Small Business, Enterprise and Employment Bill

Debate between Graham P Jones and Ian Murray

Wednesday 19th November 2014 Commons Chamber

[Ian Murray]

My hon. Friend makes a good point. There are many agencies dealing directly with businesses, particularly small businesses, that could play a role in national minimum wage enforcement. Poor pay and enforcement should be a job for all of us, whether LEPs, local authorities, the national minimum wage enforcement section, Members of Parliament or whistleblowers. We need a drive towards ensuring that anyone who decides to flout the rules on the national minimum wage knows that there is an organisation out there that can report them and take action against them.

Amendment 8 would also require the Secretary of State to report on the level of financial penalty. Although an increase in the maximum fine to £20,000 per employee is welcome, we are disappointed that the Government did not follow Labour’s lead in Committee by increasing it to £50,000. By setting the penalty at £50,000, Ministers would send a clear message to rogue businesses that they run a real financial risk by not paying the minimum wage. It would also put the fine on a par with other fines, such as those for fly-tipping.

As the Minister might be aware, her colleague and party president, the hon. Member for Westmorland and Lonsdale (Tim Farron), at the start of the year echoed Labour’s calls for a higher financial penalty, stating:

“A £50,000 fine for fly-tipping versus a £20,000 fine for exploiting a human being is just ludicrous. It tells you all you need to know how we, as a society, have our priorities wrong.”

I suggest that it is not society that has its priorities wrong in that regard, but the Government.

[Graham Jones (Hyndburn) (Lab)]

Would these changes have an impact on people working in the informal economy who are not paid the minimum wage?

[Ian Murray]

Absolutely. We see in the informal economy forced self-employment, bogus self-employment and people not being paid the national minimum wage. It is a big issue in relation to migrant workers and agency workers. It is a huge issue across not only the formal economy, but the informal economy. It is something we must stamp down on, because it undermines people’s wages and the ability to be paid properly. The crucial point is that it is also uncompetitive for business, because the businesses that do the right thing, pay proper wages and abide by all the legislation are undercut by those that do not, and we have to deal with that. These measures are both pro-business and pro-employee.

Finally, amendment 8 is also crucial to ensuring that the Government consider wider improvements in pay in our labour market—namely, the promotion of the living wage. Under this Government, the number of people paid less than the living wage has risen from 3.4 million to just under 5 million in just four years. That not only impacts on low-paid workers, their families and communities, but piles up costs for the country as more people in work have to rely on the social security system, with tax credits topping up their poverty pay.

Labour councils have led the way in paying their workers a living wage, even within tight budget constraints, and getting more workers in the private sector paid a living wage by using their procurement powers and encouraging the creation of local living wage zones. My local council, City of Edinburgh council, has been paying the living wage for some time now. Other organisations in the private sector are now seeing that paying the living wage is something they should be doing. I must declare an interest as a member of the board of Heart of Midlothian football club, which a few weeks ago took the historic decision to become the first football club in Scotland to pay the living wage to not only all its staff, but all its subcontractors.

--- Later in debate ---

[Ian Murray]

There is a key balance in terms of raising the allowance. The poorest paid are not affected by any increases in the personal allowance, while everyone else benefits. There is a significant decrease in tax take from every taxpayer, but the lowest paid are not included in that.

[Graham Jones]

One of the pernicious elements of this situation is what we are starting to see in my constituency with agency work, whereby people on zero-hours contracts are being pushed into self-employment when they take hours through an agency. With reference to the tax take, there is some concern that this practice is pushing people into the informal economy and tax is not being paid at the full rate. It is also pernicious in terms of the hours that are offered to people and the insecurity of being in self-employment as opposed even to agency-paid employment.

[Ian Murray]

Absolutely. We are creeping into the wider problems with the employment market. There is a huge issue with bogus self-employment and a huge issue for the Treasury as regards the informal economy. That is why the shadow Work and Pensions Secretary, my hon. Friend the Member for Leeds West (Rachel Reeves), has said that, particularly with regard to the construction sector, we should deem people to be employed unless it can be proven otherwise.

[Graham Jones]

It is certainly an issue in the construction sector in my constituency, but it is now spreading into other sectors, including catering.

[Ian Murray]

It is most prevalent in the construction sector, but it affects other low-paid sectors as well. This goes back to the point I made in response to one of my hon. Friend’s previous interventions about good businesses being hit by the playing field not being level because of people undercutting wages and undermining their responsibilities to society in terms of paying the appropriate tax that they should be paying on the wages that they are generating.

So as not to be too uncharitable to the Minister, let me say that we welcome clause 145, which introduces an exclusivity ban into zero-hour contracts. However, as with yesterday’s pubs debate, the Government have been dragged kicking and screaming into doing anything at all about this issue. They have fallen far short of introducing measures that really tackle the exploitative use of these contracts. They are doing nothing to change the practices of companies that base their entire work force management strategy on zero-hours contracts. As my right hon. Friend the Leader of the Opposition said last week, zero-hours contracts have

“left too many people not knowing how they will make ends meet from one week to the next and unable to plan for the future. And this government won’t do anything to stop it. But we will.”

Our amendments attempt to build on the fact that the Government have tabled an amendment to the law, albeit a minor one, to stop exclusivity by suggesting that they take that one step further. Amendment 9 would require the Secretary of State to introduce regulations so that workers on zero-hours contracts can enforce their rights. It is completely ludicrous that we have been left in a situation where the Government have introduced legislation to ban exclusivity clauses in zero-hour contracts but have not put in any enforcement action so as to be able to remedy the problem. The Minister for Business and Enterprise was pressed repeatedly on this in Committee but could offer only the option of enforcement through the usual employment tribunal channel. Perhaps he should spend less time apologising to the Prime Minister and more time apologising to the millions of workers he is letting down through this clause.