Small Business, Enterprise and Employment Bill

Debate between Bill Esterson and Jo Swinson

Wednesday 19th November 2014 Commons Chamber

[Bill Esterson]

My hon. Friend rightly brings me back to zero-hours contracts and the problems and difficulties they create for people. Working a very low number of hours causes enormous hardship and difficulties: the difficulty of working an uncertain number of hours that can go up or down; the difficulty of claiming benefits to cover some of the gaps when going on and off benefits; and the difficulty in trying to navigate a system deliberately put in place by the Government to restrict what people, who are in work mostly, are paid in social security. I am glad he has made that point.

The use of agency workers, typically from eastern Europe, by companies in this country to undercut local staff is wholly unfair on the migrant workers who work for very low rates of pay and wholly unfair on local staff who are pushed out of the picture by being undercut. That is disastrous both for them and for the workers who are brought in. The knock-on effect is very damaging to the local economy too, because often any money earned, even in such low amounts, is sent back home and not spent locally and circulated around the local economy. The agencies have to be stopped. I am glad that it is Labour policy to take action to reduce the abuse perpetrated by such agencies. My hon. Friend the Member for Edinburgh South (Ian Murray) made the point very well: good businesses want to pay decent wages, but they are undercut in so many ways that they find it difficult to do so when unscrupulous employers exploit the system. Agencies’ use of overseas staff on low rates of pay is just one of the ways in which that happens.

The Bill introduces a penalty for employers who do not pay the national minimum wage. The problem is that there will be no improvement in enforcement. I mentioned the cuts in the number of staff at Her Majesty’s Revenue and Customs.

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

indicated dissent.

[Bill Esterson]

The Minister shakes her head. Is she telling me that I am wrong when I say that the people who used to work in this sector for HMRC in my borough and have told me they have lost their jobs and that they are not telling me the truth?

[Jo Swinson]

I am not telling him that his constituents are not being truthful in relation to their circumstances, but I am saying that the Government have invested more money in the enforcement of the national minimum wage. HMRC has employed more compliance officers in this area of work. I am sure that on behalf of his constituents he would wish to take up his concerns with the Treasury, but national minimum wage enforcement work has received additional investment from the Government.

[Bill Esterson]

I am glad the Minister has made that point. The reality is that those who used to work for HMRC would be very puzzled to hear it. Many staff working at HMRC, whose numbers have fallen in the past four-and-a-half years, would be puzzled by it, too.

The lack of improvement in enforcement is a worry, which is why our proposal to give the responsibility and power to local councils is so important. We propose the real deterrent of a £50,000 fine—the Government have not come forward with anything on that scale—and the aspiration of £8 an hour for the national minimum wage. That would move things forward significantly, while at the same time encourage the payment of a living wage.

All these low pay issues—the people who have to put up with low hours on zero-hours contracts, as my hon. Friend the Member for Central Ayrshire (Mr Donohoe) pointed out; the part-time nature of many of the jobs created in recent years, which the Government are so keen to trumpet; the way in which the minimum wage is undercut; the lack of a living wage; and the fact that people are £1,600 a year worse off—show why it is so important for proper action to be taken. The national average for the number of people in work on low pay is one in five. In my constituency, two in five are paid less than a living wage. For my constituents, the issue of low pay is absolutely crucial. They are crying out for an improvement in the way the economy is balanced, so that far more people benefit from economic recovery and we see a reversal in the year-on-year fall in living standards they have suffered under this Government.

There are very high numbers of people on low pay, which—the point was made in an earlier exchange—has led to low tax receipts. That explains why the apparent improvement in the number of those in employment has not been linked to a reduction in the deficit. The deficit is now going up again, despite the draconian cuts in public spending.

--- Later in debate ---

[Jo Swinson]

The evidence submitted in the reports is pretty comprehensive, so I think it does meet the requirements set out, particularly when combined with the assessment of the latest hourly earnings and the impact of the minimum wage and what it does to living standards and hourly earning. I think that the existing reporting requirements are adequate and that the amendment would bring about a duplication. I welcome the interest in the issue, however, and I welcome the fact that as well as those formal reporting requirements, we have had various debates—sometimes in Westminster Hall, sometimes here in the Chamber—on these issues. Furthermore, these topics are returned to frequently at BIS oral questions, and I expect that to happen tomorrow. It is right that we have these opportunities to discuss these issues because they are important.

Let me deal with some of the specifics that came up in the debate about enforcement of the national minimum wage. In particular, we heard the charge that the number of investigations had gone down and that this was some sign of failure, but I believe the picture is more nuanced than that. Since the national minimum wage was introduced and HMRC has been the enforcement body, that body has continually assessed how it undertakes enforcement activity and how it can be improved. It is true that the number of individual investigations has gone down, but that has been coupled with a much more efficient undertaking of investigations. In particular, HMRC often now has larger and more complex investigations as part of the risk assessment work being undertaken. Sometimes those cases take longer to complete, so there will be fewer overall cases. The number of people covered by each case, however, has been increasing.

In addition, when someone makes a complaint to HMRC about the national minimum wage, rather than just going in to investigate the particular worker, Joe Bloggs, and their circumstances, HMRC has the power to widen the investigation—not only to ensure that the anonymity of the complainant is preserved, but to recognise that if there are anomalies in one particular worker’s payment, it might well be the case for other workers within the organisation. It has the power to expand the investigation more widely. Although that has reduced the number of cases that have been completed, the number of workers helped and the amount of arrears recovered has increased, so that is a good thing.

The number of workers helped, for example, has risen between 2009-10 and 2013-14 by more than 17%. The average number of workers per case has nearly tripled, and the average amount of arrears per case has increased by 260%. I think that is a good news story on enforcement, particularly concerning the resources available for enforcement, about which the hon. Member for Sefton Central (Bill Esterson) was concerned. Some 144 officers have been involved in HMRC. As a result of the additional resource dedicated by BIS—the budget has increased by £1 million to £9.2 million—a further 26 individuals have just been hired. A team of 170 is now working to ensure that there is compliance with the enforcement of the national minimum wage. It is clear from the figures that that significant increase in resources has already been delivering, and it will continue to deliver.

[Bill Esterson]

I am pleased that the Minister has given us those figures, but if so many people are involved, why have so few employers been named and shamed under the Government’s policy? The numbers do not seem to stack up.

[Jo Swinson]

So far 30 employers have been named and shamed, and, as I said in Committee, there will be a further tranche of naming and shaming shortly.

The previous system was much more permissive in terms of the number of cases in which naming could operate. Until the new rules were introduced, only one employer had been named over a period of many years. We introduced those rules on 1 October 2013, but they did not operate retrospectively, and hence applied only to investigations that began on or after that date. The previous criteria apply to the many current investigations that began before 1 October 2013, and in those cases employers are much less likely to be named. Many other investigations began on or after 1 October 2013 and are still ongoing, so the final stage of the issuing of a notice of underpayment and the consequent ability to name and shame has not been reached.

As I think has been recognised, the numbers are already increasing, but given that this is a new scheme, it is inevitable that they will start small and become larger as cases work their way through the system.

--- Later in debate ---

[Bill Esterson]

I do not remember whether the Minister gave these figures in Committee, but she said a few moments ago that 30 companies had been named and shamed. Does she accept that up to 300,000 staff are affected, and if she does, can she tell us how many of them are employed by those 30 companies?

[Jo Swinson]

I think that the hon. Gentleman is comparing apples with oranges. According to the most recent estimate, the number of employees who are paid less than the national minimum wage is lower than 300,000—about 236,000, I believe. I stress that that is an estimate. Obviously we do not have data on every single person in the country; such estimates are based on surveys. The figure of 30 companies is not an annual figure; those are cases that have been completed since the new rules came into force.

I can assure the hon. Gentleman that the vast majority of cases in which the national minimum wage law has been found to have been breached are being named and shamed once the notices of underpayment have been issued. Obviously there is still a job to be done: people must be informed about how they can ensure that their rights are being properly enforced. Let me say yet again that if people fear that they are not being paid the national minimum wage when they should be, they should ring the pay and work rights helpline, which is a free service and totally confidential. The number is 0800 917 2368, and I shall continue to take every opportunity to publicise it, because it is important for people to know that they can receive advice on a confidential basis and then make a complaint if they decide to do so.

Local authorities have been mentioned. I think it right that HMRC works in partnership with authorities—with some success—to ensure that enforcement happens, but I also think it right for there to be a national enforcement body. The issue of social care has been raised, along with the issue of travel time, which is well documented. Travel time, other than the times involved in travel to and from work at the beginning and end of the day, needs to be included in the national minimum wage. We are well aware of that, and HMRC is enforcing it.

We know that there are issues in the care sector. That is why targeted enforcement was carried out, and why my colleagues at the Department of Health have been working closely with local authorities to produce guidance to ensure that they contract providers who can provide quality care, along with fair terms and conditions for their work force. Authorities should not be pricing contracts at a level that prevents their basic national minimum wage obligations from being met.

Amendments 9 and 10 concern zero-hours contracts. We have already discussed the question of whether or not they are sometimes a good thing. It was the former Member of Parliament for Sedgefield, Tony Blair, who said, on 3 October 1995,

“There will be an end to zero-hours contracts.”

However, the Labour Government did not deliver that, perhaps because there are people for whom such arrangements work well, as we heard from the TUC during the evidence session in Committee.

While there are undoubtedly problems with zero-hours contracts, and I do not wish to dismiss them, I think it important to introduce some perspective to the debate. Last year the Chartered Institute of Personnel and Development conducted a survey to establish what was happening on the ground, and produced a report. It found that zero-hours contract workers were just as satisfied with their jobs as the average United Kingdom employee, that they were happier with their work-life balance, and that they were less likely to feel that they were being treated unfairly by their organisations.

Post Office

Debate between Bill Esterson and Jo Swinson

Wednesday 27th November 2013 Commons Chamber

[Jo Swinson]

I agree with my hon. Friend. He is right to highlight the challenges that his community and others faced under the previous Government. I am delighted to hear the news that the Post Office is delivering for his constituents, and he is right that a diverse and innovative range of services will help to ensure that the Post Office has a sustainable and secure future.

[Bill Esterson (Sefton Central) (Lab)]

The people running a number of post offices in my constituency just cannot make them work. They are not viable, for many reasons. They have a knock-on effect on other retailers, and they will not be able to provide the vital community service to the local community, including the older people who rely on them. What is needed is the kind of Government work that my hon. Friend the Member for North Ayrshire and Arran (Katy Clark) mentioned. That is the essential long-term future for those post offices; otherwise, the measure announced today is just delaying the inevitable, and we will still have a closure programme by another name.

[Jo Swinson]

We are modernising the post office network because we recognise that it cannot look the same in the future as it did 50 years ago. There have been a range of changes in the way that we live our lives and the way that people access financial services through bank accounts. For example, there is less demand for people to be paid at post offices. Those all have an impact on the services that post offices offer. That is why we need to diversify into a range of new services, and why the new models are often based on co-locating a post office with a thriving retail business, where they can mutually benefit, with the post office driving footfall to help the retail business drive sales. In the new models, sales of the other retail businesses have increased. That is how we can build a sustainable future. We cannot set the post office in aspic and keep it as it was 50 years ago.