Taylor Review of Modern Working Practices

Baroness Donaghy Excerpts

Tuesday 11th July 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, the terms of the report did not include discrimination. Unless I have missed something in the report—I read it last night—it does not come with up recommendations around discrimination but looks purely at new forms of employment: that is, the relationship between self-employment and people working in the gig economy, who may now be called dependent contractors. It does not deal directly with the issues that the noble Lord raised.

[Baroness Donaghy (Lab)]

I welcome the statement that,

“the best way to achieve better work is through good corporate governance, good management and strong employment relations”.

That is an extremely good summary, and if that is what the eventual recommendations and implementation achieve, it will have been a historic report. I have three brief questions. First, one of the problems about our low-wage economy is that we are getting a lower tax base. Therefore, this is not necessarily good news for HMRC; a lot of the so-called independent contractors and bogus self-employed do not pay very much in the way of income tax.

Secondly, there has been increasing confusion between the statutory national minimum wage and the national living wage; people are getting very confused about those two things, to the detriment of both issues. Thirdly, there are recommendations about changing the remit of the Low Pay Commission—I declare an interest as one of the founding commissioners in 1998. One of the reasons for the tripartite success of the commission is that it has focused on a fairly narrow range of issues. My concern is that if these were widened to include quality of work on a sectoral basis, it might eventually weaken the power of its recommendations. Would the Minister care to comment on that?

[Lord Prior of Brampton]

My Lords, the noble Baroness is clearly right about the lower tax take. Clearly, if earnings are higher, the tax take will be higher. It is rather shocking. These are the figures in America: in 1970 the average median salary among the lowest-paid 90% of people was $34,000; in 2013 it was $31,000—it has gone down. This is the problem that all western economies face: earnings are stagnant and falling. Our children’s generation may be facing a less prosperous future than we do. This is the huge dilemma that we all face. When she says there will be a lower tax base, she is absolutely right. The whole point of improving productivity is to improve earnings. It is in all our interests to improve earnings—to see wages grow.

The noble Baroness also talked about the confusion between the living wage and the national minimum wage. She has now confused me so I shall have to write to her. She went on to talk about the Low Pay Commission. When the previous Government brought in the living wage and the trajectory for it, that was a political decision; it was not made by the Low Pay Commission. One of the criticisms of the minimum wage is that politicians cannot resist the temptation to get involved in it. To some extent, the Low Pay Commission has been subverted by politics. I guess that was inevitable. Actually, the increase in the living wage was one of the great triumphs of the coalition Government.