National Minimum Wage Bill

HL Deb 11 June 1998 vol 590 cc1197-221

6.12 p.m.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis)

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

Moved, That the House do now resolve itself into Committee.—(Lord Clinton-Davis.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Viscount Allenby of Megiddo) in the Chair.]

Clause 1 [Workers to be paid at least the national minimum wage]:

Baroness Miller of Hendon moved Amendment No. 1:

Page 1, line 7, leave out ("by his employer").

The noble Baroness said: When I first read the Bill and then saw this amendment, which looks very simple and which was proposed by my colleagues in the other place, I wondered why the Government were making such a fuss, but this amendment was debated at considerable length—for almost three hours—in Committee in the other place. It was described then as a "probing" amendment, but as no answer was given to the basic question, we have to take up the time of your Lordships' Committee by raising the matter again. The basic question is: why do the Government insist on the inclusion of the words, "by his employer", when to any dispassionate reader they seem to be mere verbosity? As long as the employee gets the minimum wage, why does it matter who pays him?

The debate in the other place largely revolved around the situation of catering and hairdressing staff, whose remuneration includes tips whether given directly to the employee or shared out in the tronc system. There are stories—perhaps apocryphal—that the doormen and cloakroom attendants at major London hotels, far from being paid any wages, used to pay the hotel for the concession. There are other examples. There used to be a system whereby taxi drivers kept a proportion of the fares and all the tips. Those drivers would not have regarded themselves as the employees of the vehicle owner but merely as hirers of it. However, under this Bill, it is likely that they will cease to be treated as self-employed and would be employees.

Then there is the situation where an employee is given a commission on what he takes in. I am not talking about ordinary commercial travellers and salesmen but about people such as seaside deckchair attendants who used to keep part of the ticket money as an incentive to be more assiduous. I doubt whether the unions permit local councils to operate that system these days.

I repeat my question: why do the Government insist on these three little words which do not add a single thing to the Bill and the exclusion of which will not detract from the clause by one iota? Is it because of some hidden agenda to abolish tipping, a long-held desire of old Labour, emulating the Soviet Union where it was impossible to get a taxi once the driver had performed his daily quota of rides?

Today I read a report in the Daily Telegraph—it was repeated many times on the radio—of a leak suggesting that the Low Pay Commission agrees with us. I shall be pleased if that report is correct. The question is: do the Government agree with the Low Pay Commission?

My other question is: when are the Government going to tell us what the Low Pay Commission's entire report says—or are the Government going to continue with their practice of treating Parliament with contempt and announce their policies to favoured journalists instead of to Members of both Houses, a practice for which Madam Speaker has reproved the Government on several occasions in the past few weeks?

In the light of the leaked report, will the Government undertake to accept and implement this amendment? I beg to move.

Viscount Thurso

Perhaps I may respond to one point made by the noble Baroness when moving her amendment. I refer to her point about service charges and tipping. Before doing so, perhaps I may say how sorry I was not to be present in the House for the Second Reading of this Bill as I have spoken often in your Lordships' House in support of such provisions. I should very much have liked to be here to record my support then. My comments throughout this stage are intended to be helpful and constructive, even if a little probing.

It is important to understand that there are two kinds of service charge normally operating in hotels and restaurants. The first comprises tips which are left on the table by clients who have enjoyed a good meal and feel moved to leave something extra. Customarily, they are collected either by the waiter concerned or through something known as petit tronc. There is no involvement of the employer whatsoever. The sums are simply divided among the staff and very little, if any, record is kept of them. I hope that those payments are not swept up into any consideration of a minimum wage. That would clearly be quite wrong.

The other form of service charge is where a specific percentage is included on the bill by the establishment and where the patrons very often do not have any discretion about whether or not to pay it. That is called the tronc system and it is usually administered by the hotel or restaurant. The amount passes through the books and has PAYE and national insurance levied on it. When one is recruiting a member of staff, it is usual to say, "You will be paid such-and-such as a salary and you may expect to receive so-and-so from the service charge", of which usually a certain amount is considered guaranteed. In that instance, I believe that it is perfectly proper for that amount to be taken into consideration when looking at the minimum wage. However, I feel that that is encompassed within the words, "by his employer". As those amounts are dealt with by the proprietor of the restaurant or hotel and appear in the PAYE system and on the payroll, it seems to me that that situation would be covered by the words currently in the Bill.

Finally, I reassure the noble Baroness that the story about doormen is entirely apocryphal. I believe that that went out before the last war. In any hotel with which I have had anything to do doormen are gold dust and I do not believe that in London the minimum wage will affect any of them.

Lord Clinton-Davis

First, I welcome the noble Baroness to this debate, which of course will be very short. We shall finish at about half-past seven! I am sure that the noble Baroness will make a major contribution to that debate. I am not surprised that the Opposition took so long in Committee in another place. The noble Baroness said that it took three hours. If it relies on the argument that the Labour Party is emulating the Soviet Union, it is not surprising that it takes a long time. That is just verbiage, and the noble Baroness knows it.

I very much welcome the contribution of the noble Viscount, Lord Thurso. He has made a personal contribution to the principle of the national minimum wage. He has applied that in the hotels of which he has experience and in which he is involved. I congratulate him on applying the principle and not just talking about it.

There is a very good reason for opposing this amendment: it is against the whole thrust of what we seek to do. That is the simple answer to the points made by the noble Baroness. The amendment seeks to remove the requirement on employers to pay their workers at least the national minimum wage. It would make it very unclear where responsibility for payment rested. If there is no responsibility how can there be enforcement? The Bill makes it manifestly plain that the responsibility lies with the employer, and there is no alternative to that. The approach of the Bill, just as with other employment law, is based on the relationship between employer and worker. I do not see any difficulty in relation to that. The proposition is very simple. We are talking about a minimum wage, and wages are paid by employers. The amendment undermines the purpose of the Bill which requires employers to pay their workers at least the national minimum. How could a worker or enforcement officer press a claim if it was not abundantly clear who was responsible for paying the minimum wage? Our evidence is that business wants to see effective enforcement. Good companies do not want to be undercut by bad companies. Clause 54(4) of the Bill makes it very clear who is the employer.

The noble Baroness spoke about tips. I believe that the issue is rather more complex than she has credited. The Low Pay Commission will make a report on this matter. I am unable to set out the Government's detailed position on tips until they have responded to the whole issue in due course. What I can say is that customers in restaurants are not employers. Sometimes they treat employees as employers but they are not. They have no share in the responsibility to pay the staff the minimum wage. We shall deal with the whole area of performance bonuses, gratuities and tips when we come to make our Statement on the recommendations of the Low Pay Commission.

We shall consult very widely on the draft regulations which will take this issue into account. I do not want to go into the whole issue of tipping at this particular juncture. The noble Viscount, Lord Thurso, has drawn attention to some salient points. We shall return to that matter in due course. I believe that the Committee would be very unwise to support the amendment moved by the noble Baroness.

Lord Fraser of Carmyllie

Before my noble friend determines how she responds to the Minister's reply, if the noble Lord opposite believes that the Committee will be finished by 7.30 p.m. he should advise us in which week it will reach that conclusion. I regard his response on the issue of tips as totally inadequate. I recognise well enough the very real difficulty in which he finds himself; namely, the Low Pay Commission has a report on which the Government have not yet reached a view. Clearly, the Government are trying not to reach a view upon it until this Bill has concluded its passage through this House and has been returned to another place. That is unsatisfactory. It is not simply a matter that affects the narrow point of tips in restaurants. I believe that the noble Earl, Lord Thurso, is correct.

Viscount Thurso

I thank the noble and learned Lord for that promotion, but I remain simply a Viscount.

Lord Fraser of Carmyllie

The noble Viscount may in any event enjoy that promotion for only a brief period. I believe that the noble Viscount was correct in saying that there were two types of tips. First, there are tips that are simply left on a plate or are passed directly to staff and the employer has no part in their distribution. Secondly, there are those which are collected and then divided up according to an agreed formula.

As I understand the proposal in the not particularly confidential report from the Low Pay Commission, it is recommended that all payments by result, commissions, bonuses, tips and gratuities paid through the payroll—which fall into the second category—should be included when calculating salary levels. If that is the only type of tip that is included when the calculation of the minimum wage is made, the difficulties may not be very significant. However, if what is proposed—I have not seen the confidential report—is that a wider category of tips should also be included, then some very fundamental questions arise on the whole structure of the Bill. The assumption that lies behind many of the ancillary provisions of the Bill is that of necessity the employer knows what has been paid over to the employee. For example, we find in Clause 28 that in any civil proceedings that arise over this issue there is to be a reversal of the ordinary burden of proof.

It is not difficult to understand why the Government may consider that to be an acceptable approach when the employer has full knowledge of all that is paid over to the employee. But in the circumstances that we are considering in which a restaurateur may be broadly aware that most of his clientele tend to leave tips, he may not know how much they leave or how often they leave them or whether any tips are left in any particular week. I believe that in those circumstances there is a very real argument that the onus of proof should not be reversed. For that reason I believe it is important to know at the outset exactly what is to be included and what is to be excluded. I believe that it would be in the Government's interests to give the Committee as clear an indication as possible of what is to be included; otherwise, we shall have to go through the Bill line by line assuming the worst and that even those tips which are not passed in any way through the books of the employer are to be included when calculating whether or not the minimum wage has been met. I hope that the noble Lord will at the outset give the Committee a rather fuller response than he has given so far.

I appreciate the difficulty. From reports that have appeared this morning in the media—in particular, the Daily Telegraph—Mr. John Monks of the Trades Union Congress has been writing to the Government about what is in the report. The Committee must know what is in the report and what the Government propose to accept at the earliest possible date; otherwise, it is not simply a matter of determining whether it is £3.60, £3.40 or £3.80. If one was concerned simply with the figure that might be one thing. It is now becoming clearer and clearer that the report contains a number of other issues that must be addressed within the whole framework of the Bill. If the Government were prepared to take a number of straightforward decisions we could deal with the scrutiny of the Bill much more simply and without the elaboration which I otherwise fear will prove to be necessary.

6.30 p.m.

Lord Clinton-Davis

It is nice to see the noble and learned Lord back. I welcome him back. His contribution is bewildering because, at one moment, he says that he understands the difficulties—the Low Pay Commission report has not been published, and the Government have not responded to it—then he says that he wants to know where the Government stand in relation to the report on this and that issue. I am not going to deal with Low Pay Commission report in dribs and drabs. He understands that.

The noble and learned Lord may want to have a debate on tipping now. I can assure him that it is a long and complex subject. It is not easy to deal with. We have the tronc system; questions of who controls it and how it is controlled; and service charge issues with which to deal. This place will have ample opportunity to discuss the matter in a more comprehensible way in due course, because it will then have before it the recommendations of the Low Pay Commission and the Government's response to those detailed matters. I shall not go into the issue in any further detail this evening, notwithstanding the noble and learned Lord's implied threats. I was only joking about 7.30 p.m. It is more like 7.40 p.m. after that intervention.

On the noble Baroness's own admission, there was considerable scrutiny of the Bill's principles in another place. We are going through a number of those debates again. This place is entitled to do that. I confess that when I was in opposition I did that on a number of occasions because it is appropriate for this place to go through such things again if it deems fit. We have reached certain agreements in that regard which necessarily mean that it is not always helpful to go through the fundamental points again.

I tried to make it clear in my first speech that in the amendment the Opposition are seeking to undermine the fundamental tenet of the Bill. I can add nothing more to what I said originally. I hope that the noble Baroness will withdraw the amendment.

Lord Fraser of Carmyllie

I leave it to my noble friend to make up her own mind. It will not do: the Minister said on Second Reading that this place would see the report before the end of last month. I have not seen it. We do not yet have any government decisions on it. At the risk of repeating myself, if the only issue that this place needed to have brought to its attention was the level recommended by the commission—£3.60, £3.40 or £3.80—I could see that a final decision by the Government on that matter would not necessarily affect the detailed scrutiny of the Bill.

What is troubling about today's report is the revelation that there is to be an amendment on how tips are to be treated. There is an indication also in the press reports that the trade unions are profoundly unhappy about the recommendation. The Daily Telegraph claims that it is a recommendation which seems certain to be accepted by the Government.

That is our difficulty. I am sure that the Minister understands what I am driving at. Unless we know how that matter will be handled by the Government, the only way forward for us—I should prefer to avoid taking this way forward—would be to assume in every circumstance in the Bill, where there might be some impact on the drafting, if tipping on a wider basis is to be included, close scrutiny will be needed. Let us not be flippant about 7.30 p.m. or 8.20 p.m., I am more concerned that we will not do ourselves a great deal of good, in trying to scrutinise properly, if we have to make a broad range of assumptions, because, if only the Government would make up their mind, we could set them aside so that the range of scrutiny would be markedly restricted.

I appeal to the Minister again to give us some indication, if he can, of when we might know about these matters. We were promised the report by the end of May. As we understood it at the time, that meant that we would all have it available for this Committee stage. It would be helpful were we to know, at least before we reach the next stage, whether we shall see the report by then, and, equally importantly, whether there is any prospect of having the Government's decision on the acceptance or otherwise of those recommendations by that time.

Viscount Bridgeman

I support the amendment, but I do not in any way anticipate a later amendment tabled by my noble friend Lady Miller. The Inland Revenue has, for many years, had to wrestle with the problem of tipping. At the later stages of the Bill, I hope that the Government will pay attention to the long-established practice which has been built up by the Inland Revenue in relation to tipping.

Lord Clinton-Davis

The noble and learned Lord has asked me to do what he used to rebuke me for suggesting, that titbits of information that he might read in the press should be the subject of considered debate here. I decline to do that. He has referred repeatedly to what he has read in the Daily Telegraph, based, of course, upon speculation.

We are dealing with the framework for the national minimum wage. It will be implemented through regulations which will be subject to the approval of both Houses of Parliament. The Bill establishes the principle of the national minimum wage and the regulations will define the detail.

When we come to debate those matters, many of the issues to which the noble and learned Lord has referred will be dealt with. I cannot continue the debate by going into further and better particulars, as the noble and learned Lord wishes. I have said that on a number of occasions, and repetition does not improve the argument. He then said that he would have to take us through the Bill step-by-step, no doubt threatening us with spending hours and hours on the Bill. That is for him to choose.

I have had detailed discussions with his Front Bench and with the Liberal Democrats. The noble Baroness will recognise that. We have tried to be as helpful as possible. I had not expected this kind of approach this evening. It is a matter for the noble and learned Lord. He is an experienced Member of this place and of the other place. It is for him to decide what he wants to do.

The commission's report and the Government's response will be before this place. I cannot say now when that will be. It is not just a question of choosing one item to discuss. The commission was asked to consider a number of complex items. It would be doing an injustice to it were we just to select, piecemeal, the matters that we were going to discuss, when the Government have not mind up their mind upon the entirety of the report. I cannot carry the matter any further.

Lord Fraser of Carmyllie

I am becoming even more disappointed by the Minister's response. It has been indicated that the noble Lord's colleagues are having a reception this evening. If that were not so, I would be minded to go back on a promise that we would not have a Division on the matter. The noble Lord must appreciate how close he is getting to infuriating us seriously. The programme, the timetable for the publication of the report, and the timetable for securing decisions of the Government are not titbits. It was said at Second Reading that we would at least see the report before we reached this stage of the Bill. That does not seem to be a matter that should be caricatured as seeking titbits of information. The Government clearly regard it as extremely important to have the matter resolved as objectively as possible by passing it to the Low Pay Commission for a conclusion.

I shall not press the matter further on this amendment. However, if the noble Lord regards our seeking to discover the likely response of the Government to the report as a titbit, or something of inconsequence, it will not make for a measured, calculated consideration of amendments by the Opposition. I leave it to my noble friend to determine what she wishes to do.

Lord Clinton-Davies

I had no intention of upsetting the noble and learned Lord. I have done so on a previous occasion. I know how wrathful he can be. It was not my intention.

I am saying that at this stage I cannot give the noble and learned Lord a timetable. I can undertake to inform the House at the earliest opportunity what the timetable will be, and how it will fit into consideration of the further stages of the Bill, but I cannot do so tonight. The noble and learned Lord would be the first to rebuke me—he has done so in the past—for relying on speculative information in the press. The noble and learned Lord will recall that. If he cannot do so, my memory is better than his in that respect. Be that as it may, I wish to add that footnote to this debate.

Baroness Miller of Hendon

The Minister will remember that on Second Reading I asked specifically when we were to receive the report from the Low Pay Commission. I recall the matter well because the noble Lord intervened, saying that he thought he had already addressed the matter. It is impressed upon my mind, since I thought that I must have misheard. Whether or not I misheard, it is troubling that when we seek to discuss the Bill all we have are leaks. The Daily Mail today had an article on tipping. A little while ago we heard that the proposed sum was £3.60. We heard that the Treasury was not pleased about that. Then we heard reference to the Board of Trade. We are entitled to ask when we are to receive the report from the Low Pay Commission and to be concerned that the House will not receive it first.

Having said that, I shall read carefully what the Minister said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

6.45 p.m.

Baroness Miller of Hendon moved Amendment No. 2:

Page 1, line 8, at end insert (", provided that such person has no other casual, part-time or permanent employment with another employer in respect of the same work.").

The noble Baroness said: The urgent need for this amendment arises from an ambiguity in the clause compounded by what was thought by one of my honourable friends to be an ill-considered throwaway remark by the Minister for Small Firms during the Committee stage in another place. It occurred not in relation to Clause 1 but on a totally different aspect of Clause 2. That is why I believe that the Minister did not realise the full implication of what she said.

The Minister began by saying: Under Clause 1 a worker is entitled to receive the national minimum wage from his or her employer. If the employee has two jobs, he or she is entitled to have the national minimum wage from each employer". The honourable Member for Daventry asked: Is she saying that would apply if the employee was employed simultaneously? The Minister replied—and this is of vital significance: Absolutely. An employee who is working for more than one employer simultaneously would be entitled to receive the national minimum wage from each of his or her employers". Let me stress the word "simultaneously" in that reply. The honourable Member for Buckingham then said: I think the Minister has just dropped a clanger, to judge by the expression on the faces of Labour Members at the back of the room. Am I correct in understanding that an employee would be entitled to claim the national minimum wage from more than one employer at one time for work in respect of the same period? The Minister replied: Yes, of course". I stress the words, "in respect of the same period".

It seems to me that the honourable Member was being magnanimous and charitable, as is his wont, in assuming that the Minister had been guilty of a slip of the tongue. Not so; the Government really meant it. In the very next session of the Standing Committee that afternoon, the Minister of State said: If an individual has two employers for whom he works during the particular pay period, each employer has to pay the minimum wage irrespective of whether a worker has three, four, five or six employers". I apologise for the lengthy quotations, but it was important for the Committee to hear exactly what the Government contend is the effect of the Bill.

As the Committee is aware, the courts may now adopt the practice of looking at what Parliament intended when interpreting the words of an Act. Perhaps I may give the Committee a couple of examples of the ludicrous results that follow from this incongruous interpretation of the Act.

Let us imagine that three brothers trade in partnership in a small factory unit manufacturing widgets. Their only employee is a secretary who answers the telephone, deals with a small amount of correspondence, issues the invoices and does other minor clerical jobs. For that she is currently paid £7 an hour or £280 a week. We understand that the Low Pay Commission has recommended a national minimum wage of £3.60. If the Minister's interpretation is correct, the result is that she would now have to be paid £432 per week because she was working for three employers, the three persons who owned the business in partnership. However, the paradox does not end there. Next door is a similar business, but it trades as a limited company, so its secretary has only one employer—the company. She therefore has the proper single market rate for the job.

In place of that hypothetical example, let me give one that would exist in real life. Let us consider a large firm of solicitors practising in the City, let us say in Gray's Inn Road. Part of the infrastructure of that firm is a catering staff of three or four people to supply tea, coffee and quantities of delicious sandwiches so that complicated negotiations do not have to be broken off for lunch and staff and visitors in meetings are sustained well into the night. Never mind the Minister's hypothetical three, four, five or six employers. Let us suppose that that firm had 54 partners who are the owners of the firm and the technical employers of the catering staff. It is by no means the largest of such firms; there are many larger firms with numbers of partners running into three figures.

If the Minister is right, it means that each member of the catering staff, receptionists, the four people employed in the print room (which churns out thousands of pages of documentation every day), and members of the typing pool, would be entitled to 54 times the national minimum wage. If it were 54 times £3.60, the figure would be £194 an hour, or £1,555 for an eight hour day, or £7,760 for a five-day week, or even £404,352 a year. Of course that is a perfectly preposterous proposition. I am certain that one result would be a mass exodus of your Lordships from this House to seek a job as a messenger boy or girl in such a firm.

By their injudicious remarks in another place, the Ministers have opened Pandora's box. Sure enough, someone will try it on and perhaps a judge will feel bound to adopt the two Ministers' interpretation. This simple amendment removes any possible ambiguity or doubt. Common sense tells us that if a person is working simultaneously for more than one person, then he or she gets paid for the hours he or she is working concurrently. For an eight-hour day the pay is for eight hours, not 16, 24 or 54 times eight which equals 432 hours.

Nobody can claim to be paid for a 432-hour day, but that is what the Ministers in the other place were suggesting. Even the planet Mercury only has a 59-hour day. What the Minister is suggesting is that the meaning of this Bill would introduce the mother of all Spanish practices.

I do not believe for one moment that the Government could possibly intend this utterly ridiculous interpretation to prevail. All they need to do, to put the issue beyond any doubt, is to adopt the eminently sensible amendment, which in no way detracts from the right of an employee to receive the minimum wage, whatever it turns out to be, for each actual hour worked. I beg to move.

Lord Clinton-Davis

The noble Baroness spoke of preposterous propositions and then went on to make a number of them, drawing inspiration from the planet Mercury in doing so.

Perhaps I may deal with the question of a partnership. I have been inured into this because I am a solicitor. All the noble Baroness has to do is to mention the word "solicitor" and I become ensnared. We are talking about one employer in that situation, in terms of a partnership.

One can rely on a whole set of hypothetical circumstances in order to try to undermine a principle. All these cases, if they fell to be dealt with, would have to be dealt with on the specific facts, on the particular contractual arrangements that existed between the parties. The responsibility for paying the minimum wage can depend on those particular circumstances, especially on whether the individual being paid is self-employed, or an employee or a worker.

Amendment No. 2 would remove the entitlement to the minimum wage from any worker who works for more than one employer in respect of the same work. That is the purpose of it. I see that the noble Baroness nods in agreement.

It is worth mentioning that when the amendment was originally tabled on 30th March the words in respect of the same work were omitted. According to that version, the amendment would catch employees with a second job. We could certainly have a debate about that, if that occurred, when there was a debate in another place.

The situation would, in any case, be clear. The minimum wage would be payable for both jobs. After all, if a person has two jobs, no one expects his first employer to pay him less simply on account of the fact that he is earning two pay packets. That would be beyond the realms of imagination. So why should anybody with two jobs not be entitled to the minimum wage in respect of each employment?

The issue of second jobs does not appear to be the point that lies behind this amendment. The original amendment was changed and replaced on 21st April by the current version, which adds the words in respect of the same work". Therefore, the situation which the amendment seems to envisage is one where a single person is being paid by two employers to do the same work. For the individual in question, that appears to be a very happy situation, because the person concerned would be receiving two salaries for carrying out a single piece of work.

With great respect, I do not believe that the amendment has anything to do with practical realities. Are there really individuals in this happy situation? Can the noble Baroness point to such cases? The noble Baroness sought to allude to solicitors' partnerships, which have nothing to do with this at all. Or, are there really employers who, between them, are content to pay the same individual twice over? Perhaps the noble Baroness can allude to certain factual situations. In any event, if she is able to, I do not see these situations being something that the Bill could or should be designed to prevent.

With the best will in the world, I believe that the revised amendment is meaningless. The situation is quite simple, despite this and other attempts to make it appear complex. If a worker has more than one employer and more than one job, each of those employers is responsible for paying the worker at least the rate of the minimum wage for the time during which that worker is working for him. I do not see the problem. If a person does two jobs as a worker, then he or she should get two wages, each underpinned by the minimum. That is our case. I believe it is a very sensible proposition.

I believe the Opposition have become somewhat confused by these hypothetical instances. I hope the noble Baroness will feel persuaded that this is not a matter which she would wish to press forward tonight.

The Viscount of Oxfuird

Perhaps I may have some clarification. A number of people in this country act on a commission-only basis. How could they be described under these circumstances? Because they are responsible for the sale of a product, in the course of their work they may be employed by four or five employers. In that case, would they fall within this particular clause?

Lord Clinton-Davis

No, because they would be self-employed persons. They would be acting on a commission-only basis.

Baroness Miller of Hendon

For the purposes of clarity and Hansard, I was not nodding at the Minister. I was smiling across the Despatch Box and I was not actually agreeing with what he was saying.

Turning to that particular point, I hesitate to argue a point of law with the Minister, who has been a member of the solicitors' branch of the legal profession for, I believe, something like 45 years. Indeed, I would not wish to argue a legal point with anyone on the Government Front Bench. As he said to me, with the greatest respect, that I was wrong, I would like to say, with the greatest respect, that I believe that the Minister is wrong.

A limited company is a legal entity. A corporation created by statute or Royal Charter, such as the BBC, is a legal entity. A partnership is not a separate legal entity, but a body made up of all its individual members. If one of them incurs a debt on behalf of the partnership, or injures someone in the course of the partnership's activities, or if someone simply falls down a defective staircase in their office, each partner is jointly and severally liable to the third party. In my opinion, it is not sufficient simply to exempt partnerships because there are other activities where a person can be working for more than one person simultaneously.

The Minister asked me to give some examples. It could be a joint venture or an unincorporated members' club. For example, I and some colleagues could get together to employ a researcher out of our meagre secretarial allowance, or 50 of us could decide to engage a trainer to conduct a keep fit class between Divisions during late sittings, and many of your Lordships might well appreciate that. The amendment that we are considering has been drafted so as to cover any eventuality that the most fertile imagination could conceive. The Minister suggested that the wording of the amendment had been changed. We have changed it in order that it will cover any example that anyone might like to think up.

The amendment is helpful and is intended to rescue the Government from the consequences of the very loose phraseology used by the draftsman, followed by the extravagant and ill-considered interpretation put on the clause by the two Ministers in the other place.

I have no intention of withdrawing the amendments at the moment. I wish to hear what the Minister has to say and I believe that my noble and learned friend has something to say, too. The Minister suggested that the amendment was irrelevant and that I did not know what I was talking about. I tried to point out to him that it was particularly relevant and that I should like to hear what he had to say.

Lord Clinton-Davis

I should never be so discourteous as to say that the noble Baroness did not know what she was talking about. I am grateful to her for her intention to be helpful, but it has not worked out that way. The partnership she referred to was a body. That is exactly what it is.

7 p.m.

Lord Fraser of Carmyllie

Is a partnership a person?

Lord Clinton-Davis

No, a partnership is not a person.

Lord Fraser of Carmyllie

Will the Minister look at Clause 54(4), which states: In this Act 'employer', in relation to an employee and a worker, means the person"?

Lord Clinton-Davis

It is not, normally speaking, a person, but in the context of this Bill that is how it is defined. Normally speaking, a partnership is not a person, but it depends on the context in which one is referring to it.

Lord Fraser of Carmyllie

There will be some disagreement between my noble friend and myself because so far as I am concerned a partnership in Scotland, as even English lawyers know, enjoys a separate legal persona. Therefore, in the terms of that definition, I have no doubt that a Scottish partnership would be a person.

I am interested to know, and I should be grateful for elucidation before we reach Clause 54, whether a partnership in England is properly described as a person. If a partnership in England is described as a person, we wish to get the matter clarified before we reach Clause 54.

Lord Clinton-Davis

For the purpose of this Bill, a partnership is defined as a person. In other respects, it may not be. However, I do not wish to become involved in that debate, nor do I wish to become involved in the niceties of Scottish law, of which I know even less than English law.

The question about keep-fit classes is interesting, and I shall join. I am not suggesting that the noble Baroness is talking utter balderdash; I merely tried in a polite way to refute the argument from the Government's point of view. We do not see that she is seized of the proper point. I do not see that repetition adds anything to the argument; I clearly set out our case in this regard. We believe that the Opposition are wrong. The amendment, if agreed to, would do serious damage to the Bill and I do not want that to happen. I invite the noble Baroness to withdraw it.

Lord Monson

Before the noble Baroness decides what to do, perhaps I may say with all respect that I do not believe that the noble Lord, Lord Clinton-Davis, has answered her point about people banding together to hire the services of a secretary or a personal trainer. We are not talking about partnerships, which may well be a grey area; what we are talking about is not a grey area.

Lord Clinton-Davis

If two people employ someone to do a job simultaneously for them the position is clear; the person concerned should receive two wages, each underpinned by the minimum. It is inconceivable that in the circumstances described by the noble Baroness and the noble Lord, Lord Monson, a typist would have a worker's contract with all three. It does not happen that way.

We are dealing with hypothetical situations. In reality, when considering the legal liabilities of particular circumstances, one would have to examine the contractual relationship which exists. One could dream up all kinds of hypothetical situations which will not advance the interests of addressing the principle. The Bill reflects employment law, all of which assumes that a worker cannot have more than one employer in relation to one job. He or she can of course have two jobs at the same time, one in the morning and one in the afternoon, but cannot do them simultaneously.

Baroness Miller of Hendon

After that last remark, I am in a certain confusion. I would have thought—and the noble Lord, Lord Monson, made the point—that we could all join together and have a keep-fit class in the Royal Chamber. The question is whether each and every one of us would have to pay the minimum wage to the instructor for undertaking the same job at the same time. I have listened carefully to what the Minister said. Although I do not agree with him, I shall not press the matter to a Division tonight. We agreed not to do so because the Minister's colleagues were at a social gathering and it is not my intention to break such an agreement.

The Government need to look at the issue again and we wish to return to it. In no way does this simple amendment interfere with or alter any of the principles of the Bill. It clarifies the Bill and would get the Government out of certain trouble. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 3:

Page 1, line 14, at end insert (" or has reached the age of seventeen years, whichever is the later").

The noble Baroness said: In moving Amendment No. 3, I shall speak also to Amendments Nos. 4 and 5. Some parts of the Bill are defective because not all the effects of particular provisions have been fully considered. Clause 1 (2)(c) is one such provision. As drafted, the Bill provides for the start of an employee's entitlement to receive at least the national minimum wage to be when he or she reaches school-leaving age.

Perhaps I may say for the first time that, as the Minister knows, we on these Benches do not agree with the idea of a national minimum wage, although we certainly appreciate that it is a manifesto pledge. All we shall attempt to do is to make it a little easier and a little better for everyone to live with. I agree that if there has to be a national minimum wage there has to be a start-up date for it. However, basing it on something as flexible as the school-leaving age produces uncertainty and ambiguity.

The reason is simple. Within the United Kingdom there are three different school-leaving ages. England and Wales have a different age from Scotland, and Northern Ireland has yet a third. The differences are a matter of months, being based on how long after a child reaches his or her 16th birthday he or she is allowed to leave school. The details, even as set out in the normally helpful notes to the Bill, are extremely confusing. I have read them several times and, as the Minister will have done so, perhaps he can explain the differences. I found the matter extremely confusing, although in practically every other respect the notes on clauses were helpful.

No doubt they would be understood by an expert on education, which I certainly am not. But it is clear that children living within the four different areas will be able to leave school at ages different from others living in the same area. I agree that that problem cannot be avoided. However, as between the four areas, each using a different formula, there can be a difference of several months between the age at which a child is allowed to leave school. For example, as I understand the figures in the notes to the Bill, it means that a Scottish child may have to remain at school until he or she is about 16¾. According to this same note, in Northern Ireland a child may leave school in the same year as he or she attains the age of 16 on or before 1st July. Frankly, I am not sure what that means for Northern Irish children but it seems to me that a child born on 2nd July—which happens to be the birthday of one of my sons—would have to stay in school a whole year longer than one born on 1st July. If the proposed Scottish parliament has the power to do so, it could presumably alter the school leaving age north of the border to yet a different one, higher or lower, thus yet again introducing a different standard.

For the purpose of the present debate we do not have to concern ourselves with the precise effect of these arcane and convoluted regulations. It is sufficient to say that as between England and Wales on the one hand and Scotland on another hand and Northern Ireland on a third hand, children are treated differently. Using the term of art, "school-leaving age" means that distinctions will be made between children from different parts of the United Kingdom. That is, in effect, discrimination, not just on the grounds of age but also on the grounds of nationality. I believe that is totally unacceptable. I am amazed that the party opposite should continue to countenance it after it was drawn to their attention in the other place. But that is not the end of the anomaly.

In Committee in the other place, my honourable friend the Member for Daventry pointed out the situation of someone living on or close to the Scottish border; for example, in Berwick-on-Tweed. Would his entitlement to the national minimum wage depend on where he lived or where he took a job? Would a new school leaver from England be entitled to a different wage from a colleague working alongside him who lives in Scotland? That is not the end of the possible problems. What would happen if a young person from the EC came here from a country where, for example, the school leaving age is 18 or 15?

However, what I am addressing here is the differences in school-leaving ages between children living in different parts of the United Kingdom. The amendment we propose purely and simply provides a uniform base for all school-leavers irrespective of where they live or where they work. It is not designed to deprive them of any so-called benefit from an entitlement to a minimum wage, although I personally believe they will find themselves in severe competition with those still at school who are trying to secure the part-time and weekend jobs that so many young people are looking for.

The amendment removes the absurd geographical distinctions that I have drawn attention to. In the debate in the other place no satisfactory explanation was given by the Government for not agreeing to sort out this unnecessary problem. Now that they have time to reflect, I trust that they will agree to do so.

Before I speak to the next amendment I should like to mention a matter which comes back to our discussions much earlier on the Low Pay Commission. If rumour has it, and it is right, it may well be that young persons under 18 will not be entitled to the national minimum wage. Therefore, the whole of the argument which I have just proposed would be irrelevant. That is why I and my noble friend made the point that it is difficult for us to deal with all these matters in the dark because we do not actually know.

I turn to Amendment No. 4. This amendment does not seek to provide the facility to exploit with low wages senior citizens who have attained the age of 65 and who choose for whatever reason to remain at work full or part-time or even in some new occupation. I certainly would not wish to do that. I must declare an interest in that I will be joining that venerable group in just a few days' time, difficult as I find it to believe. Nevertheless, it is the truth.

The purpose of the amendment is to provide for the exclusion of those of pensionable age from what we believe may be the adverse effects of a national minimum wage. We believe that the effects of the Bill may be to harm many members of a particular group that the Government think it is intended to help. Elderly workers are indeed a vulnerable group. The same is true for those under the age of 26 where the Government have already taken permissive powers to make an exception. The amendment would not force pensioners to work for low wages; nor would the amendment to Clause 3, mirroring the exception for the under-26 year-olds.

The amendment recognises that they are a group who may have low productivity specifically related to their age or the lack of modern technological skills. I hasten to add that there will obviously be notable exceptions—myself included—who will continue to be able to work with undiminished vigour, as do many noble Lords in this House. Such persons should be allowed to price themselves into work if they choose to do so.

The Low Pay Commission should be empowered by the Secretary of State, after due consideration, to recommend a separate level of pay for pensioners. The Secretary of State has already given herself discretionary powers not to follow any recommendation of the commission if she chooses not to.

Pensioners are a large and growing proportion of our population. Out of 10 million pensioners in this country—almost 20 per cent. of the population—800,000 of them are economically active. Approximately 600,000 of those are employees. There was a dip in the number of employed pensioners during the economic downturn in the early 1990s. This emphatically proves the vulnerability of this group in times of economic and employment difficulty.

The Minister in the other place propounded the novel economic theory that higher wages result in higher employment. I shall not get into arguments about the reality of the so-called McCarthy curve. I am certainly not an economist but common sense makes it clear that some jobs will be lost if wages go up. Without special exemptions, jobs will be lost if wages are forced up. Those job losses will fall on the most marginal groups with the lowest productivity. At present, those liable to be low producers—those who want merely to work part-time and who may need more time off work for health, family or personal reasons—can price themselves back into the labour market by adjusting the price they charge for their labour.

Many of the over 65s are in possession of their state pension and occupational pensions. They may be happy to give a couple of hours a day for a nominal wage, possibly just to pass the time. They, as well as those who want to supplement their state pension, may make all the difference as to whether the village shop can stay open or have to close down. I well remember the example that my noble friend gave on Second Reading of such a case. They may be the means of enabling the local newsagent to continue with the delivery service and thus be able to compete with the big chains.

An unacceptable anomaly is created by the Government's refusal to exempt pensioners from the minimum wage. Pensioners do not pay employees' national insurance contributions. A pensioner will therefore be between 8 and 9 per cent. better off than a person below pensionable age doing the same work for the same wage. Is it not odd that a pensioner should have a higher take-home wage than his colleague working for the same employer? Similarly, in cases where an employer has a pension scheme, an employee over the age of 65 will not be able to join it. That will save the employer from making contributions, and also the employee, thus increasing his take-home pay still further.

The amendment will help to rescue from the margins of employment many of those who are currently unemployed solely on account of their age. The Government, albeit reluctantly, have given themselves flexibility to exempt the under-26 year-olds. I am at a complete loss to understand why they should be discriminating against older workers who are presumably old enough and wise enough to know whether it is worth their while taking a job or whether they are being exploited. The amendment seeks to end the inflexibility which has characterised the Government's approach to this Bill.

The last amendment in the group would exclude trainees on a recognised training programme from the national minimum wage. That is Amendment No. 5. There is a vast variety of training arrangements ranging from day release, instruction at the employee's place of work, study leave and so on. The Government have not only said that their priority is education, education and education, but in numerous policy statements and ministerial speeches, as well as those delivered before the election, they have stressed continually the need for a trained, skilled workforce. We entirely share that view.

What we find surprising in a party which also claims that it keeps its electoral promises is that it is placing a positive obstacle in the way of the unskilled improving their skills. It must be a disincentive, even to the most enthusiastic employer, not only to have to incur the disruption of giving a trainee time off work and/or to spend time giving him on-the-job-training but also to have to pay him a larger wage than his existing capabilities command.

The training of a new employee is not only an expense and a burden on the employer; it is a positive benefit to the employee and will later, one day, one hopes, result in enhanced earning capacity for the employee. In other words, paid training, albeit at a wage lower than the national minimum wage, is an investment being made by both sides. There must be a strong commitment to training on both sides and, indeed, by the unions as well. As my honourable friend the Member for Daventry pointed out in Committee in the other place, there are a number of cogent reasons why there should be an exemption in respect of trainees.

First, it is simply a matter of equity. There could be occasions when a skilled person and a trainee are working side by side. There is no reason why the skilled employee and the trainee should be subject to the same minimum wage. Of course, this is a matter of differentials which the party opposite fully understands.

But, secondly, there is the matter of incentives. Employers should be encouraged to provide training and the Government should be encouraged to live up to their rhetoric for training. Why should an employer take on a trainee with all the commitment that that entails when, for the same money, he may employ someone already possessing the necessary qualifications and experience? It must be economically better for an employer to take on someone who has already been trained, presumably at someone else's expense, rather than incur the commitment of training a raw recruit.

Then there is the matter of consistency. On the one hand, the Government are proposing, under their welfare to work scheme, to give employers incentives in the form of subsidies to take on new trainees. Yet here in this Bill they will impose disincentives by requiring those same employers to pay over the market rate for those same trainees.

In the other place on 28th July, the Secretary of State said: The national minimum wage will be introduced sensibly and will take account of the needs of young trainees and not penalise occupational training activity". It is not only the CBI which supports the idea of different rates of pay for trainees and escalating rates of pay as an incentive as that training progresses. The GMB also says that there is a case for a lower training rate. The TUC itself stated: There is a case for trainees of any age to be entitled to a percentage of the full minimum wage while they attain the full level of competency required to undertake the full range of duties. However, this partial exemption must be properly regulated to prevent abuse". We certainly agree with that.

We agree with the CBI, the GMB and the TUC on that point. We agree also with what the Secretary of State said in the other place. What is surprising is that the Government do not agree at least with the evidence of the unions and the TUC. What is even more surprising is that the Secretary of State no longer agrees with herself and what she said just 10 months ago. Why has she departed from her previous reasonable attitude and adopted the inflexible doctrine of universality?

There is then the aspect of ageism which I mentioned earlier. Why are the Government discriminating against older workers? They are giving themselves the option with no assurance at all that they will exercise it to provide exemptions for those under the age of 26. In view of the Secretary of State's apparent aversion to exemptions, I am by no means convinced that it is more than window dressing or that she will bring the provision into effect, at least in the foreseeable future. I say that because she could make it an immediate exemption, if she so wished, in the same way as share fishermen and the Armed Forces have already been exempted.

Be that as it may, older trainees need consideration as well and their potential employers need incentives. With many traditional jobs disappearing, the previous government encouraged retraining schemes. The mining and steel industries are cases in point. I do not suggest that the present Government are any less committed to the retraining of those who, for some reason or other, have become redundant—and what an ugly word "redundant" is. However, it is inconsistent and wrong for the Government to place that obstacle in their way simply for what appears to us to be nothing but the doctrinaire concept of universality. That doctrine is evidenced by the title that the Government have chosen to give the Bill; that is, the National Minimum Wage Bill.

In Committee in the other place, the Minister of State claimed that Clauses 3 and 4, give the Government maximum flexibility to take into account the Low Pay Commission's recommendations". With all due respect, they most certainly do not. Clauses 3(3) and 4(2) are hedged around with the most severe limitations. It so happens that I hope to assist the Government to simplify the whole matter with the amendment that I shall propose to Clause 2 later. Therefore, I shall not take up the time of the Committee any further at this stage.

The object of the amendment is to stop the Bill moving in the wrong direction by making it more difficult for employers to take on genuine trainees of whatever age. I beg to move.

Viscount Thurso

I should like to ask the Minister one question. Before doing so and speaking generally on training, I have always believed that the minimum wage is just that—a minimum wage—and that everyone employed should be entitled to it. Once people are trained, they should move on to higher rates of remuneration. Therefore, I do not quite support what the noble Baroness said. Indeed, in all the industries where I have been employed, we have tended to take the view that you take people on at the specific rate, you train them, and thereafter you receive the value of the training. In a later amendment we seek to reduce the age from 26 to 18, very much on that principle. It is in that regard that I should like to ask my question.

Colleges place people with businesses for work experience. Those people should be, although sometimes they are not, completely supplementary to the workforce. The employer takes them on specifically because of the co-operation that exists with the college in order to give work placement experience. In the hotel and catering industry, during a three-year degree course, students will typically spend six months on a practical experience split over several departments. In that circumstance they are not required by the business. I am fearful that if provision is not made, there will be a disincentive for employers to offer places to colleges. I am not sure whether that situation is covered later in the Bill. I should be grateful for the Minister's comments.

Lord Monson

The noble Viscount, Lord Thurso, is perhaps too young to remember that there was a time not very long ago when student nurses, trainee accountants and so on, far from receiving a minimum wage, had to pay something towards their training.

The noble Baroness has made out an excellent case for all three of her amendments. I wish to comment in particular on Amendment No. 4. It was mentioned that exemption has already been made for the under-26 age group. That group already receives concessions on rail travel, both here and on the Continent. The over-65s receive many more concessions—free prescriptions, subsidised rail travel, and free bus, Underground and suburban rail travel—as well as a state pension and, in most cases, an occupational pension. Why on earth should they not be allowed to work for a lowish wage for fun, as it were, or just to keep their hand in or to give them contact with other people, if that is what they wish?

7.30 p.m.

The Earl of Balfour

I should like to speak to Amendment No. 5. I shall give the Committee a specific example of something that happened to me. When I left the sea with, I am glad to say, a master's certificate in my pocket, I wanted to get into another industry; namely, the manufacture of wire and wire ropes. It was arranged for me to go to America to learn that trade in a firm which was very friendly with a firm in Scotland. I went over there and worked in every department of the firm for about nine months, which enabled me to receive a thorough grounding in the trade. However, that was on the very clear understanding that I received no wages whatever. In fact, I was warned that if I did receive any wages it would very much upset the wire-drawers union and that I would also be in quite serious trouble with the US income tax authorities.

I have given the Committee that specific example, but a similar sort of case arose a while ago. I am now a farmer. The son of a very good friend of mine wanted to gain experience of farming on other farms and came to my farm to learn. He lived with me and my family but, again, for various tax reasons, he was paid not a single penny. In that respect, I feel that those people who want to receive a proper training could find themselves in difficulties under the provisions of this Bill.

Lord Fraser of Carmyllie

I rise to offer a few additional comments on Amendment No. 3, which relates to the age of 17, or the compulsory school-leaving age. The Minister will be aware from previous exchanges that one of the matters that I believe that this Chamber ought legitimately to be exploring at this stage is the interrelationship between those pieces of legislation, which, even after constitutional change affecting the rest of the UK, will remain within the purview of this Parliament. It is absolutely clear that the issue of employment law generally—and certainly the national minimum wage—will remain within the purview of the Westminster Parliament.

However, as Clause 55(4) makes clear: For the purposes of this Act, a person ceases to be of compulsory school age in Scotland when he ceases to be of school age in accordance with sections 31 and 33 of the England (Scotland) Act 1980". As I understand such matters, following on from Royal Assent and the establishment of the Scottish parliament, it is proposed that that 1980 Act is one which it would be for the Scottish parliament to amend, if it so desired. I want to be absolutely clear about that point. The difficulty lies in the relationship between devolved matters, such as education, and matters of employment, such as the national minimum wage. If the Scottish parliament were significantly to alter the school-leaving age, that would carry with it the potential for a significant change as regards those to whom the national minimum wage would apply.

I would be grateful if the Minister could confirm whether that is the case. If the Scottish parliament were to change the provisions within the 1980 Act from, let us say, the age of 16 to the age of 18, would it mean that no one in Scotland would come within the national minimum wage until he or she reached the age of 18? Alternatively, is this one of those rather grey areas where the purpose of the reserved matter is effectively being defeated and where accordingly, in such circumstances, there is the potential for an override of what the Scottish parliament would do?

My understanding is that there is such a risk attached. If that is the case, then, for the purpose of clarity and indeed for the purpose of uniformity, across the United Kingdom, which my noble friend highlighted, perhaps I may suggest to the Minister that a preferable way to deal with the matter would be to do so within employment law to establish a single age. It would mean that the age limit would not suffer the risk of fluctuation in different parts of the UK and would, within employment law, be applied uniformly across the country. For that reason, at least part of Amendment No. 3 would seem to me to have a value as regards securing such uniformity.

Lord Clinton-Davis

This has been a somewhat long debate thus far. The remarkable and astonishing fact that has emerged from it is the revelation by the noble Baroness that she is approaching the age of 65. Indeed, I cannot believe it. I thought that she was about 33, but there we are. I have no doubt that the noble Baroness will continue with the undiminished vigour to which she referred.

In essence, the minimum wage will apply when a person has left school. The amendment would include on the face of the Bill a much more rigid situation—that is to say, a starting point of 17 years—from which entitlement to the national minimum wage would start. In replying to this series of amendments, it is important for me to point out the need to distinguish between the primary legislation and how it is framed and the flexibility which the Bill provides under secondary legislation, especially under Clause 3.

As far as concerns the Bill's framing, I suggest that the most logical place to draw a line for eligibility in principle for the minimum wage is as set out in the Bill; that is to say, at the age when a person no longer has to attend school and may enter full-time work. Therefore, on that basis, there is a clear dividing line between the world of education and the world of work for the purposes of the Bill.

However, there is a difference between the framing of the Bill and how it is to be implemented in detail. Here I refer to the power available to apply exemption or a different rate to those under the age of 26, and to the Government's particular request to the Low Pay Commission to consider whether, and if so how, that power might be used. It is true that there was a considerable amount of discussion in the other place about the possible consequences as regards the variation of ages in England, Wales, Scotland and Northern Ireland at which young people can leave school; and that, under the Bill as drafted, this would introduce an unfairness in entitlement to the national minimum wage.

If there were anomalies, I submit that they would arise as a result of the different education systems in the United Kingdom. They would have nothing to do with the minimum wage as such. In practice, I do not believe that such anomalies would amount to very much. However, even if they did, there is no need to change the primary legislation as suggested by the amendment. Instead, we could simply make use of the powers available under Clause 3 to set the entitlement according to a strict age limit rather than school-leaving status. We shall certainly be consulting when we come to frame the draft regulations in this regard. Therefore, when Parliament comes to consider those issues, noble Lords will be able to embark upon a full debate on age exemptions. I submit that the amendment is unnecessary.

I turn now to the point made by the noble Viscount, Lord Thurso. Many people on what is called work experience will not have contracts of employment or other kinds of employment contracts. Therefore they will be completely outside the scope of the Bill. Some who are engaged on work experience may be trainees or apprentices with contracts of employment. We have asked the Low Pay Commission to make recommendations on this point. We believe that Clause 4 deals with that issue. However, I am grateful to the noble Viscount for having raised that important matter.

The experiences of the noble Earl, Lord Balfour, are interesting but I am not sure that they are germane to the issues that we are considering here. In those days the situation was completely different from the position with which we are currently dealing, and will deal with when this Bill is enacted. The noble and learned Lord, Lord Fraser, raised a point which I hope I have dealt with in the remarks I have just made. I notice that he nods his head in agreement.

I turn now to Amendment No. 4 which would have the effect of removing people of pensionable age from the scope of the Bill altogether. It would take away their right to the national minimum wage. I do not know whether that was intended but in our view that is what the effect would be. Certainly I agree with the contention made by the noble Baroness that those who acquire a certain age are still able to make a contribution. I declare my interest without revealing my age, which is a very great one. As far as I can see, the amendment would remove the right to a decent minimum from workers who have retired from their main jobs but who want to supplement their pensions by working, for example, at a local shop. It would also affect those who had not retired but who continued in their original job after attaining the age of 65. Why should employers be allowed to pay less than the national minimum wage to those older workers who have gained a lifetime of skills and expertise and who can still be of great benefit to firms for whom they work? Many pensioners would be excluded by this amendment. Our calculation is about 272,000 men over 65 and 504,000 women over 60 are in work.

The amendment would not only deprive those aged 65 and over of the right to a decent wage, but it would also encourage job substitution. That point was not taken up by the noble Baroness. I refer to the replacement of younger workers by older workers. That is not the outcome that we intend to produce under the Bill. The Committee will be aware that Clause 3 provides for a single exception on grounds of age for young people below 26. There are complex issues involved here. That is why we have asked the Low Pay Commission to look at the position of young people and to make recommendations. However, the issues are different as regards those aged 65 and over. Many will have retired from their main job but others will still continue in their main job. Whatever the case, they still have skill and expertise to offer. They deserve the rate for the job, and the rate for the job should be at least the national minimum wage. We do not need to provide for different treatment of those aged 65 and over. I hope that the noble Baroness will withdraw her amendment.

Amendment No. 5 effectively addresses the issue of how we should deal with people who are in training, or, more particularly, workers who are working only as part of a recognised training programme. The amendment would have the effect of removing entitlement to the minimum wage from people within this classification. We want a well trained, adaptable, motivated workforce. Certainly rapid staff turnover is not something that we aim at. We do not want employers to lose the incentive to offer training. We asked the Low Pay Commission to consider particularly the position of young people, many of whom will be learning a job and will be willing to undergo training to improve their opportunities. That is to be encouraged. It is not something that we would wish to discourage.

The commission was also given the task of considering and recommending a different rate for trainees. Clauses 3 and 4 of the Bill have made provision to enable the Government to respond—if we agree—to any recommendations which are made by the commission in this area. I think it is right to frame the primary legislation in the way that we did. These situations can then he adjusted by the secondary legislation which, I repeat, Parliament will have a full opportunity to consider. The amendment would provide a great deal of unnecessary detail on the face of the Bill which would be unhelpful.

Perhaps this is a suitable moment for me to make my next point as it applies to much else in the Bill. We intend to consult by circulating draft regulations covering the regulations which the commission proposed on these issues, and no doubt on others. They will be subject to affirmative resolution.

In more technical terms it could be said that the amendment would go too far because it would take the trainees in question outside the entitlement to the national minimum wage altogether, whether that is the standard rate or, if that is decided, a modified rate. I believe that would give entirely the wrong message to employers and workers. After all, trainees are an important part of the workforce. Their training will make them more valuable to a company and will have a great effect on their future working lives. For all those reasons I hope that the noble Baroness will withdraw the amendment.

7.45 p.m.

The Earl of Balfour

Before the noble Lord sits down, I point out that in the example I gave I tried to illustrate that for various reasons I was not allowed to earn any money at that time. I think particularly of a student who comes to this country and who wants to study textiles but for technical reasons he is not allowed to earn money in this country. That is exactly what happened to me. We are now in the common market but during the period to which I referred a Dutch student could have got into trouble if he had earned money and then crossed borders.

Lord Clinton-Davis

If we brought that situation into the current considerations, there would need to be an examination of the contractual relationship that exists in the circumstances. I cannot respond to a hypothetical instance of that kind because all kinds of considerations would be brought into play. I see that the noble Earl agrees.

Lord Fraser of Carmyllie

Before my noble friend decides what to do with the amendment, the noble Lord correctly recorded that I nodded as he provided me with an answer. I certainly now understand the route to an answer which he has offered me in terms of regulations under Clause 3. However, I think the noble Lord will recognise that I do not readily accept that such a route to achieve an answer by way of regulation is necessarily desirable.

Baroness Miller of Hendon

I have listened carefully to what the Minister has said. As regards Amendment No. 3, there is another point I can make with regard to the Low Pay Commission. If the rumours are correct, and if people under 17 were exempted, it would not matter whether the age limit was school-leaving age or 17. However, that is another issue.

I was interested to hear the Minister's remarks in relation to Amendment No. 4. He made no mention of the position of pensioners; namely, that they would not pay national insurance and would therefore be 8 per cent. better off anyway. So a pensioner might want only a small job helping out at a corner shop and would perhaps find great difficulty.

I now turn to the question of training raised in Amendment No. 5. The Minister referred to Clause 3, which relates to the under-26s. There are many people over 26 who change careers and who need training. However, having made those comments, I shall reflect carefully on the matter. I believe that these points are fundamental and we may wish to return to them. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 4 and 5 not moved.]

Baroness Farrington of Ribbleton

I beg to move that the House do now resume. In doing so I suggest that the Committee stage begin again not before ten minutes to nine.

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

House resumed.