National Living Wage

Debate between Jim Cunningham and Simon Danczuk

Monday 18th April 2016 Commons Chamber

[Simon Danczuk (Rochdale) (Ind)]

It is a pleasure to follow the hon. Member for Bradford South (Judith Cummins). I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) for helping to secure this vital debate, and I hope that she gets well very soon.

Britain certainly deserves a pay rise. It has been due one since 2010. If we listened to the rhetoric from the Government, we might be forgiven for believing that the new national living wage would end all the problems of those who are struggling to make ends meet. We have heard the radio adverts in which countless actors with differing regional tones deliver sonnets about what the new national living wage entails for them. In reality, this is not a real living wage—far from it. Although many will receive a step up, some in our society will face an uphill challenge from 1 April. As chair of the all-party group on small shops, I have spent the last couple of months talking to business owners, who fear that the increase in their wage bill will be the final nail in the coffin, because they will simply not be able to meet those costs. I will come on to some of the points raised by the hon. Member for Shipley (Philip Davies).

There were some promising features in the Budget on business rates, aimed at small businesses. From April 2017, small businesses will either be taken out of the rating system completely or have a smaller burden to pay. However, 2017 is the key point.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman mentioned the Government’s new measures on business rates. I do not know whether he is aware of this, but some local authorities may lose out because of that. In other words, it may cost them more.

[Simon Danczuk]

The hon. Gentleman is absolutely right. That is a real concern for local authorities, and there is disparity across the country. That is a good point.

The other point about business rates is that there is an issue with the fact that the relief will not be introduced until 2017. Small businesses will struggle for a whole year before they receive the relief that is in the Budget. As I have already mentioned in this Chamber, the retail business rate relief grant has been stopped this year for small business owners as well. Small businesses employ 35% of the nation’s workforce, but they employ more than half of those who are on the minimum wage. From 1 April, small businesses will be dealt a double whammy of increased wage bills and a reduction in support from business rate grants. They will be under real financial pressure for a whole year.

[Simon Danczuk]

I am going to make a little bit of progress. Larger retailers will be able to offset their costs by reducing the benefits that they pay out, such as Sunday pay, as we have seen from the examples that the hon. Member for Mitcham and Morden has raised in the media recently. Smaller businesses will have to put up prices, slow recruitment or perhaps downscale their operations. Some will have to shut down because they are unable to shoulder the costs until 2017 after having struggled for years. The truth is that the new national living wage should have coincided with the changes to the business rate system.

Next I want to mention the pressures facing the social care sector, which has faced a wave of pressure from the Government over the last few years. We have heard much recently about the social care precept, which enables councils to raise council tax by 2% to pay for care costs. Senior members of Rochdale Borough Council have told me that with the introduction of the national living wage, the precept will provide very little extra funding, if any. Poorer areas such as Rochdale—this is similar to the point made about business rates—will raise only just over £1 million from the precept, because of the council tax bands of the properties in the borough. Even the Conservative-led Local Government Association has warned that the national living wage will put adult care services at breaking point.

The new change is even more worrying in view of the fact that many in the care sector are not even paid the minimum wage. Work by Unison has shown that pay structures, such as not paying travelling time, mean that those who care for our elderly loved ones are not being paid for the vital work that they do. If we want to give careworkers the wage that they deserve, it must be adequately funded. They are some of the most hard-working people, and they deserve to earn at least the minimum wage. Unless the appropriate funding is in place, that simply will not happen.

[Mr Jim Cunningham]

I was not referring to the living wage, as such. I was talking about the cost to local authorities of the change in the business rates. Some local authorities will lose out on this.

[Simon Danczuk]

I understand that point, and I agree with it completely. Britain deserves a pay rise, not some public relations stunt from a Chancellor who is obsessed with political strategy. An increase in the minimum wage must be done properly, and small businesses must be helped so that they can afford it. Most importantly, it must enable individuals to support themselves. The minimum wage remains a great Labour triumph. By the look of things, we will need a Labour Government once again to give Britain a proper pay increase.

Money Transfer Accounts

Debate between Jim Cunningham and Simon Danczuk

Wednesday 17th July 2013 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bayley. I also place on record my appreciation of my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali), not only for securing the debate, but for championing the cause—raising awareness, expressing concern and bringing MPs of all political parties together to ensure that the issue reaches a far wider audience. I genuinely appreciate that. She said much about this banking policy and how it will affect people in Somalia and other countries, and I want to concentrate my comments on the impact in my constituency and similar towns in the United Kingdom.

As long ago as November last year, I wrote to HSBC about one of my constituents, Mr Shamshad Ali—I have the letter with me. He has a money service business called Sterling Currency Exchange Ltd and is the general secretary of the remittance association of the United Kingdom. HSBC decided unilaterally to close his bank account, because it no longer wished to operate in the sector. I worked with Shamshad to get the bank to change its mind, but to no avail. He and I then worked together to find an account with another bank, again to no avail. As Shamshad pointed out, we tried the Royal Bank of Scotland and NatWest, both funded through the public purse and in receipt of much public money, but they too refused him. He now has to operate his business in conjunction with another business, which still has an account with Barclays—but time is running out, and that might well end as well.

The Government need to know about the serious consequences, which include the closure of good businesses, as my hon. Friend pointed out, at the cost of many thousands of jobs throughout the United Kingdom and certainly of a number of jobs in Rochdale. There is also a direct impact on people in my community. Migrant workers, many of them professionals, many on whom the Rochdale economy relies, depend on those independent businesses to be able to send money back to their country of origin. Those workers are being turned off working in towns such as Rochdale, which concerns me.

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank my hon. Friend the Member for Bethnal Green and Bow (Rushanara Ali) for securing the debate and I thank my hon. Friend the Member for Rochdale (Simon Danczuk) for giving way. I, too, have many people from Somalia and other parts of the world living in my constituency. The important thing, which we often learn, is that the family back home rely on the money being sent to them to survive. If they are not allowed to survive in that way, they go underground and are driven to other means. The sooner the Minister takes the matter up and talks to the banks in this country, the better, because not only are people in Somalia affected, but Somalians and other people who have businesses in this country, through transactions and jobs.

[Simon Danczuk]

That is exactly the point that I am leading on to. People in my community send money back to their families—in this instance, in my constituency, to Pakistan, Kashmir and Bangladesh. At this important time of Ramadan, as my hon. Friend the Member for Bethnal Green and Bow pointed out, people rely on the businesses that we are discussing to help them send charitable contributions to the countries from which they originate. We should not underestimate that. Friends and families out in other countries may be exceptionally poor and reliant on such charitable donations, in particular at this important time of year of Ramadan, to help them to celebrate Eid and to buy new clothes, so that they can have a reasonable time at a key point in the Islamic calendar. As a result of the changes, my constituents, instead of being able to use a good, local and independent firm, which complies with all the regulations, will have to use one of the banks, Western Union or MoneyGram.