Draft National Minimum Wage (Amendment) (No. 2) Regulations 2024

Chris Stephens Excerpts

Monday 18th March 2024 General Committees

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I beg to move,

That the Committee has considered the draft National Minimum Wage (Amendment) (No. 2) Regulations 2024.

It is a pleasure to serve with you in the Chair, Mr Hosie. The purpose of these regulations is to raise the national living wage and national minimum wage rates on 1 April 2024. They were laid on 13 January and approved by the House of Lords on 12 March.

We are delighted to say that this uplift will see the achievement of one of our core pledges: for the national living wage to reach two thirds of median earnings by 2024. The target was set with the intention of ending low hourly pay, in line with the OECD definition, for those eligible. Now, on the 25th anniversary of the minimum wage, that target will be met—a genuinely historic moment.

We have achieved that on time, in spite of the difficult global conditions of the past few years—the huge economic impact of the pandemic, the shockwaves of the war in Ukraine and recent cost of living challenges. That is something that the Government, and every parliamentarian, should be proud of. Indeed, we should also be very proud of the contribution from businesses, who have obviously borne the greatest burden of paying it.

I will turn shortly to the detail of the regulations, but I will first thank the Low Pay Commission. We have once again accepted all of its recommendations for the national living wage and national minimum wage rates. Its diligent approach to conducting detailed analysis and carrying out a range of stakeholder engagement has continued to pay dividends, enabling the Government to strike the right balance in giving millions of workers a well-earned pay rise, without harming businesses—the lifeblood of our economy—or adversely impacting the balance of the UK’s labour market. I extend my thanks to all of the commissioners, including Bryan Sanderson, whose term as chair ended around the turn of the year. I look forward to continuing to work closely with the Low Pay Commission, including the newly appointed chair, Baroness Stroud.

Turning to the rates themselves, once these regulations have secured parliamentary passage, the national living wage will increase on 1 April to £11.44 an hour—a record 9.8% cash increase of £1.02. As well as hitting our goal of seeing the national living wage reach two thirds of median earnings, we are also delivering on our pledge to extend eligibility from workers aged 23 and over to those aged 21 and over. By including 21 and 22-year-olds in the national living wage, these regulations will put more money into the pockets of more workers.

Given that younger workers remain more susceptible to economic shocks, the national minimum wage rates for those under 21 years old will remain in place. However, in making its recommendations, the LPC noted that employment among workers aged between 16 and 20 has been strong in recent months, and that the previous large increases to the national living wage have widened the gap to those younger workers entitled to the national minimum wage at lower rates. We are therefore pleased to deliver a significant uplift to the other national minimum wage rates.

These regulations will increase the rate for 18 to 20-year-olds to £8.60 an hour—a rise of 14.8%, or £1.11. The minimum wage for workers above school leaving age, but under 18 years old, will increase to £6.40 an hour—up by £1.12, or 21.2%. The same applies to the apprentice national minimum wage rate, which applies to apprentices aged 19 and under or in the first year of their apprenticeship. The accommodation offset, meanwhile, which is a daily rate, will increase by 9.8%, or 89p, to £9.99.

The Government published a comprehensive impact assessment when these regulations were laid, including an equalities assessment. Hon. Members will note that this impact assessment has once again received a green, fit-for-purpose rating from the Regulatory Policy Committee. I also note that the net cost to business is £217 million per annum.

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

I am very grateful to the Minister for showing his customary politeness in giving way. In the impact assessment, I do not see any reference to UK Government employees. Does the Minister know how many UK Government employees will benefit from the provisions he is laying out today?

[Kevin Hollinrake]

I do not know that figure, but the hon. Gentleman raises an interesting point. He is not just talking about the overall number of Government employees—I do not know that number either—but the ones that are on national living wage. I am very happy to look at that, and I will be interested to hear his reflections later. Perhaps he will enlighten us on what he believes that number to be.

We estimate that three million workers will receive a direct pay rise as a result of this uprating. The increase to the national living wage will represent a boost of more than £1,800 to the gross annual earnings of every full-time worker on the national living wage compared with this year, and a boost of £8,600 compared with 2015, when the policy was first announced. To put that in context, when this year’s uprating comes into effect in April, the national living wage will be approximately 70% higher than in 2015. Meanwhile, the consumer price index has increased about 30%, so it has increased at over twice the rate of inflation.

Finally, I remind hon. and right hon. Members of one further important change we have introduced to the minimum wage regulations. The Low Pay Commission recommended that minimum wage exemption for live-in domestic workers, which the Employment Appeal Tribunal had found amounted to indirect discrimination against women, should be removed. Due to legislation we passed earlier this year, it will be removed from the statute book from 1 April, protecting more of the UK’s vulnerable workers from exploitation.

We recognise that businesses and workers alike remain keen to hear about the future of the minimum wage. I can therefore confirm that we will be publishing the 2024 remit to the LPC shortly. The remit will ask it to provide recommendations for the national living wage and national minimum wage rates to apply from April 2025. The Government and the LPC will continue to monitor closely the impacts of these increases on the economy, and carefully consider our future ambitions.

--- Later in debate ---

[Chris Stephens]

It is a pleasure to see you in the Chair, Mr Hosie. I direct the House to my entry in the Register of Members’ Financial Interests, as I will be raising some issues pertinent to it.

I have been present at every Delegated Legislation Committee since 2015 that has discussed the national minimum wage and its rates. Year after year, those of us who have argued about age discrimination have been mocked, traduced and told that we were talking nonsense. We were told that those aged 25 or over had higher bills than those aged 21. I made the point then that that was a nonsensical position, but was told that I was talking nonsense. However, it turns out that the Low Pay Commission finally agrees with those of us who believe that those aged 21 have the same bills as those who are older.

I welcome that change. Will the Minister take the opportunity, on behalf of his colleagues in years gone by—some of whom are in the Cabinet now, I note—to apologise to those of us who argued the position on age discrimination? I note that age discrimination still exists in relation to national minimum wage rates, and I believe that is nonsensical. Two workers working beside each other, one aged 17 and the other 37—let us say they are flipping hamburgers at a McDonald’s franchise—should get paid the exact same wage for doing the exact same job. I hope the Minister will explore that with the Low Pay Commission to ensure there is no future age discrimination, despite the welcome change that the Government have made.

[Sir Desmond Swayne (New Forest West) (Con)]

Will the hon. Gentleman give way?

[Chris Stephens]

I give way to a good friend I served with on the Work and Pensions Committee.

[Sir Desmond Swayne]

The hon. Gentleman makes a fair point, but—I have employed young people myself—is it not right to allow employers the discretion to discriminate between various employees on the basis of their ability and readiness to work, and indeed to pay a younger employee, perhaps, marginally more for their greater efficiency than another employee, rather than constrain all employers within the tight rules he would impose?

[Chris Stephens]

I thank the right hon. Gentleman for that point. That provision already exists, but we are talking about the minimum wage rate—the very floor—and that should not be subject to age discrimination. He is correct that some employers have grades and spinal column points, and that is allowed. That reflects people’s experience, how long they have been with the employer and all the rest of it. That does happen, but I do not believe the bottom line—the absolute minimum that a worker can be paid—should be subject to any age discrimination at all. We cannot have two workers doing the exact same job on different wage rates because of their age, not because of their experience. There is a difference between age and experience.

I listened intently to the hon. Member for Ellesmere Port and Neston, who is correct about the economic conditions and the fact that in-work poverty still exists. The Government have failed to implement the report that they asked Matthew Taylor for: only seven of the 59 recommendations have been enacted. Now, I do not want every single one of those recommendations to be enacted, but to do only seven out of 59 is disgraceful.

As the hon. Gentleman said, wages are being dragged down in this country through shifts being cancelled and because people are in what I would argue is bogus self-employment—zero-hours contracts. I note that those issues are covered in a private Member’s Bill to be debated on 26 April, the Workers (Rights and Definition) Bill, which is in my name. I hope the Minister and shadow Minister will welcome the Bill and indicate that they will support it.

When I intervened on the Minister, I made, I think, a very important point. I asked how many UK Government workers will benefit from this delegated legislation. I again refer to my entry in the Register of Members’ Financial Interests: I am the chair of the PCS parliamentary group. To the best of my knowledge, there are tens of thousands of UK Government workers who are paid the national minimum wage, including some employed by the Department for Work and Pensions. I invite the right hon. Member for New Forest West, who sits on the Work and Pensions Committee, to have a look at that, because it is a serious issue that so many workers in the Department for Work and Pensions have to rely on the benefits they are administrating because they are on the national minimum wage. I invite the Minister to write to all Committee members and tell us how many Government employees are paid the national minimum wage.

It is not just the DWP—incredibly, some of those on the minimum wage are employed by HMRC. Some of those employed to chase tax avoidance and evasion, and perhaps to tackle multinational companies that do not pay the rates they should, are paid the national minimum wage. Will the Minister write to tell us how many UK Government employees are being paid the national minimum wage? That is important, because the wage increases he has announced today are what UK Government employees will be getting. That will be their only pay increase this year, and I hope he will take that away.

I want to mention enforcement, because it is important that the Government outline how they will enforce this delegated legislation laid today. My concern is that there are far too many vacancies in the national minimum wage rate compliance unit; perhaps the Minister can tell us how many there are. If there are vacancies, they will lead to the backlog referred to by the shadow Minister and the chasing of unpaid wages for years. I hope the Minister will be able to answer those points when he sums up.

--- Later in debate ---

[Kevin Hollinrake]

I am purely responding to the points that the hon. Gentleman raised, to try to make him understand there is a balance to be struck in the economy between jobs and pay. That is the balance we are trying to strike.

The hon. Gentleman and the SNP spokesman, the hon. Member for Glasgow South West, made points about enforcement, which we take very seriously. We have doubled the compliance budget between 2015-16 and today to £27.8 million. We have ordered employers to reimburse £100 million to 1 million workers. We take this very seriously.

The naming and shaming scheme was suspended during covid. I understood why, but I was very keen to reintroduce it. It is the principal deterrent. I reassure the hon. Member for Ellesmere Port and Neston and other members of the Committee that, whenever we are about to do a naming round, we write to all the employers and tell them that they are going to be named. We get a lot of push-back, and we push right back again. There is no excuse for not paying the minimum wage. We have named a total of 3,200 businesses since 2013, including more than 500 just last month.

The hon. Gentleman raised the point about the vacancy in the Low Pay Commission. We are actively seeking candidates for that; if anybody is out there listening, I am very happy for them to come forward. I am very confident that new chair Baroness Stroud will do a fantastic job.

The SNP spokesman said that he wants a higher living wage, which I completely understand. He is very willing to nail his colours to the mast, unlike the Opposition, about where he thinks that should be, but I gently push back to him as well on the balance we need to strike here. The hospitality sector in Scotland is struggling as well as ours, and others are too. We must make sure we get that balance right. I have to say that in Scotland the failure rate in hospitality is even worse, being 30% higher than it is in England. That is partly down to the fact that Scotland has not passed on the rates money for those hospitality businesses, as has been done in England. The average pub in Scotland is £15,000 a year worse off because of that policy.

[Chris Stephens]

Surely, the big problem in the hospitality industry is the fact that worker after worker is being discriminated against in that industry. Zero-hours contracts are rampant—people turn up for a shift and they are told the shift has been cancelled. Surely that is the big problem. The Minister is not seriously defending bad employers, is he?

[Kevin Hollinrake]

I would never do that; as a former employer myself, I would never do that. However, I do not accept the picture that the hon. Member paints. The hospitality sector is a fantastic sector in this country, with many good businesses and many good employers. For him to trash the reputation of the sector in that way, saying that zero-hours contracts are “rampant” in the sector—I think that he should just check his language. That sector does a fine job under very difficult circumstances, and the circumstances are far more difficult in Scotland.

Regarding the Low Pay Commission, the hon. Member made the point about younger workers on lower pay. That is a very fair point; he raises it time and again. It is our position and the position of the Low Pay Commission that younger people are more susceptible to a weaker labour market. That is why we have different rates. I declare my interest—I have daughters of that age who earn the lower rates of the minimum wage and I am very happy that that is the case, because I would rather that they had a job than no job at this point in time.

The minimum wage and the national living wage are floors, not ceilings. If good employers pay more, and many do, clearly we welcome that.

I will just conclude—

[Chris Stephens]

Before the Minister concludes, can he answer this question about UK Government employees? How many of them are on the national minimum wage? Can he say whether the Government have a plan to deal with that situation?

[Kevin Hollinrake]

As I said before, I do not know the answer to that question; if the hon. Gentleman wants to put down a written question on the subject, we can give him an answer to it by separate means.

This debate is an important reminder of the good that Government can achieve—a sentiment that I am sure will be echoed by Committee members. I thank the Low Pay Commission once again for its advice this year, which has been as expert as ever, and I commend the regulations to the House.

Question put and agreed to.

Resolved,

That the Committee has considered the draft National Minimum Wage (Amendment) (No. 2) Regulations 2024.