Living Wage

Ian Lavery Excerpts

Wednesday 9th January 2013 Westminster Hall

[Mr Chope]

I will not give way to the right hon. Gentleman again, because lots of people want to participate in the debate.

Even the figures produced by supporters of the concept of a London living wage demonstrate the variation in living wage—£6 an hour each for members of a couple with no dependants, rising to £18.57 for a single parent with three dependant children. That is an annual wage requirement of £36,319 a year—pretty close to the level at which they would have to pay higher rate tax and lose their child benefit under the wholly misguided benefit arrangements the Government have introduced. That is a side story to what we are discussing.

If an individual wishes to employ someone, they offer a wage for the job and it is up to individuals applying for the job to decide whether it is worth while to undertake it at the wage offered. I hope the Minister will endorse that in his summing up. If employers just offer wages in line with the national minimum wage, they cannot differentiate between the person one might describe as the “honest plodder” and the person with a little more enterprise, flair and, potentially, loyalty to the organisation. That is why it is often in the best interests of a company to offer higher wages, and indeed why I offer gap-year students in my office significantly more than the minimum wage. I recognise that in that way I am more likely to get gap-year students who will stay the course, be conscientious and turn up for work on time than if I offer either zero wages or an internship rate.

I operate in a marketplace myself, and all I am suggesting is that other employers should be encouraged to operate in the marketplace. We should not sleepwalk into having a system of nationally set minimum wages that supposedly amount to a living wage.

[Ian Lavery (Wansbeck) (Lab)]

Will the hon. Gentleman give way?

[Mr Chope]

I will give way once to the hon. Gentleman.

[Ian Lavery]

The hon. Gentleman peddled a lot of information about the national minimum wage that was completely unfounded, and he appears to be doing exactly the same now. Does he not agree that the living wage is good for business, society and people in the workplace?

[Mr Chope]

The living wage may, in certain circumstances, be good for employers—I have just conceded that—and for employees, because they will receive more money than from another employer. I am much less certain about the overall benefits for society as a whole. Dramatic statements have been made about how, if everybody had the living wage, it would increase the amount paid to the Exchequer and therefore increase the amount of money available to fund public expenditure, but that analysis does not bear detailed scrutiny.

My point is that wages should be left to the marketplace. It is for an individual to present himself, and if he wishes to take a job for £4 an hour—[Interruption.] The hon. Member for Wansbeck (Ian Lavery) shows his scepticism, but a large number of graduates, who are out in the marketplace, are being presented with a stark choice: they either work for nothing—as an intern, basically—or do not receive the minimum wage because that is regarded by employers as unaffordable. Therefore, if an individual said to a potential employer, “I’m prepared to work for £4 an hour,” it would create an illegal situation. The purpose of my Employment Opportunities Bill was to enable people voluntarily to opt out of the requirements of the minimum wage should they so wish. I would have thought that that was pretty fundamental in an open, democratic society, but obviously the control freaks in the socialist party do not like giving people the freedom to do that. [Interruption.]

[Mr Chope]

There is a chasm between what is articulated by those who support the living wage and—

[Ian Lavery]

Will the hon. Gentleman give way?

[Mr Chope]

I will give way a final time, but I will then sit down, because several others want to participate.

[Ian Lavery]

I thank the hon. Gentleman for giving way a second time. Is he really suggesting that the marketplace should determine wages? Would he accept people working for £1 an hour?

[Mr Chope]

In countries overseas, many people work for less than £1 an hour, and some of them have taken jobs that would have been available to people in this country, because those jobs have been outsourced overseas. Some of the work done shows that companies based in, say, London may want to pay all their staff high salaries, which is fine, but often outsource more menial jobs to overseas locations where people are paid much less than the minimum wage operating in this country. That is an area where the market should operate.

The market for labour in Cornwall or north-east England is different from that operating in London. The market for a young single person is different from that for someone with a lot of dependants. I have constituents, as I am sure does the hon. Gentleman, who have recently been made redundant but have so many commitments that they cannot afford to take a job at a significantly reduced salary, because they would be unable to meet all those commitments. That is part of what I describe as the operation of the marketplace.

I do not feel that I am out on my own on the living wage, but we should not lose sight of the importance of allowing the market to operate in this area. Whether we call it a moral case or whatever, I do not think that someone employed at £6 an hour—taking the figures I gave earlier—should be prevented from being employed because somebody comes along and says that there shall be a national living wage in excess of £6 an hour, with employers shedding employment as a result.

Hundreds of thousands of people are self-employed. They work for far less than the minimum wage or what people might describe as a living wage, but they work hard and for long hours as self-employed people. Why should we condemn what they do, if they are operating in their own marketplace? Why should we base a living wage on a week of 37 and a half hours when, to increase their wages and standard of living, many people choose to work more hours than that? Why arbitrarily choose that number of hours as the basis for assessing a living wage, because a living income may be based on people working a lot more than 37 and a half hours?

This debate has the potential to be quite interesting. I am grateful to the hon. Member for Erith and Thamesmead for introducing it. I hope that, in summing up, my right hon. Friend the Minister will leave no room for doubt that the coalition Government are absolutely opposed to the living wage and more regulation.

--- Later in debate ---

[Kwasi Kwarteng]

I support it now, because it is a fact of life. To address the hon. Gentleman’s comment directly, the minimum wage is not set at a level that is damaging to business. It is set at a reasonable level, although I am not saying that it is the best level. I want people to earn more—of course I want them to be more affluent—but the way to achieve greater prosperity is to allow businesses to do well, to flourish and to employ people, and that will not happen as a result of the state demanding a certain level of wages. We have been there: in the ’70s, we had national incomes policy and price policy, but that all failed—it was a complete disaster. It is baffling, in 2013, that we are hearing the same old socialist arguments for Government intervention and control.

I appreciate that many others want to speak, so I will finish on this point.

[Ian Lavery]

Is it a socialist ideal or policy to support having a decent living wage so that people can put bread on the table for their kids?

[Kwasi Kwarteng]

I have said this about three times in my speech: everybody wants people to have higher wages—[Interruption.]