National Minimum Wage

Baroness Morgan of Cotes Excerpts

Wednesday 15th January 2014 Commons Chamber

[The Economic Secretary to the Treasury (Nicky Morgan)]

This afternoon’s debate has been a good one, and we have heard interesting contributions from all parts of the House. I counted 13 Back-Bench Members of Parliament who have been able to contribute in the couple of hours available to us. I will try, shortly, to address as many of the points raised as possible in the time allowed to me.

The shadow Secretary of State and many Opposition Members have taken great pride in pointing out that 17 years ago some members of my party had reservations about the impact that a minimum wage might have on UK businesses. The Opposition are right to point out that some of those fears—[Interruption.] I think they might want to listen to this. They are right to point out that some of those fears have been unfounded and that the minimum wage has been important for our lower-paid workers. I hope Opposition Members will realise that acknowledging mistakes is not terribly hard. The shadow Chancellor might want to think about that when he realises who crashed our economy.

What we have to remember is that this is all about finding the right balance. Yes, we would like to see a faster increase in the national minimum wage and everyone sharing in the recovery, but if an increase were to cost people their jobs or to slow down the recovery, then it would, as my right hon. Friend the Chancellor said last week, be completely self-defeating. That is why my right hon. Friend the Business Secretary has asked the Low Pay Commission, whose judgment and expertise we value greatly, to consider the conditions that we would need for a faster increase.

[Chris Williamson]

Does the hon. Lady deprecate those employment agencies that seek to use the Swedish derogation model to get around the implementation of the minimum wage? Is that not a gross abuse of that derogation, and does she deprecate it?

[Nicky Morgan]

I will come on to that point, as the hon. Member for Blaydon (Mr Anderson) mentioned it in his speech. If Members will forgive me, I will accept only a few interventions because I want to reflect on the points that have been raised this afternoon.

As all Members are aware, the Low Pay Commission will report to us next month on the recommended wage for 2014, and the Government will respond shortly after. As we have heard this afternoon, we must ensure that the existing wage rates are properly enforced, which is why this Government’s steps to hit those firms found guilty of failing to pay the wages with penalties and publicity will be so important.

Let me turn to the points that have been made by Members across the House this afternoon. We started with a typically thoughtful contribution from my hon. Friend the Member for Harlow (Robert Halfon), who has looked a great deal at this area. He mentioned the reintroduction of the 10p tax band, which is an interesting suggestion. [Interruption.] Yes, who did abolish the 10p tax rate? I think it was the Labour party! My hon. Friend also talked about making some changes to national insurance contributions, but the most important thing he said was that we want to leave workers with more money in their pockets, and that is what this Government are all about.

The hon. Member for Burnley (Gordon Birtwistle) reminded us all that the Low Pay Commission is independent, which is critical. It was set up by the previous Government and we need to wait to hear what it recommends before we make any further decisions.

My hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) was absolutely right about the importance of low inflation. I am sure that he, like all Members, will welcome the recent fall in inflation and the impact that that will have on people’s wages and the amount of money that households have to spend.

My hon. Friend the Member for Braintree (Mr Newmark), who is not in his place at the moment, talked about the policy to abolish national insurance contributions for those under the age of 21, which was announced by my right hon. Friend the Chancellor in the autumn statement. He was absolutely right to say that we must encourage businesses to take on as many young employees as they possibly can.

Let me move on to the contributions from Opposition Members. The right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) and the hon. Members for Glasgow North East (Mr Bain), for Derby North (Chris Williamson), for Corby (Andy Sawford), for North Tyneside (Mrs Glindon) and for Hayes and Harlington (John McDonnell) all talked about enforcement. I am sure that others did as well. In 2012-13, Her Majesty’s Revenue and Customs collected £3.9 million in arrears for workers; 26,500 workers benefited. That was a 33% increase in the number of workers benefiting and a 26% increase in the number of arrears identified. Seven hundred employers were penalised last year for failing to comply with the national minimum wage rates, and the value of fines, as my right hon. Friend the Secretary of State said earlier, was seven times higher last year than it was in 2009-10.

In 2009-10, 381 penalties were charged, and last year it was 696, although it had risen to more than 900 in the previous two years. Opposition Members talked about the amount of money that was given to the enforcement agencies. However, it is not necessarily about how much money is given but how effective those enforcement agencies are with the money that is given to them—a principle that Government Members take very seriously.

I must comment on the point made by the hon. Member for Vale of Clwyd (Chris Ruane) about the fact that although it had taken the Labour party nearly 100 years to deliver the national minimum wage, it got there in the end. It looks like it is going to take the shadow Chancellor 100 years before the Labour party comes up with a long-term economic plan. He has plenty of time and we look forward to hearing it.

Opposition Members, particularly the hon. Member for Glasgow North East, did not tackle the fact that the rise in the income tax threshold introduced by the Government has left more money in workers’ pockets. The hon. Gentleman talked about comparisons with the minimum wage and what it was when Labour was in government, but the fact is that constituents come to MPs from both sides of the House and say that they have more money in their pockets as a result of the fact that the personal allowance has gone up.

The hon. Member for Birmingham, Selly Oak (Steve McCabe) talked about UK employees being undercut. We have asked the Equality and Human Rights Commission to explain what enforcement action it is taking against employment agencies that discriminate against our nationals, for example by advertising UK jobs exclusively overseas. That is an issue we are aware of and we have asked the EHRC to address it.

I thought that the hon. Member for Corby (Andy Sawford) was very fair in his remarks about enforcement in his constituency. There is clearly more to come and I heard what he said about the new penalty figures and the penalties that have been levied. I am sure that my colleagues in BIS will take note of what he said.

The hon. Member for Blaydon talked about care workers. As my right hon. Friend the Secretary of State said, the guidance on travelling time has been updated. It is right that we should do more to get that guidance out. I have been approached about it in my constituency office as the Member of Parliament for Loughborough and we certainly need to disseminate it better.

We had some interesting contributions from Members this afternoon and I thank all Members for their contributions. I am aware that I have not necessarily been able to respond to all the points that have been raised this afternoon. I shall certainly take away what has been said and I will read the debate to see whether we need to tackle any other issues.

It is fair to say that almost everyone who has spoken in the Chamber today wants to achieve the same goals. We want to see those who receive the minimum wage paid fairly and we want to see those who do not pay the minimum wage treated harshly. I am sure all Members welcome today’s announcement, mentioned by Government Members, that the fines have been quadrupled from £5,000 to £20,000. As my right hon. Friend the Secretary of State said, we would also like to increase those fines to £20,000 per worker, which will send a clear message to employers who think that they can flout the minimum wage regulations that that is not an option and that they need to pay a fair wage for a fair day’s work.

We want wages to continue to rise, unemployment to continue to fall and our economy to continue to recover, and we want everyone in this country to share in that. I ask the House to wait for the Low Pay Commission’s report, to reject the motion and to support the Government amendment.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.