Draft National Minimum Wage (Amendment) Regulations 2023

Debate between Andy McDonald and Justin Madders

Monday 6th March 2023 General Committees

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this evening, Mr Hollobone.

I thank the Minister for setting out the regulations. Their purpose is to update the National Minimum Wage Regulations 2015 for the various age groups and categories of worker that the Minister set out, as well as to make adjustments for apprentices and the daily living accommodation offset rates. To be clear, we will not oppose the regulations; any rise in the minimum wage is a welcome step, particularly in the context of the spiralling inflation of the past year. I am sure that many workers are anticipating—indeed, counting on—the rises that we have heard about today.

The Minister said that this is the most generous increase in cash terms that we have seen. Obviously, that has to be looked at in the context of an inflation rate at a 40-year high. Last year, I raised concerns that the increases then were not calibrated to the cost of living, which had sharply increased in the weeks before the relevant regulations were announced, so it is welcome that the Low Pay Commission was able to factor in the high inflation on this occasion.

However, I am concerned that only the rate for 21 and 22-year-olds has been increased at a level comparable to inflation, with the 10.9% increase. The other wage categories have increased by 9.7%, which is actually 0.4% below the 12-month inflation figures released by the Office for National Statistics in January. We know that the cost of living for many people is significantly higher than that. Food, fuel and housing costs have increased at steeper rates. Food inflation is at about 17.6% and, according to a House of Commons Library report published two weeks ago, domestic gas and electricity prices have risen by 129% and 67% respectively.

On top of all that, private rents have reached a record high, including through a 16.1% rise in London rents in the last 12 months. On average, monthly mortgage payments have increased by £500 because of the Budget last autumn. The cost for people of sustaining the basics of everyday life, be it food in their stomach, a roof over their head or keeping warm, has skyrocketed. We agree that the regulations will take some steps to address the situation, but there is still quite a gap.

The Minister referred to the intention to have the national living wage reach two thirds of median earnings by 2024; in the current economic climate, does he still consider that aim to be achievable? He said that the target is subject to the prevailing economic conditions; does he consider the outlook over the next 12 months to be conducive, or otherwise, to meeting that target?

It is disappointing that the Government have once again not addressed the inequities of the minimum wage age limits. People’s age should not determine the price of goods and services, and it certainly should not determine their income. The decision to retain the different age rates is even more unfair given the cost of the basics that I have outlined, particularly the cost of energy, food and fuel. It should be noted that the number of young people on zero-hours contracts has risen again, with the proportion of 16 to 24-year-olds on zero hours contracts now at the highest level since 2013, and with a 4% increase in the last year of people in that age group looking for additional work. It seems that the younger generation is once again bearing the brunt of the current inequities in the workplace.

The Opposition value equally the contribution of people in work. It does not seem fair that two people who perform the same role should be paid differently because one is 24 and the other is 21. It is not fair that the year of someone’s birth will determine the rate of a wage increase or, as we have seen in respect of inflation, a real-terms cut in pay. Only 21 and 22-year-olds will see their pay rise at a rate equivalent to inflation; those on the national living wage aged between 18 and 20, and 16 and 17, as well as those on apprentice rates, will see a smaller increase. I understand that the purpose of giving 21 and 22-year-olds a higher rate of increase is to smooth their transition to the national living wage, but it means that is the only group to see a real-terms pay increase this year.

[Andy McDonald]

I wonder whether my hon. Friend can help me. Does he find it as inequitable as I do that there is prejudice against young people in the workplace? They do not go into supermarkets and find that goods are priced at a lower level because of their age, so how on earth can it possibly be justified that they should receive a lower rate of pay for the work that they do opposite somebody 10 years their senior?

[Justin Madders]

That is exactly the point: the expenses faced by people who live independently are the same regardless of their age. That is why the current differences are indefensible.

On the differences in the increase, will the Minister say a few words about why the accommodation offset is going up by only 4.6% this year? That is considerably below the other rates. I understand that there is a review going on in that respect.

The impact assessment states that the tight labour market has caused nominal wages to increase, particularly among the lowest paid. It says that many businesses consulted by the Low Pay Commission said that better wages are used to attract and retain their workforce. Alongside good working conditions, we believe that is central to good employment practice. However, I have heard from representatives of certain sectors that some do not treat the minimum wage with the importance that others do. When we met in Committee to discuss the relevant regulations last year, it was noted that non-compliance was greatest in the hospitality and care sectors. Will the Minister tell us what steps have been taken to deal with non-compliance in those sectors?

There is a particular concern that domiciliary care workers are not being paid for the time spent travelling between locations, thus causing their wages to fall below the minimum wage levels. I hear—a recent Unison survey confirmed this—that about 73% of care workers are not paid for their travel, and Unison estimates that that affects between 155,000 and 220,000 workers. The impact assessment is correct that some sectors use high wages to entice workers, but it is clear that some in the care sector are not doing that. The abuse of travel time means that the minimum wage is not being paid to hundreds of thousands of people.

I understand that, because of the fragmented work patterns, carers’ pay calculations are highly complex, and hundreds of time fragments per day are to be accounted for. That means it can be very difficult for people to ascertain whether they are being paid the minimum wage. Of course, it is possible under section 10 of the National Minimum Wage Act 1998 to get the pay records and inspect them, but I am told that those requests are frequently ignored, and information is often provided in a form that is difficult to decipher. Even pay experts sometimes find it hard to understand what pay is being received.

Employers are obliged to keep sufficient records, but there is a grey area in respect of what the standard constitutes in reality and, of course, the guidance can be ignored. No employer in the care sector has been prosecuted for poor record keeping, despite the high number of compliance failures and the clear evidence produced in the survey. Will the Minister talk to his officials about what more can be done to address the widespread abuses in the care sector, which deserve closer examination?

We should not forget that the minimum wage does not cover everyone. It does not cover the self-employed, many of whom do not receive the minimum wage. What is being done to address that? What is done to address the issue of people who are in bogus self-employment who do not get the minimum wage but, because the people who hired them are gaming the system, have no ability to challenge their pay and do not appear in any statistics? What steps are being taken to help those who are exploited because they are engaged on an internship that stretches out for months without pay? What about those who have to do a trial shift and work for eight, 10 or 12 hours, only to be told at the end that they are not required and will not get paid? Those are all abuses of the minimum wage and I want to hear from the Minister what is being done to tackle them.

Enforcement is key. If we are to have confidence that the regulations will benefit all our constituents, we need to be confident that they will be properly enforced. This year is the 25th anniversary of the Labour party having established the principle that workers are entitled to a minimum wage in law. It is important that the Government ensure confidence in the system by bringing to task unscrupulous bosses who exploit their workers. The law is positive only if it is enforced. The past 25 years have made a lot more employers consider the law when they pay their workers, but they have not ended the existence of unscrupulous bosses altogether.

One of the most crucial elements of the legislation is the need to tackle businesses that flout minimum wage regulations. The Minister understands the importance of enforcement because on 23 February he told me in a written answer to one of my questions that the naming and shaming of employers who fail to pay the minimum wage is an “important part” of enforcement and compliance. He is right about that, because companies should expect to be found out and called out when they underpay their staff, but given it is such an important part of the Government’s strategy, why has not a list of shame been released since the previous time the relevant regulations were debated? Given that the lists are supposed to be published on a quarterly basis, a hiatus of a year and a quarter since the last one, with no explanation, is concerning, so I hope the Minister will address that point when he responds.

The delays in publication have serious implications. The December 2021 round of naming included only investigations that had concluded back in 2018, and some of those had looked into breaches that went back almost a decade. We now have no publicly accessible register of firms found to be underpaying staff since before the covid pandemic. We all know that the labour market has changed drastically in that time, so it really is important that we get on to round 19 as soon as possible.

Leadership and setting an example are important. Naming and shaming is one thing; modest fines are another. If transgressors are allowed to continue to procure lucrative contracts from Government Departments, it could be said that the consequences of their actions are light. When handing out work to the private sector, the Government have billions of pounds at their disposal to distribute. Whether such reliance on the private sector is a healthy or wise option for the Government is a matter for another debate, but at the very least I would hope that those found not to be paying the minimum wage are at the back of the queue when it comes to handing out Government contracts, if not removed from the queue altogether.

It seems the Department for Business and Trade does not even bother to ask itself the question when contracting with the private sector. In response to a recent written question on whether the Department has issued any contracts in the last three years to companies that had appeared on the list of shame, the Minister told me that he

“does not hold information about the number of named employers who have a contract with a Government Department.”

He cannot stand up today and categorically tell us whether his Department has or has not contracted work with a company found to be illegally underpaying its workforce. How can the Department responsible for ensuring that businesses in this country comply with minimum wage requirements be unable to confirm something so basic and so important? Is compliance not a question worth asking of those who receive taxpayers’ money to undertake Government contracts?

There are concerns about other Departments that have sought to engage with companies that have appeared on the list of shame. I will not go through them all now, but it is important that the Department responsible for enforcing the minimum wage should look closely at whether the people it engages are paying it.

[Andy McDonald]

My hon. Friend makes an important point that speaks to the lack of commitment from the Government, given their previously expressed view to create a single enforcement body that could have embraced the enforcement of the national minimum wage. Is he as disappointed as I am that we still do not have any clarity from the Government on whether that single enforcement body will be formed?

[Justin Madders]

My hon. Friend is absolutely right about the questions in respect of the level of commitment. When I was preparing for today’s debate I looked back at previous discussions, and the Minister has always talked about the single enforcement body. We have not heard any of that from the Minister today. Perhaps he will confirm that it is still the Government’s intention to introduce a single enforcement body. They will have to table legislation to do that, so we might yet be disappointed. Will the Minister confirm, in the light of the answers we have received, that he will undertake a full investigation and ensure that in future those who do not pay the minimum wage face further scrutiny before they are given Government contracts?

As I hope to have demonstrated today, legal minimum levels of pay are not the whole solution to low pay, but they are an important part of it. Trade unions, as the collective voice of workers, also play a vital role in securing better working conditions. I hope that one day we have a Labour Government who will help all our constituents to receive the pay and conditions that they deserve.

Employment Rights: Government Plans

Debate between Andy McDonald and Justin Madders

Monday 25th January 2021 Commons Chamber

[Andy McDonald]

I am more than happy and delighted to confirm that that is utter and complete nonsense. Is it likely? I just ask people: is that really likely? Of course it is not.

If the Secretary of State now wants to say that the 48-hour cap, holiday pay entitlements and rest breaks will be protected, and that he will scrap the planned consultation, perhaps he can say so in unequivocal terms here today and vote for our motion.

Today’s motion also calls on the Government to set a timetable to introduce legislation to end “fire and rehire” tactics. It is not a new phenomenon, but it has gained prominence because of the conduct of major employers such as British Airways, Heathrow and British Gas—some in circumstances that they claim to be justified by the covid pandemic. It is about sacking workers and hiring them back on lower wages and worse terms and conditions, including 20,000 British Gas employees who kept working through the pandemic to keep customers’ homes warm and worked with the Trussell Trust to deliver food parcels. I think of the engineer who explained that he was often the only face that people living in isolation were seeing. This is how they are repaid.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

My hon. Friend is absolutely right that fire and rehire has been around for a long time, but does he agree that that shows just how weak the current unfair dismissal laws are and how they really need to be strengthened?

[Andy McDonald]

My hon. Friend is absolutely right. We have had an erosion of protections and rights over many years, and we have to deal with it and review it comprehensively.

This also includes British Airways, whose use of fire and rehire was described by the cross-party Transport Committee as

“a calculated attempt to take advantage of the pandemic to cut…jobs”

and weaken the terms and conditions of its remaining employees, and it deemed this “a national disgrace”. The Leader of the Opposition was right to call for fire and rehire tactics to be outlawed, saying:

“These tactics punish good employers, hit working people hard and harm our economy. After a decade of pay restraint—that’s the last thing working people need, and in the middle of a deep recession— it’s the last thing our economy needs.”

We have repeatedly warned that the practice would become increasingly common, triggering a race to the bottom, and I take no delight in observing that this warning has come to fruition. Research published today by the TUC reveals that fire and rehire tactics have become widespread during the pandemic. Nearly one in 10 workers has been told to reapply for their jobs on worse terms and conditions since the first lockdown in March, and the picture is even bleaker for black, Asian and minority ethnic and young workers and working-class people. Far from levelling up, the Government is levelling down, with nearly a quarter of workers having experienced a downgrading of their terms during the crisis.

Fire and rehire is a dreadful abuse and allows bad employers to exploit their power and undercut good employers by depressing wages and taking demand out of the economy. It is all the more galling when those very companies have had public funds to help them to get through the pandemic. The economic response to the 2008 financial crisis in Britain was characterised by poor productivity and low wage growth. The Government fail to understand that well-paid, secure work is good for the economy, and greater security for workers would mean a stronger recovery. If the Government had listened to the Leader of the Opposition back in September, countless workers could have been spared painful cuts to their terms and conditions, but it is not too late for the Government to act. They can act now to introduce legislation to end fire and rehire and give working people the security they need. If they do that, they will have our full support.

Finally, I turn to the Government’s amendment, in which they say that

“the UK has one of the best employment rights records in the world”

and that the UK

“provides stronger protections than the EU”.

That is simply not the case. The UK ranks as the third least generous nation for paid leave and unemployment benefits out of the US and major European economies. A UNICEF analysis of indicators of national family-friendly policies has the UK at 34th on one index and 28th on another, lagging behind Romania, Malta and Slovakia and just edging ahead of Cyprus.

The Government’s amendment also “welcomes the opportunity” to strengthen protections for workers, but what are the Government doing with the opportunity that they so welcome? What have they been doing on fire and rehire? All we have had is sympathy and hand-wringing, when action was and still is required. Where were they on Rolls-Royce at Barnoldswick? It was Unite the union and the courage and determination of those brave workers that fought to secure their jobs, not this Government. What works best for the UK is what works best for its working people, and undermining their rights and protections does not cut it. Accordingly, Labour will not be supporting the Government’s amendment.

Why did the Secretary of State’s Department embark on this review, and how can it be that his Department has sought responses from companies without the consultation being published? Can he confirm that it is now dead in the water, or does he intend to bring it back at a later date? We were promised an employment Bill that would make Britain

“the best place in the world to work”.

The Opposition would very much welcome a Bill that did exactly that, but given his track record, we have major doubts. Perhaps he can tell the House when we will see that Bill introduced.

From this point on, it is about how we rebuild our country and secure our economy. That objective has to have working people—their interests and their health and wellbeing—right at the forefront. As a bare minimum, that has to include maintaining the basic protections that employees have had up to now and then building on them. Sadly, workers will find no hard evidence of this Government enhancing their rights and protections, but it is what they were promised, and it is what they are expecting, so we will be holding the Government to it.