National Minimum Wage

Debate between Dan Jarvis and Jo Swinson

Tuesday 16th December 2014 Westminster Hall

[Jo Swinson]

I hope I can provide a lot of reassurance on those points. The hon. Gentleman is right that there is a fear factor, which is why it is important for people to recognise that they can make complaints in confidence. It will not necessarily be clear which member of staff has made a complaint. The HMRC investigator will not just go along to a company and say, “Can you show me the records for this particular member of staff?” The investigator can ask to see the records for all members of staff. That has two benefits. The first is confidentiality, but secondly, of course, if one member of staff is not being paid the minimum wage properly, it is possible—indeed, likely—that other members of staff are also not being paid properly.

To put the issue in context, the hon. Member for Strangford (Jim Shannon) suggested that the reason why there are not as many prosecutions as he might like is that people are not coming forward. Actually, since HMRC began enforcement back in 1999, more than 229,000 workers have received arrears worth more than £54 million. In the last year alone, £4.6 million in arrears was delivered to 22,600 workers, a significant 17% increase in the number of workers helped compared with 2009-10. The amount of arrears per case is also rising. HMRC is learning how to ensure that it does not just look at one person in the business; now it routinely looks much more widely at lots of workers within the same business. That is important to ensure that enforcement works.

We are the fastest-growing G7 economy at the moment, and that strong growth is reflected in our employment statistics, with more people in employment than ever before. That is good news, but hon. Members have raised issues about the type of employment and whether it is just insecure part-time employment. It is worth recognising that our figures from the Office for National Statistics show that full-time work made up three-quarters of the growth in employment since the election and 85% over the last year. The growth in the labour market is significantly of full-time work, but of course there are issues around the insecurity of work, which the Government are taking steps to address. We understand those issues too.

We will return to this matter, rightly, many times in this House. I pay tribute to the Members present today, who in their different elements have been campaigning on the issue. The hon. Member for Stockton North (Alex Cunningham) is particularly assiduous in the care sector, where HMRC has done a significant investigation and is seeking to follow up. That is an area where HMRC found a lot of non-compliance. We need to stay on the case of industries where there are greater problems, because lack of compliance is much less widespread in other industries.

[Dan Jarvis]

I am slightly concerned that the Minister might not address the fundamental issue that I raised in my speech, which is that the low pay challenge for the country has changed. Record numbers of people in low-paid work are struggling to make ends meet. I would be grateful if she critiqued the model that I proposed; I am thinking specifically of the five-year target and more powers for the Low Pay Commission. Will she respond on those two points?

[Jo Swinson]

Certainly; I am happy to. I understand where the hon. Gentleman and his Opposition colleagues are coming from when they call for a five-year target, but there are significant problems with that approach. Announcing an ambitious-sounding minimum wage level would not necessarily take into account future economic conditions, which could be a problem in two ways. If the economy did not perform as strongly as expected, job cuts could be the consequence of an ambitious target. Equally, if the economy did much better than anticipated, we might find that the target ended up holding back wage growth. We need to get the balance right.

My right hon. Friend the Business Secretary has said clearly that it would be helpful for the Low Pay Commission to be able to provide more forward guidance, so that it is no longer the case that once a year, business suddenly learns what the next rates will be without any idea of how things will go forward. It is worth bearing in mind what the Low Pay Commission has said about the period that we are entering now and whether we should be expecting further rises above inflation in the national minimum wage. That will be of great comfort to the many people who, like the constituent of the hon. Member for Barnsley Central, work for the national minimum wage.

On the taskforce suggestion that the hon. Gentleman made, a sectoral approach can be helpful, but there is a danger of distracting the Low Pay Commission from setting the basic rate of minimum wage. It is already considering the impact of the national minimum wage on pay, employment and competitiveness in the low-paying sectors, and it sets that out in its annual report. Members of the commission go out personally to visit lots of different organisations and employers across the UK in a range of sectors. In its recommendations, the commission manages to reflect back what it has considered after examining all the evidence.

However, there is an issue with the Government and others encouraging higher pay. The national minimum wage is not just what people are paid. It is just that: a minimum, a floor. It is right that we should set a basic level. Some employers will not be able to afford to pay more than the minimum wage. If somebody wants to come to any of our constituencies and set up a business, and they cannot afford to pay more than the minimum wage but they will provide jobs, we would probably welcome that. However, there are many businesses that probably can afford to pay more than the national minimum wage and currently choose not to. That is where we would like to encourage behavioural change.

I am heartened to see many employers making a virtue of the fact that they are living wage employers, for example, or making commitments about pay levels. We should encourage employers to compete with each other on such issues—with falling unemployment, that will be more possible in the months and years to come—because we should not just accept a situation in which it is expected that someone on the national minimum wage will stay there. We want basic jobs to be created with that wage floor, but we also want people to be able to progress from a national minimum wage job through the ranks. As their skills and the length of time with their employer increase, their wage should also. We will continue to encourage employers to pay more than the minimum wage where they can.

I know that hon. Members here will continue to campaign on the issue, and I thank everybody for such a constructive debate. I am, thankfully, not talked out.

Question put and agreed to.