National Minimum Wage (Amendment) Regulations 2016

Earl of Listowel Excerpts

Monday 18th January 2016 Lords Chamber

[Lord Stoneham of Droxford (LD)]

My Lords, the Minister should not be surprised that we are having a debate of this nature. On this side, we fully understand the reasons why the noble Lord, Lord Stevenson, has moved his amendment. There is concern that the Government entered into this policy on the hoof. They did very little consultation or preparation for it. There are also signs that there were was not much cross-departmental consultation within government. The measure is designed, we think, to deflect attention from what was at that time the reduction of the tax credit policy. Like the noble Lord, Lord Stevenson, we are very concerned about the looseness of words to describe something that it is not. We have had in the housing area the concept of affordable rents, and indeed affordable housing, when they clearly are not affordable. Now we have the national minimum wage perverted into the national living wage. We welcome the increase but it is a deception to think that we will necessarily be able to reach what is a genuine living wage, as the noble Lord, Lord Stevenson, pointed out.

However, if this is the first step—and I accept that it is—to do more for low-paid employees and reduce subsidies to employers, then of course we welcome it. That initial step is acceptable, but there are a number of conditions. Clearly there was a lack of involvement of the Low Pay Commission in drawing up these original proposals. We accept what the Government have said—in future they will use the Low Pay Commission for advice on further increases, and in bringing together the national minimum wage with the so-called national living wage. But as the Secondary Legislation Scrutiny Committee pointed out, this is a big change: it involves £1.2 billion of costs in the labour market, and 6 million employees are affected. I must declare an interest here as chair of Housing & Care 21, which employs people who will be affected by these changes, although we largely pay well above the national minimum rate. The whole area of social care is particularly vulnerable. I know that the Government have made a number of initiatives on this, but obviously we will want reassurances that public sector contracts are seeking to push pay levels up, rather than contain them. Also, young people are excluded from these changes and no recognition is given to the extra costs of actually living in London. Therefore, the higher living wage should apply there.

We have a number of questions for the Government, some of which the noble Lord, Lord Stevenson, has already put. In what form will the Low Pay Commission’s advice be sought when it comes ahead of the Budget next year in setting the rates for 2017? What encouragement will be given by the Government to raise productivity, particularly in low-paid sectors? At the end of the day, if we wish to avoid inflation and unemployment, we have to raise productivity in these areas. What extra resources are going to be put into HM Revenue to deal with the extra policing of a much wider group of employees to ensure compliance? As the care cost cap implementation was delayed for five years at the start of this Government, what reassurance can the Government give that they will not delay that further, given the costs that will obviously be implied by these changes in the cost of social care? Finally, do the Government have any ambition to extend to those under 25 years of age the whole concept of the national living wage?

We cannot vote for this amendment to the Motion, because we set the direction of policy, but we do expect assurances from the Government for the ongoing investigation, particularly regarding the work of the Low Pay Commission. This measure generally supports our own policy of raising tax allowances and making sure that those at the low end of the pay market are paid a living wage.

[The Earl of Listowel (CB)]

My Lords, I am grateful for this opportunity to debate this very important area of government policy, and I would like to ask the Minister about the impact on early years provision. As we all know, high-quality early years provision is vital to improve social mobility and to help many more families into employment. In principle, this policy should increase the pay to those working in early years settings, which are, notoriously, very poorly paid, so in principle this is very welcome. The Government have recently doubled the amount of free hours for families using childcare for two and three year-olds, so that puts a big burden on providers, and the new national living wage will exacerbate that. If the Minister could provide some reassurance about the impact of the national living wage on early years providers, I would be grateful.