National Minimum Wage (Hansard, 31 March 1999)

§ Lord Sainsbury of Turville

During the drafting of the National Minimum Wage regulations 1999 the Government received a number of submissions from employers and intentional communities about the operation and amount of offset that may be allowed to count against the national minimum wage where a worker is provided with accommodation, and its long-term future. The Government fully recognise that the offset is an important factor in pay in some sectors, such as hotel and catering, and that if set at the wrong level it would have a detrimental impact for those sectors and their employees.

Because the offset in the regulations reflects the recommendations of the Low Pay Commission, the Government asked the commission to look again at this issue as a matter of urgency and report to government. The Government are today publishing its report and copies are available in the Printed Paper Office.

The Government would like to thank the commission for looking at this matter so quickly. The commission has made three recommendations:

(1) There should be no immediate change to the rate of the accommodation offset in the national minimum wage regulations, but the commission should monitor the use and impact of the accommodation offset on business and employees;
(2) The commission should monitor the administration of the accommodation offset and, in the light of practical experience, report on its future application in its second report;
(3) Members of intentional communities should be regarded as volunteers rather than workers, and not covered by the national minimum wage.

In considering the matter the commission looked again at the evidence and basis for its earlier recommendation and took further oral and written evidence. It also looked at current practice through collective agreements, arrangements under the Agricultural Wages Boards, previous practice under the Wages Councils and arrangements in other countries. The commission concluded that there was little evidence at this stage that businesses could not cope with the level recommended and that therefore no changes should be made at this time. However, it recognised that it would be important to monitor the operation of the offset in light of practical experience and the application of the National Minimum Wage regulations. It propose that it should do this as part of its remit to monitor and evaluate the introduction and impact of the national minimum wage. The commission has agreed with the Office for National Statistics a trailer question for the 1999 New Earnings Survey which it is hoped will provide a clearer insight into the practice of providing an accommodation allowance.

The Government agree with the commission's conclusions and accepts its recommendations not to change the offset at this time. However, the Government are keen that the commission should closely monitor the practical effects of its application. The Government also note the commission's acknowledgement that the continuation of the offset is of significance for a number of businesses and workers and welcomes its intention to undertake a full review in its next report.

The commission also looked at the position of individuals who follow a particular lifestyle living and working as members of a religious or charitable community—intentional communities—in receipt of board and lodging and a small amount of subsistence. The commission concluded that the position of members of intentional communities was similar to that of volunteers who are specifically excluded from the national minimum wage and that they should be treated as such. The exclusion of volunteers in the National Minimum Wage Act 1998, which was agreed with the support of all parties and the voluntary sector, is drawn very narrowly and does not cover members of intentional communities. It will therefore be necessary to amend the 1998 Act to provide an exclusion.

The Government accept the commission's recommendation that members of intentional communities should not be covered by the national minimum wage and propose to introduce a suitable amendment to the 1998 Act through the Employment Relations Bill which is currently before Parliament.

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