National Living Wage

Holly Lynch Excerpts

Monday 18th April 2016 Commons Chamber

[Holly Lynch (Halifax) (Lab)]

I join colleagues in congratulating my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on securing this important debate. I wish her all the very best for a speedy recovery. I thank my right hon. Friend the Member for Enfield North (Joan Ryan) for opening the debate in her absence.

One of the biggest challenges facing this Government has been the persistence of low-paid work. I welcome any and all measures to address that. I will focus on asking the Government to reconsider the decision to deny the national living wage to under-25s.

It is an absolute travesty that young people have been told that they are not worth £7.20 an hour. I ask the Government to think carefully about the message that sends to young people and their families. People between the ages of 21 and 24 are currently paid 50p less than the new living wage per hour, 18 to 21-year-olds are paid £1.90 less an hour, and those under the age of 18 are paid just £3.87 an hour, which is £3.33 less. It is frustrating enough for those under 25 to be missing out on the financial boost, but the Minister for the Cabinet Office and Paymaster General outlined his reasons for that decision as follows:

“Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average…It was an active choice not to cover the under 25s.”

What a blow to the next generation.

To give some perspective, Queen Victoria inherited the throne at the age of 18, Steve Jobs was 21 when he co-founded Apple, Mark Zuckerberg was 19 when he created Facebook, Adele was just 21 when she produced her Brit and Grammy award-winning album of the same name, and Roger Federer had won eight grand slam singles titles before he turned 25. Tales of William Pitt the Younger, Prime Minister at just 24, have no doubt made all of us in the Chamber feel like underachievers, but although that is far from being the norm, there is nothing new about young politicians and, dare I say it, the hon. Member for Paisley and Renfrewshire South (Mhairi Black) is doing a pretty outstanding job as the baby of the House at the age of 21. I accept that those embarking on a new role often require training and support from employers, and so perhaps initially represent a reduced return on the employer’s investment of wages, but that could be the case for any new employee, regardless of age.

I will give an example of how unjust the policy could be in practice. Let us imagine a young person who takes their A-levels at 18, and goes into training in the workplace or directly into employment. They could have been in their job for seven years before being entitled to the living wage, yet a new employee could start in the same role, sat at the next desk, and be paid the living wage—50p more an hour—with seven years’ less experience, simply because they are over 25.

Alternatively, a young person might study hard at school and decide to pursue an academic route by going to university. Research by Which? indicates that a typical student on a three-year course outside London might expect to graduate with around £35,000 to £40,000 of student loan debt. Most students on a three-year course graduate at the age of 21. The Office for National Statistics has identified that around 47% of graduates are employed in non-graduate roles, a trend that has steadily increased since the 2009 recession. A young graduate who has done all the right things—worked hard and got a degree—and who is saddled with up to £40,000 of debt as a result has only a 53% chance of securing a graduate job, and is not even entitled to the new living wage. That also means that they will not start paying their student loans back to the Government, which surely does not make sense for anyone.

When I graduated from Lancaster University at 21, I started working for an SME in my constituency, predominantly working in sales both overseas and across the UK. As one of the few employees who was young, was not married and did not have children, I was regularly asked to travel at short notice and do the out-of-hours engagements, working evenings and weekends. That reflects the experience of young people across the country. Young people are often asked to work harder and longer hours because of their youth—to work the longer shifts, lift the heavier packages and work the antisocial hours—and often oblige, through a desire to prove themselves and to move up the ladder, but also because sometimes their circumstances mean that it is easier for their employers to ask them, as a young person, rather than older members of staff who might have commitments at home.

Matt, who works in my parliamentary office, is 23. He graduated from Oxford University at 21. He works, in all honesty, like a Trojan, as do my other staff, who are over 25. It would be completely unfair and unjust to pay Matt less than my other members of staff simply because of his age.

There is also a danger that the omission of under-25s from the living wage makes those over 25 more vulnerable in the workplace, as it has the unintended consequence of making those under 25 more attractive to companies that have to deliver a service at the lowest possible cost. I hope that when summing up the Minister will outline what safeguards the Government intend to introduce for the living wage. In an economy where a few pounds is the difference between winning and losing a contract, how do we ensure that firms will not seek exploitatively to employ only under-25s, doing a disservice both to them and to those who are over 25 and will miss out as a result?

With that in mind, I ask the Government to reflect on their offer to young people. Citizens Advice recently published a report stating that young people from varied socioeconomic backgrounds are starting their adult lives with a significant and sometimes crippling amount of personal debt. Further figures from the Office for National Statistics confirm that as a result of lower pay, under-25s are being sucked into debt. According to the latest figures, 16 to 24-year-olds have the highest level of debt compared with income. It is double the debt level for the population as a whole. Would it not make sense to give that group a helping hand, and extend the national living wage to under-25s?

In response to a question from my hon. Friend the Member for Mitcham and Morden, the Prime Minister said:

“We want to see people taking home more money”.—[Official Report, 9 March 2016; Vol. 607, c. 276.]

However, we are once again on the wrong side of the debate on equal pay for equal work. I ask the Government to rethink their decision to deny under-25s the national living wage.