Terms and Conditions of Employment

Alison Thewliss Excerpts

Tuesday 19th February 2019 Commons Chamber

[Kelly Tolhurst]

I thank my hon. Friend for pointing out the good work of the Low Pay Commission and how it brings people together to come up with balanced proposals, such as those before us today, which the Government have accepted.

The regulations mean that a full-time worker will be more than £2,750 better off next year compared with the year the national living wage was introduced. The regulations also increase the rates for younger workers and apprentices. Those aged between 21 and 24 will be entitled to a minimum hourly rate of £7.70, which is a 32p increase; workers aged between 18 and 20 will receive an extra 25p an hour, taking their rate to £6.15; 16 to 17-year-olds will earn at least £4.35 an hour—a 15p increase; and apprentices aged under 19 and those in the first year of their apprenticeship will receive the largest percentage increase of 5.4%, meaning an hourly rate of £3.19.

[Alison Thewliss (Glasgow Central) (SNP)]

Does the Minister appreciate that that is not even enough to buy a Freddo?

[Kelly Tolhurst]

I point out to the hon. Lady that we are talking about the apprentice rate.

The regulations will also change the amount employers can charge workers for accommodation without it affecting their pay for national minimum wage purposes. From April, this will increase to £7 per day.

Changing the law is the first step, but we also need to make sure all workers know they are entitled to the national minimum age and that all employers know they must pay it. The Government run an annual campaign to increase awareness of the national minimum wage and the national living wage. Last year, we spent £1.48 million reaching workers and employers through posters and billboards as well as digital and online channels. We know that most businesses are good employers and pay at least the national minimum wage, but where non-compliance exists the Government will step in and make sure that money is recovered on behalf of workers.

Since 2015, we have doubled our investment in enforcement of the regulations to more than £26 million per year. More than 420 staff in Her Majesty’s Revenue and Customs are involved in the enforcement of the national minimum wage, and they follow up every worker complaint they receive. HMRC also conducts pro-active, risk-based enforcement in sectors or areas with a higher risk of workers not being paid the legal minimum wage, including those identified by the director of labour market enforcement. In this work, it co-operates with other labour market enforcement bodies to share information and conduct joint operations where that makes sense for businesses and workers.

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[Alison Thewliss (Glasgow Central) (SNP)]

I know that many Members across this House share my concern that Brexit and the removal of hard-won EU legislation will mean a race to the bottom for workers’ rights in the UK. In that respect, it is at least a little bit encouraging to see a commitment to continuing to increase minimum wages; however, as I have said time and again in this place, it does not go nearly far enough. The UK Government’s pretendy living wage is not enough to live on. The real living wage, as calculated by the Living Wage Foundation, is set at £9 an hour, or £10.55 an hour in London; the pretendy living wage falls short of that. For those of us who want a highly educated, highly skilled, high-wage economy, it continues to be extremely disappointing that the UK Government choose not to increase the minimum wage to a level people can actually live on.

High wages are linked to increased productivity—an issue the UK has struggled with for many, many years—increased staff retention and higher standards of workers. A substantial increase in wages is not a choice between acting in the interests of businesses and acting in the interests of employees; it is entirely possible to cover both. The attitude that I am hearing from Government Members is that the national living wage falls short of a real living wage, but we should celebrate it anyway because it represents a pay rise for working people. That shows a real lack of aspiration on the part of the UK Government—a Government who claim that they want to help people work their way out of poverty but whose actions fail those people time and again.

If this UK Government really wanted people to work their way out of poverty, they would be investing in our labour markets, increasing the powers of trade unions and improving the rights of those in insecure work. They are presiding over one of the lowest rates of real wage growth among the advanced nations of the G20. Andy Haldane at the Bank of England has described the past 10 years as “a lost decade” for workers, and the measures today will do very little to address that problem.

As things stand, the Chancellor is giving with one hand and taking away with the other. For those at the lower end of the income scale, the proposed increase in the minimum wage does not even offset the impact of the benefits freeze. I and my hon. Friends have consistently called for an end to the benefits freeze, which is a pay cut by stealth for some of the lowest earning people in this country. We welcome the Labour party’s commitment to scrap it, even if it did not feature in its 2017 manifesto.

The age pay gap is the income inequality that the national minimum wage policy creates between age groups. The Department for Business, Energy and Industrial Strategy impact assessment on the policy explicitly states that the purpose of a lower minimum wage for under 25s is to

“maximise the wages of low paid younger workers, without damaging their employment prospects.”

It also says that the Government asked the Low Pay Commission to recommend separate national minimum wage rates

“by age band (16-17, 18-20 year olds, and 21-24 year olds).”

There is no real evidence to justify why that is necessary. It is insulting to young people in my constituency and across these islands to say that employers would not want them if they had to be paid a fair wage; quite apart from that, it entices employers to make hiring decisions based on age, encouraging unscrupulous employers to break the law.

Make no mistake, this is state-sponsored age discrimination. In the impact assessment, the public sector equality duty sets out that the Government must

“eliminate unlawful discrimination, harassment and victimisation and other conduct prohibited by the Act”.

It goes on:

“The protected characteristics consist of nine groups: age, race, gender, disability, religion or belief, sexual orientation, gender reassignment, pregnancy and maternity, marriage and civil partnership.”

If women were to be paid less than men, that would be against the law because gender is one of the protected characteristics; mysteriously, however, this impact assessment does not extend to age. I would really like to see some smart lawyer take a legal challenge against the Government, because there is clear discrimination in the terms of this statutory instrument on the basis of age alone. There is no justifiable reason for this policy.

To compound matters further, the proposal that we are discussing today will increase the pay gap between age groups. The uprating that will result from the regulations means that 24-year-olds could earn £90 less a month than 25-year-olds for exactly the same job, amounting to a difference of more than £1,000 a year. The gap would increase even further within the under-25 age groups, making it even harder for young people to get by. Since the measure was brought in in 2016, 18 to 20-year-olds have seen the age pay gap between themselves and someone on the higher rate go from £1.90 to £2.06; 16 and 17-year-olds have seen it rise from £3.33 to £3.86—that gap between the highest wage and all that they are legally entitled to be paid—and for apprentices, the gap has gone from £3.90 to £4.31. No justification is given in the impact assessment for that state-sponsored age discrimination.

If I were to suggest that Members of Parliament—an MP born in 1973, perhaps, like my hon. Friend the Member for Glasgow South West (Chris Stephens), or an MP born in 1978, like the Minister, or myself, born in 1982—were to be paid different rates depending on age, I cannot imagine any MP in the House signing up to that. Why should young people face the discrimination in law that the Government are proposing today?

[Gillian Keegan]

I am listening carefully. Having started my working life aged 16 as an apprentice, I would not expect to get the same minimum wage at 16 as I would starting in a new job when I was 20, 30 or 40. Surely there is some recognition that experience comes with age, even if it is not always experience in the workplace. I think that perhaps people when they are older might expect to see a differential to reflect their experience.

[Alison Thewliss]

The hon. Lady misses her own point, because the regulations are not called “The National Experience Wage (Amendment) Regulations”. The regulations discriminate by age alone, not by experience, so if the hon. Lady, as a 16-year-old, walked into a job on the same day as somesone who was 25, she would not be legally entitled to the same wage. The 25-year-old would have no more experience in that job, regardless of their experience in life. There might be 20 or 16-year-olds who are far more savvy on the first day in the job than a 25-year-old, or a 45-year-old, or a 65-year-old. We are not measuring experience here.

[Mike Wood]

Surely the hon. Lady acknowledges the Low Pay Commission’s conclusion:

“In light of this evidence we concluded when thinking about the pay floor for this age group, that it could not currently be set to the same level as the national living wage without risks to employment.”

[Alison Thewliss]

That was exactly the type of comment that the Conservatives made when the national minimum wage was introduced—that it would risk people’s employment. That has not been the case. The impact assessment says that the Government asked the Low Pay Commission to set the national minimum wage at these levels. The Government have instructed the Low Pay Commission to do this. That is quite different, and I do not buy the hon. Gentleman’s arguments at all.

The gap amounts to a difference of thousands of pounds in the take-home pay of a 16-year-old, an 18-year-old, a 21-year-old and a 25-year-old, and it is completely unjustifiable, because this is not about experience, as I said. It does not say that in the regulations; they specify the age, and age alone.

I shall quote from the excellent report by the Young Women’s Trust, called “Paid Less Worth Less?”, which I commend to the Minister. Shanae, who is 24, said:

“A 25 year-old starting out on their first job and just entering the workplace would have the same experience as a 16 year-old who is also just starting out. If companies want to pay based on experience, then that should be reflected in what they choose to pay people. But that’s different from paying us on our age.”

She is absolutely correct.

At 25 or younger, many people have families of their own to support and their own responsibilities, and in the research by the Young Women’s Trust, Tia mentions her circumstances specifically. She says:

“I am a care-leaver and I have lived independently since I was 17, so that makes my costs exactly the same as maybe like a 30 year-old who is living in a private rented flat. You have bills to pay like any other adult. Everyone gets hungry. Everyone has to pay for gas, electrics, toiletries, clothes and food. It still adds up the same. So I don’t see why there should be a pay difference.”

I do not see why there should be a pay difference either. It is completely unjustifiable.

Young people have to pay the same amount as somebody over 25 for rent, for getting the bus to work, for childcare, for the cinema, and maybe for a Freddo bar. All those prices are exactly the same. Young people are not entitled to discounts on their rent because of their age, and indeed they get less in benefits from this Government as well because of their age, so they are doubly missing out. Young people deserve the right to be paid a fair market value for their skills, and not be subject to state-sponsored age discrimination.

I mentioned unscrupulous employers. When I was at school, it was well known among my peers that some employers would employ young people right up until the point at which they would have to pay them more, and then they would let them go. That is particularly true for people on zero-hours contracts or in precarious employment, who can be let go at a moment’s notice. As soon as an employer has to pay them more, they are shown the door. There is very little by way protection, particularly for young people, who often do not know their rights and cannot afford legal representation to challenge an employer. A few years ago I met a constituent who had been working in a bar when the rate of pay went up. She was pretty sure that she was let go because she was the oldest person employed there, but she could not prove it. This Government are leaving the door open for unscrupulous employers to do that time and again to low-paid workers, often female workers in part-time jobs. This Government are aiding and abetting those unscrupulous employers.

Scotland is the best performing part of the UK when it comes to paying the real living wage. There are 1,363 real living wage employers in Scotland, and I am proud to say that the latest among them in my constituency include the Scottish Fairtrade Foundation, Silver Cloud and the spectacle manufacturer IOLLA, which has a shop in Finnieston. I am proud that those responsible employers are seeing the benefits of paying the real living wage, because it improves retention and morale. However, powers over the minimum wage are not currently devolved; they remain with this Government, who are not interested, frankly, in making the change for young people in this country. If the Minister is not interested in doing this, will she devolve the powers to the Scottish Government and let us get on with the job?

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[Kelly Tolhurst]

As I have already highlighted, age rates are not new to these regulations. We have asked the Low Pay Commission to review the age-related rates to see whether they are fit for purpose, and to report back later in the year.

As hon. Members have raised in the House, it is absolutely true that younger workers are the most vulnerable with regard to employment. I must point out that, from September and November 2018, 11.7% of 16 to 24-year-olds were unemployed, compared with 2.9% of over-25s. It is absolutely right, when these rates are set, that we have in mind that we want young people to be in work and getting experience in order to have the future earning capacity to reach their full potential and be able to fly. They can do that through work experience, and by getting into a place of work and gaining such experience, while in some cases they will get the entrepreneurialism they need to go on to do great things.

[Alison Thewliss]

Will the Minister give way?

[Kelly Tolhurst]

I want to make one more point about the age-related model. This model has been in place since 1999, and it is used across OECD countries, so it is not specific to the UK.

I will move on quickly to enforcement. I have said at the Dispatch Box a number of times since I have had this role that we take enforcement extremely seriously. That is why we have doubled spending on enforcement to £26 million. In 2017-18, there were 810 penalties, totalling £14 million. This is five times more in penalties than were imposed in the last five years of the previous Labour Government. To level the criticism that we are not taking enforcement seriously is just factually incorrect.