Age Discrimination: National Living Wage

Cat Smith Excerpts

Wednesday 8th June 2016 Westminster Hall

[Cat Smith (Lancaster and Fleetwood) (Lab)]

As ever, it is a pleasure to serve under your chairship, Mr Davies. I congratulate my hon. Friend the Member for Halifax (Holly Lynch) on securing this important debate. She absolutely hit the nail on the head when she said this policy is a kick in the teeth for young people. That comment was certainly well received by the Chair.

The Government are sending a worrying message about the generations by pitching them against each other. They are leaving an open goal. They are saying to young workers, “You are not as valuable as older workers.” During the debate we have heard some worrying examples of employers trying to circumvent the fundamental purpose of the increase in the minimum wage by deliberately hiring under-25s. What we have not heard, and I hope the Minister will rectify this, is an indication of a clear strategy from his Government as to how they will ensure that the so-called national living wage is not used by a small number of unscrupulous employers to manage out staff aged 25 or over or to change terms and conditions in a way that would fly in the face of provisions enshrined under the Equality Act.

As part of the shadow Equalities team, I must say that it does not come as a huge surprise that the Government have once again failed to consider equality. We have a Prime Minister who has referred to equality impact assessments as “pointless reports” and “bureaucratic nonsense” and who refuses to conduct a cumulative impact assessment of Government policies on women since 2010. In lieu of that, the Labour Equalities team commissioned research from the House of Commons Library that showed that, as of the Chancellor’s last Budget, 86% of the net savings to the Treasury through tax and benefit changes since 2010 have come out of the pockets of women. The Government appear to talk the talk on equality, but they fail to put in place the fundamental work to ensure that, advertently or otherwise, certain groups in our society do not end up the losers as a result of Government policy.

The Government could have worked in collaboration with key partners such as the Living Wage Foundation or the University of Loughborough to help to pilot the higher rate minimum wage before it went live, but instead it was rushed through so that the Chancellor could score a political hit at the Budget with a shiny new policy. The Government have self-appropriated the term “living wage” to mean their age-restricted minimum wage. That is what it really is, as it is based on median earnings, while the Living Wage Foundation rate is calculated according to the cost of living. That cost of living is the same for young workers as it is for older workers. I have never met a landlord who is willing to rent out a property for less money to someone who is under 25, or a baker who is willing to sell a loaf of bread for less because the person wanting to eat it is under 25. It costs us all the same to live.

We have seen the Government pinch and misappropriate a term to describe a policy pushed through without any proper equality safeguards. Some of the key questions posed during the debate must be answered. What safeguards are in place to ensure that employers cannot manipulate the terms and conditions of their staff to make them worse off as a result of the new higher national minimum wage? What strategy is in place to ensure that workers under 25 are not exploited and that the provisions of the Equality Act are not breached? Will companies be named and shamed? Will there be financial penalties? The Government must put their declarations of being a party of equality into action and demonstrate they are serious about that by answering those basic questions and ensuring that safeguards are in place for young people and all employees in the workplace. Of course, all that could have been thought through much earlier, had the policy not been rushed in the first place.

Young people deserve a better deal than the one they are getting from this Government. What message are the Government sending to young people with wages low, maintenance grants for the poorest students cut and voter registration rules cynically changed to lock young people out of democracy? The number of young people owning their own home is at its lowest level since records began. University tuition fees have trebled. It seems very much that the Government are not on the side of young people, and I fear that the consequences will be severe.

Even the former Tory MP David Willetts, who now heads the independent Resolution Foundation, has said that the Government are creating a “country for older generations”, in which pensioners benefit from constantly rising incomes while the young, their families and children—under-25s can have a family and children—are battling constantly rising prices and falling incomes. He said:

“The social contract is a contract between the generations and in Britain it is being broken.”

The Government must not leave the next generation out in the cold and take them for granted. It seems that the policy of a minimum wage only properly kicking in at 25 has been dreamt up with an idea of young people who perhaps go through higher education and do some internships while living at home with their parents. The reality for many young people is that they are an adult at 18, leaving home and standing on their own two feet. I call on the Government to integrate equality into their thinking right across their policy, so that all groups in society are treated equally.

[Geraint Davies (in the Chair)]

Before I call the Minister, may I make it clear that my somewhat ambiguous utterance in response to one of the comments made by the mover of the motion should not be interpreted as an affirmation? I am completely impartial in my job. Over to the Minister.

[The Minister for Skills (Nick Boles)]

Mr Davies, it is a pleasure to serve under your chairmanship. Whatever utterances you choose to make, I will still enjoy serving under your chairmanship.

I congratulate the hon. Member for Halifax (Holly Lynch) on securing the debate and for setting out her argument as clearly as she did. Hers was one of the more reasonable and well-founded arguments made, but listening even to her speech one would have thought it was not the Labour Government who introduced the idea of age-related minimum wages. Because you are, Mr Davies, like me, of a somewhat older generation than some of the contributors to the debate, you will remember that age-related rates were an integral part of the original National Minimum Wage Act 1998—Labour are right to be proud of that achievement. It was integral that the design should allow rates to vary up to the age of 26. That was done by the Labour Government explicitly to protect young workers in the labour market.

In advancing the argument that the national living wage is somehow an egregious act of discrimination, the Labour party and the hon. Member for Halifax have to accept that they are advancing the argument that the last Labour Government to win an election were a discriminatory Government. Although I am sure that the hon. Members from the Scottish National party would be only too happy to endorse that suggestion, I suspect that the hon. Member for Halifax and the shadow Minister, the hon. Member for Lancaster and Fleetwood (Cat Smith), would not want to go quite that far.

Let me turn to the impact on employment opportunities. Hon. Members seem to forget that there is a real reason why raising legal minimum wages for younger workers too quickly is a risk. When the last Labour Government—the same Labour Government who brought in the minimum wage with age-related bands—finally limped out of office in 2010, unemployment was high in general, but it was particularly high for young people. In the first quarter of 2010, more than 930,000 young people throughout the United Kingdom aged between 16 and 24 were unemployed. The unemployment rate was much higher as a percentage than the rate for people over 24.

I am glad to say that under the coalition Government and the current Government, we have managed to bring unemployment down not only for people over 24, but particularly for people under 24. Now, 307,000 fewer people between the ages of 16 and 24 are unemployed than when the last Labour Government completed their term in office. The risk of unemployment for young people is a sensitive issue because we all know that a protracted period of unemployment can have long-term negative effects on people’s chances as they go through life.

[Cat Smith]

Will the Minister give way?

[Nick Boles]

No. I heard a lot from the hon. Lady.

It is especially important that young people are given early opportunities, which explains the original construction of the national minimum wage. Opposition Members surely recognise that the Low Pay Commission is an independent body charged with advising the Government on what is a responsible increase for the national minimum wage. The commission is charged with looking in particular at what is called—forgive me for the rather unpleasant jargon—the varying bites of minimum wage rises. That refers to the percentage of the median wage for someone of that age that the national minimum wage would represent at that particular level. I am sure everybody can understand, because it is a matter of common sense, that the closer the national minimum wage rate for somebody of that age gets to the median wage, the greater the risk that raising the national minimum wage rate will reduce employment opportunities.