Living Wage

Debate between Jim McMahon and James Berry

Thursday 3rd November 2016 Commons Chamber

[James Berry (Kingston and Surbiton) (Con)]

I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) for bringing the debate to the House. I enjoy working with her on human rights in Sri Lanka, and I enjoyed hearing her comments in the debate. I welcome the speech of the hon. Member for Halifax (Holly Lynch), whom I am following for a second day running.

The national minimum wage was introduced by the Labour Government in 1999 at £3.60 an hour for those aged over 22. Successive increases based on recommendations from the independent Low Pay Commission meant that it reached £6.70 by last year. I commend the Labour Government for introducing the national minimum wage, but this progressive Conservative Government introduced the national living wage, increasing the lowest rate of pay for those aged 25 and over to £7.20 this April, and to £9.35 from April 2020.

That was significant for at least three reasons. First, some had often wrongly characterised the Conservative party as an opponent of statutory minimum wages, which was clearly not the case. Secondly, the 2016 rate represents a 7.5% increase, or a 10.8% year-on-year increase, which is the largest cash increase ever to a living wage. Thirdly, the independent Low Pay Commission concluded that the real value of the new national living wage would restore and surpass the value lost in the economic downturn. I was therefore delighted when the Government announced the national living wage, as were many of my constituents in Kingston and Surbiton who were among the 1.8 million workers in the UK benefiting from the introductory wage increase.

I was concerned about the effect of the national living wage, particularly in sectors such as nursing homes. Members on both sides of the House raise the issue of the high cost to councils of placements in nursing homes, and the high costs to private users of nursing homes, which I thought would only go up if the minimum wage was increased. I discussed that with a number of care home owners in my borough of Kingston, who pointed out that they were either already paying in excess of the then proposed national living wage or planning to do so—there was such a shortage of nurses and healthcare assistants willing to work in nursing homes that they had to pay the additional amount to get quality staff.

[Jim McMahon (Oldham West and Royton) (Lab)]

The hon. Gentleman has started a very curious train of thought. Let us say that the employers had said that the increase would have an impact. Would his view have been that the staff who look after some of the most vulnerable people in his community should not be allowed the increase?

[James Berry]

My concern was that the cost would be passed on to the customer, which would either be the council or private payers, who often have to shell out a huge amount to pay for the care of their parents or loved ones. As it happens, as far as I have seen, that has turned out not to be the case. In fact, I have seen no significant evidence of widespread transfers of the cost of the national living wage to customers.

How have the costs been absorbed? Some companies have absorbed them by taking a hit to their profits. Others are doing the very things that the hon. Member for Mitcham and Morden listed, many of which are absolutely disgraceful—I have no quarrel with her about that. There are other examples of companies forcing staff to buy their own uniforms or pay for their training, which I similarly condemn, as I am sure she would.

What action are the Government taking? First, with minimum wage enforcement, an employee can take their employer to an employment tribunal for breach of contract. Secondly, when there is non-payment of a minimum wage, including the national living wage, the employee can complain to Her Majesty’s Revenue and Customs, which investigates every single case and can require repayment of the underpayment. Following changes made by the Government in April, a fine amounting to 200% of arrears can be levied. There is also provision for naming and shaming, which is popular in this context at least, as 687 companies have been named and shamed so far. As far as I am aware, there have been no complaints of this action not being taken when it has been demanded of HMRC.

What happens when the rule is not breached, but the spirit of it is? I hope that the Government will continue to criticise employers that do not follow the spirit of the rules in exactly the way the hon. Members for Mitcham and Morden and for Halifax and my hon. Friend the Member for Sutton and Cheam (Paul Scully) have taken the opportunity to do today so that we, as customers, can also take direct action by not shopping at Marks & Spencer this Christmas if we are not happy about how it treats its staff.

What we did not hear from the hon. Member for Mitcham and Morden was any suggestion of how the Government could do more to deal with employers who do not behave according to the spirit of the rules without wrapping them up in regulation after regulation. If I had an answer to that, I would certainly give it to the House, but I have not heard of one yet. I am pleased there are regulations in place to tackle those who breach the letter of the rules. I hope that hon. Members and the Government will continue to call out those who breach the spirit of the rules; I will continue to do that, too.