HL Deb 18 June 1998 vol 590 cc1693-709

3.57 p.m.

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

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the President of the Board of Trade on the national minimum wage. The Statement is as follows:

"Today the Government publish the report of the Low Pay Commission and spell out how, in our response to that report, we will begin to end the scandal of poverty pay.

"In the labour market we inherited just over a year ago, many workers received such excessively low rates of pay that they were driven to work long hours simply to make ends meet. We all know the examples: a homeworker paid as little as 35 pence an hour; a cleaner £1.30 an hour; or a security guard £2.35 an hour—and bring your own dog!

"In addition, such low levels of pay mean that taxpayers provide massive sums of income subsidy and businesses, large and small, striving to compete, as Britain must, on quality and value for money, see their position undermined not by fair competition, but by cutthroat cowboys. And with the lack of any fair and basic minimum standards at work, the gap between real hourly earnings of the lowest and highest paid almost doubled in the past 20 years.

"This was the outcome of the strategy of the previous Government; that Britain aimed to be merely the cheapest rather than the best, no longer the workshop of the world, but the sweatshop of western Europe.

"This Government believe in decent standards as a spur to competing sustainably on quality, to tackle social exclusion and to make work pay.

"We have already made substantial progress. The working families tax credit will guarantee an income of at least £180 per week for families working full-time. No family with weekly earnings of less than £220 will pay tax. The reform of national insurance contributions will reduce barriers to work. The New Deal will help the young and the long-term unemployed to move from welfare to work; and the Fairness at Work White Paper and the work of the Social Exclusion Unit are all part of the wider strategy to reshape Britain.

"The national minimum wage is a key element in this range of policies. It will help create a better rewarded and more committed workforce, itself a force for driving up standards and helping competitiveness. Experience elsewhere shows too the likelihood that staff turnover will be reduced and investment in training encouraged, which itself improves productivity.

"We were determined from the outset that the national minimum wage must be introduced sensibly and in accordance with prevailing economic conditions. That is why we set up the Low Pay Commission, with George Bain in the chair, after only 90 days.

"The commissioners were publicly recruited following Nolan principles, and drawn from among employers, employees and independents, each serving in an individual capacity. Their work is impressive. I would like to pay tribute to George Bain and the other commissioners who have done a quite remarkable job.

"As well as studying 500 written submissions, they took oral evidence from a wide range of organisations, and held over 200 meetings throughout the United Kingdom. They heard from large and small employers, trade unions, individual employees including homeworkers, and a range of other interested organisations.

"I wholeheartedly commend their immense hard work, energy and willingness to give so freely of their time for this important task. As we made clear in our evidence to the Low Pay Commission, the government are particularly concerned to ensure that our national minimum wage should be set at a level which avoided the risk of adverse effects on employment, inflation and the PSBR.

"We have been particularly mindful of the need to protect the position of young people. It is in our view essential that we avoid reducing the relative attractiveness to young people of staying on in education and training, and to avoid discouraging employers from providing training for those in work. These concerns have guided our judgment on the decisions in response to the commission's recommendations.

"The Government welcome the report and support all of the commission's key recommendations, subject to consultation on some of the practical details. In particular we accept a main rate of £3.60 per hour before deductions with effect from April 1999. When combined with the working families tax credit and other benefits, for a one-earner couple with two children, this means an effective wage of more than £7 per hour. We accept that all those aged 16 to 17 or on formal apprenticeships should be exempt, and we also accept the proposal to institute a development rate. The commission proposes that that minimum rate should apply at £3.20 to all 18 to 20 year-olds, and to all workers starting a new job with a new employer and receiving accredited training.

"We are however at a critical point in the economic cycle. The Government are determined to proceed with all due caution with the introduction of that rate, especially for the crucial group of those aged 18 to 21.

"We have therefore decided, for this group, to phase it in two stages, with an initial transitional rate of £3.00 from April 1999, which will increase to £3.20 in June 2000. However, we are asking the commission to review the position of 21 year-olds again in 1999, following the implementation of the £3.00 transitional rate, and then to provide a further report on whether, in the light of experience to that date, they reconfirm their advice that 21 year-olds could safely be covered by the main adult rate. I am pleased also to announce that we shall also be asking the commission to continue its work monitoring and evaluating the introduction and impact of the minimum wage.

"Introducing the minimum wage at the levels I have announced today will help some 2 million workers escape from poverty pay without adverse effects on jobs or inflation. These will include: 1.4 million women, over 1.3 million part-time workers, some 200,000 young people, around 110,000 homeworkers, approximately 175,000 lone parents who work, and some 130,000 ethnic minority workers.

"The remaining Low Pay Commission recommendations deal with such technical matters as the composition and reference period for calculating the minimum wage, the handling of benefits in kind and its application to homeworkers and pieceworkers.

"We have fully and carefully considered these recommendations and accept them in principle, subject to consultation on the practicalities and detail of their implementation when formulating the regulations implementing the national minimum wage.

"Both Houses will have an opportunity to discuss all the matters on which the commission have made recommendations when we lay draft regulations in Parliament following that consultation.

"In order to assist right honourable and honourable Members I shall place in the Vote Office a paper setting out the Low Pay Commission's recommendations as well as details of where further consultation is required.

"Today marks a further milestone in implementing this Government's manifesto commitments. The introduction of the national minimum wage would never have taken place under a Conservative administration. From the outset the Government's approach to the minimum wage has been that it must be approached in an atmosphere and a framework of partnership. The Low Pay Commission has shown that that approach was the right one. It is clear from its work that there is now an overwhelming welcome for the principle of the minimum wage. Among the few people out of step appear to be the party opposite. I challenge it today on behalf of the 2 million people benefiting from these proposals, to say whether it will, if returned to office, seek to reverse the steps we take today.

"The minimum wage, along with our other policies, such as the working families tax credit, will help remove the worst cases of exploitation in the workplace, cases which have no place in a modern Britain.

"I commend the report to the House."

My Lords, that concludes the Statement.

4.6 p.m.

Baroness Miller of Hendon: My Lords, I thank the Minister for repeating this very important Statement. Is he aware that, although at long last we welcome the official Statement from the Government, it has been massively leaked for weeks, apart from copies apparently being privately available to the trade unions ahead of Parliament? Unlike others, I have not had the chance to read this 285-page report in the half hour that was available before entering the Chamber.

Is the Minister aware that we welcome the fact that the Government have agreed a lower sum for the young, one of the vulnerable groups that will suffer most from this ill-conceived doctrinaire concept? The Minister claims that the New Deal will help the young move from welfare to work. Can the Minister say how that will happen? He is absolutely right; we would not have introduced the Bill, although we most certainly agree with the minimum income.

Up to this very minute Parliament has been legislating about a pig in a poke. The National Minimum Wage Bill has passed all of its stages in the other place without honourable Members knowing for certain what the national minimum wage will be. Here we have gone two-thirds through the Committee stage, which is a very abbreviated stage considering the number of unknowns and the number of blank cheques that the Government are asking us to sign, but only now are we being told some of the details. We did have a leaked figure, with counter leaks from within an apparently divided Cabinet that a sort of Dutch auction is going on, with the Chancellor of the Exchequer trying to bid the figure down as if he were in some kind of oriental bazaar. There is more that we need to know.

Mr. Rodney Bickerstaffe, the Secretary General of UNISON, said in a television interview last Sunday that there was a lot of pressure by the Treasury on the Low Pay Commission to keep the national minimum wage down. Can the Minister say what pressure was brought to bear by the DTI on the Low Pay Commission with regard to other aspects of its deliberations? To what extent did the different Government departments interfere with the supposedly independent and impartial inquiry? Why were the terms of reference of the Low Pay Commission circumscribed by the Secretary of State and Clause 5 of the Bill, which has not yet become an Act, to produce a pre-determined result? If, as the Minister stated, the commissioners were widely recruited, why was there no representative of genuine small businesses?

Why, if the commission had been so minded, was it not able to recommend different figures for different areas, sectors of employment, different size undertakings, different ages over 26—for example, senior citizens—or different trades or occupations?

On Second Reading, I asked why the President of the Board of Trade had expressly forbidden the Low Pay Commission to take regionality into account. May we please have an answer now? Despite using the American minimum wage as their model, which provides many exemptions for small businesses, why will the Government not give the same exemption to our own small businesses?

The Minister has said that this measure will help about 1.4 million women. If the American experience is anything to go by, why would the American equal pay Act 1963 have given exemptions to business with an annual turnover of less than 500,000 dollars? Is he aware that tables on page 104 of that report show that a national minimum wage of the order proposed by the Government would add almost 2 per cent. to the wage bill of Britain's agriculture and up to 5 per cent. in the cleaning industry? Do the Government agree that it is small businesses which are currently providing the greater number of new jobs, while big businesses are still shedding them?

Although the Government must be tired of being reminded of the Deputy Prime Minister's frank admission that, any silly fool knows that the national minimum wage would result in job losses", perhaps they will tell us whether they agree with the noble Lord, Lord Haskell, who as recently as 18th May at col. 1277 agreed that if an employer had to pay more in wages he would shed labour.

Do the Government agree with Professor Bain, the Chairman of the Low Pay Commission, who told The Times on 3rd June 1997 that he would be, surprised if there were not some job losses, but the question is whether those jobs would be better lost anyway"? Do the Government agree with what he appears to have been saying: that job losses would be a price well worth paying? Can the Minister say whether there is any truth in the report in the Mail on Sunday last Sunday that Professor Bain has warned that he might resign if the recommendations of the Low Pay Commission are not accepted?

Do the Government agree with the analysis which appeared in The Times on 17th June by Christine Buckley who also repeated the adverse effects on employment of the national minimum wage, especially on young employees? Do they agree with that same analysis which repeated my warning on Second Reading; namely, that it would have an adverse effect on the Government's Welfare to Work programme? Will the Minister say whether that is the advice that the Treasury has given to the Chancellor?

Do the Government agree with the CBI, which forecast that the national minimum wage, could result in rising prices, business closures and unemployment"? That is despite the fact that the CBI is now reported as saying that it could live with the figure of £3.60.

Do the Government agree that the CBI does not speak for my village store or everybody's local newsagent which are the sort of business that will be hit hardest by a national minimum wage of £3.60? Will the Government be publishing the minutes and rationale of the deliberations of the Low Pay Commission in fixing the figure? We are very curious to know how it could arrive at a figure of £3.60 when in the USA, where the average wage is far higher than in the UK, it is five dollars 15 cents which is merely about £3.15.

What is the Government's attitude to the threat by Mr. Monks that the unions will jump free (whatever that means) from the so-called partnership with the employers and government if the LPC's recommendations are watered down? Is the Chancellor not worried about that? Will the Government introduce fresh legislation to deal with any political strikes threatened by UNISON at its current conference if its demands for different levels of the national minimum wage are not met?

Do the Government agree that this latest interest rate increase, the sixth in 13 months, was due to the fears of the Bank of England's Monetary Policy Committee about the increasing size of wage settlements? What assessment does the Minister have of the impact on wage inflation of the introduction of the national minimum wage?

Do the Government agree with the widely held view, as reported in The Times that: A 5.25% pay award by Marks and Spencer was an important factor in the decision"? Marks & Spencer is generally regarded as a model employer. Does the Minister agree that it was bound to have taken the forthcoming national minimum wage into account and would have ensured that it maintained its pay differentials with other employers?

Do the Government agree with the noble Lord, Lord Healey, who once said in the other place that the minimum wage was something on which the unions will build differentials? How will that help the Chancellor to secure the wage restraint he is calling for? How will the national minimum wage increase productivity and employment, and help to bring down interest rates which are at a damagingly high level?

The Minister said that when we were in government, we aimed to be the cheapest rather than the best. I utterly reject that. I am proud to have been part of a government who made sure that we secured one of the lowest unemployment rates in the world. We were very keen to try to maintain that.

Lord Monkswell

My Lords, is the noble Baroness aware of the edict in the Companion that points out that short points and questions about what is contained in the Statement is all that is allowed when a Statement has been made? We seem to be having a tirade of prepared points of view which have almost no relationship whatever to the Statement.

Lord Skelmersdale

My Lords, that is absolutely not so. That does not apply to Front Bench speakers and I advise my noble friend to carry on directly.

Baroness Miller of Hendon

My Lords, I thank my noble friend for that advice. I must tell him that I intended to do that anyway.

Is it not true that the leaks from Cabinet about the disagreement between the Treasury and the DTI are because the Chancellor wants a rate which will be less inflationary and which will lose fewer jobs? I commend him for that. Does that not look as though at least he agreed with our objections that it would have been inflationary and would cause the loss of jobs? If the recommendation of the Low Pay Commission was not to be accepted, why did the Chancellor not set the rate himself? Is it because, like the matter of interest rate rises being hived off to the Bank of England, this Government wish to hive off their responsibilities to make unpleasant decisions to someone else so that they can say, "not my fault, guy", or in this case, "not my fault, comrades"?

4.17 p.m.

Lord Razzall

My Lords, I share the noble Baroness's welcome for the Statement. That is the only thing that she said with which I agree. When the Minister responds, I should be grateful if he would correct a point which he made at the end of the Statement when he indicated that the Opposition were against the proposals put forward. I hope that he will make it clear that he was looking opposite him and not obliquely to the Liberal Democrats, because, as he well knows, we stand four-square behind the Government in this regard. We believe that the slave rate wages which have been paid in many sectors of British industry are a scandal. That matter should have been rectified long ago and we entirely support the Government's determination to do that.

I admire the noble Baroness's ability, from a half hour study of the Statement, to produce 43, or perhaps 45, detailed questions on it. In fact, we should admire her skill in turning the speech which she and her colleagues made both on Second Reading and in Committee into that many questions. Of course, we have heard it all before.

The first point I make is that from reading the report, it is clear that the basic minimum wage has been fixed at a point at which the maximum advantage will accrue to the lowly paid with the least effect on jobs. When people have an opportunity to look at the detailed report, they will see that it demonstrates quite clearly that anything over £3.60 or £3.70 per hour starts to have a more significant effect on jobs than the recommended rate. It is demonstrated in the summary of recommendations at paragraph 23 that at the proposed level the national minimum wage will increase the nation's wage bill by a little over 0.5 per cent.

Our party does not wish to be critical of the Government in accepting that fundamental recommendation. Clearly, from what we read in the papers, we understand that there is significant opposition to the rate from sectors of the trade union movement. I await to hear with interest whether the Minister is prepared to comment on that. But having read the report, that seems to be a sensible figure for the Low Pay Commission to have recommended and for the Government to have adopted.

Clearly the significant issue that we ought to spend a little time on and ask the Minister to comment upon is the question of young workers. During the course of studying the Bill in this House, we considered long and hard whether the appropriate cut-off point was 26 years of age, which was the original suggestion by the Government, 21, 18 or indeed 16 years of age. Although there is disagreement between the Low Pay Commission and the Government, we are now moving towards an acceptance on the government side of a two-tier rate. But now is not the time to go into that aspect of the debate. However, when looking at the overall impact of not having the standard minimum rate for all young people, it would be worth while if the Government were to indicate whether they have looked into, and costed, the issue of housing benefit as regards not paying young people the full rate. I assume that that is a relevant factor for the Chancellor of the Exchequer in making his recommendations.

Perhaps I may now indicate where we part company with the Government. Rarely do I want to take a point that the Conservatives have taken because they often have a tendency to look at form rather than substance. However, I have two concerns about the way the Bill and these proposals have been dealt with. First, we have seen a most extraordinary series of events through newspaper reports relating to the fact that the rate and the proposals have been well known for at least a month, despite the fact that there has been no government statement to that effect. It is well known and has been well reported that there is a significant row in the Government over whether the recommendation of the Low Pay Commission should or should not be accepted. Secondly, having at last had the Statement, we find, contrary to every expectation held since the Low Pay Commission was established, that the Government are now saying that they basically agree with the proposals of the commission except in one very critical area where they have decided they will not adopt the recommendation. That is obviously significant.

We know that the Treasury normally likes to control all pay, but this is a classic example of the Treasury trying to pay the dog and bark itself. No one who has been involved in the proceedings on the Bill would ever have expected the Government simply to take the very detailed work of the Low Pay Commission and say, "We like that aspect of it. We like it overall, but we don't particularly want to accept one very key recommendation".

I do not want to say anything further at this stage on that point. However, it leads me to my final point. As the Minister will know, we argued strongly during the course of the Bill for the need to give the Low Pay Commission a much more permanent status. Quite honestly, we have been somewhat surprised in our discussions with the Government and in the debate which has ensued as to why they have not been prepared to make such a commitment. Can the Minister confirm that when we come to review the progress of the National Minimum Wage Bill we will now enshrine into the legislation the permanent status of the Low Pay Commission? There is a clear recommendation in the report that it would like to review exactly what is happening in two years' time. There is a demand in the context of the debate that has followed that that should happen. Otherwise, we are fearful that the sort of rather unseemly political row which has featured in our newspaper reports over the past few weeks will happen every year or every two years when such recommendations are put forward again.

I should like to press the Minister on that point. Is it now quite categoric that the Government will give permanent status to the Low Pay Commission and, dare I say it, in future, unlike this time, adopt its recommendations?

4.24 p.m.

Lord Clinton-Davis

My Lords, I should like to thank the noble Baroness, Lady Miller, for the nice remarks she made about the Statement and about the whole policy of the national minimum wage of which I know she has always been a most active supporter. Indeed, she made that clear during the Committee stage of the Bill. I also thank the noble Lord, Lord Razzall, who I know is very much an adherent of the principle of the national minimum wage. Although we have differences, I believe that they are relatively minor when placed against the backcloth that here we have, for the very first time in this country, something which ought to have been introduced years ago; namely, a national minimum wage.

I turn, first, to the allegation of leaks, which I do not believe is of dramatic importance. To say the least, it is a little irksome for this Government to be lectured about leaks when, in the case of the previous government, it seemed to me that theirs was the only vessel in the world to leak from the top. There has been much speculation in press reports and in the media in that respect; indeed, I do not deny that fact. But four weeks from receipt of a document dealing with an innovative policy is not a very long time for the Government to take to consider all the implications involved. Of course discussions take place in Cabinet where different points of view are expressed. I thought that had also happened in previous governments, but perhaps I was wrong. It is possible that they were all in unison about the disaster that they were imposing upon us.

I turn now to the dire effects of this as suggested by the noble Baroness. I accept the noble Baroness has not yet had time to read the report, but when she does so she will see that they are expressly refuted by the Low Pay Commission. The commission considered in great detail a vast amount of evidence to which I have already referred. As regards the terribly serious impact on small businesses, job losses and all the other adverse speculations in which the noble Baroness indulged, I should point out to the House that the report of the Low Pay Commission has not confirmed any such prospects. I respectfully suggest that the commission considered the matter in rather more detail than the noble Baroness, the shadow Secretary of State or, indeed, the Conservative Party has done. No one has conducted an assessment of the position in such detail. Therefore, to predict all these dire effects is to dramatise the whole situation out of all proportion for a rather simple party political point.

We also had the allegation that there was pressure from the Treasury and the DTI to interfere with the conclusions of the Low Pay Commission. There is not a shred of evidence to suggest that; indeed, I vehemently deny it. The House would be here until next Christmas if I were to attempt to reply to all the points raised by the noble Baroness. It is as well to have all that on the record, but it could all be significantly reduced to one sentence: the Tory Party does not accept the minimum wage. All the rest is verbiage.

The noble Baroness referred to the fact that there was no representative of small businesses on the commission. That reflects a complete misunderstanding of the nature of the Low Pay Commission: there were no representatives of any interests. Those concerned were there because they are people with expertise covering a very wide field. Therefore, they contributed not as delegates or representatives but as individuals using their own personal experience. The remit was set by the Government, and I did not think that there was too much complaint about the way in which we did so. I believe that the remit was a perfectly reasonable way of setting out the issues for consideration. The Low Pay Commission did a very good job in dealing with all the factors involved.

My noble friend Lord Haskel was brought to book, but I could not quite understand why. He is sitting here calmly and is not in the least upset by the attack upon him. I understand that the matter he dealt with did not concern wages but rather investment. He does not accept the view that—

Baroness Miller of Hendon

My Lords, I thank the noble Lord for giving way. I certainly would not dream of mentioning anything that I did not believe the noble Lord, Lord Haskel, had said. That is not the kind of thing I would do. However, I refer the Minister to col. 1277 of the Official Report, which I have already mentioned. I refer to a question from the noble Lord, Lord Waddington, at Question Time, who asked, Is the noble Lord saying that if an employer has to pay more in wages, he will shed labour and go for new technology, thus being able to operate with fewer employees"?—[Official Report, 18/5/98; col. 1277.] The noble Lord, Lord Haskel, replied, again at col. 1277, I am afraid that that is the way of business today. Increased productivity often means more investment and fewer people".

Lord Clinton-Davis

My Lords, I do not wish to get involved in this debate because it is taking up time. My noble friend Lord Haskel replied to the question asked by the noble Lord, Lord Waddington. That is plain from what the noble Baroness has just read out.

It has been asked whether George Bain will resign. I heard him speak this morning and I did not detect a hint of any resignation being tendered. Of course he would have preferred the Government to have accepted the recommendations in full. It has also been asked why we should bother with the Low Pay Commission at all when the Government are dictated to by my right honourable friend the Chancellor of the Exchequer. I have read stories which claim that certain Members of the Government are opposed to a rate of £3.60. That is not true but that was speculated. I have read all kinds of stories. The only area of difference between the noble Lord, Lord Razzall, and myself relates to young people. I shall discuss that in a moment.

I ask the following rhetorical question. If the Government had simply set up the Low Pay Commission and then accepted all its findings in their entirety without question, I have no doubt that the noble Baroness would have asked whether the Government did not have a view of their own. Weeks ago I stated from this Dispatch Box that we value the work of the Low Pay Commission, but it is for the Government to make up their mind on the evidence. That is a perfectly feasible action on the part of the Government.

It is difficult to respond to all of the questions that have been asked. I shall try to respond to those I have not dealt with, although I have dealt with many of them. As regards small firms, there is no evidence at all that small firms' organisations seem to be discomfited by the evidence before us. I turn now to the points made by the noble Lord, Lord Razzall. I welcome his support. On the question of the rate, we take the view that £3.60 is a sensible rate and that it will not have an adverse effect on jobs in any significant degree. Of course, job gains and job losses occur for many reasons. I cannot reply to the question of the noble Lord on housing benefit as I do not have the figures before me. I shall try to obtain the information and write to him.

As regards young workers, the Low Pay Commission itself states that they are a separate case. The Government have always recognised this is a difficult case and a finely balanced one. The Low Pay Commission's report stated that the concentration of young people in the lowest decile of earnings might lead to the conclusion that the age of 21 or 22 would be an appropriate cut-off point. There is reflected the finely balanced nature of the argument.

I look forward to the discussions that we shall have on this report. I hope that the discussions will be sensible and based upon the real matters at stake, rather than simple Conservative Party prejudice.

Lord Shore of Stepney

My Lords, in assessing the significance of the Statement that my noble friend has repeated, I hope he can help not just myself but also the House in answering two questions. First, he mentioned the figure of 2 million low-paid employees who would benefit from the introduction of the new rate, of whom I think he said 1.4 million were women. Are these people additional to those whom we anticipate will benefit from the working families tax credit, or are they largely subsumed in that group, which, incidentally is to receive a more generous benefit than the new rate for the low paid? Secondly, in considering the relationship between the minimum wage and the working families tax credit, does not the latter have the unanswerable advantage that because the sum of money making up the pay is contributed by the state rather than by the employer there is no threat whatever to jobs?

Lord Clinton-Davis

My Lords, I am grateful to my noble friend Lord Shore. My understanding is that the figures I have quoted stand by themselves. However, I may be wrong and I shall certainly look into the matter. As regards my noble friend's second point, I consider that the issues are complementary rather than mutually exclusive. I am grateful to my noble friend for raising the issue. I shall certainly look further into it.

Lord Acton

My Lords, the noble Baroness, Lady Miller, mentioned the current American minimum wage of 5.15 dollars. Is my noble friend the Minister aware that the International Herald Tribune reported in February that President Clinton and the Democrat leadership in Congress announced that their party will run in the mid-term election in November with a plank in their platform of a 6.15 dollar minimum wage? The OECD estimates that in 1997 the purchasing power parity of the pound was almost exactly 1.50 dollars. Thus 6.15 dollars is approximately equivalent to £4.10. Does he not agree that the American President and his party are comfortable with a minimum wage some 50p higher than our proposed minimum wage?

Lord Clinton-Davis

My Lords, the alliance with the Clintons is a strong one. The American experience, like that of other countries, is, of course, different. This is the first time we have introduced the national minimum wage. I am sure the House will be grateful to my noble friend Lord Acton for giving us this information.

Lord Beloff

My Lords, in view of the business which has unfortunately been interrupted by this Statement, what is implied by the word "national" in national minimum wage? What is the nation to which it applies?

Lord Clinton-Davis

My Lords, if the noble Lord had paid more attention to the debate to which he has just referred he would be aware that we are talking about the United Kingdom, which includes Scotland.

Baroness Jeger

My Lords, I have two questions. First, what makes Her Majesty's Government think that younger workers are charged less for their lodgings, their food, their clothes and their fares? Is this measure not discriminating unfairly against these young workers?

Secondly, is there not a danger that unscrupulous employers will be tempted—I go no further than "tempted"—to take on school-leavers until they reach the age of 20 or 21, then get rid of the lot and start again with another batch of school-leavers? I know that there are certain protections in relation to unfair dismissal through the work of employment tribunals. I merely wish to be sure that tribunals will not be overloaded with work if the situation is abused by unscrupulous employers.

Lord Clinton-Davis

My Lords, I hope that will not be the case. Effective enforcement is important. That is a matter to which the Government will return when we have consulted and drawn up the regulations which will be laid before the House in due course. It is absolutely right to speak of effective enforcement. I do not want to help my noble friend put ideas into the minds of the unscrupulous as to how they might react to this situation. I do not in fact believe that the points she has raised will have an overriding or overall effect.

The reason for taking the steps that we have in relation to younger people is simply that, on balance, we have to operate somewhat cautiously in the first period of the national minimum wage. We do not want to deny young people an effective ability to obtain good jobs. We have other programmes in place designed to achieve precisely that. It is not a question of discrimination; it is a question of examining the evidence and balancing the situation. That we have done. A review will take place on at least a part of our proposals within a very short time.

Earl Russell

My Lords, in giving a general welcome to the Statement, for the benefit of the party physically on my left, will the Minister list the other major industrial countries that do not have a minimum wage? I do not believe that that will detain him until Christmas.

On the question of a lower rate for the young, is the Minister aware of the work done by the National Association of Citizens Advice Bureaux and by Shelter, arguing the grave likelihood that welfare-to-work will break down because the young cannot find affordable rented accommodation? Does he accept the general principle of equal pay for equal work? Is the Minister aware that if 16 and 17 year-olds have no entitlement to benefit, they may now be compelled to take jobs on which they cannot live? Does he believe that to be right?

Lord Clinton-Davis

My Lords, the list would be a very short one indeed. I thank the noble Earl for raising that point. There are different experiences, and some countries apply different practices for young people.

We are aware of the situation, as indeed is the Low Pay Commission, which entered a caveat. We will certainly take account of the representations referred to by the noble Earl. On the basis of present evidence, we do not share the draconian fears that he has expressed. No doubt he will wish to raise the issue in more detail later.

Lord Davies of Coity

My Lords, perhaps I may remind the House that the seeds of the national minimum wage were first sown in 1986, the very same year that the Conservative Government started to dismantle the wages councils, which were set up by Winston Churchill in the early part of this century. It is absolutely clear that those sitting on the Conservative Benches are totally opposed to a national minimum wage. What are not so clear, and indeed are rather confusing, are the arguments that they marshal in support of their opposition. It seems that they do not address the objectives of this Government or the realism of the situation.

The Government have two worthy objectives. One is to try to get as many people as possible into employment. The other is to ensure minimum standards of a civilised nature for those who are most vulnerable in our society. When addressing those objectives, there has to be some degree of proportion and balance. If the minimum wage is levelled too much towards adults, on the one hand large numbers of adults can be unemployed and young people will find employment—

Noble Lords


Lord Davies of Coity

My Lords, I understood that I could make a comment.

Noble Lords


Lord Haskel

My Lords, perhaps I may remind my noble friend of the words of the Chief Whip asking Back-Benchers to limit their remarks to questions and factual clarification.

Lord Davies of Coity

My Lords, I shall therefore terminate my remarks and pose a question. Given that less than 10 per cent. of the British working population will be covered by the national minimum wage—2 million people, 1.4 million of them women, out of a total working population of 22 million—does the Minister feel that any self-respecting employer will be in any way damaged or in opposition to the national minimum wage?

Lord Clinton-Davis

My Lords, to respond to my noble friend's last point, many employers have already taken advantage of the fact that the climate in industry is changing, and they are themselves changing. Many are paying in excess of the recommended national minimum wage.

My noble friend is right in drawing attention to the history of the abolition of the wages councils—an example of Conservative amnesia. The great thing about the Conservative Party is that it does have balance—its members have a chip on both shoulders.

Lord Lang of Monkton

My Lords, remembering, as I do, the sets of figures with which I was furnished by my officials at the DTI as to the number of jobs that would be lost at different levels as a result of a national minimum wage, with what figures has the Minister been supplied by his officials at the DTI indicating the numbers of jobs that will be lost given the level of minimum wage that has now been decided by the Government?

Lord Clinton-Davis

My Lords, I rely on the evidence provided for, and accepted by, the Low Pay Commission.

Lord Burlison

My Lords, I welcome the Statement by my noble friend the Minister. It brings us into line with many of the other western European countries, and indeed America, by establishing a national minimum wage, which already exists in those other countries. I congratulate the Government on persisting in establishing the principle of a minimum wage. Does the Minister feel, as I do, that the establishment of that principle will in the future provide a means of getting rid of poverty pay in this country?

Lord Clinton-Davis

Yes, my Lords, that is one of the reasons that I have already adduced. Achieving better conditions in Britain's workplaces is critical in terms of achieving a more involved and committed workforce, and a workforce that is treated decently and with dignity. That is effectively what this is all about.

Lord Harding of Petherton

My Lords, I do not know what the precise cut-off age will be for young people being paid less than older people. Will the Minister accept that, as the noble Baroness, Lady Jeger, does not seem to recognise, if I employed a labour force I should not expect to pay more experienced people the same as young people who had just started in the job?

Lord Clinton-Davis

My Lords, that has been one of the arguments in the finely balanced discussion that has taken place. I note that the noble Lord is not saying that he disapproves of the idea of a national minimum wage. He merely refers to an element of it. That is the point made by my right honourable friend in the Statement.

Lord Hardy of Wath

My Lords, will my noble friend monitor the situation to see where jobs will be saved as a result of the introduction of the national minimum wage? Will it not mean that the responsible employer who pays decent wages will not find himself in unfair competition with an employer who may prosper mightily while paying starvation wages to his workers, who as a consequence have to be subsidised by the state?

Lord Clinton-Davis

My Lords, my noble friend is right, that is why many employers have supported the concept of the national minimum wage. It is the old argument about the level playing field. People who are carrying on a decent job of employing workers on a civilised basis do not want to be cut down by cowboys displaying the kind of tactics of which presumably the Conservative Party approves.

I have already said that the position is to be monitored by the Low Pay Commission and I am glad that that is the case. The point was made by the noble Lord, Lord Razzall, in the debate that we had. I hope that he is satisfied with that response.

Lord Stoddart of Swindon

My Lords, will my noble friend confirm that at £3.60 per hour we are talking about a weekly wage of just under £137? That is little enough and I feel sure that all noble Lords sitting here would find great difficulty living on it.

I wish to ask two questions. First, will the minimum wage be increased year by year? Secondly, will it be increased in relation to the retail prices index or in relation to wage movements, or a mixture of both? Finally, perhaps I may ask him whether the 20p difference between £3 and £3.20 for young people will have any effect on employment. I doubt it.

Lord Clinton-Davis

My Lords, as to the last point, my noble friend is entitled to entertain his doubts about the situation. The proof of the pudding will be in the eating. That is why it is important. All the other points he raised relate to that and that the Low Pay Commission should monitor the situation. That will be done. Therefore it will also impact on the mechanism to be deployed as to whether there should be increases.

I entirely agree with the point made by my noble friend that few noble Lords would wish to live on the minimum wage. However, it is a floor; it is not something which will apply in all cases of employment. We hope not. But at least it is right for the first time to have that floor so that the lowest paid—the most vulnerable—can be protected.

Lord Jacobs

My Lords, does the Minister agree that the real danger of a minimum wage—and I support it—lies not in London and the south east of England where job opportunities are considerable, but in parts of England like the north and the west country, where the real test will be whether job opportunities will continue or whether employers will no longer be able to afford to employ workers and so start reducing the labour force?

Lord Clinton-Davis

My Lords, with respect, I do not believe that the noble Lord is right about that. There are places in the regions that suffer a serious impact from low wages. Even in parts of the country where we expect people to be well rewarded, that is not always the case. That is why we do not accept the regional argument which has been well and eloquently argued in this place in Committee by the noble Lord's party.

Lord Rowallan

My Lords, can the Minister furnish us with the list of countries which do not have a minimum wage? In answer to the question from the noble Earl, Lord Russell, he said that the list was short.

Lord Clinton-Davis

My Lords, it is here.

Lord Watson of Invergowrie

My Lords, the Minister referred a few moments ago to the national minimum wage being a floor. Does he agree that there is a danger that those who do not accept the concept of the national minimum wage—and I am talking about employers—will view it as a national maximum wage? For that reason, does he agree that the need to be a member of a trade union at this time is as great as it has ever been?

Lord Clinton-Davis

My Lords, yes. I happen to be a trade unionist myself, so I agree with the point. My noble friend is well known as having an excellent background in that regard, and I can understand his articulation of the point.

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