Eilidh Whiteford
Main Page: Eilidh Whiteford (Scottish National Party - Banff and Buchan)Department Debates - View all Eilidh Whiteford's debates with the Department for Education
(9 years, 7 months ago)
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Mr Russell Brown (Dumfries and Galloway) (Lab)
It is a pleasure to follow the hon. Member for South Derbyshire (Heather Wheeler), who is, dare I say, one of the jovial characters in this place. She speaks much sense. She speaks about doom and gloom among Labour Members, and I try as best I can to be upbeat, but I am sure that she would recognise that the economic recovery that Government Members talk about is not being seen across the country. I have said it time and again, and I hate to say it, but I will not let people forget that 13 or 14 months ago the average wage in my constituency in rural south-west Scotland was 24% beneath the UK average. Thankfully, that has improved and it is now at about 17% or 18%, but people are struggling.
Across the country, working people have seen their wages fall by an average of £1,600 a year, because under what I—and my colleagues, I am sure—see as the Government’s failing plan, the recovery is benefiting a privileged few and most families are not seeing the green shoots of any kind of economic recovery. The real value of the national minimum wage has fallen and one in five employees are low paid. That impacts not only on low-paid workers but on their families, their communities and the local economy. It piles up across the country as more people in work have to rely, as has been said this afternoon, on the social security system to make ends meet.
My hon. Friend the Member for Westminster North (Ms Buck) mentioned the Campaign to End Child Poverty and the work done by the centre for research and social policy at Loughborough university. The figures out today for my area are soul destroying. The figure for the number of children living in poverty is now 23.2%. Those figures include more than 3,000 children affected by in-work poverty, whereas 1,200 are affected by out-of-work poverty. A massive shift is going on and we are seeing more and more families affected—families with children. We should all be saying that we are going to do something about that together to get children out of poverty. The situation is pretty desperate in some areas, and I recognise that my hon. Friend cited even higher figures from her London constituency.
The hon. Member for South Derbyshire mentioned colleges. I have to tell her that the college system and the further and higher education systems are different north of the border. I have a new college in my constituency that is only two or three years old, but the budget has been cut by the Scottish Government. Over the years, about 30% of the young students going into that college have had no formal qualifications whatsoever. The formal education system has failed them, but the college offers them a second chance that many of them have seized. However, the budget for our further education colleges is being cut—that is not the fault of Government Members, because it is a devolved issue—and so courses are being cut. That means that young people who need that second chance are being deprived of the opportunity.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Does the hon. Gentleman accept that the number of apprenticeships in Scotland is at a record level and that targeting funding at policies that will get young people into work, rather than at an endless cycle of college courses that do not lead to work, is a better use of scarce public money at a time when the block grant has been cut and when public finances are under immense pressure?
Mr Brown
I recognise that finances are under pressure, but I would say the same to the hon. Lady as I said to the hon. Member for South Derbyshire. The situation is not the same across the entire country. Youth unemployment in my area sits at some 5.3% whereas the Scottish average is 4.8% and the UK average is 3.8%, as there are so few job opportunities. When young academically inclined people in my area manage to get off to college or university, 90% never come back because the quality jobs that the hon. Member for South Derbyshire has spoken about are simply not there. It is a rural economy—tourism is the other major employer—but the growing job market is in the care sector as people come to the area to retire. We have a vastly different economy to other places, although similar economies exist.
I want to move on to the issue of the national minimum wage. I said in an intervention on my hon. Friend the Member for Streatham (Mr Umunna), the shadow Secretary of State, that I served on the Committee for the National Minimum Wage Bill. As I said at the time, the only other person who served on the Committee who was in the Chamber at the time at which I made the intervention was Mr Speaker. There were some long nights. Indeed, I remember two particularly lengthy sittings: one that started at 4.30 on a Tuesday afternoon and ended at 1 o’clock the following afternoon, and another that started at 4.30 on a Thursday afternoon and finished at 6.30 the following morning. But it was really worth it. I remember campaigning in Lockerbie when the figure of £3.60 an hour was announced, and one guy I met on the doorstep asked, “Is this figure of £3.60 right?” I said yes and asked whether it would affect him. “Of course it will,” he said. He was working the best part of 50 hours a week in the forests—heavy, dirty and dangerous work—but taking home only about £112 a week.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I very much welcome today’s debate on the minimum wage, because it affects millions of people across the UK, including thousands in my own rural constituency, and I think that it, more than any other policy, has the potential to tackle poverty.
In-work poverty is perhaps the most stark symptom of the deep income inequality that is increasingly the hallmark of British society, but people in low-paid jobs have been badly let down by successive Governments, who have failed to ensure that the minimum wage keeps pace with the cost of living. We need to recognise that that failure has had a huge impact on people in low-wage jobs and ask ourselves how we can change the minimum wage into a living wage.
If the minimum wage had kept pace with inflation, those in low-paid jobs would be more than £600 a year better off now: they would be earning £7.48 an hour. That is still short of the living wage, which is currently calculated at £7.65 an hour, but it is a lot closer and makes the gap between a minimum wage and a living wage a lot more bridgeable.
I intend to support the Labour motion because any commitment to increase the minimum wage is a step in the right direction, but it is important to put the proposal in perspective and acknowledge that it will not be a living wage. If we use existing forecasts of inflation, we will see that the living wage is projected to rise to £8.57 an hour by 2020, so what is being proposed today falls well short of a wage that someone can actually live on. I would also urge a note of caution: we have no means at all of knowing whether those forecasts are right. They might be higher or lower—the Office for Budget Responsibility does not have much of a track record in accurate forecasting to date—so we have absolutely no way of knowing what a phased increase of the minimum wage to £8 an hour by 2020 will mean in real terms.
Ian Swales
Does the hon. Lady recognise that the living wage is based on a net figure, because it is a net figure that people actually spend, and will she join the Living Wage Foundation in welcoming what this Government have done with regard to the tax threshold, which has helped to narrow the gap between the minimum wage and the living wage?
Dr Whiteford
The hon. Gentleman makes an important point, but in fact the Government have not gone nearly far enough, because inequality in this country is growing, not reducing. There have been vast increases in income at the top end of the income spectrum, while increasing pressure is being put on people at the lower and middle parts of the spectrum. The gap between the richest and poorest in our society is widening and that is not in any way sustainable.
It is important to understand that if the minimum wage were linked to inflation, it would have a much better chance of keeping pace with the actual cost of living. That would help avoid the current situation, whereby the minimum wage is well below the cost of living and forces people to be dependent on in-work benefits. It would also help address Labour’s prescriptive proposal, which limits us to the increases on the table without knowing what the economy is going to do between now and 2020. Anyone with a crystal ball would be well advised to be cautious in their predictions.
Yesterday and earlier today the House discussed the promise of extensive new powers for the Scottish Parliament, which are now being considered by the Smith commission. The minimum wage is a prime example of a policy that I would like to see devolved, and I am pleased that the Scottish National party’s submission to the Smith commission has set out the benefits of that, particularly the ability to link the minimum wage to inflation, which would immediately improve the position of low-paid workers and, over time, reduce reliance on in-work benefits.
The Scottish Government’s expert group on welfare reform has also considered the issue and recommended that the minimum wage should begin to rise, in phased stages, to the level of the living wage. Like others who have spoken, however, I do not think it is possible to divorce the issue of the minimum wage from the wider tax and benefits system.
Given that a very high proportion of people in low-paid work are in receipt of in-work benefits, we need to look at the design of the welfare system. One of the greatest failures of the UK’s welfare model has been the disincentives it has created for part-time workers in particular to increase their working hours, because of clear financial disadvantages and risks associated with doing so. For instance, for a couple with children and one parent in work, increasing working hours from 50% to full-time work results in 82% of the extra earned income being lost through tax and loss of benefits, which radically undermines the perception of work as a route out of poverty. A redesigned model would have the potential to address those high withdrawal rates and tackle the existing disincentives so that lower-income households could keep a greater proportion of the increases in earned income.
I echo the point made by the hon. Member for Dumfries and Galloway (Mr Brown). The people who are getting the biggest and fullest benefit from changes to the tax system and the lowest rate of tax are those on the highest incomes. The changes are benefiting those at the top end of the income spectrum and having a fairly marginal impact on those at the lower end, because what they gain in tax they lose in benefit. The net impact in many cases has been to reduce their income, particularly in relation to average income in the country as a whole.
A redesigned model would be especially important for families and those with dependent children. In a week when we have seen very sharp increases in child poverty—this has been referred to by the hon. Member for Dumfries and Galloway—it is really important to make the point that most of the children in poverty in Scotland are children in working families. They are the children of working parents, and the changes to the tax and benefits system have pushed them into an even harder position than they were in previously. They have been hitting the headlines for all the wrong reasons. I want to challenge the view that having one in five children living in poverty is inevitable, because that is simply not acceptable. We could change that if we put our minds to it. We need to get our priorities straight.
When the minimum wage was introduced in the 1990s, I remember fears of Armageddon being expressed from some quarters and apocalyptic warnings that jobs would be lost and that the economy would go to hell in a handcart. Of course, that is not what happened, because when people had a bit more money in their pockets they spent it. The higher costs to businesses, which we all take seriously, were more than outweighed in economic terms by the benefits to businesses, including job creation, and in social terms by the huge benefits and improvements to the standard of living for people in low-income households.
There are also potential fiscal benefits from an improved minimum wage in savings to the benefits bill, and potential for increased tax receipts. We need to recognise that and not pretend that it is simply a cost. It is actually a way of getting people into work and improving the standard of living for many people throughout our society—not just the people in those jobs, but those who depend on them, such as their children and other dependants.
Mr MacNeil
My hon. Friend is making a fine speech. What she is saying could be summed up by the economists Krugman and Stieglitz, who say that one person’s spending is another person’s earning. When we put money in people’s pockets, it has a very good economic effect all around.
Dr Whiteford
My hon. Friend makes a valuable point.
I want to touch on another issue that has been mentioned by others, namely the disproportionate number of disabled workers and minority ethnic workers in minimum wage jobs. We have already heard about Lord Freud’s disgraceful comments and I hope the Government will step back from what was an outrageous thing to say about people who are already disadvantaged in the labour market.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. For the sake of accuracy, the hon. Member for St Albans (Mrs Main) made that point earlier and it has been dealt with. The hon. Member for Harlow (Robert Halfon) certainly did not say that.
Dr Whiteford
Thank you for that clarification, Mr Deputy Speaker. The first I heard of those outrageous slurs on the hon. Member for Harlow was today, but I hope that the record has been put straight and that he will continue to put it straight. I would feel much happier, however, if Government Members would dissociate themselves more firmly from what Lord Freud has said.
Richard Fuller
On a point of order, Mr Deputy Speaker. This is my first point of order so please give me some forbearance. At what point is it orderly to refer to comments that have not been made in this House and at what point is it not orderly to do so? Comments have been made about one Minister in one location, and other comments have been made about a Member of Parliament in another location. Which is orderly and which is disorderly to refer to here?
Mr Deputy Speaker
First, we are not going to worry about the Chair’s decision. My decision—I will be quite clear—is that a peer from another place has been mentioned, but I do not want to get into a debate about something that has been over the airwaves relating to two Members. That issue has been clarified in this Chamber and by another Member. I do not want the debate to centre on that. This is a debate, as we know, about the minimum wage and support for people.
Dr Whiteford
I want to dwell on equality, because we must remember that the vast majority of people in minimum wage jobs are women. Issues of ethnicity and disability often compound those of gender inequality. Minimum wage jobs are overwhelmingly done by women who are in part-time positions because of their caring responsibilities. Such women are often in sectors with far too much gender occupational segregation, such as cleaning, catering and cashiering. They often have temporary and insecure jobs, and they often work antisocial hours. Other Members have mentioned the problems of exploitative zero-hours contracts.
We cannot separate from this debate the huge impact of gender inequality on wages in this country or dissociate it from child poverty and its long-term impact on our society, which was discussed earlier. We know that children who grow up in deprivation are likely to need the heath service more, to have lower educational attainment and to have much worse job prospects in the long term. Unless we are prepared to recognise that people deserve a living wage to support their families, we cannot begin to tackle the inequality that so dogs our society.
I want to touch on the difficulties of enforcing the minimum wage, which other Members have mentioned. This year, the Low Pay Commission has taken evidence in my constituency, where a significant number of people are in low-paid jobs. Although unemployment is very low in Banff and Buchan—about 1%—a very high proportion of people earn less than the living wage. The vast majority of employers respect employment law and pay at least the minimum wage, but people have nevertheless brought me reports of being paid less than the minimum wage. That issue is extremely difficult to address.
I have been made aware of cases of people involved in the so-called informal economy, as well as in the service sector. They may not have a contract and may not have received pay slips. They know that they are being short-changed and that, in relation to national insurance, they could be losing out on their pensions in the longer term. They are also short-changing Her Majesty’s Revenue and Customs and the rest of us. However, they are reluctant to put their heads above the parapet because they need their job and do not want to jeopardise what little income they have. In a close-knit rural community, they also do not want to be labelled a troublemaker.
Beefing up local authorities’ powers might help, but that is not a real solution. In theory, employees who are being paid less than the minimum wage can pursue legal action against their employer or take them to a tribunal with every likelihood of success, but the reality is that somebody paid less than £6.50 an hour is very unlikely to have the financial means to access the tribunal service or take on the associated legal costs. That is wholly unrealistic, and I hope that the Minister will address that issue and suggest ways round it when she responds, particularly given the changes that the Government have introduced.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)
I just want to say that any constituent of the hon. Lady, or indeed of any other Member, who finds themselves in such a situation should ring the pay and work rights helpline on 0800 917 2368. They do not need to access the tribunal system; HMRC enforces the national minimum wage on behalf of workers.
Dr Whiteford
I am grateful to the Minister—it is very helpful to have that phone number on the record—but my experience, having helped constituents in such a way, is that nothing changes. The Government need to do more on this to make people feel confident about asserting their rights.
I want to wind up quickly by saying that we have reached a situation in the UK where people in low-paid work—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I just help the hon. Lady? I have been very patient. She has now spoken for 14 minutes. To be serious, I do not think that that is doing justice to other Members. I am very patient, but she needs to get to the end.
Dr Whiteford
I was just bringing my remarks to a close, Mr Deputy Speaker, but it is important to say that the minimum wage has the potential to lift people out of poverty. I hope that this Government and whoever the next Government are will take such an opportunity.