Living Wage

Debate between Albert Owen and Nick Boles

Thursday 6th November 2014 Commons Chamber

[The Minister for Skills and Equalities (Nick Boles)]

It is a pleasure to reply on behalf of the Government to this thoughtful and interesting debate. I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) not only on securing this debate during living wage week, but on his work, month in, month out, as deputy chair of the all-party group on poverty.

This has been an exemplary Backbench Business Committee debate. It has been polite, well researched, thoughtful and subtle, except when we were subjected to the ritual of Labour Members and nationalist party Members from other nations in our fine Union taking lumps out of one another. That is always a source of light relief for Government Members, so I make no objection.

It is fair to say that there is not a single Member of the House who does not want everyone in the country to command at least the living wage for their work. We share that goal, so the questions that we have debated so well today are how we get there, and how we ensure that the steps we take make progress and do not put at risk everything we have achieved.

We must remember that this country and economy were subjected to the most appalling shock. We lost 6% of our GDP as a result of the financial crash and the great recession that followed. The Low Pay Commission has not been able to recommend significant increases in the minimum wage until this year—it is important for me to say to the hon. Member for Banff and Buchan (Dr Whiteford) that this year the increase was higher than the average increase in wages, but she is right that this is the first time for a few years that that has been possible. The Low Pay Commission has been unable to make such a recommendation until this year because of the weakness of the economy and the massive increase in unemployment.

Fortunately, that situation has improved—it is by no means perfect, but it has improved. We have a strong and stable growing economy. This economy has created 2 million jobs. In the past year, we have seen the largest fall in unemployment ever. I say that not just to blow the Government’s trumpet, as Ministers always do—a little trumpet blowing is part of the job—but because nothing makes a better backdrop for achieving sustainable increases in the minimum wage and the living wage than a stably growing economy that creates employment.

Once a person is in a job, it is far more likely that they will be able to secure increases in wages than if they are receiving unemployment benefit—it is much less likely that someone can go to an employer and say, “I do not want that job at that wage,” and persuade them to increase the wage. If someone is in a job and has worked well for a number of months, and if the employer looks around and sees that there are not quite so many people eager for that job, the ability of every employee and the unions who represent them to secure sustainable increases in wages is far greater. The most important thing, therefore, is a strong and stable economy that creates jobs.

The second most important thing is for those who can afford to pay more than the minimum wage to lead the way and set an example. Many hon. Members have mentioned the role of the Government, Departments, local authorities and major businesses in our economy. Others mentioned examples of businesses that can afford to pay more than the minimum wage and should, and that perhaps should know better, not least the premiership football clubs mentioned so eloquently by the right hon. Member for Tottenham (Mr Lammy).

I make no pretence that I had anything to do with this because I have only recently been appointed, but I am delighted to be able to say that the two Departments in which I am a Minister—the Department for Education and the Department for Business, Innovation and Skills—are living wage payers for all their direct employees. That is important. The Department for Education also ensures that agency workers are paid more than the living wage. However, as hon. Members have pointed out, under some contracts—often cleaning or security contracts—we cannot guarantee that everybody receives more than the living wage.

We need to work on that, but we should not fool ourselves by thinking there is a simple lever we can pull. I believe almost any contract, if it is thought about intelligently, can be reconfigured in such a way that an equivalent level of service can be achieved without increasing the number of people employed, and that therefore productivity improvements can be sought that will make it possible for a contractor to pay a very slightly higher wage. I therefore do not believe there is necessarily a choice between lower service from contractors or lower wages. It is possible to maintain or even improve services and pay better wages, but it is not simple and it is not easy. The way to do it is by working with one’s contractors, explaining to them one’s hopes, ambitions and aspirations and hearing from them other ways we can perhaps change our demands as employers and contract letters, so that they can afford to pay those wages.

We heard examples from many hon. Members, not least my hon. Friend the Member for Hexham (Guy Opperman), of major companies that found a striking improvement in their ability to motivate and retain staff after they agreed to pay them the living wage. It is fantastic that companies such as KPMG and Costco are now willing to come out on the record and say that this is their experience. It is, however, very important that we understand that those companies may be in a position where they can do that, and that not every small and medium-sized business in the country is in that situation. It is through argument and example that the case is best made, not by imposition. That is why the Low Pay Commission does not believe that imposing a living wage, or making the national minimum wage rise to the level of the living wage, would be sensible.

Finally, before I give my hon. Friend the Member for Warwick and Leamington a chance to sum up, it is important for us to be very careful about what we say about the minimum wage and how increases are projected or promised. One of the reasons that the fears raised by my party on the minimum wage were not realised—Members were right to say that it was very controversial when it was introduced—and why most business groups in the country now support the national minimum wage is the way it has been constructed. The Government submit evidence to the Low Pay Commission, which produces recommendations, and the Government normally follow those recommendations. It is very important that we stick with that approach and do not start imposing on the Low Pay Commission politically driven expectations that cannot be delivered in our economy.

[Albert Owen]

On the national minimum wage, is the Minister saying that his party in local government, and many other parties where they are in control, should introduce this and build it in where they are not bound by the Low Pay Commission?

[Nick Boles]

Wherever they responsibly can, yes. Forgive me, but I must let my hon. Friend the Member for Warwick and Leamington sum up.