National Minimum Wage (Workplace Internships) Bill

Debate between Alec Shelbrooke and Peter Heaton-Jones

Friday 4th November 2016 Commons Chamber

[Alec Shelbrooke]

I am grateful to my hon. Friend for addressing those points. May I urge him to focus on the statistic that shows that 40% of people who are offered an internship have to turn it down because they cannot afford do to it? On opportunities and choice, we are getting close to a situation where half of those offered an internship cannot afford to do it. As my hon. Friend has said, internships are becoming a massive means of getting into the professional job market, so I urge him to keep that statistic in mind when he moves on address opportunity.

[Peter Heaton-Jones]

My hon. Friend makes a good point and I will seek to address it later in my remarks.

On social mobility, unpaid internships can be extraordinarily expensive for many of those wishing to go into the professional services, which are often located in the bigger cities and, in many cases, far away from rural constituencies such as mine. If young people in North Devon wish to undertake an internship in one of the larger cities, that will mean paying travel expenses and finding accommodation. For many—this goes to the heart of the point that my hon. Friend has just made—that is simply prohibitive. I do understand that that is a problem. If internships are accessible only to those with financial means, we will entrench a system where the professions are disproportionately dominated by those from families with higher incomes.

[Peter Heaton-Jones]

That is a good argument, but the difficulty is that I am not sure that the Bill addresses it. That is my problem and my challenge to my hon. Friend the Member for Elmet and Rothwell. My hon. Friend the Member for Crawley (Henry Smith) makes a good point and I will address later the internships offered by the small and medium-sized enterprises that dominate my constituency and many others.

I applaud those employers that do provide funding for internships—there are some—whether it be in the form of pay or expenses. Many charitable bodies, trade associations and universities provide bursaries or similar so that those of limited means can access internships. All these schemes are essential in ensuring that, no matter their background and financial means, people who work hard and are dedicated will achieve their goals. The schemes open the door to the opportunity of an internship.

There is of course always more that can be done. I am glad that this Government are working to promote high-quality paid internships through improving codes of practice, creating awareness campaigns and, importantly, sponsoring the graduate talent pool. These will all make internship opportunities available to those from poorer backgrounds. We must remember—this goes to the heart of our discussion—that an even greater block to accessing internships for many people is a lack of contacts. Put simply, they do not know the right people. That is often a greater block than a lack of pay, so it is right that the Government have acted with initiatives such as the graduate talent pool.

As I have already hinted, my difficulty with the Bill is the level of pay that it expects the facilitator of an internship—the employer—to pay. Broadly, as my hon. Friend the Member for Elmet and Rothwell has mentioned, there are two categories in the existing national minimum wage legislation: workers and apprentices. Workers provide a trade or service in return for remuneration and have an obligation to provide this work—I must sound as though I was an hon. and learned Member, which I assuredly am not—while apprentices receive a lower rate of pay, because although to a degree they provide the same services as workers, they receive on-the-job training. Consequently, the pay level for apprentices recognises that the employer invests time and resources in them, and they do not have to be paid as workers. In my view, interns are closer to the category of an apprentice, rather than that of a worker.

Internships provide individuals with experience and training, which helps them to deliver and gain employment. The Bill states that

“the intern meets learning objectives or gains experience of working for the employer”,

and that the internship provides

“practical experience in an occupation or profession.”

In my view, that is largely what an apprenticeship achieves. Workers, who receive the national minimum wage, do not set out to meet learning objectives or gain experience of working for the employer. That is almost ancillary to their role, which is to provide a service in return for their remuneration. Interns do not provide for the employer the same value as a worker, if I may put it that way, so their pay should not be the same. If I may say so to my hon. Friend, that is one of the flaws in his proposed Bill.

[Alec Shelbrooke]

My hon. Friend will have heard the examples I have given of major multinational, multimillion-pound corporations, such as KPMG, making it very clear that everybody working in their organisation is contributing to it. It is unfair to say that interns in a business do not contribute in the same way as others, as in the case of somebody working for Vivienne Westwood.

[Peter Heaton-Jones]

I must apologise to my hon. Friend. I did not mean that interns do not add value; I think they add incredible value. Interns in my office have added incredible value. I was merely seeking to draw a distinction in law about the difference in status, as it were, between workers and interns or apprenticeships. Interns absolutely do add value, but I was seeking to make the point that if an intern’s circumstances mirror those of a worker, they will be covered by current employment law.

Another issue in relation to social mobility, which in my view is so important, is whether internships should exist at all. This is the heart of what I am seeking to say in this speech. My fear—fundamentally, if simplistically—is that increasing the cost of interns will inevitably mean that fewer internships are available. That is especially the case in constituencies such as mine of North Devon, where the vast majority of employers contributing to the local economy are small and medium-sized enterprises.

If those SMEs are forced to pay interns the national minimum wage, my fear is that many businesses in North Devon will simply not be able to afford to set aside that sort of money to offer internship opportunities. It is important not to choke off the opportunities available to our young people—and indeed others—and I fear that an unintended consequence of the Bill might be to do just that in areas such as North Devon where SMEs make up the vast bulk of employers and thus provide the vast bulk of opportunities for possible internships.

[Alec Shelbrooke]

For the purposes of clarification, may I assume that my hon. Friend nevertheless supports the National Minimum Wage Act 1998?

[Peter Heaton-Jones]

Yes, but in the context of my hon. Friend’s Bill we are discussing whether or not the national minimum wage should be applied to internships. My argument is that, if it is, there will suddenly be a contraction—a fairly major contraction—in the number of internships offered by SMEs, which make up the bulk of employers in my constituency and in many others. My point is specifically about employers’ ability to offer internships and the opportunities that will be available. We do not want to choke off opportunities. Yes, some internships are offered by big corporations and big employers who can afford the cost, but many more internships are short term—perhaps for only a few weeks or even a few days—and in small and medium-sized businesses. That will absolutely be the case in my constituency. These small businesses take on interns almost out of a sense of duty to their local community. I fear that if we mandate the extension of the national minimum wage to internships, the number of opportunities available to young people and the work experience opportunities offered to my constituents will sadly and inevitably decrease. As I say, that is an unintended consequence of the Bill.

In my view, allowance should also be made for a short internship that does not mandate any remuneration. Long-term internships are good, and there are many professions in which they happen. Short internships, though, sometimes literally of a few days, are far more numerous and are more often offered by small businesses. That is the case in my North Devon constituency, where the overwhelming majority of internships will be very short—only a few days or perhaps a couple of weeks. Very few SMEs in North Devon will have the capacity to offer a longer internship, and they would be further prevented from doing so if they were mandated to pay the national minimum wage.

Many people, particularly young people, in my constituency are offered internships because of the employer’s desire to help the individual to get on rather than to use their labour. As I say, it is almost a community scheme, and in a place such as North Devon it operates in a way that is very healthy for society and for that sort of community where we sometimes feel that we are a long way from everywhere else—albeit that we in North Devon are, I like to think, our very own small economic powerhouse.

This contrasts starkly with longer-term internships that are often found in many professions that are prevalent in big cities. Of course, if someone in my constituency wants to take up one of these internships, it will come at a greater cost, not least because of the travelling costs from North Devon to one of the big cities. I fear that the Bill does not distinguish between the short-term internships offered by small companies and the longer-term internships in large cities, where the costs for the individual will be higher, but the large corporation will be better able to pay the national minimum wage. I fear that an effect of the Bill might mean many of the short-term internships currently offered by small businesses in my constituency will not be offered in future, thus reducing the available opportunities to my constituents. That is not something I want to see, and I am sure it is not something that my hon. Friend wants to see either, but I fear that, should the Bill proceed, it might be one of the unintended consequences.

[Alec Shelbrooke]

My hon. Friend is making a case that many others have made today. It is unfortunate that, when I was drafting the Bill, the advice I was given was that the 28-day provision was unenforceable. However, if my hon. Friend were minded, by some miracle, to allow the Bill a Committee stage, I am sure he would like to join that Committee, and perhaps table amendments to meet those needs.

[Peter Heaton-Jones]

That is a very kind offer, and one that is almost impossible to resist. It is possible that I shall not need to “RSVP” in about 29 minutes, but we shall see.

My hon. Friend and others have expressed a fear that there is currently some exploitation: that businesses are taking advantage of those who should be valuable work-experience interns, and using them to do as much work as many of their other employees while getting away with not paying them. It is certainly not acceptable for an employer to use an unpaid intern as just another worker carrying out the same task as others while not being paid, but I fear that my hon. Friend’s Bill will not solve that problem.

The Government have done some work in this regard. This year, for instance, they increased HMRC’s enforcement budget by £7 million. It is important for staff to be paid the appropriate amount for the work that they do, and for that payment to be properly declared. We must ensure that internships are not used as a way of circumventing national minimum wage legislation.

Reference has been made to the position of charities and voluntary organisations. Because I have a copy of the House of Commons Library’s excellent briefing, I am aware that the National Minimum Wage Act 1998 already

“provides an exception…which enables a limit range of organisations (e.g. charities) to enter contractual relations with volunteers without necessitating payment”

of the national minimum wage. That is to be applauded, because many charities and voluntary organisations in the third sector rely on the good will of volunteers to come and do the work that is so necessary in that sector. It would be entirely wrong for those excellent organisations to be mandated to pay the national minimum wage to volunteers. That could have a serious impact on their important work.

According to the House of Commons Library briefing—I think that this is a masterful example of understatement—

“This area of the law is notoriously complex.”

I fear that, sadly, the Bill may do nothing to ease that notorious complexity. I think that we need to look carefully at other ways of closing some of these loopholes if we wish to extend some of the very noble efforts that my hon. Friend has been making so far.

I applaud my hon. Friend, for the aims of his Bill are noble, but I do not think that making the national minimum wage mandatory for workplace internships is appropriate. I fear that it will have the unintended consequence that I have described: that it will have an impact on the availability of internships and the capacity of small and medium-sized enterprises such as mine in North Devon to offer opportunities to young people. It is important that they are able to offer those opportunities, and that young people are able to take them up, so that we can ensure that our Government’s priority and ambition to deliver a country that works for everyone is fulfilled.