Living Wage

Alistair Carmichael Excerpts

Thursday 3rd November 2016 Commons Chamber

[Margot James]

I shall be dealing later with some of the points that the hon. Lady made in her speech about other benefits, and the overall impact on wages and take-home pay, but she should bear in mind that 8.2% is not very dissimilar to 10%. That does not mean that I am defending what many people have described as excessive pay rates at the top end. Indeed, the Prime Minister has asked my Department to produce a discussion paper on corporate governance. She has made it clear that she expects some of that top-end remuneration to come under the microscope, especially when it does not seem to reflect improved corporate performance.

I have listened carefully to representations about the level at which Governments should set the national living wage and the way in which overall pay should be managed. Higher pay needs to be affordable for employers, because if they cannot afford to pay it they will not hire workers and, worse still, may even lay workers off. The Low Pay Commission is led by an expert panel and is absolutely independent of the Government. We will continue to take its expert and independent advice, which will help us to set the national living wage. The commission will make its recommendations after careful consideration of the state of the economy to ensure that we can afford to make the living wage as high as possible without costing jobs. It will gather extensive evidence across the economy from workers, their representatives and employers, and will then reach an independent view.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

As the Minister will know, the merchant marine service has been one of the most difficult areas of employment when it comes to enforcement of the national minimum wage. When will we have the updated guidance on the application of the minimum wage to seafarers that we were promised?

[Margot James]

I will ask Her Majesty’s Revenue and Customs, which is the enforcement body for the minimum wage, what stage its investigation has reached. As one of my hon. Friends pointed out earlier, HMRC investigates every single complaint for underpayment, but it also mounts sector-based inquiries into such matters as the circumstances of seamen.

Let me now deal with some of the overall issues raised by the hon. Member for Mitcham and Morden. I share some of the concerns that have been expressed today. We know that employers are responding to the national living wage in a range of ways, depending on the markets in which they operate and the current state of their businesses. The extent to which they may be able to absorb the extra costs from profits, pass them on in the form of increased prices, increase the productivity of their staff or reduce other costs will vary between and within sectors. We think it essential for employers to ensure that their reward packages are competitive, and that they reward staff for their work in order to retain and develop workers who are fundamental to their success.

Ultimately, however, although we can set the minimum wage, it is for employers to decide how to manage those increases in their costs. Any changes in contracts must be agreed with workers, and must be in line with the law at the very least. Any instances of unfair dismissal that might result are, of course, a serious matter, and would be dealt with through employment tribunals, but employees could always contact the Advisory, Conciliation and Arbitration Service for guidance at the same time.

It is worth noting that changes in pay structures in the retail sector can reflect long-term changes to introduce greater consistency, perhaps the sort of changes that we have heard about this afternoon. Some may be coincident with, but not a consequence of, the introduction of the national living wage, and I do not accept that they are in any sense loopholes. The Government will continue to set a minimum hourly wage, and remuneration over and above that rate is a contractual matter between the employer and the employee.

--- Later in debate ---

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I am pleased to have this opportunity to contribute to this important debate, and I pay tribute to the hon. Member for Mitcham and Morden (Siobhain McDonagh) for securing this time from the Backbench Business Committee. I am grateful for the many examples that she and others have brought to the House today. I do not in any way seek to diminish those examples when I say that the people I am about to speak about would probably bite your hand off if they were offered the terms and conditions that the hon. Lady and others have described. I want to talk about the pay levels and employment practices on offer to our seafarers that are all too common in the maritime sector in the United Kingdom.

The recent detention of two vessels operating in the North sea—the Malaviya Seven and the Malaviya Twenty in Aberdeen and Great Yarmouth respectively—lifted the lid on payment and employment practices that are frankly scandalous, and from what I hear from many of those who work in our merchant marine in the North sea, this is just the tip of the iceberg. These practices are much more widespread and there is much more to be found. To put it bluntly, if these practices were happening on dry land, enforcement action would be taken immediately. They would not be tolerated. Because they are happening at sea, however, they are somehow out of sight and out of mind. I hope that when the Minister speaks to representatives of HMRC, she will impress it upon them that that attitude has to change.

I want to bring to the House’s attention the situation regarding two ferries that run lifeline freight services to my constituency from Aberdeen. The Helliar and the Hildasay are operated by Seatruck Ferries, but they are on contract to Serco, which operates the Scottish Government-funded lifeline ferry service. The RMT tells me that in 2014, when it last had sight of the contracts, some 20 ratings on the two ferries were being paid £3.66 an hour. The ferries’ journeys start in Aberdeen and finish in either Orkney or Shetland in the Northern Isles, but the company is able to pay that rate because it is deemed to be operating wholly outside UK waters. It beggars belief. It is wrong not only for the ratings, most of whom are probably Estonian nationals, but for UK seafarers whose jobs and livelihoods are being undercut by such employment practices. It is outrageous that a taxpayer-funded service is being operated in a way that undermines the opportunities of British seafarers to get working conditions and employment rates to which they would otherwise be entitled.

Seatruck Ferries recently said:

“Seatruck Ferries operates in a worldwide shipping market where NMW”—

national minimum wage—

“application in isolation would place the company at a serious disadvantage in relation to its competitors.”

It would appear that what it is doing is illegal, but, frankly, that is sheer sophistry. It is a scam that the Government could stop if they were minded to take the necessary action to stop it. That is why the point about the Government guidance on the application of the national minimum wage that I made in an intervention on the Minister is not just important, but extremely urgent. The practice may be bad, but from what I hear an awful lot worse is going on in the North sea on ships that have been chartered to the oil and gas industry.

I will not detain the House much longer because I do not have the time, but in evidence to the Energy and Climate Change Committee I challenged the chair and chief executive of the newly created Oil and Gas Authority to bring the operation of the maritime sector in the North sea within its remit, but they flatly refused. It seems to me as though they knew that there was something nasty underneath the stone and for that reason they were not prepared to lift it.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The time limit is now four minutes.