National Minimum Wage (Amendment) Regulations 2014

Lord Jones Excerpts

Monday 24th February 2014 Grand Committee

I conclude by reiterating the Government’s commitment to the national minimum wage and the protection it provides to the low paid without damaging their employment prospects. Through these regulations we are providing the necessary clarity that any work experience undertaken as part of a traineeship in England is exempted from the national minimum wage. However, we are taking a firmer stand against businesses that should be paying their workers the national minimum wage. I commend this order to the Committee.

[Lord Jones (Lab)]

My Lords, I thank the noble Viscount, Lord Leckie, for his useful introduction—if I may call it that. Looking at the Explanatory Memorandum to the National Minimum Wage (Variation of Financial Penalty) Regulations, I think that it appears to the reader here in Grand Committee to be a helpful, positive approach.

I welcome a tougher approach—that may be quoted—and the aim of skilling the young unemployed must be welcomed. I note that on this matter he mentioned England but, perhaps understandably, he did not venture to mention Wales. Is he able to give any information when he replies to the Committee as to what is happening in Wales on this matter?

It is also worth welcoming the aim of increasing compliance, which will necessarily involve instituting criminal proceedings. We heard in the Committee just now a very welcome commitment to the national minimum wage itself, which is a foundation statement when bringing in legislation such as this to your Lordships’ House. However, I recollect that in another place, when the national minimum wage was proposed by the Government of Mr Tony Blair, the opposition to it was somewhat lengthy and rather loud. It is good to hear from Her Majesty’s Government now a different tone of voice and a very obviously sincere commitment from the Minister.

With reference to the legislative background, we can only give three cheers to the phrase in the Explanatory Memorandum which states that,

“workers are entitled to be paid at least the minimum wage which is specified as one of four hourly rates”.

Also, paragraph 4.2 states that,

“the officer may serve a notice of underpayment requiring the employer to pay arrears to the worker or workers named in the notice”.

We can only imagine the difficulties of young people who are getting a miserable wage by law—some are not getting even that—and trying to make their way in a very difficult climate. Her Majesty’s Government should not lose sight of that dreadful situation across the nation today.

The Explanatory Memorandum also makes clear that there will be a requirement on,

“the employer to pay a financial penalty to the Secretary of State within 28 days of service of the notice”.

That has to be welcome, but I have questions concerning the policing that aims to prevent underpayment. Is the Minister able to tell us how many people make up that specific unit in HMRC’s enforcement section? If the work of the Government is to be done effectively, one hopes that that specific arm of government is adequately staffed. Often the suspicion is that HMRC is not adequately staffed, and it would be reassuring to hear what the numbers are.

Secondly, is the Minister able to tell us the total amount of fines for the latest available year? What was the largest fine imposed? Is he able to throw any light on that large fine, such as the details of the company? Is he able to enlarge on the answer, should he have it available to him?

[Lord Young of Norwood Green (Lab)]

My Lords, I thank the Minister for his introduction of these statutory instruments. I will deal with the traineeships first.

When reading the Explanatory Note, I noticed that the traineeships do not get any pay, or if they do it will be up to the employer; nor is there any requirement to pay travel expenses or lunch et cetera. I wonder how much the travel expenses—never mind the lack of pay—act as a deterrent to young people taking up these traineeships.

Obviously, we welcome anything that makes young people more employment ready. There was a reference to English and maths, but I am always surprised these days when I do not see any reference to IT. That is now such a key part of any young person’s employment capabilities that I would have thought it would have been in the mix.

It was also interesting to hear from the Minister that 500 training organisations have agreed to deliver these traineeships. As we know from experience, some of the apprenticeship training that was being delivered lacked quality and the Government had to take action. Bearing that in mind—it is not only this Government who have suffered, as we also had some difficult experiences—I think that it really emphasises the need to ensure that there is a monitoring process to ensure that we are getting value for money and a quality training process.

On minimum wage compliance, there have been lots of announcements by the Government. I certainly welcome the number of probing questions asked by my noble friend. I will be interested to hear the Minister’s answers. The Government have been saying over a period of time that they are going to “name and shame” those firms. It might act as an extra deterrent if they did so. Like my noble friend Lord Jones, I welcome the Government’s espousal of the minimum wage. He is absolutely right to remind us of the dire predictions that were made at the time about the terrible effect that it was going to have and the millions of jobs that were going to be lost—not taking into account the impact on millions of workers who were being paid, in some of the worst examples, £1 an hour.

I am glad that the Government are now fully in favour of the minimum wage, although not every Conservative Member of Parliament seems to be—indeed, some of them have put down Motions calling for small firms to be exempted from paying it. I would welcome some assurance that the Government will not be going down any such road. Given their previous strange decision regarding their magnificent bargain offer to employees to get rid of their employment rights in return for shares, I wonder what take-up there has been on that. It was almost like buy one get one free—if you believe in that, clearly you also believe in a free lunch.

To return to this statutory instrument, I found myself a bit confused by all the statistics being given by the Minister. I think I have this right: he talked about there being £45 million of arrears; I was not sure how many complaints that had resulted from. I could not quite comprehend whether or not these figures were going down as a result of the enforcement. That is what we want to see. I was pleased to hear the Minister introduce the pay and work rights helpline. It seems to be carrying out its function.

We welcome the higher penalties, although we probably think that they should be even higher still because there still seems to be a significant number of employers that believe they can get away with not paying the minimum wage, which is a real disgrace. The Minister and the noble Lord, Lord Jones, referred to getting a 50% reduction if you pay what you should have been paying. I suppose that I can see some logic in that if it gets them to pay up, but I would like some assurance that, if the same employer were to commit this offence again, we would not allow them to have a second chance of getting a 50% reduction. Would that apply if there were a repeat offence?

To summarise, we generally welcome this measure. I would be interested to know why we have not yet had any examples of the Government actually naming and shaming employers, which might act as a further deterrent, and I would like some clarification on how many cases of enforcement there have actually been over the period that this has been taking place.