National Minimum Wage (Amendment) Regulations 2017

Debate between Lord Mendelsohn and Baroness Buscombe

Tuesday 28th February 2017 Grand Committee

[Lord Mendelsohn (Lab)]

I thank the Minister for her introduction and my noble friend Lord Jones for his contribution, which raises the important question of Wales, and agree that the Minister’s case was cogently put. It presents an important annual ritual of ensuring that the national minimum wage and the national living wage are uprated.

I commend the policy and want to say how important this has been as a measure to create a real basis for enhancing the opportunities and life chances of people, and for ensuring that employers are unable to use inequality and asymmetry of power to the detriment of people who are giving up their labour. The way this has been presented and the detail behind it is outstandingly thorough. It is a perfect measure. All the complaints that I have had about other measures are more than adequately addressed by what is an outstanding piece of analysis of not just why this policy decision was made, but previous policy decisions, what alternatives could be chosen and challenges to the assumptions on which it was based. All of this is contained in the accompanying documents to the statutory instrument, which are of outstanding quality. I commend the department for its work in putting it all together and, in particular, the Low Pay Commission, which has done an outstanding job. We are truly blessed to have a mechanism that seems to work well, that people understand and that tends to comes to sensible and just decisions.

I wish to raise two areas for the Minister to consider. First, as we look to expand the apprenticeship programme and increase the number of young people who can move into employment through the use of this mechanism, so that they can adopt skills and become much more focused on the needs of businesses or even public sector organisations now the duty is on them, I would be very interested to know whether any evaluation is being made on what the likely impact of that will be—especially as we may create a cascade effect—to make sure we do not affect the employment opportunities of those at younger ages. I would also like to evaluate whether this is now distorting the opportunities at younger ages, and whether it is worth reviewing in the next review of the national minimum wage and the national living wage.

Secondly, I again ask the Minister whether the enforcement mechanisms she has outlined are sufficient. It is to be welcomed that the Government are applying more resources and a little bit more focus on making sure that companies meet their national minimum wage obligations. It is very instructive to see the number of incidents that take place in large organisations and companies with very prodigious finance departments. It shows a sense not just of non-compliance, but of callous disregard—of the abdication of duty in the most extraordinary fashion. To use an example I mentioned earlier, which I am more than happy to mention again, it is utterly shocking that Debenhams was able to get away with what it did and that its chief executive was able to take his bonus. Look at the explanation of the long-term incentive plans in company reports. Look at the reports to shareholders about remuneration for the senior executives—in particular how it affected the chief financial officer and the chief executive officer—and at the number of consultants that they brought in to make sure they got the right remuneration. I know that they spent time with their remuneration executives to make sure that they can play their games with the board to do this. The sheer fact that they have allowed their employees to suffer in this abject way is absolutely appalling.

Unless we have mechanisms that address the problems of culture, of having effective measures to counterbalance it and incentives that affect people, then we will have this terrible story time and again. I applaud the Government for putting more towards the enforcement, but the measures have to be targeted in the right way. If you run a company, you run it properly. If your duty is to pay people, you pay them properly. If you do not, you bear the consequences.

[Baroness Buscombe]

I thank noble Lords for their very helpful contributions to this short debate. I begin by responding to the noble Lord, Lord Jones. The measure that was introduced back in I think 1998 was a huge step change in clarity, fairness and respect for people who are low paid.

Digital Economy Bill

Debate between Lord Mendelsohn and Baroness Buscombe

Report: 1st sitting: House of Lords
Wednesday 22nd February 2017 Lords Chamber

[Lord Mendelsohn]

My Lords, I support the amendment and thank the noble Lord, Lord Clement-Jones, for an outstanding summary. In relation to caps, it is important to understand the consequences of bills which cause stress to people in particular circumstances, and why this is another part of ensuring that we have the right social impact in such policies. Mobile phones are not luxury products. Actually, low-income households are more reliant on their mobile phones than other households: they are five times more likely to be mobile- only—that is, no landline or broadband—than the highest earning groups. The major cause of mobile phone debt is unexpectedly high bills which are usually caused by consumers using services not included in their standard monthly tariffs—very frequently with no real conception about how the complexity of the tariff has an impact on their bills. These unanticipated bills can make it harder for consumers to budget, especially if they are on a low income. Unexpected bills can exacerbate a consumer’s debt problems. Citizens Advice reports that 70% of its clients who receive mobile phone debt service also receive advice on other debts. The consequences are significant and only these measures outlined in this amendment will in our view have the impact to address this problem. In other ways, complicated information and other consequences will limit the capacity of people to manage their debts.

I must confess that I think ensuring roaming capacity —not a national roaming programme—for those people in the absence of service in order to increase their ability to access mobile services is a terrific idea. I thought it was a very good idea when I first heard it, so I got one, and it is outstanding. I have cracked many of the problems of very poor mobile service, including in that far-fetched place, which never seems to have decent service, called Hampstead. I now have perfect service—it is an absolutely terrific system.

I think that there is a very strong case for this. We are not talking about a national programme, but it certainly addresses a large part of the problem about coverage. There seems to be no particular issue: it gives us good customer experience, it is not particularly difficult to roll out, and that is why it is sensible and worth while for it to be in this Bill. Now that I have another phone, I of course endorse the provisions on switching, but I would make this point about switching and compensation. These strengthen and make explicit the powers of Ofcom to require certain changes in relation to compensation to make sure that companies automatically compensate customers who experience poor levels of service. I think there is a very strong consensus, and that Ofcom will come to the conclusion that it is vital that consumers are financially compensated. An automatic compensation scheme will act as an incentive to telecoms companies to improve their performance.

[Baroness Buscombe (Con)]

My Lords, I am sorry that I was unable to satisfy noble Lords at Committee, so let me try again. Amendment 5 raises important issues for many customers, and we really do appreciate consumer concerns. Following previous debates that we have had on these matters, my officials have spoken with mobile network operators to check progress in this area.

Currently, providers offer consumers various ways to manage their usage, including the use of bill caps. So I say to the noble Lord, Lord Clement-Jones, that it is possible already for a consumer to put a cap on his or her expenditure. Tesco Mobile, for example, already provides capped contracts for the benefit of its customers. This includes a safety buffer which can be set to suit preference. Three allows consumers to block calls that go over their monthly allowance and calls that may be not be included as part of their allowance. Vodafone allows a cap to be set up through an app. Additionally, EE, Virgin Media and O2 offer the facility of notifying customers through warning text message alerts when approaching the limit of their allowances.

The Government expect providers to continue to take steps to minimise bill shock and ensure that their customers are adequately equipped to manage their mobile phone usage. We will underline this further in the forthcoming consumer Green Paper, which will be published in April, a Green Paper that my noble friend Lord Ashton has referenced today. This is an issue that needs careful thought, which is why the Government believe it is only right that we do so in a consultative manner. We need to consider and mitigate unintended consequences in that process.

Universal bill caps do not exist for other utility services for good reason—the essential nature of them. Mobile phone services are indeed an essential service for many; I agree with the noble Lord, Lord Mendelsohn, that they are not a luxury. We need to ensure that the outcome from this debate does not risk putting people in vulnerable situations, whether that is leaving them unable to make a vital call when they break down at the side of the road or having to contact a friend or relative in their hour of need.

I know a number of elderly people living on their own who rely wholly and completely on their ability to use their mobile phone if they are afraid or concerned or have a fall. They may have forgotten to pay their bills and so on. Suppose they did not have that opportunity to contact someone in an emergency. They would be put in a difficult and frightening situation. I know there is a feeling that, “Well, the bill cap is there, but people could still contact the emergency services”. However, we already have an enormous burden on our emergency services, and we fear that this would increase that burden. So would this really be in the interests of consumers, as suggested by the noble Lord, Lord Clement-Jones?

I agree with noble Lords that mobile providers need to take responsibility for looking after their customers. The Government have previously negotiated a voluntary agreement with providers that means there is already a £100 liability cap to cover lost and stolen mobile phone handsets, provided that they are reported as lost or stolen within 24 hours. There was good reason not to put that agreement in primary legislation: it would have been too prescriptive and offered no flexibility as technologies progress. That is an issue that we keep returning to: do we want to be prescriptive in the Bill when we are talking about the digital economy, when we know the technology is constantly changing? So we have considerable concerns with putting such a prescriptive amendment into primary legislation.

It is worth highlighting that Ofcom, as regulator, has a duty to protect the interests of the end-user in the telecom markets. It would therefore seem improper to progress the amendment without due consideration to what the role of government and Ofcom would be regarding enforcement. There is no point putting this in the Bill if there is no practical enforcement. This is yet another reason why the Green Paper will allow us to reach a well thought-out solution to address the concerns that noble Lords have rightly raised.

The switching principles that noble Lords have proposed putting on to the statute book are broadly those on which the Government consulted in an October 2015 call for evidence. Following the end of that consultation, the Government published a response in May 2016, including revised principles based on responses received to the call for evidence. The Government’s response also confirmed our commitment to work with Ofcom to ensure that consumers could switch their telecom services, by legislating through the Digital Economy Bill. However, the Bill does not mandate the switching principles, as this would go against the spirit of them as principles and would not take account of the different characteristics of different sectors and consumer needs. We know that it would risk creating a power that could prove to be, again, too prescriptive for the future needs of consumers as technologies continue to develop.