National Minimum Wage

Lord Hannan of Kingsclere Excerpts

Wednesday 21st February 2024 Lords Chamber

[Lord Offord of Garvel (Con)]

I thank the noble Lord for that. There is a wage scale, as he will well know. For those aged 18-20, it is £8.60 an hour and for those under 18 it is £6.40 an hour, an apprentice rate. The point of this is a scale. We all start work on lower wages and increase our wages as our skill levels increase. We must not be in a situation where we, in effect, lock young people out of the market. We must ensure that young people get into the market earning wages and then increase their skills and their wages. The noble Lord will know well that many studies have been done on the wage scar, which blights young people if they do not get into a job early and get training. We want young people in a job early, trained up, so they can increase their wages.

[Lord Hannan of Kingsclere (Con)]

My Lords, has my noble friend the Minister’s department made any assessment of whether these increases in the minimum wage, which go well above and beyond average wage increases, have impacted the ability of companies to take on interns, which is normally the main route into employment; whether they have had an impact on speeding the adoption of automation and assimilating the upfront costs; whether employers respond by cutting in-work benefits, discounted meals and so on, to compensate; and, not least, what the impact is on the price rise of the finished product, because often people on minimum wages are also consumers of minimum wage products? If, for example, fast food becomes much more expensive, it is not going to be hedge fund managers who pay.

[Lord Offord of Garvel (Con)]

I thank my noble friend for that. The cost to business is a consideration that we must consider. The cost of this particular increase will be £3 billion over six years and I emphasise that it will fall largely on the SME community. Some 99% of our companies are SMEs, with 2.5 million VAT-registered companies. Setting aside the 10,000 companies that employ 30% of the workforce, 60% of the workforce are employed in SMEs and they are bearing the brunt of exactly these wage increases. We survey employers and they want to pay higher wages. We want a good, well-paid workforce but we must do so in a way that balances the needs of business and workers.