Employment Opportunities Bill

Alan Campbell Excerpts

Friday 17th June 2011 Commons Chamber

[Mr Nuttall]

My hon. Friend has made a good point. That was part of the overall effect of the introduction of the national minimum wage, with which I was about to deal. Earlier speakers have said that many employees—especially those at the bottom of the pay scales—benefited from its introduction, but it is sometimes forgotten that, by implication, it must have had an inflationary effect on the economy. Nowadays we are constantly hearing that the increase in the VAT rate has, understandably, had an effect on the inflation figures. Similarly, given that the cost of employing people is the biggest single cost incurred by many businesses—especially in the service sector—the introduction of a national minimum wage is bound to have a serious and significant inflationary effect. Therefore, the overall effect of helping those at the very bottom of the pay scales is perhaps not as great as may sometimes be thought.

We have heard a lot about the arguments for, and logic behind, the national minimum wage, but I submit that they are, in fact, arguments for a national income guarantee, as there would be logic in saying every member of society should have a given minimum level of income. That is not what the national minimum wage does, however. It is entirely different, and therefore in most cases—there are exceptions, one of which I shall touch on shortly—the choice is between a life on benefit and a life in work.

Let us consider the following hypothetical situation. An entrepreneur wants to establish a new restaurant in my constituency. It is a large restaurant with a number of tables, and he wants to employ waiters and waitresses. The restaurant will be open full-time, and he calculates that he can pay a total of £53.37 per hour for his workers. It just so happens that that is nine times the current national minimum wage of £5.93. At present therefore, he would be able to employ nine members of staff. The entrepreneur places an advertisement in the press, and 10 people apply for the jobs—the true figure would probably be much higher, of course. They are all friends who went to school together or met at the local job centre. They are probably some of the 625 people to whom I have referred who are unemployed. They say to the entrepreneur, “This is great. This is just what we would like to do. It is an opportunity for a job. We would all like a job.” The entrepreneur replies, “I’m sorry, but under the current legislation I cannot employ all of you. The best I can do is employ nine of you.” Therefore, the 10th friend is left unemployed and living on benefits, whereas the other nine can get a job earning the minimum wage.

Under the Bill’s provisions however, they would be allowed to say, “Actually, we’ll help our friend out. We want to help our friend No. 10; we want him to have a job. We all voluntarily agree to that. We would still be far better off if we worked for, let’s say, £5.33 an hour, and then all 10 of us will be able to have a job. We’ll all be friends working together. That will be tremendous, and our poor 10th friend will not be left on their own.” Without this Bill’s provisions, the great irony of the existing situation is that the nine would be employed while the 10th could become self-employed and would be entitled to work for less than the minimum wage in any case. That is an anomaly in the current legislation.

Whenever the national minimum wage is discussed and arguments are put for and against it, people always talk about “big businesses” and “rogue employers”, but let us not forget that the national minimum wage applies to all employers, including charities and small organisations in the voluntary sector. They are all affected by the national minimum wage. The Bill is a contribution to the big society, because it would mean that small charities would be able to employ more people, not only the young, but perhaps older people, too—this is not just about people in the under-24 category. My figures show that in my constituency this might apply to 280 people over 50. These people might be able to afford to work for less, perhaps because they have bought their own home and paid off the mortgage, and they may wish to help a local charity. I am talking about self-sufficient people who are not claiming benefits and who want to work for a small local charity. As the law stands, they would not be able to do so. The Bill therefore contributes to another other theme of the big society—that of passing power over.

[Mr Alan Campbell (Tynemouth) (Lab)]

In those circumstances, could the person not volunteer for the charity? They would therefore not be “working” and would not be subject to the minimum wage legislation.

[Mr Nuttall]

Many charities employ people and also have volunteers; many small charities employ a certain number of people on a full-time basis and also have volunteers.

[Mr Campbell]

But is not the premise of the big society that people should volunteer? It is about encouraging people to volunteer, rather than about people seeking employment.

[Mr Nuttall]

The big society is about helping to enlarge the voluntary sector. [Hon. Members: “It is voluntary.”] Yes, but some voluntary organisations still employ people to run the volunteers.

The other aspect of the big society is the passing of power from the Government down to the individual. What better example could there be of the big society than for this Bill to become law and for this House to say to the individual, “We will give you back the right to decide for yourself whether or not you wish to work.” That would be the biggest move that this House could make towards helping the big society, as it would give individuals the right once more to decide for themselves whether they want to live a life on benefit or to work for a living. I commend the Bill to the House, and I look forward to hearing the rest of the contributions.