Draft National Minimum Wage (Amendment) regulations 2021

Imran Hussain Excerpts

Wednesday 3rd March 2021 General Committees

[Imran Hussain (Bradford East) (Lab)]

It is a pleasure to serve under chairmanship, Sir David. I echo the thanks from the Minister to my hon. Friend the Member for Liverpool, Wavertree who has done significant work on this matter and has an outstanding private Member’s Bill that addresses some of the issues that we are addressing today.

The regulations are not contentious and I hope that the Minister will agree that raising the minimum wage—the wage that some of the poorest in our society are paid—should never be contentious. We welcome any rise in the minimum wage and we also recognise the step in the right direction made by the change within the regulations, which will see a reduction in the age at which an individual is eligible to be paid the full rate from the age of 25 to 23.

Broadly, therefore, the regulations have our support. However, let us remember that when the Government speak of increases in the minimum wage, it was indeed a Labour Government who introduced the national minimum wage in the first place, and that when the Government pat themselves on the back for introducing, in their words, a national living wage, it is actually no such thing. The living wage is currently set at £9.50, and at £10.85 an hour in London, by the Living Wage Foundation, taking into account a range of living costs and considerations, compared with the Government’s rate of £8.91 an hour.

We recognise that the increases in the different rates of the national minimum wage for different age groups come at the recommendation of the independent Low Pay Commission, as highlighted by the Minister, and that the Government tasked the Commission with recommending the increases required to reach two thirds of median earnings by 2024. However, for too many workers with high costs of living, particularly in the capital and other urban areas, this increase may not prove sufficient to match their rising costs, particularly during this pandemic, when we have seen those on the lowest end of the pay scale being hit the hardest. Instead, the last Labour manifesto set out an ambitious but achievable goal of introducing a national minimum wage for all employees by 2020, creating a real living wage whereby everyone is rewarded with a fair day’s pay for a fair day’s work.

We also recognise the above-inflation rise for apprentices, who are woefully underpaid, and we hope that this increase will not end there and will also be matched by a real ambition to boost the number of quality apprenticeships across the country. The Government should seriously consider using the underspend in the apprenticeship levy to help pay the wages of new apprentices directly in order to boost take-up, as those of us on the Labour Benches have advocated many times. An apprentice is an investment by an employer in their local economy and their workforce, and employers must always be encouraged to treat them as an investment and not as low-paid, disposable labour.

Although reducing the age limit at which an individual is eligible for the full rate of the national minimum wage is, of course, also a step in the right direction, the Government have still retained the age limit. This retention fails to acknowledge that those under the age of 23 face many of the same pressures as those faced by someone over the age of 23. Many young people below the age of 23 still have to make rent, cover bills and put food on their tables, and it is wrong that they are being held back because the Government and employers do not believe that their contribution to society and to the economy is worth the full rate of the national minimum wage. Therefore, the Government should look closely at scrapping this ridiculous age limit. Those below the age of 23 are more likely to spend their wages than put them away in savings, which will put money back into our local economies at exactly the same time that we need to bolster consumer spending, in order to recover from the present crisis and get the country back on its feet.

The regulations also increase the time limit for which employers are required to retain records for the purpose of enforcement of the national minimum wage from three years to six years, following a recommendation from the Director of Labour Market Enforcement. Again, this change is, of course, welcome.

Underpayment of the national minimum wage remains a serious problem, which sees unscrupulous employers exploiting their workforce, particularly in certain sectors of the economy, such as the care sector, and we should rightly clamp down on practices that see staff being cheated of their pay. However, we note that this was a recommendation put forward by the now departed Director of Labour Market Enforcement, who left his post last month. His post remains unfilled, despite his offering to remain in the position over an interim period. Allowing this post to remain vacant during a pandemic in which many workers, and predominantly those on the lowest end of the pay scale, are being exploited is a grave oversight by the Government, particularly when we know that so many employers are trying to circumvent minimum wage rules and so few punishments for doing so have been handed down.

In conclusion, we will not oppose the regulations. However, we must leave ourselves in no doubt that, although any rise in the minimum wage is a positive thing, those proposed in the regulations will not be the answer to the endemic problem of low pay in our economy, and nor will they help deliver the transformation that our economy desperately needed even before this crisis. It will also not solve the ills that are faced by many workers in low-paid roles, who face disproportionately higher living costs and who have to pay a poverty premium, whereby they are financially penalised just for being poor. We therefore urge the Government to look at the remit and scope of the LPC—particularly during these pressing times, in which those who are on low pay have been hit the hardest—and to scrap the age limits for the minimum wage to ensure that all are paid fairly for their work, regardless of age.