National Living Wage

Jo Stevens Excerpts

Monday 18th April 2016 Commons Chamber

[Joan Ryan]

Indeed. Compare that double whammy—loss now and loss of deferred income, which is pension income—with what happens to the companies: they gain from cutting pay, and from the reduction in corporation tax, which should offset the pay increase, not allow them to cut pay. Although B&Q says that it has rectified the sort of situation I have described, I defy B&Q senior management to place themselves in the shoes of Mr Jones and Ms Smith and honestly say that they feel optimistic about their future.

Let us turn our attention to other employers that we know are doing similar things. Bradgate Bakery is part of the group that owns famous brands that we all enjoy, such as Ginsters pies and Soreen loaf, but the pay that it is offering staff is a lot less tasty than its food. Bradgate has written to all its Leicestershire staff, detailing changes to their wages. Most shop-floor employees at Bradgate were earning just over £6.70 an hour before 1 April, so the introduction of the national living wage should have made quite a difference for them, but Bradgate, like B&Q, has found an opportunity to save money. That is because of the universal truth that companies will usually pay their workers a lot less than they can afford, if they can get away with it.

[Jo Stevens (Cardiff Central) (Lab)]

Does my right hon. Friend agree that part of the problem is that employers see the national living wage or minimum wage as a ceiling for payments, rather than a floor, and will always try to pay the least that they can get away with?

[Joan Ryan]

rose—

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[Justin Madders]

The hon. Gentleman is missing the point, which is that we have a very dishonest settlement whereby the Government are saying, “You’re going to get more money in your pocket,” but again and again we are seeing employers use unscrupulous methods to take that money back. We want the Government to come up with a much more clear and transparent way of dealing with this, so that employers end up paying what the Government have decreed is the minimum that people can live on.

[Jo Stevens]

Specifically on the point about small businesses, we know that if the lowest-paid workers, who often work for small businesses, have a pay increase, they tend to spend it locally, so the local economy grows. In addition, the Government have given tax cuts to businesses, so small businesses are not being deprived of any benefit.

[Justin Madders]

My hon. Friend makes an excellent point. We have heard examples today involving large national chains. We can all use our spending power to go elsewhere and support local businesses, which are the lifeblood of our communities.

We should not be surprised by the way this policy is panning out, because this is the way in which some employers have always operated—they see every issue that affects their business as an excuse to whittle away at the terms and conditions of their staff.

The Minister for Skills said in a written parliamentary answer, which my hon. Friend the Member for Bradford South (Judith Cummins) referred to earlier, that any changes to terms and conditions should be discussed and agreed with workers in advance. I am sure that that advice will come as a surprise to the Secretary of State for Health, given his approach to the junior doctors dispute. I am afraid that the idea that employers will wait for an agreement on these issues is fanciful and bears no relation to the reality on the ground.

Those who are represented by a trade union at least have a fighting chance, but the reality is that employers can and do change terms and conditions fairly frequently. When they do so, it is almost always to the detriment of the people they employ. Once an employer gives a notice of change, the employee has very little redress. If legal redress is an option, the introduction of employment tribunal fees has made that a most unlikely route, given the 80% drop in employment tribunal claims since fees were introduced.

My constituency of Ellesmere Port and Neston is one of the top five living wage blackspots for women working part time across the north-west, according to the TUC, with 66% earning less than the living wage. Any increase in basic pay has to be a step in the right direction for that group of workers, as long as it does not come at the expense of other elements of the pay package.

It would be a mistake to claim that simply increasing basic pay means that there is now a fair workplace settlement. We know that many ruses and mechanisms are used to stop effective workplace protection, such as bogus self-employment and zero-hours contracts. This policy could even see the development of other scams. Some unscrupulous employers might sack people just before their 25th birthday just so that they can get someone on a cheaper rate. More apprenticeships that are apprenticeships in name only might pop up because they offer the chance for an employer to pay someone a lower rate for the same job. What will be done to tackle that?

Nearly half of all minimum wage jobs are in hospitality and retail—sectors that are both major employers in my constituency. I have conducted my own research into the practices of many of the national restaurant and fast food chains, which has revealed widespread abuse that the Government do not appear to be interested in tackling. The research, which was conducted at the end of last year, showed that 90% of the 9,000 outlets surveyed did not pay the real living wage. It also highlighted the widespread practice of what is known colloquially as “shift shafting”, whereby staff are sent home at the start or in the middle of a shift if the outlet is not busy, without any pay or compensation. More than 80% of respondents to the survey admitted that they would do that. It means that people can end up out of pocket simply by going to work, through being made to wait around without pay and then being sent home without even having their travel costs reimbursed. I hear a lot about the Government wanting to get everyone into work who is able to work, but I hear no condemnation from them of the blatant exploitation of people who are trying to do the right thing, and find themselves out of pocket through the very act of going to work.

Let us make every job reward people with a wage that they can actually live on, but at the same time let us put in place a proper system of workplace protection so that a Government policy is not allowed to be undermined by unscrupulous employment practices that take away other benefits so that people end up no better off, and in some cases actually end up worse off. To achieve that, we need a fundamental change in the Government’s approach, starting with the recognition that trade unions and collective bargaining have a significant role to play in the future prosperity of our nation. We need a fundamental change not only in the Government’s attitude but in the attitude of many employers, with a move away from the bean-counting philosophy that views the worker as a disposable item ready to be replaced by a machine that does not question, expect to be paid or belong to a union. For many people, being in work means vulnerability and uncertainty about their future. How can we tolerate a situation in which people in work can routinely not know whether they will have earned enough to put food on their family’s table at the end of the day?

We should not be fooled into thinking that this policy is a panacea. The Institute for Fiscal Studies estimated that even with the new minimum wage, people with children will be £700 a year worse off thanks to other changes introduced by the Government. The reality is that we are having this debate because the law and culture in this country place far too little emphasis on employment rights. Until this place resolves to do something about that, the kind of injustices that we have heard about today will continue.

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[Jo Stevens (Cardiff Central) (Lab)]

It is a pleasure to follow the hon. Member for Glasgow Central (Alison Thewliss). I pay tribute to my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) for securing this debate and to my right hon. Friend the Member for Enfield North (Joan Ryan) for standing in for her and opening the debate. I hope that my hon. Friend the Member for Mitcham and Morden makes a speedy recovery.

I shall focus my remarks on a specific group of workers—seafarers. These are the only group of workers who are excluded from the full protection of the national minimum wage legislation and equal pay legislation. Ships working in UK waters between UK ports and between UK and continental ports are crewed by staff on pay rates that are well below the national minimum wage. Increasingly, companies are recruiting outside the UK to crew their ships with non-UK seafarers, particularly ratings, in order to profit from sub-national minimum wage pay rates.

Allied to the rise of the flag of convenience vessels, these exploitative pay and employment practices are driving a decline in the number of UK seafarers. In the early 1980s, there were 28,000 officers and 30,000 ratings in the UK merchant navy, but by June last year, the total number of UK seafarers had dropped to 23,380—a fall of nearly 60%. The position for UK ratings, particularly deck and engine, has become exceptionally precarious, with 8,830 working at sea last year—a fall of over 25% since 2011 and over 70% in the last 30 years. Pay exploitation in the UK shipping sector is happening because non-EU seafarers are excluded from the full protection against nationality-based pay discrimination in the Equality Act 2010.

Following years of campaigning by maritime unions, the last Labour Government commissioned an independent assessment of the impact of nationality-based pay differentials in the shipping industry, which was known as the Carter review. It concluded at the end of the parliamentary term in May 2010 that there would be no adverse impact on the shipping industry or jobs and recommended the outlawing of all nationality-based seafarer pay differentials.

The last coalition Government, however, rejected the Carter recommendation, but the Government were forced, under threat of infraction by the European Union, to protect European Economic Area seafarers from nationality-based pay discrimination. In recent months, maritime trade unions have contributed, with the Government and industry, to a working group on the effect of the existing protections in the Equality Act 2010, and it will report in the summer.

At present, passengers and businesses are travelling on vessels crewed by seafarers who are earning as little as £2.40 an hour. This legalised exploitation has systematically undermined maritime jobs in the UK, damaging the skills base and driving up unemployment rates in seafarer communities across the UK.

The RMT trade union estimates that prior to the introduction of the increase in the national minimum wage, over 8,300 seafarer ratings working on UK-flagged or other vessels qualifying for the tonnage tax are likely to be earning hourly rates of pay below the national minimum wage. It stands to reason, therefore, that the introduction of a higher statutory minimum wage will put more seafarers below that threshold and more employers in breach of the national minimum wage legislation.

In its March 2016 report to the Government, the Low Pay Commission recommended that a stronger third-party complaints system be introduced for employers breaching the national minimum wage. That would be through the creation of a public protocol to govern HMRC’s investigation of third-party complaints. This would provide feedback to the complainant and could be a useful source of additional evidence on the rates of pay and contractual terms and conditions of employment for seafarers. The Low Pay Commission said:

“We recommend that the Government establishes a formal public protocol for HMRC to handle third party whistleblowing on breaches of the NMW, which should include arrangements for giving all possible feedback to relevant third parties and appropriate continuing involvement in any resulting casework.”

I urge Ministers to accept that recommendation. A strengthened third-party complaints procedure represents the most effective way to tackle pay rates in the shipping industry that fall below the national minimum wage because of the understandable reluctance of the affected seafarers to complain directly to the UK Government.