Edward Leigh
Main Page: Edward Leigh (Conservative - Gainsborough)Employment Opportunities Bill
Edward Leigh Excerpts
Mr Edward Leigh (Gainsborough) (Con)
On a point of order, Mr Deputy Speaker. Have you received any request from the Government this morning to give an urgent statement on the crisis in the eurozone? This is urgent and important. President Sarkozy and Chancellor Merkel are locked in discussions, the Commission is battling to reach an agreement, the Greeks are being prevented from devaluing, and our own people are threatened with having to pay for a £1 billion bail-out. Are Treasury Ministers coming here today to give a statement so we can question them on this important matter?
Mr Deputy Speaker (Mr Lindsay Hoyle)
I have no knowledge of a statement to the House being prepared; I have not been given notice of that. As the hon. Gentleman knows, it is not for me to ensure such a statement is given; that is up to the Government.
Philip Davies (Shipley) (Con)
It is bizarre that the hon. Member for Manchester Central (Tony Lloyd) thinks that it is appalling for young people to be going out to work for low wages, and that he would therefore prefer them to be sat at home watching Jeremy Kyle and “This Morning” and visiting their local amusement arcades, rather than having gainful employment. That is a matter for him, of course, and we all have our own views on what we think is best for people to do. I think that working is better than doing as the hon. Gentleman suggests, but he obviously disagrees.
I have risen to support my hon. Friend the Member for Christchurch (Mr Chope), and to commend his courage, because there are certain political views people are not allowed to hold. The principle of free speech fell away in this country a long time ago, and it certainly went out of British politics a long time ago. Over time, a situation has arisen whereby we are not allowed to express certain views in polite company, such as questioning the merits of sex education in schools. Also, in the previous Parliament nobody was allowed to question the benefits of the Climate Change Act 2008.
Mr Leigh
It is impossible to have any sensible debate on the national health service, too, as it has become a kind of religion. We have had a catastrophic health statement this week, ruling out competition. There are clearly no-go areas in the arena of public debate, on which the two Front-Bench teams join together so there is no proper debate as to how we can best take matters forward. On the NHS, for instance, the social insurance systems on the continent are far superior and give patients a much better deal, but there is no proper debate of how we might introduce such insurance systems.
Philip Davies
Mr Deputy Speaker, you would not want me to start talking about the national health service in this debate, so I shall resist my hon. Friend’s tempting offer, but he is absolutely right that it is considered unacceptable in politics to argue for certain unpopular causes. I always ask people to celebrate anybody in politics who will stand up and say something controversial or unpopular, because I think they are doing a great service to our democracy, even though they may be insulted by Labour Members. I therefore commend my hon. Friend the Member for Christchurch on bringing this important issue before the House, and for trying to generate a grown-up debate about the benefits, or otherwise, of a fixed national minimum wage that people are not allowed to get out of.
I have always believed that a political consensus is usually a precursor to a disaster. Every party in this House supported joining the exchange rate mechanism, yet it turned out to be a complete disaster. The setting up of the Child Support Agency had cross-party support and it was seen as a great thing, but it has been a complete fiasco. Everyone across the political divide has had to support the setting up of tax credits, too, yet anybody who has had any dealings with the system knows that it has been a complete fiasco as well. The fact that there is political consensus in support of a measure does not mean to say it is good, therefore; it just means to say the measure is likely to be politically expedient.
Philip Davies
My hon. Friend is absolutely right. Of course, it is very easy for everyone to try to sweep such matters under the carpet, but we would be doing this place a great disservice if we did. I am appalled that Labour Members, who supposedly—as they claim—represent the most vulnerable in society, are perfectly happy for those people never to be given the opportunity to get a job as a consequence of Labour’s policies either on this matter or on benefits.
Mr Leigh
My hon. Friend is making an important contribution and it is important that we have this debate, but let me ask him a question as a critical friend. Let us forget the fact that there is a minimum wage at the moment. Why should a disabled person work for less than £5.93 an hour? It is not a lot of money, is it?
Philip Davies
The point is that if an employer is considering two candidates, one who has disabilities and one who does not, and if they have to pay them both the same rate, which is the employer more likely to take on? Whether that is right or wrong and whether my hon. Friend would or would not do that, that is to me the real world in which we operate. The people who are penalised are those with disabilities who are desperate to make a contribution to society and who want to get on the employment ladder, but find time and again that the door is closed in their face. If they could prove themselves earlier and reassure the employer who took them on that they would not cause a problem in the way the employer might fear—I am sure that there are a lot of myths out there and that many of these people would be just as productive as those without a disability—they might well move up the pay rates much more quickly. At the moment, they are not getting any opportunities at all.
We all know that some employers break the law and pay below the national minimum wage, but it strikes me that the only way employers are likely to get away with that is if they employ illegal immigrants. If an employer is employing a British citizen or someone who is here legally and tries paying them below the minimum wage, legal action can be taken against them, they will face a huge fine and the employee can do something about it. If that employer is employing an illegal immigrant, the power rests with the employer, because they will judge that the illegal immigrant will not take up the case officially. If they do, their illegal status in this country will be exposed and they will be turfed out of the country.
One consequence of the national minimum wage is that it encourages illegal immigration into this country. Illegal immigrants know that they can get employment below the national minimum wage and are happy to do so because it is probably higher than the wage they would earn back in their country. They also know that they will have no problem getting a job because some employers will be crying out for someone whom they can pay less than the national minimum wage. I am not sure whether any research has been done on this, but I would be interested to know how much illegal immigration into this country has come about as a result of the introduction of a national minimum wage.
Whatever the effects on employment of a minimum wage are in general, its effects in a recession must be worse. My hon. Friend the Member for Christchurch may well have made this point before I entered the Chamber, as I was a few minutes late, but people will recall that at the start of the credit crunch, or recession, a couple of companies—my hon. Friend, who is more knowledgeable on this than I am, will correct me if I am wrong, but I am sure that those companies were JCB and Corus—told the people working there that the wage bill needed to be reduced by 20%, so either 20% of the staff could be made redundant or everyone could take a 20% pay cut. One way or another that wage bill had to be reduced. If I remember rightly, the workers in those places—JCB sticks in my mind in particular—got together and voted to take a 20% pay cut. They made that choice themselves. Rather than being made redundant, they chose to take a pay cut.
Philip Davies
My hon. Friend is right and reinforces my point. Those people decided they would prefer a 20% cut to risking a 20% chance of being made redundant.
Mr Leigh
Again, it is very important that we tease out these arguments. Those people took a pay cut, but presumably it still did not reduce their wage below the minimum wage. What worries me about my hon. Friend’s argument is that although I know the Bill says that everything will be voluntary, will there not be massive pressures from employers? Might they not tell staff that they are in awful trouble and ask whether they will consider taking less than the minimum wage? Might they not say to a disabled person, “You’re not quite so good at doing this job; will you please take less than the minimum wage?” Although the provision is ostensibly voluntary, there will be pressure on the employed to take less than the minimum wage.
Philip Davies
My hon. Friend might think that such choices should be available only to people who are highly paid, but a firm in which all the staff are paid the minimum wage might be faced with the same predicament. Why does he think that the only people who should have the choice are highly paid people? Why should more lowly paid people not have the same option to take a pay cut or to be made redundant? Why does he want to deprive them of that choice? Why does he think that only highly paid people are capable of making that decision? Why are not more lowly paid people capable of doing so, if they feel it is in their best interests? To force those people to be made redundant in such circumstances is, I think, an outrage. It is an outrage that we would not allow them to make the choice themselves. The whole principle is that the Government and state know best and know what is best for everybody, so they will not even allow anybody to make the choice for themselves.
Philip Davies
Mr Deputy Speaker, I fear that I would incur your wrath again if I were respond to that, so may I just say in passing that I thought what the shadow Chancellor said yesterday was drivel. I will now move on to the rest of the Bill.
My point is that the minimum wage could be reduced by about a pound an hour, which would be a great benefit to employers and may encourage some of them to take on more people. If tax rates were adjusted accordingly and those people currently earning the minimum wage of £5.93 an hour were taken out of tax, they would not be any worse off. Therefore, no one would be penalised by that. Those people would still take home the same rate of pay as they do now, yet it would be a great fillip to employers, many of whom are struggling; as my hon. Friend the Member for Wellingborough helpfully pointed out, there would be benefits in terms of the employment contributions that they have to make as well.
Philip Davies
I have heard that argument. I do not want to be sidetracked, but I do not agree with my hon. Friend. The fewer people at the lower end who pay tax the better. I do not see why we should expect the lowest paid in the country to contribute to taxes. They should be allowed to take home and keep what they earn. It is very rare that I say this to my hon. Friend, but I simply do not agree.
Mr Edward Leigh (Gainsborough) (Con)
I apologise for being delayed and missing the start of this debate, Madam Deputy Speaker. I wish to congratulate my hon. Friend the Member for Christchurch (Mr Chope)—he is also an actual friend—on doing a signal service to the House by courageously raising this issue, as it is important that we have an honest debate about it.
There are many arguments in favour of what my hon. Friend is trying to do. That applies both in terms of the Bill’s wider context, which I shall deal with in a moment, and what he is specifically trying to do on the minimum wage. The first relates to the tragedy of youth unemployment, which is an increasing problem. In addition, businesses undoubtedly need to respond to the marketplace, because they are in the marketplace and they cannot avoid it. It is also undoubtedly better for people to work for less than be unemployed, because work helps people to get training, make contacts, gain experience and so on.
My hon. Friend has also said that we are talking about a voluntary process, but it is precisely on this point that his Bill has difficulty. As was well said by the hon. Member for Harrow West (Mr Thomas), who leads for the Opposition, this issue may well be a show-stopper that prevents the Bill from becoming law. There is undoubtedly a mismatch in power between an employee who is desperate for a job and an employer. Although my hon. Friend the Member for Christchurch assures the House that the process is entirely voluntary, one can undoubtedly envisage many situations in which there will be problems. My hon. Friend the Member for Shipley (Philip Davies), who has unfortunately been called away for a moment, mentioned the example of disabled people, who often find it more difficult to get jobs because what the employer has to pay them is on a level with people who are not disabled. As I said to my hon. Friend, the employer might summon the disabled person and say, “I’m sorry, but you have this disability and you are not quite as capable as doing this job as other people, so please sign on the dotted line to be paid less, as this provision is now law.” One has to assume that these Bills will become law, so we need to tease out these important points.
In other circumstances, an employer might say to employees that there are severe problems and that the marketplace is very difficult, so employees will have to sign on the dotted line and take less than the minimum wage. It is a bit simplistic—and, dare I say to my hon. Friend the Member for Christchurch, a bit naive—to assume that the process is entirely voluntary. I am not sure that the marketplace works like that.
Mr Bone
It was quite wrong of me to call my hon. Friend a shocking leftie on this issue—I clearly got that wrong. He makes a very fair point about the Bill needing to be considered carefully in Committee. The original version contained the idea of limiting the period for which someone could opt out of the minimum wage. Perhaps that would reassure my hon. Friend.
Mr Leigh
Obviously, if the Bill is allowed to progress to Committee, we will have to tease out some of those points. My hon. Friend the Member for Christchurch accused me of being a paternalist, but there is nothing wrong with thinking like a parent. I suspect that this is a clash between the free market wing and the socially conservative wing of the Conservative party.
The Victorian age has been mentioned. Many Victorian owners were very bad and we can read about them in Dickens’s novels, but many, particularly those inspired by conscience, religious faith and other such factors, were superb employers. There was a big debate about these issues in Victorian times. Without boring the House, I want briefly to allude to a papal encyclical called “Rerum Novarum”, issued in the latter part of the 19th century, which made it absolutely clear that the wage earner is entitled to a just wage and that we cannot live with an untrammelled free market because there is a mismatch in power between employer and employee. These are very important issues that must be addressed by my hon. Friend the Member for Christchurch before the Bill becomes law.
Mr Binley
I find my hon. Friend’s contribution interesting, but will he accept an example of an experience that was brought to me in my constituency? Some people were made redundant through no fault of the owner of the company—the recession smacked him hard. Three of the elder members of the group who wanted to work, for their own esteem and because they felt that working had a greater relevance to their lives than not working, went to him and suggested that they take a cut below the minimum wage for a limited period. He looked into it and found that he could not do that, of course. Is that not a foolish situation when we are trying to encourage people to recognise that work is a valuable part of the human experience?
Mr Leigh
That is an excellent intervention that shows the moral issues in our debate. There will undoubtedly be situations—this is where I agree with my hon. Friend the Member for Christchurch and why I think his Bill deserves to be debated in Committee—involving a perfectly good and caring employer, such as the one described by my hon. Friend the Member for Northampton South (Mr Binley), who is in a difficult situation and employees who are desperate to keep their jobs. We must be aware of that.
There are two other issues that are worth mentioning. The first is the increasing scandal of internships, particularly for young graduates. I feel quite strongly about this matter, which has already been mentioned by my hon. Friend the Member for Wellingborough (Mr Bone). I suppose I should declare an interest as a parent, and two of my children are already graduates. All of us who are parents know that whereas our generation—that of my hon. Friend the Member for Christchurch and myself—left university in times of full employment, young people are increasingly trapped in a disgraceful situation in which employers tell them that they can work for them, but only if they work for nothing. I do not think that that is right.
When I take on an intern in the House of Commons, I pay them the minimum wage. I am firm on that. It is fine if a young person between school and university wants to come here for a week’s work experience and work for nothing, but I am absolutely clear that if someone is working here for six months or so, they should get the minimum wage, and I will not pay any less than that. However, many young people are now trapped.
One advantage of the Bill—it is worth debating further—is the excellent idea of a training wage, which I see as a kind of halfway house. It would enable employers to pay graduates something, although my view is that, if the company involved is in the City, it should pay the minimum wage. It is better if young graduates, having worked so hard to get through university, are not in the dreadful situation of kicking their heels at home or, if they do work, getting nothing for it. We must have a proper debate about the scandal of internships. It is good that my hon. Friend the Member for Christchurch has put that in his Bill. It is a Back-Bench Bill and we all know that in reality it is unlikely to become law. However, we need a fuller debate on that matter.
We also need a fuller debate on clause 1, and my hon. Friend has been honest about that. It deals with a subject we do not hear much about. It is a scandal that in this country large number of foreign nationals—people whose applications for British citizenship are being considered, or asylum seekers—are trapped in the appalling situation of not being able to work. I think that we are a bit dishonest with ourselves about that.
The hon. Member for Harrow West, made the valid point that we should not allow employers to pay less than the minimum wage because all that will happen is that the taxpayer will have to step in through the tax credit system. My hon. Friend the Member for Shipley said that he did not agree with a tax credit system, but that is a bit of a simplistic argument. It is impossible for people with children to raise a family on anything much less than the minimum wage plus some tax credit. My hon. Friend the Member for Bury North (Mr Nuttall) made the point that we should have an honest debate about what basic national benefit should be paid to keep people in body and soul. I have always argued that a universal minimum benefit payment should be available, with a minimum of churning of taxation on top of that, and as flat a tax rate as possible, which would encourage people into employment. The trouble is that so much of our minimum wage-tax credit system does not help the poor. It often traps people in unemployment and dependency and discourages people from going into employment. Those issues need to be debated much more honestly, so I congratulate my hon. Friend the Member for Christchurch on introducing the Bill. It is an interesting Bill that raises issues of great importance, and I hope that it will be allowed into Committee.
Mr Prisk
My hon. Friend is a few inches ahead of me, but he is right that that is the kernel of the argument on clause 3.
Let me give a little background, and then I shall address specifically how we expand our provisions and encourage young people in training and apprenticeships. The point about the apprenticeship rate is that it recognises that employers invest significantly in apprenticeships, and that apprentices—quite naturally, given where they are in their working cycle—are less productive than other skilled employees. In addition, young people who complete an apprenticeship derive significant long-term advantages. They know that by accepting a lower wage when training, they will enjoy future higher earnings and better job security. That fits into another Government policy, namely the significant expansion of apprenticeship places—we have increased spending by £250 million to encourage 75,000 extra places.
Is a training wage such as the one in clause 3 feasible? The clause states that someone who is contractually entitled to a training wage, and to training in skills relevant to their employment, does not qualify for the national minimum wage. However, the Bill does not specify what would be an appropriate training wage level. As the Bill stands—that is all we have to debate—employers would therefore be free to pay a training wage at any rate. In addition, individuals receiving those low wages would, as workers, be carrying out work or services for the employer.
The danger is that the provisions could be open to widespread abuse by unscrupulous employers—that small minority that look to pay exploitatively low wages.
Mr Prisk
I will come to internships later. It is important that we get right the balance between internships and work experience.
I want to continue my point about training. Another problem with the Bill is that what is meant by
“an entitlement to training from the employer in skills relevant to the employment”
is unclear. A contractual entitlement to training does not mean that the worker is actually receiving any useful training. Under the Bill, for example, a worker could, if they were working in, let us say, a cold-call centre, undertake that work—that would be allowed—because it could be deemed the best way to learn on the job and be trained. In other words, if an individual’s work involved cold-calling, they could become skilled, as described in the Bill, simply by doing the job, and not actually having a separate training programme with accreditation requirements. The question then is: would this mean that they are entitled to a minimum wage? The Bill is unclear. Under the Bill, two people doing the same job could have different contracts. Consequently, one would be entitled to the minimum wage, but the other, having a contract for a training wage, would not. The danger therefore is that these provisions could be open to abuse.
I turn to the question of how we could go beyond apprenticeships. This involves the question of whether we have some form of accreditation, which is a real problem that the Bill does not seem to address. Were we to have accredited training in certain circumstances, we would probably end up going down the route of the old development rate, which was set out in 2006, and under which there were complex rules and conditions seeking to determine exactly what the training was. That would create real problems for employers, who would want to know what the conditions were and how they would work. Would the opportunities they are providing qualify for the training wage? We would have all these grey areas and loopholes sitting between the existing minimum wage and the training wage. That is a practical problem about which I, as a former employer in the private sector—obviously I remain an employer as a Member of Parliament—would be very anxious. I would not want to find that I am unintentionally breaking the rules or finding that the guidance from the Government has to be so specific and complex that I spend too much time trying to comply with a new set of regulations, when in fact the original system was simpler—so there are real practical problems with this suggestion.
Mr Leigh
This issue is important, because we are talking about people who are being exploited. They are working 60 to 80 hours a week for big companies, big legal firms or big merchant banks all over the place, and they are being exploited. They are not training; they are working, and they should get paid. The Government should step in and do something about it.
Mr Prisk
I understand that, but as we have heard today, the Government are strongly of the belief that we should ensure that where people are entitled to the minimum wage, they should receive it. However, we would not want to intrude in the more informal areas that several Members have described, such as a week of work experience, and so on.
Mr Prisk
My hon. Friend has made a powerful point about those working longer term. We want to ensure that the law is upheld.
Before I return to clause 1, which deals with the unlawful prevention of employment, let me turn to the four clauses at the back end of the Bill, namely clauses 4 to 8. These relate to the regional minimum wage, the idea being that we should move away from a national rate, towards a more flexible, regional structure. It is worth looking briefly at how the existing law works. Under the National Minimum Wage Act 1998, workers of compulsory school age are entitled to be paid at least the national minimum wage, although there are some exceptions. Different treatment may be permitted in relation to different sectors of employment and for people of different occupations. However, having different areas poses practical problems.
Clause 4 sets out the role of the Low Pay Commission. It provides that the commission
“must consider and take evidence on the availability of employment opportunities and the impact of the national minimum wage on job creation and access to employment in…areas where the average level of unemployment in the preceding year has been above the national average”.
The commission must then
“consider in the light of that assessment whether to recommend that the minimum wage in any such area should be set at a level below the national minimum wage.”
It is not clear from clause 4 what happens if a lower minimum wage is applied to a travel-to-work area and the unemployment level of that area subsequently falls below the national average. We presume—although it is unclear from the Bill—that the lower minimum wage could no longer apply, and that the national minimum wage would therefore apply. It is also not clear whether the Bill envisages more than one lower minimum wage rate. For example, would the same lower rate apply regardless of the extent to which average unemployment in an area was greater than the national average?
Clause 5 sets out the duties of the Secretary of State in the event of the Low Pay Commission recommending that the minimum wage in a particular area should be set at a level below the national minimum wage. Perhaps peculiarly, clause 5 provides that the Secretary of State has no discretion in the matter, but must make regulations to bring the commission’s recommendations into force. I note that this is different from the Secretary of State’s position in respect of the national minimum wage, where it is for him to decide on the appropriate rate, based on the Low Pay Commission’s recommendations. It is unclear why the Secretary of State should have the discretion to implement the commission’s recommendations on the national minimum wage, which would affect around 1 million people, but not where its recommendations could affect a far smaller number of people.
Clause 6 provides that a change to the minimum wage in an area to a level below the national minimum wage would not affect existing contracts of employment. I will come to the issue of fairness later; I merely note now that this provision is another instance of allowing an employer to pay two workers different wages for doing the same job. It could also encourage employers to get rid of workers who were being paid at the national minimum wage and replace them with people paid at a lower rate.
Clause 7 presents significant practical challenges. It provides that a travel-to-work area is
“an area so defined by the Office for National Statistics.”
This point is crucial, because it affects the way in which the final four clauses operate. Ideally, a self-contained labour market is one in which all the commuting occurs within the boundary of that area. However, in practice it is not possible to divide the UK neatly into separate labour markets based on commuting patterns. They are just too diffuse. Our concern is that the opportunity for complexity and continuous change would make the operation of the proposed system significantly more challenging than at present. Speaking as an employer—which I continue to be—I am concerned about how this would work within and on the edges of those regions.
There are currently 243 travel-to-work areas. They were defined in 2007 using the old 2001 census data, so there is already a problem of time delay. The areas vary considerably in size. For example, Anglesey has two such areas, while Greater London has only one. I hope that no one will ask me why, because I do not have the answer. If we moved to a system of regional rates based on travel-to-work areas, the real problem would be the complexity that that would generate for employers. As someone who wants to see less regulation, I would be very much opposed to that. I hope that the House will acknowledge the specific practical problems associated with each of the clauses, especially relating to the way in which this part of the Bill would operate.
Clause 1 deals not with the minimum wage but with the question of unlawful prevention in relation to foreign nationals. It relates to foreign nationals above compulsory school age who are legally residing in the UK, and provides that such individuals shall not be prevented from undertaking paid employment unless certain conditions apply. The first condition is where the foreign national has only a visitor’s visa. The second is where the foreign national’s most recent application for entry into the UK has been refused. The third is that the foreign national’s most recent application to stay in the UK has been refused. Like my hon. Friend the Member for Christchurch, I noticed the typo in subsection (4), for which he has graciously apologised. The effect of the subsection as drafted would be to exempt foreign nationals who were not in detention. The problem that that would create is self-evident.
The Government support the principle that everyone of working age who has the legal right to work in this country should have the opportunity to gain a living by work which they freely accept. That is set out in article 6 of the international convention on economic, social and cultural rights, and the Government are committed to fulfilling our obligations under the convention. The problem is that the provisions in the Bill are contrary to the Immigration Act 1971. The fact that the Bill does not provide for the repeal of the relevant provisions of the Act raises an important technical issue. When we debate these Bills, we are debating whether they should become the law of the land. While I understand that points of principle are involved, we also need to ensure that we get the legislation right.