National Minimum Wage (Amendment) Regulations 2013

Lord Young of Norwood Green Excerpts

Monday 15th July 2013 Grand Committee

[Baroness Donaghy]

My Lords, I had not intended to speak in the debate but I am pleased to do so now that I have heard the Minister’s explanation of the regulations.

I was a founding member of the Low Pay Commission when it was first established. We created its infrastructure and recommended the first minimum wage. The Low Pay Commission has always been thorough and has always acted on an evidence-based footing. It is fair to say—the Minister implied this—that it has always been conservative with a small “c” on the issue of youth rates and apprentice rates for the reasons he set out. It had to get the balance right between making sure that the rates were not so large as to discourage employers and not so small as to discourage apprenticeships. Therefore, the Government have got this right.

The only additional point I would make is that there is an extra challenge coming in from the side on the issue of unpaid internships, which complicates apprenticeships in many areas. It is extremely important that we support the recommendations but also bear in mind that the issue of youth rates, internships and the application of the minimum wage is becoming more and more of a grey area.

I have always maintained, and I do now, that although there were staff whose job it was to maintain the application of the minimum wage, there were never enough. I would like the Minister to respond on that. Certainly, in many areas of industry it was quite clear that there were two levels of pay—one declared and one undeclared—but the difficulty was in getting people to complain. In areas such as the textiles centre in the south-west of Birmingham, people might go to their advice centre but they would not want their name reported because they knew that they would probably never get another job in the area if they made the complaint. They worked the legitimate number of minimum wage hours but then, off the books, they would be asked to work an extra seven or eight hours and, therefore, the average made it clear that it was not any longer the statutory national minimum wage. That practice is still happening and, if anything, is probably worse.

So, in supporting the general idea—I do not want to go against the Low Pay Commission normally, but I think in this case it has acted on the side of generosity—I would ask the question about ensuring the application of the statutory national minimum wage and that the law is carried out on the ground.

[Lord Young of Norwood Green]

My Lords, I, too, in principle welcome the Government’s proposal. I am always pleased to see their conversion to supporters of the national minimum wage. As someone else remarked in another context, it was not always thus. However, it is good to see that there now seems to be an enthusiastic endorsement of both the principle and application of the national minimum wage. We do not want to be in a situation where it decreases the number of jobs. We could argue that what has a major impact on jobs and the number of jobs available is the amount of growth we can get in the economy, but I do not think that this is the right place to debate the Government’s economic strategy. However, it is well known that we do not feel they have got it right—said he with the gift of understatement.

I endorse the comments of my noble friend Lady Donaghy. The Minister referred to the importance of effective enforcement and the problem of non-compliance. Are there any statistics of the number of complaints going into either ACAS or any of the other bodies? There is an employment rights helpline and I would be interested to know what the statistics are on complaints about non-compliance with the national minimum wage.

Other than having those concerns, we endorse the proposal.

[Lord Popat]

This has been a valuable short debate and I thank noble Lords for their important questions. A couple of specific points were raised and I shall respond to them in a moment. However, first, I should like to emphasise that the Government are committed to the minimum wage because of the protection that it provides to lower-paid workers and the incentives to work that it provides.

These regulations support the Government’s commitment to delivering fairness and supporting business, and I believe that they are fair and appropriate. The increase that the Government have recommended is reasonable, bearing in mind that the personal allowance of a large number of low-paid people has gone up in the past 18 months, which will help them to earn more money net of tax.

The noble Baroness, Lady Donaghy, and the noble Lord, Lord Young, both raised two very important issues. The LPC was established with the right infrastructure in 1997 and it does excellent work. It is quite independent of the Government and represents people from trade unions and other organisations. With the minimum wage, there is widespread acceptance that what we are recommending is appropriate.

With regard to enforcement figures, in 2012-13 the Pay and Work Rights Helpline received around 58,000 calls. Of these, the overwhelming majority—over 90%—were dealt with by the helpline. Just under 3,000 calls were referred on to the enforcement agencies for further action. We are making a real effort to ensure that employees are aware of the minimum wage and that employers are aware of the onus on them to pay the minimum wage to their employees.

I hope that noble Lords feel that they can accept the regulations. I trust that my response has been appropriate. If it has not been, I shall be very happy to write to noble Lords.

[Lord Young of Norwood Green]

I thank the Minister for that. For clarification, when he said that out of the 58,000 calls to the helpline 3,000 were referred to the enforcement agencies, I presume that that meant 3,000 calls from those receiving the national minimum wage. Am I right in that presumption?

[Lord Popat]

That is correct. In fact, the information that I have is that just under 3,000 calls were referred on to the enforcement agencies for further action—in other words, the enforcement agencies were going to take further action to resolve any outstanding issues or discrepancies between employers and employees.