Terms and Conditions of Employment

Chris Stephens Excerpts

Tuesday 19th February 2019 Commons Chamber

[Kelly Tolhurst]

I assure my hon. Friend that we take HMRC’s enforcement of the national minimum wage very seriously. There are many actions that we can take when people breach the law and do not pay the minimum wage. We will prosecute companies that are found not to be paying it, but our priority remains ensuring that workers who have been underpaid receive the arrears owed to them, and in such cases companies must also pay a penalty. We are committed to the enforcement of the minimum wage, which is why we have doubled our expenditure on it.

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

How many people are currently employed in HMRC’s national minimum wage compliance unit, and how does that number compare with, for example, the number employed in the Department for Work and Pensions to chase social security fraud?

[Kelly Tolhurst]

Unfortunately I do not represent the DWP here, so I am unable to make comparisons at the Dispatch Box today. However, as I have just said, 420 staff are involved in enforcement, and we have doubled our spending on it because we are determined to ensure that businesses pay workers what workers are entitled to. We will continue to enforce that where we can.

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[Chi Onwurah]

When we introduced the national minimum wage, it was a transformative change for the pay of so many low-paid people, and our commitment to a real living wage of £10 an hour will also be transformative for working people.

Research by the Living Wage Foundation, which the hon. Gentleman might be interested in, revealed that one in five workers—more than 5 million people—is paid less than the living wage, which is a huge increase from 3.4 million in 2009. In Newcastle, 30% of workers who live there and 20% of those who work there are paid less than the real living wage. In the north-east, around 238,000 jobs are not paid the living wage. I am therefore particularly proud that, despite having its budget halved by reckless Tory austerity over the past decade, in January Newcastle City Council renewed its commitment to pay all staff the real living wage. After a decade of imposing austerity, this Government will still not give workers a real living wage. Will the Minister tell me why the Government will not follow Newcastle City Council’s example and raise the minimum wage to a real living wage?

The Minister said that she does not represent the Department for Work and Pensions, but she does represent the Department for Business, Energy and Industrial Strategy, which is not paying the London living wage to all its staff. Will the Minister confirm the number of employees who are not receiving the London living wage? Will she explain how we can have confidence in her ability to enforce even the national minimum wage when her own staff are striking due to the lack of a decent wage from the Government of the day?

[Chris Stephens]

The shadow Minister makes an important point. UK Departments are not complying with the London living wage, and people are taking industrial action. Does she agree that that needs sorting out today?

[Chi Onwurah]

The hon. Gentleman is absolutely right. A Government who cannot even guarantee a decent wage to their own employees should not be able to speak in this debate. I hope that the Minister will clarify the points that I have raised and confirm that a real London living wage will be paid to the Government’s employees. It is totally within their ability to do so.

The increase in the minimum wage will be of some help to the lowest paid, but it will not be transformative. It will not tackle extreme and growing levels of inequality, and it will certainly not end the growing levels of in-work poverty faced by millions. Even if it was a sufficient safety net, the minimum wage would not catch all workers. With the growing gig economy forcing more and more workers into sham self-employment, it is more important than ever that every worker is paid a decent living wage. However, the minimum wage does not cover self-employment, and TUC figures show that almost half of self-employed people earn less than the minimum wage, meaning that 2 million self-employed workers are now stuck on poverty pay. Does the Minister think that that is acceptable? What is she doing to address poverty pay among the self-employed?

Another glaring inconsistency is the huge discrepancy in the minimum wage for people over 21 and for those aged 18 to 20. Will the Minister set out why the Government believe that workers aged 18 to 20 should be paid a far lower rate than those aged 21 for exactly the same work? Why is the adult rate for under 25s less than for those over 25? What is it about a 24-year-old doing exactly the same work as a 26-year-old that leads the Minister to believe the former deserves less?

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

This is my first statutory instrument debate in the Chamber, and it is a pleasure to see you in the Chair, Mr Deputy Speaker. It is also a pleasure to follow the hon. Member for Chichester (Gillian Keegan).

When we are in this Chamber, I am sure there is always a moment when we ask ourselves whether the party of the establishment actually has a clue about what happens in real life. That moment was revealed today when my hon. Friend the Member for Glasgow Central (Alison Thewliss) pointed out to the Minister that one of the increases in the minimum wage rate was the price of a Freddo bar, and we saw that some Government Members did not know what a Freddo bar was. The Prime Minister’s Parliamentary Private Secretary—I did tell him I was going to mention him—was shouting from a sedentary position that he thought the price of a Freddo bar was 10p. What chance does the country have if someone who has advised the Prime Minister does not know the exact price of a Freddo bar? Perhaps the Library might want to do some research on the minimum wage rates we would be presented with today if the minimum wage rate had increased at the same rate as the price of the Freddo bar. I suggest that the rates would be higher than what the Government are presenting today.

[Mike Wood]

Clearly, one does not get a fine figure such as mine without knowing precisely the price of a range of chocolate bars. I am sure the hon. Gentleman will be aware, as I am from having young children, that as recently as last month Freddo bars were indeed 10p in Tesco.

[Chris Stephens]

It seems unlikely—perhaps we will ask for photographic evidence from the hon. Gentleman of the price of a Freddo bar, or make that a competition for Members of Parliament this weekend.

Statutory minimum wage rates are important because in some sectors of the economy the statutory minimum rate actually becomes the maximum wage rate. It is important that statutory minimum wage rates are enforced properly. In answer to a question, the Minister notified me that the national minimum wage compliance unit has hired 420 staff to enforce national minimum wage compliance across these islands. There are 4,754 full-time equivalent posts for staff to chase social security fraud. Yet we know that more than 200,000 workers are not paid the proper statutory wage. That is an absolutely scandalous figure that needs to be addressed, so I hope the Minister can tell us what plans the national minimum wage compliance unit has to hire additional staff to correct the current situation and to ensure that the national minimum wage rates are enforced properly, so that in the future we do not have more than 200,000 workers being paid incorrectly.

The Minister mentioned the “Good Work Plan”. It is certainly the view of SNP Members that it does not go far enough. In fact, the Minister should just pick up the Workers (Definition and Rights) Bill that I have introduced and take that forward, as it would give workers far better protection. My Bill would sort out the status of a worker, eliminate zero-hours contracts, provide protection for wages if a company ceases to trade or a company owner absconds, and deal with the increasingly common workplace situation in which workers turn up at work and are subjected to short-notice shift changes, in some cases being told, “We don’t need you today,” but in others being told, “You’re going to be working far more hours than we said when you turned up to work.” When does the Minister expect the statutory instruments relating to the “Good Work Plan” to come before the House? Will they be debated in the Chamber, like these regulations?

We welcome any increase, but these measures do not go far enough. Indeed, the Government are not dealing with age discrimination in minimum wage rates, which must end. Young people are being denied a real living wage—not the pretendy living wage—of £9 an hour, or £10.55 in London. I agree with the shadow Minister that UK Government Departments should be paying the London living wage. The fact that they are not is a disgrace.

Let us look at the percentage increases: for over 25s the increase is 4.9%; for 21 to 24-year-olds the increase is smaller, at 4.3%; for 18 to 20-year-olds the increase is 4.2%; and for 16 and 17-year-olds it is 3.6%. The apprentice rate is going up by 21p an hour, which will be scant consolation to those women born in the 1950s whom the Government keep telling they should take up apprenticeships as opposed to fighting for their pensions. They would get an apprenticeship rate of £3.90 an hour. Will the Minister tell us when this age discrimination is going to end? Does she not accept that 21 to 24-year-olds often have the same responsibilities, payment demands and bills as those who are 25 and over?

Why was the age of 25 picked for the pretendy living wage? We have never had a proper explanation of why it applies to those aged 25 or over, which seems to me to be a particularly ludicrous position. I remember the arguments that we used to use when I served on the Unison Scottish young members committee not that long ago. We argued a rather sensible position: if two individuals both work at a fast food restaurant flipping hamburgers and one is 17 and the other 37, they are both active participants in the labour market, yet the difference in pay as a result of the regulations is as much as £3.84 an hour. For an eight-hour shift the pay difference would be £30 a shift, and as much as £150 a week. It really is time for this age discrimination to end, and I look forward to the Minister telling us when that will happen.

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[Kelly Tolhurst]

I welcome the hon. Lady’s comment about the London living wage, and we value the work of the Living Wage Foundation. However, it is the Government’s responsibility to set the minimum rate and, as I said, it has been agreed that the wage rates will be aligned with the median rates for those occupations, and that will come into effect on 1 March.

As a result of the increases in pay that will come into effect in April, another 350,000 young workers will benefit. Nine out of 10 workers between the ages of 18 and 24 are paid more than the minimum rates. There has been much criticism of age-related rates, but they are not new. Age-related rates have been in place since the national minimum wage was introduced in 1999. In fact, this Government have asked the Low Pay Commission to review the youth rates this year to see whether they are fit for purpose, and it will report later in the year.

[Chris Stephens]

Surely the Minister must concede that the Government have made this situation worse by introducing the pretendy living wage rate for those who are 25 and over. Has that not actually increased age discrimination, and not reduced it?

[Kelly Tolhurst]

As I have already highlighted, age rates are not new to these regulations. We have asked the Low Pay Commission to review the age-related rates to see whether they are fit for purpose, and to report back later in the year.

As hon. Members have raised in the House, it is absolutely true that younger workers are the most vulnerable with regard to employment. I must point out that, from September and November 2018, 11.7% of 16 to 24-year-olds were unemployed, compared with 2.9% of over-25s. It is absolutely right, when these rates are set, that we have in mind that we want young people to be in work and getting experience in order to have the future earning capacity to reach their full potential and be able to fly. They can do that through work experience, and by getting into a place of work and gaining such experience, while in some cases they will get the entrepreneurialism they need to go on to do great things.

[Kelly Tolhurst]

I want to make one more point about the age-related model. This model has been in place since 1999, and it is used across OECD countries, so it is not specific to the UK.

I will move on quickly to enforcement. I have said at the Dispatch Box a number of times since I have had this role that we take enforcement extremely seriously. That is why we have doubled spending on enforcement to £26 million. In 2017-18, there were 810 penalties, totalling £14 million. This is five times more in penalties than were imposed in the last five years of the previous Labour Government. To level the criticism that we are not taking enforcement seriously is just factually incorrect.

[Chris Stephens]

Will the Minister give way?

[Kelly Tolhurst]

I am keen to make some progress because I know there is other business to be getting on with.

On enforcement, we are committed to making sure that anyone who underpays on the minimum wage will be investigated and penalised or prosecuted. As I have said, HMRC will always investigate every worker complaint and make sure there is compliance with the national minimum wage. This Government are clear, as I have been all the time I have had this role, that the enforcement of the national minimum wage is important and delivering this is central.

To level the criticism that we are deliberately discriminating against young people in the workplace is pure fantasy; we are not discriminating. In actual fact, this Government are taking forward plans and making progress with work to make sure that workers in this country are not discriminated against, and we are going as far as we can.

On the specific questions about the SIs that have been laid, three have been laid. In fact, the first will be debated on 6 March, and I am looking forward to bringing it forward in the House.

The national minimum wage and the national living wage make a real difference to the lives of millions of workers in this country. I am glad that there is agreement across this House that the lowest-paid workers deserve a pay rise, which these regulations will provide. These regulations mean that, on 1 April, over 1.7 million workers on the national living wage will receive a pay rise. A full-time worker will receive an additional £690 a year. Younger workers will also get more money, through increases to the youth rates. I hope we can do more in the future.

Our industrial strategy aims to build an economy that works for everyone, wherever they live and wherever they work. Creating good jobs and increasing people’s earning power is one of the pillars of our strategy. Having a UK-wide minimum wage, recommended by the independent and expert Low Pay Commission, makes sure that the lowest paid in society are protected in terms of pay. It also means that businesses compete on a level playing field.

The increases for this year will mean that wages continue to rise above inflation. We remain on track for the national living wage to reach 60% of median earnings by 2020. We also have the highest employment rate since comparable records began. We can be proud of our labour market, and we can be proud of these regulations. I commend them to the House.

Question put and agreed to.

Resolved,

That the draft National Minimum Wage (Amendment) Regulations 2019, which were laid before this House on 28 January, be approved.