Jacob Rees-Mogg
Main Page: Jacob Rees-Mogg (Conservative - North East Somerset)Employment Opportunities Bill
Jacob Rees-Mogg Excerpts
Mr Chope
My hon. Friend is absolutely right about the black economy, and indeed I will refer to it in due course. The Low Pay Commission itself accepts that there are more than 1 million operating in the black economy at below the national minimum wage. That demonstrates that the minimum wage legislation is not working anyway and is widely ignored.
Jacob Rees-Mogg (North East Somerset) (Con)
It occurs to me that one advantage of what my hon. Friend proposes is that the mood towards asylum seekers in this country would improve dramatically. Many people feel that if asylum seekers are coming here and claiming benefits, claiming benefits was their reason for coming here. If asylum seekers were working and contributing, the British people would regard them more sympathetically
Mr Chope
My hon. Friend makes a really good point. This month we are celebrating 60 years of the UN refugee convention. One of the problems of public perception is that although everybody supports refugees—I think almost everybody would say that we are happy to look after refugees—they do not regard all asylum seekers as genuine refugees. They now think of asylum seekers as what are called illegal or irregular migrants. If we were able to give the genuine asylum seeker enhanced status, as he says, that would raise the esteem in which they are held in this country and their own self-esteem.
I turn now to clause 2. You will know, Mr Deputy Speaker, that the minimum wage is currently £5.93 an hour for an adult over 21, but this October it will rise to £6.08 an hour for such an adult, to £4.98 for those aged 18 to 20 and to £3.68 for those aged 16 or 17. In addition, for apprentices who are within a particular age range there will be a minimum wage of £2.60 from this October. To illustrate the consequences of my Bill, I will use the October figures rather than the current ones.
Defenders of the minimum wage argue that it represents the minimum living wage, but if so, why do hundreds of thousands of self-employed people work for far less, and why does the state tax the minimum living wage? I am enthusiastic about the coalition Government’s tax policy, which recognises that the minimum wage is so basic that it should not be taxed, but we are a long way from that at the moment. From October, the minimum wage for a 40-hour week will amount to £12,646 a year, whereas even the enhanced tax-free allowance for a single person will be £7,475. That means that even somebody on the minimum wage is paying tax on more than £5,000 of their income. In consequence, far from actually receiving a minimum wage of £6.08, the amount that people who are working full-time can take home is more like £5.
Mr Chope
My own view is that the Government got it wrong—I will be blunt about it. There is no point in beating about the bush. I know that I am supported in that opinion by a lot of other commentators. I will discuss later one comment on the increase of 2.5% for adults and an even smaller percentage for young people, which is that it will be disastrous for young people. If that modest increase in the minimum wage is going to make an enormous difference to young people, what would be the consequences of introducing the flexibility in my Bill? It would be nirvana for young people who do not currently have work and are seeking it. We need to consider the matter in context, and I think there is a much bigger issue than whether the minimum wage should be raised by 2.5%, as it has been this year.
Raising the personal allowance will do a lot more to help people on the minimum wage than the 2.5% increase. The effect of the interaction between the minimum wage and income tax is that about 8% of the income of somebody working on the minimum wage will be taken in tax, plus what is taken in national insurance contributions.
If a single adult is out of work, he is entitled to an out-of-work benefit payment of between £60 and £70 a week—well below £2 an hour, even for a 35-hour week. However, the minimum that he can be paid if he works for 35 hours is more than £200 a week. That is a big gap. If he is offered, and willing to take, 35 hours’ work for, say, £140 a week, which is twice what he can get on the dole, the state does not allow him to take it despite the fact that it would save the state a significant amount of money. I put this to the House and to the Government: how ludicrous, mad and silly is that situation? Why can we not allow somebody who would otherwise try to exist on benefits of between £60 and £70 a week to go out and obtain gainful employment and double his remuneration? Currently, we do not allow that.
The freedom to work for less than the minimum wage would not be attractive to everyone, which is why the Bill does not seek to abolish the minimum wage but to facilitate an opt-out by mutual consent. That freedom would not be attractive to everybody. Some might choose to invest some of their time looking for much better paid work rather than undertaking work below the minimum wage.
Jacob Rees-Mogg
It just occurred to me that somebody who refused a job who had not opted out of the minimum wage could exclude themselves from receiving jobseeker’s allowance. Would that be the case, or could the Bill make provision for that?
Mr Chope
The Bill could make provision for that—I certainly intended to make provision for that, but it is not expressed in the current wording. My hon. Friend makes a good point, because we do not want to introduce more disincentives to opting out of the minimum wage, such as putting people in a position in which they are not entitled to any benefits should their circumstances change.
Another reason why people may not want to opt out of the minimum wage is that unemployment benefit or jobseeker’s allowance provide access to passported benefits—meaning that they bring with them money for dependents and help towards housing costs and so on—so people could be worse off working for less than the minimum wage than if they were on benefits. My question is why should these people not have the freedom to decide for themselves whether or not they wish to work for the minimum wage?
Many self-employed people earn far less than the annualised minimum wage for full-time work, thereby avoiding the constraints of the national minimum wage legislation and fixed penalties. There are fixed penalties, which can run into thousands of pounds, for employers who take people on at below the minimum wage, even if that person wants to work for less than the minimum wage.
Of course, not everybody wants to become self-employed. Another argument that I expressed when the minimum wage legislation was originally before the House in the late 1990s was that it discriminates unfairly and disproportionately against people who are not classified as fully disabled—for the purposes of this argument, I shall describe such people as conscientious plodders. It might take such people a bit longer to do a given bit of work than it would take the average person, but by having a national minimum wage we are putting them at a significant disadvantage, because they might otherwise be able to work longer hours for less money per hour to achieve the same objective. If they did that, they would take pride in being able to work and contribute to our society. I do not have the figures with me, but I believe that the proportion of disabled people who are unable to get a job is rising rapidly. That might well be linked with the advent of the national minimum wage.
What would be the consequences of enabling people to opt out? There are many examples of people who offer work to others, such as window cleaning, gardening and car washing, that is not worth as much as the minimum wage. I am not talking only about what we used to know as boy scouts’ bob-a-job week jobs—it is probably more than a bob a job these days. Many people would be willing to offer something less than the minimum wage for a job, but they are currently not allowed to do so. If the price is right, a potential employer will be willing to provide work. I am sure that there is a lot of opportunity out there in the marketplace. People would offer work to people if the wage demanded were not as high as it is currently under the minimum wage. That is particularly true in the more remote regions of the country.
Philip Davies
I have given way enough to the hon. Gentleman. I want to crack on because other Members want to speak. I put Labour Members’ attitude down to their being misguided. I know that the hon. Gentleman was a university lecturer. I am not sure that I class that in the wealth-creating sector. Perhaps we will debate that in the Tea Room afterwards.
Labour Members have the attitude that basically the only way for businesses to make a profit is to screw the customers and the employees into the ground as much as possible; that that is the secret for businesses in making as much money as possible; and that, if it were not for the Labour party intervening at every possible opportunity, across the country the customer and the employee would be squeezed and fat cat businesses would make massive profits. I genuinely think that that is their view of the world. That may be the view in the Victorian age that the hon. Gentleman lives in, but in the modern world that is not how business works. That is not how to make money as a business.
In the real world today, the hallmark of successful companies—the thing that they have in common—is that they look after their customers and their employees. The thing that failed businesses have in common is that they do not look after their customers and their employees. That tends to be what differentiates successful and failed businesses. I am sorry that, still in this day and age, the Labour party has not woken up to the fact that, to be successful in business, people have to look after their staff and customers and that, if they do not, they will go out of business.
Jacob Rees-Mogg
I was concerned about my hon. Friend’s attack on the Victorian age, which was one of the finest ages in British history, when most employers were benevolent, kindly, good and not out of a Dickens novel: they were more Trollope than Dickens by and large.
Philip Davies
I can always rely on my hon. Friend to speak up for the Victorian age. In fact, he usually speaks up for an age before the Victorian age, so I commend him for being so modern, but he is right. In passing, I should say that I know that better than most, because in my constituency, I have Saltaire, which is a world heritage site made famous by Sir Titus Salt, who had his mill in Saltaire, built houses all around the factory for his employees and was the epitome of a benign Victorian mill owner, so I thank my hon. Friend for allowing me to give a plug to Saltaire in case people are looking for a great place to visit.
My hon. Friend the Member for Christchurch made a point about tax. It is perverse that hon. Members can be so wedded to the idea that it is outrageous for anyone to be paid below £5.93 an hour, yet in the next breath be perfectly happy for those people to be taxed. If we are going to have a national minimum wage, if it is a minimum that people can be expected to earn and live on as an employment wage, surely those people should not be taxed on whatever happens to be the minimum wage.
I cannot make a logical case for why the minimum wage should be taxed. It is not that people are taxed by just a bit. People in full-time employment on the minimum wage are taxed, if income tax and national insurance contributions are combined, at about £1,500 a year. If people want to argue for a minimum wage, that is a perfectly respectable position to hold, but surely those same people should be arguing that people on that wage should not pay any income tax. If Labour Members want to confirm now that they agree that people earning the minimum wage should not be taxed, I will happily give way.
Philip Davies
I have heard that argument. I do not want to be sidetracked, but I do not agree with my hon. Friend. The fewer people at the lower end who pay tax the better. I do not see why we should expect the lowest paid in the country to contribute to taxes. They should be allowed to take home and keep what they earn. It is very rare that I say this to my hon. Friend, but I simply do not agree.
Jacob Rees-Mogg
People on the minimum wage, regardless of their income tax position, will also pay VAT, council tax, tax on cigarettes particularly, tax on alcoholic beverages and often tax by playing the lottery. They will be contributing, even on the minimum wage.
Philip Davies
My hon. Friend is absolutely right; many of those people already pay an excessive amount of tax through their spending, as he says. The best thing that we could do is give them some relief in the income tax that they pay. There is an easy way of ensuring that we can help to stimulate the economy without penalising anybody in the amount that they take home. If the only purpose of the minimum wage is to ensure that people take home a certain amount of money each week, I do not see what objection there could be to people taking home exactly the same amount of money.
I could talk about the provisions in the Bill on asylum seekers. I am not entirely persuaded of the case made by my hon. Friend the Member for Christchurch, because I wonder whether the Bill might unintentionally encourage even more people to come here falsely claiming asylum. He did go some way to persuading me of the merits of his case, so I would not allow that to be an objection to my supporting the Bill. I would be happy to support the Bill because of the minimum wage provision that allows people to choose whether they wish to be subject to it or not, and I would perhaps try to delete the part on asylum seekers in Committee. If hon. Members support the provision to allow asylum seekers to work and to be paid, they could equally support the Bill on Second Reading and attempt in Committee or on Report to delete the part on the minimum wage that they do not like. Given that that opportunity is there for them, I hope that we will not hear any weasel words from people who will be seen to have voted against allowing asylum seekers to work and to be paid. They are voting against that just as much as they are voting against anything else in the Bill. I hope that the hon. Member for Manchester Central will not try to weasel his way out of the fact the he is in danger of voting against something that he claims that he enthusiastically supports. He could try to delete the part he does not like at a later stage.
Philip Davies
For the avoidance of any doubt, Mr. Deputy Speaker, I will withdraw the word “weasel”. I certainly did not mean it in any pejorative sense.
Jacob Rees-Mogg
I encourage my hon. Friend to elaborate a little on his views on clause 1, as it is tremendously important. I know that the people of Shipley will be interested, and I am pretty sure that the people of North East Somerset would like to know what he thinks.
Philip Davies
My hon. Friend tempts me. I have no problem in principle with what my hon. Friend the Member for Christchurch said in terms of people being allowed to work, particularly when they have been here for so long. There is a massive issue—the hon. Member for Manchester Central also made this point—where people have been waiting years and years for their cases to be heard and in some cases have set up a family and are still deprived from being able to work. I would prefer to tackle that by speeding up the process, rather than by accepting that the process will take ages and allowing them to work. That is my preferred solution. That is why I am not so enthusiastic about this part of the Bill. However, I will not allow that to prevent me from supporting the Bill if my hon. Friend puts it to a vote.
I appreciate that the national minimum wage is popular, I understand perfectly that it is politically expedient not to oppose it in any shape or form, and I absolutely accept that many people in this country have benefited from the national minimum wage and have seen their pay rise as a result. I do not want to undermine that point. Many people in my constituency and others have benefited from it. But in politics it is crucial that we do the right thing, even if it is sometimes unpopular to do it or to say it. It is essential that we have a proper, sensible debate about these issues to ensure that we get them right. Instead of engaging in a sensible debate where we all agree that everyone has the best interests of the public and low-paid people at heart, those who disagree with us on these matters tend to engage in some rather childish name calling and abuse, often through a lack of reason in their debates.
We want the best for everybody, and although Government Members might have different ways of going about it and a different perspective on it, nobody should be under any illusion, because we want the best for low-paid workers and people who are out of work just as much as Labour Members. I do not decry their different perspective, and I hope that they will not decry ours but instead be grown-up enough to accept that the national minimum wage has made it harder for some people to access the jobs market. If Labour Members are not prepared to accept even that, we are not going to get anywhere with trying to tackle the scourge of unemployment.
The hon. Member for Manchester Central either would not answer my question or did not know the answer to it, but the fact is that unemployment has gone up since the national minimum wage was introduced. When it was introduced, unemployment was at 1.7 million and youth unemployment was 1.1 million, and now unemployment is at 2.43 million and youth unemployment is at 1.5 million. That has happened since we have had the national minimum wage. Whether people like it or not, and whether it is convenient to point out those facts or not, they are the facts of the matter.
I am sure that all Members want everybody to have the opportunity to get a job, to develop their career and for it to flourish in every possible way, but for some people the national minimum wage may be more of a hindrance than a help, and if those people—in my view, some of the most vulnerable people in our society—consider it a hindrance and feel that for a short period taking lower pay to get on the first rung of the jobs ladder is a good thing, I do not see why we should stand in their way.
I hope that we can have that sensible debate, so that we can help everybody in society—not just people in work, but those people who are really struggling to secure their first opportunity on the jobs ladder.