National Minimum Wage

Andy Sawford Excerpts

Wednesday 15th October 2014 Commons Chamber

[Mr Umunna]

I thank my hon. Friend; that is interesting and I look forward to hearing his comments on who took what position at that time.

Yesterday, I revisited an interview with the great Sir Ian McCartney, a former Member of this House, who was the Minister at the Department of Trade and Industry and pushed the National Minimum Wage Bill through the House. He said that he would have “died in the ditch” to ensure that we got it through, and—my hon. Friend the Member for Dumfries and Galloway (Mr Brown) will remember this—we had a record sitting of the House to get the national minimum wage through in the face of resistance from Conservative Members.

I distinctly remember Sir Ian McCartney at a press conference with the Westminster lobby, explaining why we were doing what we were doing. He was a former kitchen worker and earned poverty wages. I remember seeing the news report of him weeping at that press conference, explaining how he was paid something like 1p or 2p per potato that he put in a bag in that kitchen, and asking the lobbying journalists, “How can you defend that in our country in this day and age?”

As I said, Labour Members are rightly proud of the national minimum wage, and we make no apologies for reminding people of the resistance that we met when we introduced it, and of the difference that a Labour Government make to people’s lives.

[Andy Sawford (Corby) (Lab/Co-op)]

My hon. Friend is right to highlight the stark choice around fairness that people faced in this country all those years ago in 1997, and the different positions that the Labour and Conservative parties took on the minimum wage. Does he agree that today that choice is perhaps best symbolised by the support of Conservative Members for the bedroom tax, which makes me think that they have learned nothing from their opposition to the minimum wage?

[Mr Umunna]

I completely agree with my hon. Friend, and in my constituency I have seen the stress, upset and angst caused by the bedroom tax, causing people to have to leave an area in which many of them have grown up and love so much. My hon. Friend is right: the bedroom tax shows the instincts of our different parties.

Although we are, of course, proud to have established the national minimum wage, which helped to end exploitation and extreme low pay, it did not end low pay per se. Under this Government working people have experienced their wages dropping by an average of more than £1,600 a year. The 1 October rise in the minimum wage is the first real-terms increase during this Parliament, and it is still 4.1% below its 2008 peak and just 2p above its equivalent value in 2005. Therefore, if we are elected next year, our goal will be to halve the number of people on low pay in our country. To achieve that, we need the minimum wage to evolve to address the broader problem of low pay, which is the purpose of the motion.

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[Mr Umunna]

Well, that is it, and that is precisely why we will introduce a far tougher package than the sole measure we have seen on zero-hours contracts from the Government, which is basically just a do-away with exclusivity on those contracts. That is simply insufficient given the story that my hon. Friend has just told—and I would be very interested to know who the employer was.

The third point I want to make on the changes we need is that, when the minimum wage was introduced, the hope was that it would have a ripple-effect causing wages to rise up the income scale, but that has not turned out to be the case. Frankly, it is becoming the going rate in some sectors, as my right hon. Friend the Member for Birkenhead (Mr Field) alluded to. This explains why 1.2 million employees currently just earn the legal minimum. That is up from just over 600,000 in April 1999, so we have seen a considerable increase in the number of people on the minimum. Therefore, in its beefed up role, we will ask the LPC to advise on what sectors of the economy could afford to pay more than the minimum wage and how that could be achieved.

Finally, enforcement has been mentioned, and much more needs to be done on that, as the hon. Member for Salisbury (John Glen) said. There has in some respects been a systematic failure in the way the minimum wage has been policed. To address that, we will give local authorities, working alongside Her Majesty’s Revenue and Customs, powers to enforce the law, and we will increase the fines tenfold for rogue companies that do not meet their obligations. In this way, we will evolve the national minimum wage so that it moves beyond the narrow task of setting a minimum wage to avoid extreme low pay to a broader mission to reduce low pay in Britain. As far as the Minister’s party is concerned, I discern no desire to move beyond the status quo and the current arrangements.

[Andy Sawford]

On my hon. Friend’s point about where the Government stand, I had an assurance from the Prime Minister in February that they would name and shame those employers who had been found out and fined for not paying the minimum wage in my constituency. They still have not done that. Does that not show there is no real commitment on this from the Conservative party?

[Mr Umunna]

My hon. Friend’s remarks illustrate a point I have been making.

The Minister has said he would like to see the minimum wage strengthened, but his party has set out no plans whatsoever on how it will make that happen. It is all very well picking holes in, and raising issues with, the suggestions we have put forward, but I do not see any coming from Government Members. All we have seen—as the Minister’s boss the Secretary of State, who I know is away in India, said in June—is the Chancellor, in talking about the minimum wage increasing to £7 earlier this year, simply explaining the arithmetic of what would happen if a real minimum wage were restored; commentary from the Chancellor, but no action.

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[Matthew Hancock]

I certainly can pick holes in what the hon. Gentleman said, and I intend to do exactly that. I would say that today’s admission that there is no £8 target from the Labour party because there will be “flexibility” around it shows that Labour has nothing to say on low pay, just as it has nothing to say on any other area of economic policy. The grin of the hon. Member for Streatham as he came to the Dispatch Box after the discussion about who will be the leader of the Labour party after the next election demonstrates, I think, that undermining his leader was part of his job today—and he has done it brilliantly.

[Andy Sawford]

Clearly, the Opposition have initiated this debate on the minimum wage, so it is quite bizarre to suggest that we do not have anything to say about low pay when we put it on the agenda. However, perhaps one of the Minister’s colleagues has had too much to say about the minimum wage by suggesting that disabled people are not worth it. Can the hon. Gentleman confirm whether Lord Freud is still a Government Minister? How can his position be tenable?

[Matthew Hancock]

I have said that everybody should be paid the minimum wage. That has been our policy throughout the whole period of this Government and it will continue. In fact, we are strengthening it—an issue I want to come on to. We have rejected the Opposition’s advice that the national minimum wage should be limited to £8 by 2020, not least because, on the central projection from the OBR’s earning figures as reported in The Sun, the national minimum wage will, under the Government’s plans, reach £8.06 by 2020—but only so long as we continue the economic recovery and not if we put that recovery at risk by adopting Labour’s plans.

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[Heather Wheeler]

My hon. Friend raises a superb point. Our aspiration to take corporation tax, which is already among the lowest in the G8 and the G20 at 23%, down to 20% is fantastic. The money should stay in the businesses, so that they can afford to pay their employees.

I have two superb employers, among many, in my constituency that make a point of ensuring that I am aware of what is going on. Nobody earns less than £7 an hour at Nestlé and there will be nearly 1,000 workers there. The second company, Faccenda, which is a turkey processing plant, has 400 employees. Nobody there earns less than £7 an hour and most earn far more than that. Companies realise that they do very well if they pay their employees well, but they can only do that if they do not have layers of regulation, layers of red tape and layers of “the Labour party knows best”. That is the old days. That is the ’70s.

[Andy Sawford]

It is sometimes said that my constituency neighbour, the hon. Member for Wellingborough (Mr Bone), is the meanest boss in Britain. As a former employee of the hon. Lady, who was a trustee of the charity that I ran, I can say that she certainly was not one of the meanest bosses in Britain. We would agree that it is important to pay people well and I know that that is something that she stands by, but I am not quite sure about her point about regulation. The proposals are to continue to seek to increase the minimum wage. Surely, she supports the minimum wage, so I cannot quite see why she thinks this will be a burdensome new regulation.

[Heather Wheeler]

The difficulty that the hon. Gentleman slightly skates around is the fact that this would be such a burden for companies that are not doing well. That is where we have the problem. We need our companies not to have regulation, to have aspiration and to have 20% corporation tax, so that they can pay their employees well.

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[Mrs Anne Main (St Albans) (Con)]

I am truly grateful, Mr Deputy Speaker, that you took the point of order from my hon. Friend the Member for Harlow (Robert Halfon), because the fact that he has been maligned by the shadow Secretary of State for Education so publicly on the media means that he will probably now be touring the media studios having to explain that he did not make the comments attributed to him. I seriously hope that the Member who made those allegations comes here as quickly as possible to explain in the public domain, not just by sending a text, that my hon. Friend did not make those comments, from which I am sure that many of us would dissociate ourselves.

I am glad that I heard all the previous speeches, but particularly that I heard about the flexibility that the hon. Member for Streatham (Mr Umunna) is building into his plans. One of the things I have learned about being bendy in life is that it allows one to do U-turns. We now know that Labour does not have a firm promise, as was said at the party conference, to deliver a “greater than £8 an hour” minimum wage, and there is flexibility about that. That means, of course, that in reality, with a poor and failing economy like the one we inherited from it, Labour will deliver less than the £8.06 an hour that is projected by us. This debate has revealed the fact that the shadow Secretary of State is distancing himself from that commitment. Today Labour has illustrated the fact that it is prepared to be flexible about having £8 an hour while we desire to have a greater amount of £8.06 an hour.

I am sorry that my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) is not still here; he has probably had to pop out for something very important. As I said in an intervention, I completely agree with what he said about his ten-minute rule Bill on the payment of interns. We are talking about the minimum wage in this very privileged place. Many of us are glad to be here, but many of us have had to take second jobs, or whatever, to make sure that we could afford to be here, while some people here are very wealthy and can afford to be here. It is appalling that once we have got here we seem to forget that a lot of young people would like to work for us, but then they read on the “Working for an MP” website that interns are paid only expenses. That means that they are not being paid the minimum wage. I can see the hon. Member for Leeds West (Rachel Reeves) looking at me at this point.

I believe that we should set an example in this place. The hon. Member for Streatham, who has now left, said that I was talking about work experience of a few weeks for sixth-formers, but no, I am not. All of us may have people with us doing work experience. I encourage that from those of any political persuasion in my constituency, and I do have young people coming in for a few days or a week. However, that is not what I am talking about. I am talking about the fact that MPs, with the expense accounts accorded to us to make sure that we can pay our staff proper rates in accordance with the Independent Parliamentary Standards Authority guidance, will still consider having people doing long hours in important jobs for expenses only, which often fall far below the level of the minimum wage.

The hon. Member for Leeds West might want to intervene on me, but I believe that she has had a series of interns who have not been paid the minimum wage. There is a website in operation that says whether an MP will pay for an internship. I do not believe that anyone should work for free or for very little, and that applies in this place and outside this place. If we cannot uphold the principle here, it is very hard to make the argument to employers outside.

I look forward to a revisiting, I hope, of what interns can expect should they come to work for Members in this House. Otherwise we will perpetuate the fact that this is a place of privilege and so people need to be able to have the bank of mum and dad to pay their bills in order to come here and work for a pittance for an MP. That is wrong, and it should go now. We should guarantee at least the minimum wage to anyone who comes to work in this place. The hon. Member for Birmingham, Erdington (Jack Dromey) said that he had joined a strike of members of staff here so that they could have the living wage. Good on him, but let us remember the interns who come through this place, often on short-term six-month contracts, who cannot strike and cannot have the same rights accorded to them. We as Members should think about those people, many of whom are young and aspirational.

[Andy Sawford]

Last year I had a person, Vincent Torr, working with me on the Speaker’s scheme, which was properly funded. That was a fantastic scheme for which we should pay tribute to Mr Speaker and my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who supported it. Does the hon. Lady agree that that shows us the way?

[Mrs Main]

I am in favour of any schemes that ensure that if young people want to come and work in this place, they can afford to do so. They should not have to subsidise themselves in order to be able to get here and find out what it is like to work in politics.

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[Andy Sawford (Corby) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Bedford (Richard Fuller). He made some important points. I will return to some of them, such as the one about procurement and the supply chain.

My constituency has been fighting for better wages for more than a century. I dare say that the struggle goes back even further. In 1905, Raunds boot and shoe workers marched to London. [Interruption.] The hon. Gentleman is smiling because he knows Raunds well. The workers might even have gone through his constituency. They marched to London to demand a fair rate of pay from the War Office, because they were making boots for the British Army. They rallied in Parliament square and then came into the Strangers Gallery of the House of Commons, where they caused a disturbance, such was the strength of feeling that they needed to be heard. They then marched up to the War Office, where they had a meeting. The War Office agreed to pay a fair rate. It accepted the principle that people should be treated with dignity and respect, and should be paid a wage that is commensurate with the work that they do and that enables them to exist and to have decent lives.

People in my constituency have campaigned long and hard for better wages. People in the steel industry, which used to be a major employer alongside the boot and shoe industry, campaigned for better wages and good jobs. They were incredibly let down in 1980 when the Government closed the steelworks, leaving many people out of work. That has shaped the story of my constituency, which is one of hard-working people, of a great spirit of enterprise and of some very good employment opportunities and good employers. However, there is a darker side to our local labour market.

Today, many people in my constituency have very insecure employment. Many people work through employment agencies, have zero-hours contracts and are paid at the minimum wage. Indeed, some people, as the Minister is well aware, have been paid below the minimum wage. I will come on to that later. The combination of low pay, contracts that lock in insecurity and the role of agencies in our local labour market means that, although people who work for the better employers, such as Tata Steel and RS Components, have good lives, many people struggle to lead the lives that they should be able to lead, given the work that they do, day in, day out, when they have the opportunity to work.

There has been a conversion on zero-hours contracts from the Government. They now seem to accept that they are a problem. For a time, they denied that they caused a difficulty in our local labour market. I campaigned on the issue, as did many others, and persuaded the Office for National Statistics to revise the way in which it surveys employers to identify whether people are being employed on zero-hours contracts. Its revised figures show that almost 1 million people are employed on zero-hours contracts.

The Conservative party has made the argument that some people want to be on zero-hours contracts. In the end, this issue is about economics and power. There are different kinds of casual employment where there are no fixed hours. For a long time, my local authority swimming pool has offered seasonal work. It often suits students to be employed during the summer months on a fair rate of pay and not to have a long-term contract or fixed hours. It is common to combine working in the Co-operative funeral business with being a retained firefighter. There is a long-standing tradition of that. Again, it might suit such individuals not to have fixed hours and not to be on a permanent contract. There are also examples among higher paid jobs. There are hospital consultants and lawyers who do not have fixed hours or permanent contracts, and that might suit them. That is their choice.

However, when I talk about zero-hours exploitation, I am talking about people who would much rather have a proper contract of employment; know where, from week to week, their money will come from; know what hours they are able to work so that they can plan; and, frankly, be in a stronger position with their employer to demand fairness and respect in return for the work that they do. That exploitation is not just characterised by the narrow issue of exclusivity that the Government have belatedly said they will tackle. We have not seen the legislation on that and I hope that the Minister will tell us how urgently the Government will act. Such exploitation is also about employees being required to be available for work when there is no guarantee of work, and being employed on such contracts on a long-term basis.

Others might say that people can move about in the labour market and look for better opportunities. However, if my constituents cannot get a loan to buy a car to get further afield in the area of the country that has the lowest public subsidy for public transport, how can they break out of the trap? I come across young people who cannot get into the housing market. They cannot get a rental contract, let alone a mortgage. People therefore cannot lead the life that they want, such as starting a family, because they are trapped on zero-hours contracts.

This is therefore a much bigger issue than the Government acknowledge. They have been dragged into beginning to accept that there is a problem, but they have only a very partial, narrow understanding of it. I hope that they will legislate soon. If they do not, I will support the steps that my hon. Friend the Member for Streatham (Mr Umunna) said the next Labour Government will take to address the scandal of zero-hours contracts. There is also the problem of employment agencies. My constituency has the highest concentration of employment agencies anywhere in the country. There is a legacy back to the 1980s and the make-up pay that was offered to the then steelworkers, and to the types of industries that located in Corby. To some extent, those were labour-intensive industries where the work could not be shipped abroad. That is why we have a strength in the food sector, with perishables. The work is still labour intensive and it needs to be done in the UK.

Agencies are keeping people in insecure employment on a long-term basis. Some are better than others, and some have signed our local agency code of conduct. The hon. Member for South Derbyshire (Heather Wheeler) entreated us to be positive about what we can do, and we have sought to take a local initiative and to work with the local authority and some of the best employers and agencies. We have got them to sign up to a code so that if, for example, a permanent job opportunity becomes available, they will offer that job to an agency worker who has proven themselves over time. They will, of course, always follow the law and make known to employees the law on, for example, not charging for personal protective equipment, and they will not tell people that they have to attend unpaid training as a pre-condition for work; that is illegal, but it often happens in the labour market.

I am grateful for the support that the Minister has given locally to that initiative. She met me and other local representatives, including the council leader, and helped to initiate a series of inspections by HMRC in our local area. We found that more than £100,000 was owing to local workers in fines, and as I understand, those fines have been agreed with some employers. In February the Prime Minister promised me that he would name and shame those employers, despite some Treasury objections. I hope that the Minister will name and shame them today, or if not, that she will tell me when they will be named and shamed. We have heard repeated assurances and local people want to hear those companies named and shamed.

[Jo Swinson]

On that specific point, the new naming and shaming policy, which is much more comprehensive, came into being for investigations that began from 1 October 2013 onwards. It may be that the investigations the hon. Gentleman mentions were under the previous scheme, which was obviously not adequate and that is why we have changed it. That may explain the challenge.

[Andy Sawford]

That is the kind of bureaucracy that does not work for working people, and which the hon. Member for South Derbyshire deplored. The Prime Minister gave me a personal commitment at the Dispatch Box that those companies would be named and shamed. He is Prime Minister of the United Kingdom and I do not believe that he does not have the power to do that. It would set a real example.

I support the motion. I am looking forward to hearing my hon. Friend the Member for Bolton West (Julie Hilling) so I will draw my remarks to a close by saying that there are good ideas across the Chamber and good will on this issue. It is absolutely clear, however, that we need a Labour Government again to continue the work of the Raunds strikers in 1905, and of those Labour Members who pushed the minimum wage through in 1997.

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[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

We have had a good debate. There has been a lot more agreement than the political to and fro or the very politicised wording of the motion might suggest. The hon. Member for Dumfries and Galloway (Mr Brown) gave us a welcome reminder of the history of the national minimum wage and his experience on the Bill Committee, which had two overnighters to make the legislation happen. When he was doing that in 1997, I was working in McDonald’s on £2.70 an hour. I was fortunate, however: one of my friends was working in a local greengrocer on £1.90 an hour. The National Minimum Wage Act 1998 was a landmark piece of legislation. I congratulate the hon. Gentleman on his role, and I congratulate the previous Government on introducing it.

Incidentally, it has been suggested in some quarters that the Liberal Democrats did not support the Bill. I would like to correct the record. Hansard shows clearly that Liberal Democrat MPs voted in favour, with not a single one voting against. Indeed, the Secretary of State for Business, Innovation and Skills, who became our spokesperson on the issue shortly afterwards, has made it clear that he supported it throughout.

This month, the national minimum wage for adults rose to £6.50 an hour—a 3% rise and an above-inflation rise. To people working full-time on the national minimum wage, that means an extra £355 each year. That is a significant increase and one that is very welcome. There is, rightly and understandably, enthusiasm for more from both sides of the House, which is why my right hon. Friend the Business Secretary has asked the Low Pay Commission for forward guidance to consider how we can further increase the national minimum wage. In response, the LPC has said clearly that we are coming into a period when there will be faster real increases in the national minimum wage.

The hon. Member for Bolton West (Julie Hilling) and others referred to the apprentice rate of the national minimum wage, which is only £2.73 an hour. In the evidence to the LPC that we publish today, we have made clear our intention to increase apprentice pay rates by £1 an hour to align them with the 16 to 17-year-old rate. We are putting that suggestion to the LPC and look forward to its response.

Various Members have put forward views and made understandable points about the living wage. Indeed, my hon. Friend the Member for South Derbyshire (Heather Wheeler) made a very good case, pointing out that companies do well if they pay their employees well. That is an important point to remember.

My hon. Friend the Member for Redcar (Ian Swales) reminded us that much depends on take-home pay and that therefore the interrelationship between the minimum wage and the tax threshold is also important. As he pointed out, at the beginning of this Parliament, people on the minimum wage were paying £1,000 a year in income tax, and we have reduced that by £800. They say that imitation is the sincerest form of flattery, so I am delighted that my Conservative colleagues now agree with Nick that we should raise the tax threshold further.

[Andy Sawford]

If imitation is the sincerest form of flattery, will the Minister imitate me in saying that Lord Freud should be sacked for his disgusting comments?

[Jo Swinson]

I will come to those remarks in a minute. I understand the very real concern that has been expressed.

The hon. Member for Birmingham, Erdington (Jack Dromey) talked about the money the Government spend to support people on the national minimum wage and suggested that a higher minimum wage could reduce that expenditure. The Institute for Fiscal Studies has analysed that suggestion and is not sure that that would be the result. Nevertheless, he made a powerful and passionate contribution, particularly given his experience over many years dealing with these issues. His point at the end was perhaps the most important: this is about the moral cause of ensuring people are properly rewarded for their work.

Members on both sides of the House have been understandably shocked by Lord Freud’s remarks, which, I stress, absolutely do not reflect the Government’s position and are clearly offensive and unacceptable. I am glad he has issued a full apology. Of course, my hon. Friend the Member for Harlow (Robert Halfon) rightly expressed his dismay that the shadow Education Secretary mistakenly accused him on television of supporting a lower minimum wage for disabled people. I hope that my hon. Friend’s intervention will have helped to correct the record, not just here, but more widely.

The hon. Members for Westminster North (Ms Buck) and for Bolton West and my hon. Friend the Member for Bedford (Richard Fuller) raised the issue of travel time in the social care sector, and it is important—[Interruption.]