those workers. I ask the noble and learned Lord to think again. I believe this measure is wholly within the principles of what the Government seek to do. I hope he will be persuaded by my argument. I beg to move.

The Solicitor-General (Lord Falconer of Thoroton)

My Lords, I agree entirely with what the noble Viscount, Lord Thurso, said. I believe that both of us have the same broad objective in mind. We want to ensure that there is proper and convenient disclosure of records between employer and employee. I believe our disagreement arises as regards whether this measure is the most appropriate and effective way to achieve what the noble Viscount wants to achieve, having regard to the interests of both the employer and the employee.

I think the noble Viscount will agree that often there will be a supervisor or similar person who can make the records of night-shift workers available at a time when night-shift workers are working. No difficulty will arise between a reasonable employer and a reasonable employee because they will approach the matter with common sense and reach agreement. As I pointed out in previous debates, the amendment is inflexible. The amendment would have the effect that records would have to be produced during the employee's working hours. A small employer may not have the means to make records available during an employee's working hours, but under the terms of the amendment he would be obliged to turn up in the early hours of the morning, for example, to produce the records for the employee even though that may cause immense disruption to that small employer. The Bill is silent as to the time during people's working hours when the records must be produced. It is to be hoped that as time goes on convenient times will be agreed for all.

The noble Viscount, Lord Thurso, referred to Clause 11(7) which states, Where a production notice is given, the employer shall give the worker reasonable notice of the place and time at which the relevant records will be produced". When we discussed this matter the noble Viscount may have thought that the word "reasonable" referred to the notice rather than to the place or the time. In our discussion I may have overstated the extent to which that provides a solution. The underlying principle is that one should not prescribe the time—whether in favour of employee or employer—and that one should allow this to be worked out according to the circumstances. Common sense should prevail. It is to be hoped that at the end of the day sensible notice will be given. I believe that that is the right solution in all the circumstances. I believe that the solution the noble Viscount proposes is too biased in favour of the employee. The best course is to be silent about the matter in the Bill. I hope I have persuaded the noble Viscount to withdraw his amendment. We have thought carefully about the matter and we think the best course is silence rather than trying to prescribe measures which shift the balance too far one way.

Viscount Thurso

My Lords, I am grateful to the noble and learned Lord, Lord Falconer. I fully realise that, particularly since Report stage, he has taken on board the argument that I advanced and that he has clearly given it a great deal of thought. I am only sorry that at this stage I find myself still unable to agree with what he says. If I have understood him correctly, he has said that it is better to be silent because in all the circumstances common sense will prevail. If that were true, I should have thought we would not be debating this National Minimum Wage Bill at all because we would not need to put such legislation on the statute book.

There is a small number of employers—it is a small number—who have the opportunity to make life difficult for employees, whereas the ability of an employee to make life difficult for an employer, however small that employer may be, is somewhat limited. Therefore on this occasion and with great sadness I respectfully ask to test the opinion of the House.

3.56 p.m.

On Question, Whether the said amendment (No. 2) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 110.

Division No. 1
Addington, L. Mackie of Benshie, L.
Alexander of Tunis, E. McNair, L.
Alton of Liverpool, L. Maddock, B.
Beaumont of Whitley, L. Mar and Kellie, E.
Calverley, L. Newby, L. [Teller.]
Carlisle, E. Nicholson of Winterbourne, B.
Clement-Jones, L. Razzall, L.
Craig of Radley, L. Redesdale, L.
Dholakia, L. Rodgers of Quarry Bank, L.
Ezra, L. Russell, E.
Falkland, V. Saltoun of Abernethy, Ly.
Gainford, L. Smith of Clifton, L.
Halsbury, E. Steel of Aikwood, L.
Hamwee, B. Thomas of Gresford, L.
Harris of Greenwich, L. Thomas of Walliswood, B.
Ilchester, E. Thomson of Monifieth, L.
Jacobs, L. Thurso, V. [Teller.]
Jenkins of Hillhead, L. Tordoff, L.
Kintore, E. Wallace of Saltaire, L.
Linklater of Butterstone, B. Williams of Crosby, B.
Ludford, B. Winchilsea and Nottingham, E.
Allenby of Megiddo, V. Haskel, L.
Alli, L. Hayman, B.
Amos, B. Hilton of Eggardon, B.
Ampthill, L. Hogg of Cumbernauld, L.
Archer of Sandwell, L. Holderness, L.
Bassam of Brighton, L. Hollis of Heigham, B.
Berkeley, L. Howie of Troon, L.
Blackstone, B. Hoyle, L.
Blease, L. Hughes of Woodside, L.
Borrie, L. Hunt of Kings Heath, L.
Bruce of Donington, L. Irvine of Lairg, L. [Lord Chancellor.]
Bruntisfield, L.
Burlison, L. Islwyn, L.
Carmichael of Kelvingrove, L. Jay of Paddington, B.
Carter, L. [Teller.] Jenkins of Putney, L.
Cledwyn of Penrhos, L. Judd, L.
Clinton-Davis, L. Kennet, L.
Cocks of Hartcliffe, L. Lockwood, B.
Currie of Marylebone, L. Lofthouse of Pontefract, L.
David, B. McCarthy, L.
Davies of Coity, L. McIntosh of Haringey, L. [Teller.]
Davies of Oldham, L.
Dean of Thornton-le-Fylde, B. Mackenzie of Framwellgate, L.
Dixon, L. Marsh, L.
Donoughue, L. Mason of Barnsley, L.
Dormand of Easington, L. Milner of Leeds, L.
Dubs, L. Mishcon, L.
Evans of Parkside, L. Molloy, L.
Ewing of Kirkford, L. Monkswell, L.
Falconer of Thoroton, L. Montague of Oxford, L.
Farrington of Ribbleton, B. Morris of Manchester, L.
Fitt, L. Murray of Epping Forest, L.
Gallacher, L. Nicol, B.
Gilbert, L. Orme, L.
Gordon of Strathblane, L. Paul, L.
Goudie, B. Peston, L.
Gould of Potternewton, B. Pitkeathley, B.
Graham of Edmonton, L. Plant of Highfield, L.
Greenway, L. Ponsonby of Shulbrede, L.
Gregson, L. Porter of Luddenham, L.
Grenfell, L. Prys-Davies, L.
Hacking, L. Ramsay of Cartvale, B.
Hardie, L. Rea, L.
Hardy of Wath, L. Rendell of Babergh, B.
Roll of Ipsden, L. Symons of Vernham Dean, B.
Sefton of Garston, L. Taylor of Blackburn, L.
Serota, B. Thomas of Macclesfield, L.
Sewel, L. Thornton, B.
Shepherd, L. Turner of Camden, B.
Shore of Stepney, L. Uddin, B.
Simon, V. Weatherill, L.
Simon of Highbury, L. Wedderburn of Charlton, L.
Smith of Gilmorehill, B. Whitty, L.
Stallard, L. Williams of Elvel, L.
Stoddart of Swindon, L. Williams of Mostyn, L.
Strabolgi, L. Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

4.4 p.m.

Clause 12 [Failure of employer to allow access to records]:

Lord Haskel moved Amendment No. 3:

Page 8, line 36, leave out ("subsection") and insert ("subsections (8) and").

The noble Lord said: My Lords, the three government amendments in this group are all technical amendments. They will complete and improve the Bill. They came to our attention only at this late stage. I hope that tabling them now will not inconvenience any of your Lordships. I have in any event written to the noble Baroness and the noble Lord, Lord Razzall, with an explanation of the amendments. A copy of those letters will be placed in the Library of each House. I beg to move.

On Question, amendment agreed to.

Clause 42 [Power to apply Act to individuals who are not otherwise "workers"]:

Baroness Miller of Hendon moved Amendment No. 4:

Page 26, line 14, at end insert— ("( ) Nothing in regulations made under subsection (1) above shall cause to be treated as a worker for the purposes of this Act any person counted as self-employed for the purposes of his liability to income tax.").

The noble Baroness said: My Lords, I return to the amendment to which I spoke but which I did not move in Committee, because I was disappointed with the Minister's response. Time did not permit me to raise the matter on Report.

In his remarks, the Minister produced a totally untenable argument against a perfectly reasonable proposal which does not diminish the Bill in any way. But apart from that, his comments contained one irrelevant and inaccurate comment. I wish to deal with that minor point first, because I should not like to leave it on the record unanswered.

The amendment relates to persons who are genuinely self-employed and have been authoritatively recognised as such by a major government agency, the Inland Revenue. It seeks to ensure that such persons are not recategorised as employees for the purposes of this legislation by a regulation made by the Secretary of State under the wide powers that he is taking under Clause 42(a).

The fallacious point raised by the Minister was that the Government were following the approach used in the Employment Rights Protection Act 1996 by the previous government. He then asked: If it was right to do it then, why should we not do it in these circumstances?"—[Official Report, 22/6/98; col. 52.] He also complained that I did not seek to address that point. I should like to do so right away.

The 1996 Act was not a Conservative Act; it was a consolidating Act. The provision to which the noble Lord referred was derived from the Employment Protection (Consolidation) Act 1978, which was passed by the previous Labour administration—old Labour—led by the noble Lord, Lord Callaghan. I believe that the Minister is indulging in a small piece of poetic licence when he claims that the Government are following the previous legislation.

In both the 1996 Act and the 1978 Act, an employee is identically defined as, an individual who has entered into or works under … a contract of employment". Clause 42 of the present Bill covers a diametrically opposite situation. It covers an individual "who would not otherwise be a worker"—in other words, someone who has not entered into a contract of employment.

Turning to the substance of my amendment, I shall make the same point as I did in Committee, it is to be hoped more convincingly this time than previously, unless, as seems to be the case, in every aspect of the Bill the Government's ears and mind are closed to reasonable and constructive argument.

The Bill provides that the Minister may, by an administrative order, apply the Act to, any individual … who would not otherwise be a worker". What a drastic power that is! Any individual, by administrative fiat, can be deemed to be an employee even though he and everybody else considers that he is self-employed. The Bill refers to "any individual", not just a category of people. The Secretary of State does not even undertake to consult with anybody before exercising this power.

The Government refused to accept the minor modification that I proposed at the previous stage. To save time, I do not intend to reintroduce it now. However, the wide sweeping powers being taken by the Secretary of State make this amendment essential. It provides the one important brake on his ability to act arbitrarily and even capriciously, and in fact, unnecessarily.

My amendment provides that where an individual has been recognised as self-employed by the Inland Revenue for taxation purposes, he shall be treated as self-employed for the purposes of the Act.

In Committee in the other place, the Minister for Small Businesses said that the Inland Revenue has no strict definition of self-employment, but it uses certain criteria. As a result, cases are decided individually. The noble Lord, Lord Clinton-Davis, in his reply to me said: Self-employment for tax reasons is based on a number of tests designed to establish status on a case-by-case basis".—[Official Report, 22/6/98; col. 53.] Ministers in both Houses of Parliament have, as your Lordships will see, agreed that before an individual is accepted by the Inland Revenue as self-employed, his claim to be such is carefully and thoroughly investigated. What is wrong with that? We do not disagree with the Minister exercising powers to close loopholes if he discovers any, but he may not throw out the baby with the bath water. If a person happens to be in a general category defined by the Secretary of State but is nevertheless an exception because he has satisfied the tax inspector that he is genuinely self-employed, then he is entitled to be excepted from that category.

The Government seem to have a paranoid fear that wholesale evasion will be attempted by what they call "unscrupulous employers". I have no doubt that there will be individual isolated attempts to evade the Act, and usually it will be by owners of small businesses. There are not too many large-scale devices that can be attempted and I shall certainly not put ideas into people's heads by suggesting some. However, again, the Government may well be right. Turning a genuine employee into a fictitious self-employed person could be one such route. However, I wonder by what stroke of arrogance the Department of Trade and Industry believes that it can devise loophole-proof secondary legislation more effectively than the Inland Revenue with all its vast experience of dealing with evasion?

Why should the DTI want to take on the highly technical job of drafting the anti-evasion regulations when, if the Secretary of State follows the recommendation of the Low Pay Commission—and it is the Low Pay Commission recommendations that I am talking about—it will be the Inland Revenue, combined with the contributions agency that will be responsible for the enforcement of the Act? Does the Secretary of State seriously suggest that the civil servant in the new revenue department should apply a different and perhaps inconsistent set of rules and guidelines, depending upon what hat he is wearing? Why should regulations drafted by the inexperienced DTI be more effective than the machinery that the Inland Revenue already has in place, with its vast backlog of precedents and guidelines? Believe me, persuading the Inland Revenue that a taxpayer is self-employed is no pushover. As the two Ministers have admitted, each case is carefully examined on its merits. That is a more effective method than what the Secretary of State proposes—a shotgun approach which catches everything in its path, whether or not justified.

Then there are the highly technical concepts to determine whether a person is an employee or a self-employed contractor. There is the control test, the integration test, the economic reality test, the mutuality of obligation test, the mixed or multiple test. I hope that no one will ask me to explain what those are because I do not have the foggiest idea. But I am advised that those are the kind of arcane problems that employment tribunals wrestle with in determining the same question of whether someone is an employee or whether that person is self-employed.

I have a whole page with a finely printed list of legal precedents of such cases that have reached the High Court. I confess that I have not read the whole page in detail, but I have it.

Is the Secretary of State seriously proposing to ignore all the previous rulings by the courts and set his own tests when he frames his regulations? Of course he is not. So what is the problem about accepting the ruling by the Inland Revenue, in the case of an individual, that it has ascertained, after careful inquiries, that he is indeed a genuinely self-employed person? I think there is none, except for the desire by the Secretary of State to keep everything possible in his own hands within his own empire, to re-invent the wheel and ignore legislation and court rulings that are tried and tested and that have been effective for many years.

There is this strange fear in the minds of the Government that there are all these unscrupulous employers out there simply waiting to find some complicated device to avoid the Act. But does the Secretary of State suggest that in according self-employed status to an individual tax payer—and I stress individual—the tax inspector and the employer are co-conspirators to evade the Act? Whatever the Secretary of State's motivation, one simple fact is clear. If the Inland Revenue has carefully vetted a person and has concluded that he definitely is self-employed, then that to any reasonable person should be conclusive. If the Secretary of State feels the need to make a general anti-avoidance regulation, then he can still do so. My amendment does not prevent that. He can still decide, for example, whether a milk roundsman—a fast disappearing breed—operating on a franchise from a wholesale dairy is self-employed or whether he is part of a subterfuge by the dairy. He can still decide whether minicab drivers and motor cycle messengers are employed or self-employed.

All my amendment does is to protect a person whose case has already been carefully examined in detail on behalf of the Government via the Inland Revenue, by giving him an exemption from being cast in the same mould as the evaders that the Secretary of State is trying to catch. It is totally incongruous that the definition of whether a person is self-employed can vary according to which department he is dealing with. This amendment simply asks that persons who are self-employed in the assessment of one branch of government should not be regarded as employees by another. I beg to move.

4.15 p.m.

Lord Haskel

My Lords, there will always be a grey area between employment and self-employment and the distinction is not always drawn in the same place for income tax purposes as it is in employment law. For employment purposes we have employment law; for income tax purposes we have income tax law. Indeed, for employment law purposes, we have adopted the Employment Rights Act 1996.

The noble Baroness says that it was a consolidated Act, but let me point out that the previous government adopted it and acted as if it was in force. Indeed, the definition of "worker" in the Act comes originally from the Wages Act 1986, also during the previous government's administration. So it would appear that the previous government accepted what was laid down in the Employment Act 1996 and this is what the minimum wage Bill seeks to continue.

The noble Baroness raised the point about the Inland Revenue and the contributions agency, defining what is and what is not a self-employed person. As she told us, they produce a pamphlet listing the kinds of things which will help to determine whether an individual is employed or self-employed, for the purposes of assessing his or her income tax and national insurance contributions. It is the national insurance contributions which are important. Factors to be considered are whether a person risks his or her own money in the business, whether he or she is free to hire other people, whether he or she is paid at regular intervals and so on. The amendment, though intended to clarify the position, would not do so.

The amendment seeks to tie the Bill to the definition of self-employment used in tax law. But your Lordships know that there are many ways of blurring the line between bogus and genuine self-employment. It is precisely because of that uncertainty that we need the flexibility provided by the clause. Of course, it may not be used. If it is not used, that will mean that we will have reached the conclusion, in the light of experience, that we have covered all those who should be covered and, more significantly, no one has sought to re-define their employment relationship to escape the provisions of the Bill. But we may need to use it. If we do, we should certainly not be tying ourselves on the face of the Bill to criteria which are used in a different context of tax law.

The noble Baroness asks why the Inland Revenue laws should not apply to employment. The answer is simple. Self-employment for tax purposes is based on the tests which we have already discussed. Those tests are established on a case-by-case basis. In most cases it will be perfectly clear whether someone is or is not self-employed for both tax and minimum wage purposes. However, there will be questionable cases and it is not sensible to tie employment law to criteria drawn up for tax purposes where there is any question of uncertainty.

In reality, the labour market is very complex and the way to deal with that fact is to follow the established precedent in employment law as we have already done and to build in the flexibility to extend coverage if that proves necessary. That we have done by providing the power in Clause 42. Any regulations made under that power are subject to affirmative procedure and would therefore be scrutinised by this House. The noble Baroness therefore has the safety mechanism she seemed to want.

We have had quite a bit of debate on this important subject. There has been correspondence between myself and the noble Baroness. She kindly responded only this morning to my letter. However, for the reasons I set out, I urge the House to reject the amendment. It is not right to have employment law dealing with tax matters and tax law dealing with employment matters. Employment law should deal with employment and tax law deal with tax.

Baroness Miller of Hendon

My Lords, I thank the Minister for his response. I am glad I had the opportunity of correcting on the record the point I made in relation to the Employment Rights Act 1996. I accept what the noble Lord said—that, nevertheless, the last Conservative government accepted that. But I wanted to make the point that it was a consolidating Act following a Labour Act, because when the Minister responded in Committee, he made a great deal of the fact that I was trying to reverse something that we, as a Conservative Government, had brought in. I do not agree with the Minister, but I know he responded with great sincerity.

In view of the fact that the regulations will be introduced by statutory instrument and there is a safeguard, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 43 [Power to apply Act to offshore employment]:

Lord Clinton-Davis moved Amendment No. 5:

Page 26, leave out line 28.

On Question, amendment agreed to.

Baroness Miller of Hendon moved Amendment No. 6:

After Clause 45, insert the following new clause—


(" .—(1) The Secretary of State may, after consultation with the Low Pay Commission, make an order exempting disabled persons from the provisions of this Act.

(2) An order under subsection (1) above shall provide for the issue of permits by the Secretary of State to those persons whom he believes to be disabled and may make provision for—

  1. (a) the procedure for applying for and issuing such permits;
  2. (b) the procedure for establishing the minimum wage to which each permit holder shall be entitled (being less than the single hourly rate prescribed under section 1(3) of this Act);
  3. (c) the appointment by the Secretary of State of suitably qualified persons to assess such applications; and
  4. (d) the procedure for appealing against a refusal to issue such a permit.

(3) No person shall be guilty of an offence under this Act in respect of an employee who holds a permit issued in accordance with an order made under this section.

(4) For the purposes of this section, a person is disabled if he is so affected by physical injury or mental deficiency or infirmity due to age or any other cause as to be incapable of earning the national minimum wage.

(5) A person whose employment is primarily undertaken for the purpose of therapy and whose employer is a non-profit-making organisation does not qualify for the national minimum wage in respect of that employment.").

The noble Baroness said: My Lords, I have to return to this amendment which was raised at both Committee and Report stages of the Bill, despite the fact that it was fully discussed on both occasions. I shall do so as briefly as possible because I do not wish to take up your Lordships' time with repetitive arguments, nor do I wish to put the Minister to the trouble of reiterating the responses that he gave.

Subsections (1) to (4) enable disabled individuals to make personal applications to be exempted from receiving the national minimum wage. I am talking about individuals, not wholesale exemptions of whole categories of disabled persons. In other words, I am not referring to all persons who may have lost a limb, have impaired sight or have one of the many other disabilities with which so many unfortunately are afflicted.

The difference between me and the Government on this clause is that the Government believe that the exemptions for which I am seeking to provide are discriminatory against disabled workers, whereas in fact I am trying to help them overcome one of the obstacles that may stand in the way of their obtaining a job. I repeat—and stress again because it is important—that nothing happens under this clause unless the worker wishes it to do so and unless he and he alone initiates the procedure. In other words, nothing happens unless the worker of his own free will wishes it to. The Government should not stand in the way of that free choice.

The procedure I propose is very stringent, so that even if a worker decides to apply for exemption, he must pass a stringent test to justify his request. The Secretary of State must make whatever regulations he deems appropriate and install whatever procedures he considers appropriate. I believe that he already has the machinery in place, utilised by the Department of Social Security for the purpose of determining whether a person qualifies for a disability allowance. I am not suggesting that the receipt of disability allowance gives automatic right to exemption. I repeat, every case must be the subject of an individual application by the person concerned and must be subjected to individual, independent scrutiny.

I ask the Government to think again before it is too late. Insistence on the rigid concept of universality for those who do not want it—persons who simply want a job, not necessarily for the sake of the wage—far from being discriminatory, may operate against those very persons the Government say they are trying to help.

That is not just my view. The Minister received a letter from the noble Lord, Lord Rix, who, without wishing to be drawn into what he saw as a political dispute, expressed doubts about the benefits of refusing to allow disabled persons exemption. That letter is the reason why I return to this amendment after the two previous debates on it. The letter throws an independent, non-partisan and non-political light on the matter.

When I say "non-political", I refer equally to the absence of the Government's political agenda and my party's views. It emerged that the letter of the noble Lord, Lord Rix, sent shortly before Report stage had not percolated through the ministry's postal system before the debate. The Minister therefore on that occasion had not received it. I gave him the copy that I had received and, despite his trip to Brazil immediately following the last stage, I hope that he has now had time to consider it. It is an independent assessment from an unbiased source, to which the government really ought to give serious and sympathetic consideration.

I will not take up your Lordships' time further by discussing subsection (5) which is to give exemptions to workers who are employed for therapeutic purposes—those who are working in hospital or in community homes or day centres—where the object of the work is not the wages but the medical benefit that the patient receives. I accept that some such so-called workers are not within the definition of this Bill, but some are, and what I am asking—for reasons that I fully explained to the Minister on both previous occasions—is that if they are genuinely employed, not by an unscrupulous employer but by a non-profit making organisation, they should similarly be exempted.

I seriously believe that had the Government's blueprint for this Bill not been that of universality, with no exemptions, then they themselves would have included a similar provision in the Bill, and I urge them to accept the amendment. I beg to move.

Lord Monson

My Lords, If the Government want to show that they are a caring government, they should accept this amendment. Let me try to reinforce the argument of the noble Baroness, Lady Miller, and my noble friend Lord Rix.

Consider one of the least demanding jobs in contemporary Britain—collecting trollies from the carpark of a supermarket and wheeling them back to the front of the store. That job requires no mental or arithmetic ability, no skill at dealing with difficult customers and relatively little physical strength. A totally illiterate adult could do the job, as could most children of 12. It is a perfect job for someone who wants to earn a bit of pocket money, feel useful, likes mixing with other employees or wants to work in the open air but, by virtue of disability, is too slow to do the job as effectively as a younger, fit person. An employer may not find him or her worth employing at £4 an hour, including employers' national insurance contribution, but just may find it worth employing them at £2.50 or £3 an hour, including contributions. What good would it do to deprive such an eager individual of employment opportunities?

4.30 p.m.

Lord Clinton-Davis

My Lords, the noble Baroness is quite right to say that this is a difficult, complex and highly sensitive matter. If I may say to the noble Lord, Lord Monson, the mere fact that we disagree—I hope that he will listen carefully to our views, which are not wholly in accord with his—does not mean that we are an uncaring government. There is not a necessary co-relation between that difference of view and what he had to say.

This is an extremely important matter. The noble Baroness is quite right, there has been some correspondence between us. Unfortunately, I had not received the letter by the start of this debate. I made thorough inquiries. Apparently it arrived in the office at about four o'clock that afternoon and it was not possible, through the machineries that are deployed, to bring it to my attention. In any event, I would not have been able to give it, there and then, the studious attention that it demanded. However, we have had an opportunity to exchange correspondence. The noble Baroness has had a letter from me today following my return; I think it is on the noticeboard. At all events, I signed it off soon after I returned to the office this afternoon.

I will endeavour to go through the points with some care, notably because the whole House appreciates the deep concern and commitment of the noble Lord, Lord Rix. He wrote to me, but not at the time that the noble Baroness thought; his letter arrived on the day of our debate last week.

The Low Pay Commission and the Government have given this issue a great deal of careful thought. We are at one as far as the principle is concerned; we all want to ensure that the right thing is done for disabled workers, including those with severe disabilities. There is no difference of opinion between us on that point. We believe, as does the Low Pay Commission, in the broad principle of ensuring equal treatment for disabled workers. My noble and learned friend Lord Falconer, when he spoke to this matter on Report, made it clear that it was absolutely fundamental that disabled people should not be discriminated against in the workplace.

When the Low Pay Commission consulted very widely on this matter with a whole host of organisations, including Mencap, which represented disabled people, the overall response was a strong welcome for the application of the national minimum wage to disabled people. The commission's report supports that principle by affirming that disabled workers should be treated in the same way as other workers in qualifying for the national minimum wage. We agree with the culture of social inclusion that it has emphasised.

As the noble Lord, Lord Rix, has indicated, and as the noble Baroness pointed out on Report, there are concerns that some individual employers of disabled workers might decide to discontinue offering them employment. That is the point that the noble Lord, Lord Monson, made a few moments ago. I prefer not to receive that message from the report of the Low Pay Commission; that is not what it found or anticipated. However, I do not deny that it is a possibility—just as the setting of the minimum wage at a level which was not sensible could begin to affect employment much more generally. We think we have avoided that position. We believe that employment will not be adversely affected, as indeed does the Low Pay Commission. We believe that the employment of disabled people will not be affected by the inclusion of this provision, but there may be some employers who will balk at it. I hope that employers who are prepared to offer employment to disabled or severely disabled workers will not see a national minimum wage at the proposed level as a reason to change their minds.

My noble and learned friend Lord Falconer emphasised last Monday when we debated this issue that there is a support mechanism in any event. There is the supported employment programme, which helps about 22,000 people with severe disabilities to obtain or retain jobs in open employment, and government funding is being maintained at more than £155 million for 1998–99 for that programme. It is operated by the Department for Education and Employment. I am not able to go into all the details because it is the responsibility of that department. We shall monitor carefully what happens on the supported employment programme to ascertain whether appropriate help for disabled employees is available during the introduction of the national minimum wage.

Let me refer specifically to the letter from the noble Lord, Lord Rix. Arising out of that, the noble Baroness has asked two specific questions: first, whether arrangements for paying disabled workers below the rate of the minimum wage would be illegal. She has asked that on a previous occasion. The answer is yes, it would be, in just the same way as arrangements for paying any worker below the rate would be.

She also asked whether the function of the minimum wage is to lay down some rules at one end of the spectrum and not to rule out provision at the other end. I can only emphasise again that our whole approach is an inclusive one. It is not based on different rules for some workers and not others, and that includes disabled workers.

As to the amendment, the new clause would give the Secretary of State the power to exempt disabled persons from the national minimum wage after consulting with the Low Pay Commission; it appears to provide a power to exempt disabled persons as a class. Previous versions provided for an elaborate permit-granting machinery for individual exemptions. That would have been very bureaucratic and the noble Baroness has departed from that view.

We believe that the new clause is unnecessary. The power to exempt or provide a modified rate for descriptions of persons, including disabled persons, is already available in Clauses 3 and 4 of the Bill. It is also over-prescriptive. It requires consultation with the Low Pay Commission before making such an exemption or modification. The Government see no need to exercise such a power in the light of the very clear message from the Low Pay Commission.

The Government are committed to consulting on the regulations for implementing the minimum wage and we shall ensure that organisations dealing with disabled persons, including Mencap, are invited to respond. If following that consultation there were to emerge a radically different response from the organisations representing the disabled, we would certainly reconsider how to proceed. I do not expect that to be the case but I can give the House that clear undertaking on behalf of the Government.

The whole situation needs to be kept under review. I have already said that we will ask the Low Pay Commission to monitor and evaluate the impact of the minimum wage. Included in that will be the position of people suffering from disabilities who are in work. The amendment is unnecessary. It does not add to the powers already potentially available under the Bill. I hope that the noble Baroness will not proceed with it.

Baroness Miller of Hendon

My Lords, I thank the Minister for his reply. The fact that he said that the amendment is unnecessary because Clauses 3 and 4 deal with the matter and that it will be kept under review gives me some comfort.

I am sure that both the Government and Her Majesty's Opposition have the same object in view, to do the very best we can for disabled people. We feel that our way would be better in that it would give a definite enabling power. I am certainly content with the Minister's reply that the matter will be dealt with and kept under continual review, and that Clauses 3 and 4 will be adequate. I imagine that the noble Lord, Lord Rix, will be satisfied with that response. In view of that, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 7:

After Clause 51, insert the following new clause—


(".—(1) The Secretary of State and the Chancellor of the Exchequer acting jointly shall lay before Parliament an annual report on the operation of the national minimum wage and of this Act as described in subsection (3) of this section.

(2) The Low Pay Commission may from time to time make a report to the Secretary of State on such matters relating to the operation of the national minimum wage and of this Act as seem to them to be appropriate and the Secretary of State shall lay any such report before Parliament except in so far as it is contained in the current or most recent report made pursuant to subsection (1) of this section.

(3) The report under subsection (1) of this section shall, and the report of the Low Pay Commission under subsection (2) may, include an assessment of the effect of the national minimum wage and the provisions of this Act on—

  1. (a) competitiveness and economic growth in the United Kingdom generally;
  2. (b) the balance of economic activity between the various regions of the United Kingdom;
  3. (c) the actual wage rates of the lowest decile of employed persons, and their relationship with rates paid to other employed persons;
  4. (d) the level of unemployment and of welfare benefits related to unemployment;
  5. (e) the relationship between the rate of the national minimum wage and the tax and national insurance contributions then in place;
  6. (f) training and labour markets;
  7. (g) small businesses;
  8. (h) persons with learning difficulties or physical disabilities; and
  9. (i) persons of different ages.

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

(5) The reports made under subsections (1) and (2) of this section need not be confined to the matters referred to in subsection (3).").

The noble Baroness said: My Lords, I did not move this amendment on Report because of the lateness of the hour. As I have said previously, the time that had been allocated to Report stage had been seriously eroded by two ministerial Statements. When I moved this amendment in Committee—it was then Amendments Nos. 124 and 125—I was both surprised and disappointed that they were emphatically rejected by the Government, especially after the Solicitor-General began his remarks by confirming: As with all government policies, we will wish to evaluate the effect of producing a minimum wage in full, which is likely to include most, if not all, areas listed in the proposed new clause".—[Official Report, 22/6/98; col. 76.]

The noble and learned Lord then went on to criticise the proposed new clause on the ground that it might not be exhaustive enough, although I should like to point out to your Lordships that my shopping list did not limit the matters which might be included in the reports. Despite having agreed just a few moments earlier that the Government would, indeed, be collating the necessary data for the purpose of their own evaluation, the Minister then went on to say (col. 77) that converting that into a report, would be, an extremely time-consuming exercise".

I cannot agree that with all the resources available to the DTI it is not possible to convert the evaluation into a report to Parliament. I also cannot agree that the department should be in possession of relevant data which it is unwilling to share with Parliament. What are the Government saying? Are they saying that there are some results of government policy and activity that are none of the business of Parliament?

In the 15 months that the Government have been in power, there have been numerous complaints that they are trying to marginalise Parliament. A leading article in the Daily Telegraph on 1st July on another topic commented: ever since it won the election, this Government has shown a remarkable aversion to Parliamentary scrutiny".

Is the refusal to provide information on the effects of this Act another manifestation of that policy or is it that the Government already know that the results of passing this Bill will be job losses, as conceded by the Deputy Prime Minister; wage inflation, as feared by the Chancellor of the Exchequer; and the closure of many small businesses? Knowing that, is it not a fact that the Government would like to keep away from Parliament and the public the news that this plank in their election manifesto was such a disaster, as we have predicted?

I am not just making a party political point here, because the Solicitor-General also said in the very same paragraph: An annual report from the Secretary of State and the Chancellor specifically on the national minimum wage could easily become seen as part of the annual pay round and lead to expectations of annual increases".

And there I believe you have it. That is a clear admission from the Government that the national minimum wage is likely to lead to wage inflation. It is a clear admission that our predictions about the national minimum wage leading to claims to restore differentials are correct. It is a clear admission that the predictions to the same effect which were made by the noble Lord, Lord Healey, are correct. Do the Government really believe that sweeping their internal evaluations under the carpet will prevent the information getting out? Not only does Whitehall leak like the proverbial sieve, but the media simply swarms with analysts who will produce their own evaluations in every Sunday newspaper, every financial journal, and on whichever television programme thrusts a microphone under someone's nose. Those evaluations would be better based on real facts rather than on the edited morsels which are dropped from ministerial desks.

Returning to the Minister's objection about the preparation of such a report being, in his words, "time-consuming", perhaps he also meant that it would hence be costly. Last month, in reply to a Written Question from me, the noble Lord, Lord McIntosh of Haringey, informed me that the cost of the new Strategic Communications Unit based in No. 10 was estimated to be half a million pounds a year. I am not sure exactly what the Strategic Communications Unit is supposed to do, but I suggest that using part of its large budget to assist in communicating to Parliament the effects of this major piece of government strategy would be very good value for money—and rather better than providing an endless supply of ministerial hymn sheets.

I began by expressing my disappointment that the Government had not accepted my amendment at an earlier stage. That was for two reasons. It was first and foremost because the amendment would in no way interfere with the operation of the Act. It would in no way diminish the rights of any worker. It would in no way affect whatever the Government conceive to be the objectives and principles of this Bill.

My second reason was that this Government were elected on a manifesto which said: We are pledged to a Freedom of Information Act, leading to more open Government and an independent statistical service", yet here they are, refusing to guarantee to make public information which relates to this Bill, and, in this case, statistical information to boot.

In our earlier debate on this amendment, I reminded your Lordships of the opening words of the Government's recent White Paper on freedom of information, which stated: Unnecessary secrecy in Government leads to arrogance in governance and defective decision making". I also reminded your Lordships of the Prime Minister's preface to that White Paper in which he stated: the traditional culture of secrecy will only be broken down by giving the people of the United Kingdom a legal right to know".

The trouble is that Oppositions are always in favour of freedom of information Acts, but, when they become the Government, all the Sir Humphreys talk them out of it. This Government keep on pledging, "We keep our promises". In fact, they do not. But here is one case where they could do so easily—and where we expect them to do so.

Last Thursday, when dealing with the business of the other place, the President of the Council was asked about when the draft freedom of information Act would be available. She reiterated the Government's commitment to freedom of information which she reminded the other place was one of their manifesto pledges. Now is the opportunity, without waiting for that Act, for the Government quickly to fulfil a specific promise.

Perhaps I may close by reverting to the Minister's plea that, preparing such a report would be an extremely time-consuming exercise".

How much more time-consuming and expensive will it be if, instead of producing a comprehensive report, Ministers continually have to answer a series of searching questions at the Dispatch Box?

I urge the Minister to accept an amendment which does no harm at all to the Bill but which will add to the credibility of the Government's confidence in their policy in bringing in this measure. I beg to move.

4.45 p.m.

Lord Razzall

My Lords, before the Minister responds to the noble Baroness, Lady Miller of Hendon, perhaps I may comment on behalf of the Liberal Democrat Benches. As the Minister knows, we have always been in some difficulty as the Bill has proceeded through the House in that we are fundamentally in favour of it and believe that it is a core plank of both the newly elected Labour Government and, indeed, of the Liberal Democrats. We very much support the introduction of the minimum wage. However, there have been moments in the course of both the Committee and Report stages when we have—dare I say it?—been seduced by the eloquence and charm of the noble Baroness, Lady Miller, and have supported her in amendments, on some occasions to the chagrin of the Minister. Indeed, when I listened to the siren voice of the noble Baroness talking about how Oppositions, always believe in freedom of information Acts until they become the Government, I wondered whether I dare remind her that after 18 years it may be somewhat hypocritical to use that argument the other way round.

I return, however, to this National Minimum Wage Bill. The Minister is well aware that, although we fundamentally agree with this Bill, we part company from the Government in that we have argued consistently that we want the Low Pay Commission to have permanent status. Furthermore, we should like the commission to produce annual reports to Parliament. We have argued for that because we believe that once the national minimum wage is enshrined in legislation—as we hope that it will be this week—the political debate should be taken out of the agenda so that we can have a much more technical debate in future years and thus avoid the partisan political debate that has ensued not only in this country in the past few months, but also in other countries which already have a minimum wage.

However, I must advise the noble Baroness that I do not think that the Liberal Democrat Benches can support her on this amendment. It goes far too far in prescribing the requirements on the Chancellor of the Exchequer and the Secretary of State in producing the report. As I have said, we are in favour of the Low Pay Commission having permanent status and making regular reports to Parliament. As I said on Report, we hope that the Minister will go the extra inch and finally confirm that the Low Pay Commission will be given permanent status. If that is the case the permanent status of the Low Pay Commission will produce a regular reporting mechanism which will need to be flexible in future and not prescribed in the way set out in the amendment moved by the noble Baroness. On this occasion I am afraid that we are unable to support the amendment.

Lord Falconer of Thoroton

My Lords, the noble Baroness moved a similar amendment in Committee. She will not be surprised to hear that the position of the Government has not changed since then. I am very glad to hear that the Liberal Democrats have managed to escape from the mesmerising advocacy of the noble Baroness. One can understand how someone can be mesmerised by it.

The Government have no argument with the need for monitoring. It is important to monitor the effects of any new legislation, especially in an area as important as this, when the country has never before had a universal statutory minimum wage. As with all policies, the Government wish to evaluate fully the effects of introducing a national minimum wage. That is likely to include most, if not all, of the areas listed in the new clause that is proposed by the noble Baroness. The amendment also envisages a permanent role for the Low Pay Commission in continuing to monitor the impact of the minimum wage.

To answer the point raised by the noble Lord, Lord Razzall, the Government have made clear in publishing the report of the Low Pay Commission that they wish the commission to continue to monitor and research the impact of the minimum wage following its introduction. The criteria listed in the new clause appear to be sensible, although perhaps not exhaustive. Given time, doubtless we could all come up with matters that could be added. One of the reasons why I ask the House to oppose this amendment if pressed—a point made by the noble Lord, Lord Razzall—is that it is unnecessary and over-rigid to prescribe in primary legislation when, how and who should monitor and report on the impact of legislation.

Furthermore, however significant the matters involved, it is important to recognise, as the noble Baroness appears to acknowledge, that the production of such a report will be an extremely time-consuming exercise. Its contents may also overlap with other government documents, notably the competition White Paper and to some extent Budget documentation. Therefore, we believe that it is preferable to leave this matter open. An annual report by the Secretary of State and the Chancellor specifically on the national minimum wage could easily be seen as part of the annual pay round and lead to expectations of annual increases.

I said that also at Committee stage, and uncharacteristically the noble Baroness misunderstood it. It could lead to expectations of annual increases in relation to the national minimum wage, which I am quite sure the noble Baroness would not want.

I move to the role of the Low Pay Commission. The amendment appears to presume that the commission will be able to initiate its own work and make reports rather than wait for matters to be referred to it by the Secretary of State. I should make clear again that the Government fully appreciate the work that the commission has carried out in making its report. I have already indicated that the Government wish the commission to continue to monitor and report on the impact of the minimum wage following its introduction. The position envisaged by the amendment goes somewhat beyond what the commission was asked to do in its first report. The commission envisaged by this amendment would have the power to report on everything on its own initiative, including a whole range of matters raised and debated previously both in this House and in another place at various times during the passage of this Bill.

I find it strange that the noble Baroness should support such a powerful and unaccountable body. This runs counter to other previous amendments that have sought to constrain and limit the power of the Low Pay Commission. I assure noble Lords that the Government envisage the role of the commission as being task-oriented, not unlimited. It is right that Ministers, as elected representatives accountable to Parliament, should be responsible for the setting of those tasks, one of which is monitoring. It is in order to maintain the task-oriented focus that essentially the commission must be reactive, not proactive. The commission must be independent in reaching its view but its ongoing activity should be within the framework set by politicians. For the purposes of administration and accountability there are good reasons for this arrangement.

We shall continue to monitor the effects as we do for all legislation and policies. Continued monitoring can take place through departmental research, ad hoc surveys and calling on the services of the commission itself. No doubt that monitoring process will feed into the consideration of any future variation or uprating of the level. I believe that the amendment goes beyond what is a common sense structure for the commission's activities and places unnecessary reporting obligations on the Government.

There is absolutely no intention whatever to marginalise Parliament in this respect; nor is this a matter of freedom of information. This matter is concerned with keeping under review economic circumstances. One must remember that the Government give a long and detailed report on the economy every year in the Budget. That report is accompanied by substantial red books. I believe that it is misleading and mistaken to say that this is an issue of freedom of information. I therefore ask that if given the opportunity this House should reject the amendment if the Opposition wish to press it.

Baroness Miller of Hendon

My Lords, I thank the noble and learned Lord for his response. I am sorry that my drafting of the amendment was too prescriptive so that the noble Lord, Lord Razzall, was not mesmerised by my words and could not support the proposal that there should be a report. I am interested in the response of the noble and learned Lord but I do not accept it. In this particular case I should like to test the opinion of the House.

4.56 p.m.

On Question, Whether the said amendment (No. 7) shall be agreed to?

Their Lordships divided: Contents, 66; Not-Contents, 149.

Division No. 2
Ailsa, M. Kinnoull, E.
Ashbourne, L. Kintore, E.
Attlee, E. Lucas, L.
Bauer, L. Lyell, L.
Beloff, L. Mackay of Drumadoon, L.
Boardman, L. Mersey, V.
Brabazon of Tara, L. Miller of Hendon, B.
Braine of Wheatley, L. Monson, L.
Brougham and Vaux, L. Mountevans, L.
Campbell of Croy, L. Mowbray and Stourton, L.
Carew, L. Munster, E.
Carnegy of Lour, B. Newall, L.
Clanwilliam, E. Newton of Braintree, L.
Coleraine, L. Norrie, L.
Craig of Radley, L. Northesk, E.
Crickhowell, L. Orr-Ewing, L.
Davidson, V. Palmer, L.
Denton of Wakefield, B. Park of Monmouth, B.
Dixon-Smith, L. Pilkington of Oxenford, L. [Teller.]
Dundonald, E.
Ellenborough, L. Porter of Luddenham, L.
Elliott of Morpeth, L. Rawlings, B.
Fookes, B. Saltoun of Abernethy, Ly.
Gardner of Parkes, B. Seccombe, B. [Teller.]
Selkirk of Douglas, L.
Glentoran, L. Sempill, L.
Gray of Contin, L. Sharples, B.
Harding of Petherton, L. Soulsby of Swaffham Prior, L.
Harlech, L. Stair, E.
Harris of High Cross, L. Strange, B.
Harrowby, E. Torphichen, L.
Hooper, B. Waddington, L.
Hunt of Wirral, L. Wilcox, B.
Jopling, L. Young, B.
Addington, L. Currie of Marylebone, L.
Allenby of Megiddo, V. David, B.
Alli, L. Davies of Coity, L.
Alton of Liverpool, L. Davies of Oldham, L.
Amos, B. Dean of Beswick, L.
Archer of Sandwell, L. Dean of Thornton-le-Fylde, B.
Barnett, L. Desai, L.
Bassam of Brighton, L. Dholakia, L.
Berkeley, L. Dixon, L.
Blackstone, B. Donoughue, L.
Blease, L. Dormand of Easington, L.
Borrie, L. Dubs, L.
Brooke of Alverthorpe, L. Eatwell, L.
Bruce of Donington, L. Evans of Parkside, L.
Burlison, L. Ewing of Kirkford, L.
Calverley, L. Falconer of Thoroton, L.
Carlisle, E. Falkland, V.
Carmichael of Kelvingrove, L. Farrington of Ribbleton, B.
Carter, L. [Teller.] Fitt, L.
Cledwyn of Penrhos, L. Gallacher, L.
Clement-Jones, L. Gilbert, L.
Clinton-Davis, L. Gladwin of Clee, L.
Cocks of Hartcliffe, L. Gordon of Strathblane, L.
Goudie, B. Montague of Oxford, L.
Gould of Potternewton, B. Morris of Manchester, L.
Graham of Edmonton, L. Murray of Epping Forest, L.
Gregson, L. Nicol, B.
Grenfell, L. Orme, L.
Hacking, L. Paul, L.
Hamwee, B. Peston, L.
Hanworth, V. Pitkeathley, B.
Hardie, L. Plant of Highfield, L.
Hardy of Wath, L. Ponsonby of Shulbrede, L.
Harris of Greenwich, L. Prys-Davies, L.
Haskel, L. Puttnam, L.
Hayman, B. Ramsay of Cartvale, B.
Hilton of Eggardon, B. Randall of St. Budeaux, L.
Hogg of Cumbernauld, L. Razzall, L.
Hollick, L. Rea, L.
Hollis of Heigham, B. Redesdale, L.
Hooson, L. Rendell of Babergh, B.
Howie of Troon, L. Rodgers of Quarry Bank, L.
Hoyle, L. Roll of Ipsden, L.
Hughes, L. Russell, E.
Hughes of Woodside, L. Sefton of Garston, L.
Hunt of Kings Heath, L. Serota, B.
Hylton, L. Sewel, L.
Irvine of Lairg, L. [Lord Chancellor.] Shepherd, L.
Shore of Stepney, L.
Simon, V.
Islwyn, L. Simon of Highbury, L.
Janner of Braunstone, L. Smith of Clifton, L.
Jay of Paddington, B. Smith of Gilmorehill, B.
Jenkins of Hillhead, L. Steel of Aikwood, L.
Jenkins of Putney, L. Stoddart of Swindon, L.
Judd, L. Strabolgi, L.
Kennet, L. Symons of Vernham Dean, B.
Linklater of Butterstone, B. Taylor of Blackburn, L.
Lockwood, B. Thomas of Gresford, L.
Lofthouse of Pontefract, L. Thomas of Macclesfield, L.
Longford, E. Thomas of Walliswood, B.
Ludford, B. Thomson of Monifieth, L.
McCarthy, L. Thornton, B.
McIntosh of Haringey, L. [Teller.] Thurso, V.
Tope, L.
Mackenzie of Framwellgate, L. Tordoff, L.
Mackie of Benshie, L. Turner of Camden, B.
McNair, L. Uddin, B.
Mar and Kellie, E. Walker of Doncaster, L.
Mason of Barnsley, L. Wallace of Saltaire, L.
Merlyn-Rees, L. Wedderburn of Charlton, L.
Meston, L. Whitty, L.
Milner of Leeds, L. Williams of Crosby, B.
Mishcon, L. Williams of Elvel, L.
Molloy, L. Williams of Mostyn, L.
Monkswell, L. Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

5.6 p.m.

Clause 55 [Meaning of "worker", "employee" etc.]:

[Amendment No. 8 not moved.]

Schedule 1 [The Low Pay Commission]:

Lord Haskel moved Amendment No. 9:

Page 36, line 21, leave out ("in writing").

On Question, amendment agreed to.

Lord Clinton-Davis

My Lords, I beg to move that the Bill do now pass.

Moved, That the Bill do now pass.—(Lord Clinton-Davis.)

Baroness Miller of Hendon

My Lords, this is the last occasion on which this Bill will be before your Lordships' House, assuming, that is, that the other place has the good sense to accept the very moderate and eminently reasonable amendment that was approved last Monday. For my part, it is rather like saying "goodbye" to an old acquaintance, because I have been involved in my researches, discussions with interested parties and writing my notes since before Easter.

I ask your Lordships' indulgence to enable me to add a few words to the thousands that I have spoken at the various stages of the Bill. I must first say that I am disappointed by the manner in which the Bill has been dealt with by the Government; not, I hasten emphatically to say, by the Front Bench in this House. They have been thoroughly professional and have extended me every courtesy that I could have wished for. At this stage, perhaps I may extend my sincere congratulations to the noble Lord, Lord Clinton-Davis, on his becoming a Privy Counsellor. I am sure that Her Majesty's Opposition and indeed the whole House will agree with me in my sentiments. More than that, despite our differences of opinion, I believe that our debates have been conducted in a friendly and good-humoured way. The noble Lord, Lord Clinton-Davis, the noble and learned Lord the Solicitor-General and the noble Lord, Lord Haskel, have contributed very much to that.

In paying them this well deserved compliment, I hope that I will not get them into trouble with the Minister of State, Mr. McCartney. When the amendment was passed giving the Secretary of State the option, entirely at her sole discretion, to moderate the operation of the Bill if she, and she alone, was convinced that it was necessary, the Minister of State's Pavlovian reaction was to describe it as a "wrecking amendment". While I can find excuses for his ignorance, what is not excusable was the continuation of his outburst when he added a vituperative rant straight out of Old Labour's Book of Slogans. He described the hereditary Members of your Lordships' House as, the descendants of robber barons and cattle thieves". It is perhaps not surprising that the mouthpiece of the Labour Party, the Daily Mirror, was encouraged last Thursday into describing your Lordships, and me in particular, as "vermin in ermine". In a particularly abstruse phrase used by my late mother-in-law, I take that statement from whence it comes. Whence it comes is from a paper whose main claim to fame is that Robert Maxwell considered it fit to be owned by him.

In the other place, on 16th July, the Minister of State demonstrated his implacable hatred of Conservatives, which he takes no trouble to conceal, by describing those who oppose the Bill as "a shambles" and "a rabble". I have to assume that he includes me in that description. But since the civilised rules under which this House operates forbid us to speak with asperity, I shall not reply in kind. I shall content myself with saying that if any reform of Parliament is needed, it should begin in the other place, as indeed the Daily Telegraph suggested in the leading article last Friday. I do not expect noble Lords on the Bench opposite to apologise for the Minister of State's outburst. They are most certainly not responsible for his actions. Perhaps he may not be either.

The other disappointment is that I put down 108 amendments at Committee Stage, with about a third brought back on Report. Every single one of them was rejected by the Government. While I congratulate the noble Lords opposite for the way in which they doggedly stuck to their briefs, even occasionally giving a passable imitation of pretending that they believed some of the more specious arguments they were advancing, I have to say that on the law of averages I must have been right at least once.

No doubt the objective of the Minister of State was to get the Bill through both Houses with a clean sheet, with no Opposition amendments. The noble Lord, Lord Clinton-Davis, admitted that the Government may not have got everything right. I must apologise, therefore, to the House for my being remiss in somehow not spotting and dealing with any of those potential errors in the 108 amendments that I moved.

I should also like to refer to the part played by the Liberal Democrats in our deliberations. On most occasions that they intervened they disagreed with me, which is of course their right. But they did so with great courtesy and politeness, if not always with logic. The noble Viscount, Lord Thurso, spoke about the problems of shift workers and night workers gaining access to their pay records by personal inspection. But his party opposed my amendment that access should be by means of copy documents, which would have made that easy. However, I forgive his party after it supported my Amendment No. 1 at Report stage, recognising as it did that every other country which has a minimum wage regime also has exceptions.

I thank my noble friend Lady Seccombe for her endurance in sticking solidly by my side on this Bench during the more than 12 hours or so of debates. I also thank the Shadow Minister my noble and learned friend Lord Fraser of Carmyllie for landing me with—I shall rephrase that: giving me the opportunity to conduct the Opposition's case on the Bill, and for all the helpful advice and encouragement that he provided. I also thank my unnamed researcher for the many hours of work, patience and good humour he showed in providing the information that I needed.

No one can be in any doubt, especially readers of the Daily Mirror, that I regard the Bill as a monumental mistake from start to finish, with its paraphernalia of production notices, enforcement officers and workers' minders, and the reversal of the burden of proof. I believe that it is a piece of political dogmatism, founded on the pay back to the unions for their surrender of the block vote, their acceptance of the abandonment of Clause 4, and the fact that the Government will not reverse most of the Conservative union reform legislation. The trouble is that the ones who will pay off that debt will be those whose jobs will be lost, who will not find jobs, or whose businesses will go to the wall as a result of the Bill. Unfortunately, the comments of the new president of the CBI, whose support the Government repeatedly prayed in aid during our debates, came too late for me to quote. But he confirms what I have been saying all along. The national minimum wage will cost jobs and will close businesses. I hope that we shall be proved wrong. I am not one who says, "I told you so", but in due course I fear that I may have to do so.

No less interesting is the admission reported in yesterday's Sunday Telegraph by Gavyn Davis, a close adviser to the Chancellor of the Exchequer and a member of the Monetary Policy Committee. He said that the national minimum wage is a factor in a forecast surge in wage inflation. It may well be that the disastrous consequences will be subsumed in the increase in unemployment that will follow from the Government's economic policies. The Rover car redundancies are only the beginning. The time will come when the Government can no longer glibly blame everything that is currently going wrong with their policies on 18 years of Tory misrule—just like the Wilson government which also began their career by complaining of 14 years of Tory misrule. Then they will blame their failures on the collapse of Far Eastern economies, the chaos that the single currency may bring to Europe, or even the millennium bug.

I cannot bring myself to support the Motion that the Bill do now pass. I shall not oppose it, but for the record, never let it be said that in the end the Bill received the unanimous support of your Lordships' House.

5.15 p.m.

Lord Razzall

My Lords, before the Minister responds, on behalf of the Liberal Democrat Benches perhaps I may follow the self-styled "vermin in ermine" in giving thanks for the support and help that I received in relation to the Bill. It is the first Bill in which I have participated since coming to this House. I have learnt an enormous amount from all involved. I learnt from the noble Baroness in particular that with charm and occasional wit over the various stages of the Bill she can say almost everything with which I totally disagree yet allow me on occasions to support her.

I have also learnt from her the wonderful ability to ask the noble Lord, Lord Clinton-Davis, 53 questions on the Statement. To my knowledge, she has not received more than 10 answers. Nevertheless, I shall ponder on and learn from her skill in being able to turn her Second Reading speech into 53 questions when next I am involved in a Bill of this nature.

I thank the noble Lord, Lord Clinton-Davis, for the skill with which he has dealt with all the issues I raised. I join the noble Baroness in congratulating him on his prestigious award announced today. I thank the noble Lord, Lord Haskel, for the help that he has given and the assiduousness with which he pursued all points. I thank the noble and learned Lord the Solicitor-General for the wit with which he has engaged us throughout the past heavy days.

Lord Falconer of Thoroton

My Lords, first, I thank the noble Baroness, Lady Miller, for the way in which she conducted the response to the Bill of the Front Bench. It was a real tour de force on her part. She has effectively put forward almost all the amendments—there have been hundreds—with immense charm and skill. At no stage of the Bill did any of the Front Benchers fall out with each other. That is a tribute to the noble Baroness. In the middle of a speech, the noble Baroness told us that she had eaten half her dinners in the Inner or Middle Temple. Having heard the noble Baroness, I cannot think why she did not finish. It was a great loss to the Bar.

The noble Baroness, Lady Seccombe, wound up the Second Reading debate. It was an excellent speech. It was the first time she had done so, and the speech was delivered with incredible skill and aplomb. I say that without patronisation: it was a quite difficult speech to make.

I pay tribute to the noble Lord, Lord Razzall, and the noble Viscount, Lord Thurso, for the extremely effective way in which they conducted the matter on behalf of the Liberal Democrats. Despite the unnecessary political remarks of the noble Baroness, Lady Miller, today this is not the moment for a political speech on my party, save to say this. I feel privileged to have been part of the team that has driven or piloted this Bill through the House—it depends on which form of transport one has in mind—which puts an end to poverty pay for people who have been entitled to social justice for a very long time indeed. I am proud to have been part of it. I commend that the Bill do now pass.

On Question, Bill passed, and returned to the Commons with amendments.

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