Draft National Minimum Wage (Amendment) Regulations 2022

Chris Stephens Excerpts

Thursday 10th March 2022 General Committees

[Paul Scully]

The figures are based, as I said, first on the evidence, weighing the benefits for the lowest paid with the increased cost pressures on business. Of course, it is not only for the minimum wage or living wage itself, but pushing the differentials up for other people who are slightly further up the chain. I suppose that we could make the argument, “Do you want a rounded percentage or a rounded cost?”

Having had that evidence, there is then, effectively, a negotiation between the employers’ and workers’ representatives on the commission. They then come up with that recommendation, in between, of what they feel the economy can bear. It is not always rounded—clearly, that would be easier for everybody concerned—but we do not always allow perfection to be the enemy of the good. I think we have come up with something that is good for low-paid workers and for keeping to the manifesto commitment.

The national living wage for those aged 23 increasing by 6.6% to £9.50 is an increase of 59p. A full-time worker will be more than £1,000 better off over the course of the year. The regulations also increase the rates for younger workers and apprentices, and the accommodation offset, so workers aged 21 and 22 will receive an increase of 82p an hour to a minimum hourly rate of £9.18. Workers aged 18 to 20 will be entitled to an extra 27p an hour, taking their rate to £6.83. Under-18s will have an increase of 19p to an hourly rate of £4.81, and apprentices aged under 19, or those in the first year of their apprenticeship, will receive an increase of 11.9% to an hourly rate of £4.81—51p more.

I will announce another change to the regulations that we will shortly bring forward. Last year, we asked the Low Pay Commission to gather evidence on the use of the live-in domestic worker exemption to minimum wage entitlement, which exempts employers from having to pay the minimum wage to workers who live in the employer’s home and are treated as part of the family, such as au pairs. The Low Pay Commission heard evidence from au pairs, domestic workers, and agencies for those workers. The commission concluded that the exemption is not fit for purpose, and recommended that it be removed. We have accepted that recommendation, and will introduce legislation to remove the live-in domestic worker exemption when parliamentary time allows.

We have pledged to continue raising the minimum wage in the coming years. As I mentioned, our manifesto includes a target for the national living wage to reach two thirds of medium earnings by 2024.

[Chris Stephens (Glasgow South West) (SNP)]

The Minister talked a lot about consultation with business, but he will be aware that some businesses do not comply with the legislation. Can he tell us a bit more about that, what the Government are doing to invest to ensure that their national minimum wage compliance unit is fully staffed, and whether there will be any approach to increase staffing in that area?

[Paul Scully]

I thank the hon. Gentleman. Enforcement, which is covered by Her Majesty’s Revenue and Customs, is clearly really important. We work closely with HMRC to ensure that it is resourced to enforce in this area. We will also look at a single enforcement body, as part of our wider work. One of the things that it will look at, in a number of enforcement areas, is the national minimum wage and the national living wage. Clearly, that will bring even more experience and resource to bear for it to enforce in this area, along with a number of other areas that businesses may be encroaching on. That is really important, because if a business is falling short in one area there is every chance that it is falling short in other areas as well. By bringing those enforcement regimes to a single enforcement body, it will be more effective and efficient, and it will be able to drive out poor behaviour by employers.

We understand the difficulties faced by business, workers and consumers at the moment, and our targets remain dependent on the economic circumstances, but we will continue to monitor the labour market. The draft regulations ensure that the lowest-paid workers are fairly rewarded for their valuable contribution to the economy. We will continue to monitor the impacts of increasing the national minimum wage, and will remain abreast of concerns on the cost of living. We will shortly publish this year’s remit to the Low Pay Commission, asking it to provide recommendations for new minimum wage rates to apply from April 2023. In the meantime, I commend the draft regulations to the Committee.

--- Later in debate ---

[Chris Stephens (Glasgow South West) (SNP)]

It is a pleasure to see a friend of the worker in the Chair, Dr Huq.

I thank the Minister for his presentation, and I will make a number of points. First, the so-called national living wage is no such thing. The Scottish Government promote the real living wage, which is set by the Living Wage Foundation and which is £9.90 an hour; you will be aware, Dr Huq, that in London it is £11.05 an hour. Although there is a suggestion that the Government have introduced a living wage, it is not a real living wage.

Setting minimum wage rates appropriately is important because workers spend their wages in the wider economy, so there is a boost. I noticed that the Minister did not develop that point, but businesses have an interest in ensuring that there is an adequate minimum wage rate level, because workers spend that money in the private sector and use it when they can.

The reality is that in-work poverty remains the norm and is on the rise. One other way of helping to tackle in-work poverty, in addition to the national minimum wage rates, would be the much-promised employment Bill. We have been waiting for it for four years, so perhaps the Minister can tell us where it is, and whether it remains a priority for the Government to help workers in the gig economy, where work is traditionally low paid and where there is, I am afraid, a lack of enforcement of minimum wage rates.

I want to develop the points made by my fellow Glaswegian, the hon. Member for North Wiltshire, regarding some of the figures. I have been and remain concerned about the age discrimination that goes on in the national minimum wage rates, and they do look peculiar as they have been presented. Perhaps the Minister can explain why, for example, a 17-year-old could be working in McDonald’s flipping hamburgers next to a 37-year-old who was doing the same job but would be paid a different rate. Both are participants in the labour market and they are doing the same job, but with vastly different wage rates. I am not sure that that is sustainable going forward.

Perhaps the Minister can also explain why some wage rates seem to be getting a low increase—in fact, some of the increases are lower than the price of a Freddo bar—while others are getting a big increase. There does seem to be a presentational difficulty with what the Minister has put forward. I would be obliged if he could write to the Committee to explain why for some wage rates the increase is 9.8%, for example, and for some it is 4.1%. I am sure that apprentices will welcome their increase, because that is something that we have raised before.

Could the Minister also write to the Committee on the current number of vacancies in the national minimum wage compliance unit and the actual numbers employed by that unit? I am concerned that according to the last figures that I saw, in a parliamentary answer, the numbers employed by the state in the national minimum wage compliance unit are a tenth of those chasing social security fraud. I think that ensuring that we have a good and robust national minimum wage compliance unit will help more workers in the economy.

My last question for the Minister is this. We are obviously in a cost of living crisis. He has today presented figures for April onwards, but he will be aware of the forecasts that inflation could increase within the next year, so what scope does he have to review the minimum wage rates still further? Is he in a position to look at those wage rates and increase them further, or is it possible that he may be in a position to do so in the next financial year? I ask because that may very well be required in the cost of living crisis.

I conclude by reminding the Minister of the words that we heard yesterday at the Select Committee on Work and Pensions, of which I am a member, from the great writer and author Jack Monroe about the consequences of the cost of living crisis. I would hope that every Minister has placed those words in their offices and on their walls, so that they know exactly what they need to do going forward.

[The Chair]

Order. Both Opposition speeches went a little out of scope of the regulations. I am very nice, so I let that go, but we are talking about just these regulations. Would anyone else like to say anything else? No. In that case, I call Minister Paul Scully to respond.

--- Later in debate ---

[Chris Stephens]

I do apologise, but I think the only thing that has not yet been covered is whether the Government are keeping the minimum wage rates under review for the next year because of what is happening with the cost of living crisis.

[Paul Scully]

It is difficult to do mid-year, but there will be other fiscal events, and there are other areas of support for people during the cost of living crisis. At the moment, we are going through the process of setting the remit for the Low Pay Commission to consider. It is doing a lot of evidence work now. April and May are usually its busiest time for gathering evidence, which it then considers. The LPC effectively goes away on retreat in the autumn to have those negotiations, and we usually announce the figures in October so that they are ready to start in the next financial year. It is difficult to get something substantive mid-financial year, but, as I say, there is always scope for us to look at how we can work through the cost of living crisis and pressures, which will invariably increase.

We all know that with Putin’s war, he has inflicted misery on Ukraine, and it is right that we support Ukrainians and stand steadfast with them. Hon. Members will have seen the increase in sanctions this morning, and they will inevitably have an effect on us. That is the price we are paying for Putin’s war and for freedom, frankly, and we have to acknowledge and face up to that. We will certainly see what we can do in the round, whether it is on energy, inflation or supply chains. However, I am going slightly off on a tangent, and I do not want to push that too far.

Once again, I put on the record my thanks to the Low Pay Commission for the evidence gathering that it performs and the way it works to get a consensus between employers’ representatives and workers’ representatives, which is not always easy. The LPC believed that it would face a particular challenge this year, but it came up with a really good settlement that will benefit millions of people up and down this country. I am looking forward to receiving the Low Pay Commission’s recommendations for 2023 later this year, but in the meantime I commend the regulations to the Committee.

Question put and agreed to.

Resolved,

That the Committee has considered the draft National Minimum Wage (Amendment) Regulations 2022.