National Minimum Wage

Jo Swinson Excerpts

Wednesday 15th October 2014 Commons Chamber

[Dr Whiteford]

I want to dwell on equality, because we must remember that the vast majority of people in minimum wage jobs are women. Issues of ethnicity and disability often compound those of gender inequality. Minimum wage jobs are overwhelmingly done by women who are in part-time positions because of their caring responsibilities. Such women are often in sectors with far too much gender occupational segregation, such as cleaning, catering and cashiering. They often have temporary and insecure jobs, and they often work antisocial hours. Other Members have mentioned the problems of exploitative zero-hours contracts.

We cannot separate from this debate the huge impact of gender inequality on wages in this country or dissociate it from child poverty and its long-term impact on our society, which was discussed earlier. We know that children who grow up in deprivation are likely to need the heath service more, to have lower educational attainment and to have much worse job prospects in the long term. Unless we are prepared to recognise that people deserve a living wage to support their families, we cannot begin to tackle the inequality that so dogs our society.

I want to touch on the difficulties of enforcing the minimum wage, which other Members have mentioned. This year, the Low Pay Commission has taken evidence in my constituency, where a significant number of people are in low-paid jobs. Although unemployment is very low in Banff and Buchan—about 1%—a very high proportion of people earn less than the living wage. The vast majority of employers respect employment law and pay at least the minimum wage, but people have nevertheless brought me reports of being paid less than the minimum wage. That issue is extremely difficult to address.

I have been made aware of cases of people involved in the so-called informal economy, as well as in the service sector. They may not have a contract and may not have received pay slips. They know that they are being short-changed and that, in relation to national insurance, they could be losing out on their pensions in the longer term. They are also short-changing Her Majesty’s Revenue and Customs and the rest of us. However, they are reluctant to put their heads above the parapet because they need their job and do not want to jeopardise what little income they have. In a close-knit rural community, they also do not want to be labelled a troublemaker.

Beefing up local authorities’ powers might help, but that is not a real solution. In theory, employees who are being paid less than the minimum wage can pursue legal action against their employer or take them to a tribunal with every likelihood of success, but the reality is that somebody paid less than £6.50 an hour is very unlikely to have the financial means to access the tribunal service or take on the associated legal costs. That is wholly unrealistic, and I hope that the Minister will address that issue and suggest ways round it when she responds, particularly given the changes that the Government have introduced.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I just want to say that any constituent of the hon. Lady, or indeed of any other Member, who finds themselves in such a situation should ring the pay and work rights helpline on 0800 917 2368. They do not need to access the tribunal system; HMRC enforces the national minimum wage on behalf of workers.

[Dr Whiteford]

I am grateful to the Minister—it is very helpful to have that phone number on the record—but my experience, having helped constituents in such a way, is that nothing changes. The Government need to do more on this to make people feel confident about asserting their rights.

I want to wind up quickly by saying that we have reached a situation in the UK where people in low-paid work—

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[Andy Sawford (Corby) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Bedford (Richard Fuller). He made some important points. I will return to some of them, such as the one about procurement and the supply chain.

My constituency has been fighting for better wages for more than a century. I dare say that the struggle goes back even further. In 1905, Raunds boot and shoe workers marched to London. [Interruption.] The hon. Gentleman is smiling because he knows Raunds well. The workers might even have gone through his constituency. They marched to London to demand a fair rate of pay from the War Office, because they were making boots for the British Army. They rallied in Parliament square and then came into the Strangers Gallery of the House of Commons, where they caused a disturbance, such was the strength of feeling that they needed to be heard. They then marched up to the War Office, where they had a meeting. The War Office agreed to pay a fair rate. It accepted the principle that people should be treated with dignity and respect, and should be paid a wage that is commensurate with the work that they do and that enables them to exist and to have decent lives.

People in my constituency have campaigned long and hard for better wages. People in the steel industry, which used to be a major employer alongside the boot and shoe industry, campaigned for better wages and good jobs. They were incredibly let down in 1980 when the Government closed the steelworks, leaving many people out of work. That has shaped the story of my constituency, which is one of hard-working people, of a great spirit of enterprise and of some very good employment opportunities and good employers. However, there is a darker side to our local labour market.

Today, many people in my constituency have very insecure employment. Many people work through employment agencies, have zero-hours contracts and are paid at the minimum wage. Indeed, some people, as the Minister is well aware, have been paid below the minimum wage. I will come on to that later. The combination of low pay, contracts that lock in insecurity and the role of agencies in our local labour market means that, although people who work for the better employers, such as Tata Steel and RS Components, have good lives, many people struggle to lead the lives that they should be able to lead, given the work that they do, day in, day out, when they have the opportunity to work.

There has been a conversion on zero-hours contracts from the Government. They now seem to accept that they are a problem. For a time, they denied that they caused a difficulty in our local labour market. I campaigned on the issue, as did many others, and persuaded the Office for National Statistics to revise the way in which it surveys employers to identify whether people are being employed on zero-hours contracts. Its revised figures show that almost 1 million people are employed on zero-hours contracts.

The Conservative party has made the argument that some people want to be on zero-hours contracts. In the end, this issue is about economics and power. There are different kinds of casual employment where there are no fixed hours. For a long time, my local authority swimming pool has offered seasonal work. It often suits students to be employed during the summer months on a fair rate of pay and not to have a long-term contract or fixed hours. It is common to combine working in the Co-operative funeral business with being a retained firefighter. There is a long-standing tradition of that. Again, it might suit such individuals not to have fixed hours and not to be on a permanent contract. There are also examples among higher paid jobs. There are hospital consultants and lawyers who do not have fixed hours or permanent contracts, and that might suit them. That is their choice.

However, when I talk about zero-hours exploitation, I am talking about people who would much rather have a proper contract of employment; know where, from week to week, their money will come from; know what hours they are able to work so that they can plan; and, frankly, be in a stronger position with their employer to demand fairness and respect in return for the work that they do. That exploitation is not just characterised by the narrow issue of exclusivity that the Government have belatedly said they will tackle. We have not seen the legislation on that and I hope that the Minister will tell us how urgently the Government will act. Such exploitation is also about employees being required to be available for work when there is no guarantee of work, and being employed on such contracts on a long-term basis.

Others might say that people can move about in the labour market and look for better opportunities. However, if my constituents cannot get a loan to buy a car to get further afield in the area of the country that has the lowest public subsidy for public transport, how can they break out of the trap? I come across young people who cannot get into the housing market. They cannot get a rental contract, let alone a mortgage. People therefore cannot lead the life that they want, such as starting a family, because they are trapped on zero-hours contracts.

This is therefore a much bigger issue than the Government acknowledge. They have been dragged into beginning to accept that there is a problem, but they have only a very partial, narrow understanding of it. I hope that they will legislate soon. If they do not, I will support the steps that my hon. Friend the Member for Streatham (Mr Umunna) said the next Labour Government will take to address the scandal of zero-hours contracts. There is also the problem of employment agencies. My constituency has the highest concentration of employment agencies anywhere in the country. There is a legacy back to the 1980s and the make-up pay that was offered to the then steelworkers, and to the types of industries that located in Corby. To some extent, those were labour-intensive industries where the work could not be shipped abroad. That is why we have a strength in the food sector, with perishables. The work is still labour intensive and it needs to be done in the UK.

Agencies are keeping people in insecure employment on a long-term basis. Some are better than others, and some have signed our local agency code of conduct. The hon. Member for South Derbyshire (Heather Wheeler) entreated us to be positive about what we can do, and we have sought to take a local initiative and to work with the local authority and some of the best employers and agencies. We have got them to sign up to a code so that if, for example, a permanent job opportunity becomes available, they will offer that job to an agency worker who has proven themselves over time. They will, of course, always follow the law and make known to employees the law on, for example, not charging for personal protective equipment, and they will not tell people that they have to attend unpaid training as a pre-condition for work; that is illegal, but it often happens in the labour market.

I am grateful for the support that the Minister has given locally to that initiative. She met me and other local representatives, including the council leader, and helped to initiate a series of inspections by HMRC in our local area. We found that more than £100,000 was owing to local workers in fines, and as I understand, those fines have been agreed with some employers. In February the Prime Minister promised me that he would name and shame those employers, despite some Treasury objections. I hope that the Minister will name and shame them today, or if not, that she will tell me when they will be named and shamed. We have heard repeated assurances and local people want to hear those companies named and shamed.

[Jo Swinson]

On that specific point, the new naming and shaming policy, which is much more comprehensive, came into being for investigations that began from 1 October 2013 onwards. It may be that the investigations the hon. Gentleman mentions were under the previous scheme, which was obviously not adequate and that is why we have changed it. That may explain the challenge.

[Andy Sawford]

That is the kind of bureaucracy that does not work for working people, and which the hon. Member for South Derbyshire deplored. The Prime Minister gave me a personal commitment at the Dispatch Box that those companies would be named and shamed. He is Prime Minister of the United Kingdom and I do not believe that he does not have the power to do that. It would set a real example.

I support the motion. I am looking forward to hearing my hon. Friend the Member for Bolton West (Julie Hilling) so I will draw my remarks to a close by saying that there are good ideas across the Chamber and good will on this issue. It is absolutely clear, however, that we need a Labour Government again to continue the work of the Raunds strikers in 1905, and of those Labour Members who pushed the minimum wage through in 1997.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

We have had a good debate. There has been a lot more agreement than the political to and fro or the very politicised wording of the motion might suggest. The hon. Member for Dumfries and Galloway (Mr Brown) gave us a welcome reminder of the history of the national minimum wage and his experience on the Bill Committee, which had two overnighters to make the legislation happen. When he was doing that in 1997, I was working in McDonald’s on £2.70 an hour. I was fortunate, however: one of my friends was working in a local greengrocer on £1.90 an hour. The National Minimum Wage Act 1998 was a landmark piece of legislation. I congratulate the hon. Gentleman on his role, and I congratulate the previous Government on introducing it.

Incidentally, it has been suggested in some quarters that the Liberal Democrats did not support the Bill. I would like to correct the record. Hansard shows clearly that Liberal Democrat MPs voted in favour, with not a single one voting against. Indeed, the Secretary of State for Business, Innovation and Skills, who became our spokesperson on the issue shortly afterwards, has made it clear that he supported it throughout.

This month, the national minimum wage for adults rose to £6.50 an hour—a 3% rise and an above-inflation rise. To people working full-time on the national minimum wage, that means an extra £355 each year. That is a significant increase and one that is very welcome. There is, rightly and understandably, enthusiasm for more from both sides of the House, which is why my right hon. Friend the Business Secretary has asked the Low Pay Commission for forward guidance to consider how we can further increase the national minimum wage. In response, the LPC has said clearly that we are coming into a period when there will be faster real increases in the national minimum wage.

The hon. Member for Bolton West (Julie Hilling) and others referred to the apprentice rate of the national minimum wage, which is only £2.73 an hour. In the evidence to the LPC that we publish today, we have made clear our intention to increase apprentice pay rates by £1 an hour to align them with the 16 to 17-year-old rate. We are putting that suggestion to the LPC and look forward to its response.

Various Members have put forward views and made understandable points about the living wage. Indeed, my hon. Friend the Member for South Derbyshire (Heather Wheeler) made a very good case, pointing out that companies do well if they pay their employees well. That is an important point to remember.

My hon. Friend the Member for Redcar (Ian Swales) reminded us that much depends on take-home pay and that therefore the interrelationship between the minimum wage and the tax threshold is also important. As he pointed out, at the beginning of this Parliament, people on the minimum wage were paying £1,000 a year in income tax, and we have reduced that by £800. They say that imitation is the sincerest form of flattery, so I am delighted that my Conservative colleagues now agree with Nick that we should raise the tax threshold further.

[Andy Sawford]

If imitation is the sincerest form of flattery, will the Minister imitate me in saying that Lord Freud should be sacked for his disgusting comments?

[Jo Swinson]

I will come to those remarks in a minute. I understand the very real concern that has been expressed.

The hon. Member for Birmingham, Erdington (Jack Dromey) talked about the money the Government spend to support people on the national minimum wage and suggested that a higher minimum wage could reduce that expenditure. The Institute for Fiscal Studies has analysed that suggestion and is not sure that that would be the result. Nevertheless, he made a powerful and passionate contribution, particularly given his experience over many years dealing with these issues. His point at the end was perhaps the most important: this is about the moral cause of ensuring people are properly rewarded for their work.

Members on both sides of the House have been understandably shocked by Lord Freud’s remarks, which, I stress, absolutely do not reflect the Government’s position and are clearly offensive and unacceptable. I am glad he has issued a full apology. Of course, my hon. Friend the Member for Harlow (Robert Halfon) rightly expressed his dismay that the shadow Education Secretary mistakenly accused him on television of supporting a lower minimum wage for disabled people. I hope that my hon. Friend’s intervention will have helped to correct the record, not just here, but more widely.

The hon. Members for Westminster North (Ms Buck) and for Bolton West and my hon. Friend the Member for Bedford (Richard Fuller) raised the issue of travel time in the social care sector, and it is important—[Interruption.]

[Madam Deputy Speaker (Dame Dawn Primarolo)]

Order. There are too many private conversations going on in the Chamber, and it is disrupting my ability to hear clearly what the Minister is saying. If Members are in the Chamber, they are here to listen to the Minister. If they want to have a private conversation, they could step outside to continue it.

[Jo Swinson]

Thank you, Madam Deputy Speaker.

Travel times are a genuine issue. If somebody is expected to travel—during the day as part of their work, rather than to and from work—that time should be included for minimum wage calculation purposes. I shall repeat the number for the pay and work rights helpline, which investigates these complaints: 0800 917 2368.

HMRC did a major piece of work on the social care sector and found that of the 224 employers investigated between 2011 and 2013, 104 were not paying the minimum wage properly, and identified £1.2 million of arrears for more than 6,300 workers. So there is a way that people can get what they are due, but we need to look at the wider issues as well, which is why the Department of Health recently consulted on statutory guidance for local authorities to make that crystal clear. The final guidance is expected soon. It is vital that we have proper enforcement, which is why we have increased the enforcement budget by 15% to £9.2 million. The extra money will help to employ extra compliance officers to ensure that complaints can be properly investigated and proactive work undertaken to investigate non-compliance. Indeed, just last year, 22,600 workers were paid back arrears of £4.6 million as a result of HMRC’s work.

The hon. Members for St Albans (Mrs Main) and for Elmet and Rothwell (Alec Shelbrooke) mentioned interns. On this point, we already have clear rules: if somebody is expected to turn up and undertake specific tasks, they should be getting the national minimum wage, whether they are in the House of Commons or anywhere else. It is right that somebody highlighted the excellent Speaker’s parliamentary placement scheme, set up by the right hon. Member for Salford and Eccles (Hazel Blears), along with my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw). I was involved in making that happen before I became a Minister. It is a good scheme and one that I hope will continue to be successful.

Zero-hours contracts will be discussed in more detail in the Small Business, Enterprise and Employment Bill, but the Government are taking action, through a code of practice, to ban exclusivity and improve standards for people working on such contracts.

In conclusion, the Government support the national minimum wage setting minimum standards in the labour market and encourage employers to pay more. We do not agree with the Opposition’s flawed prescription on the best way to achieve this, and we do not support the motion, but we will continue to support the national minimum wage and protect the most vulnerable people, making sure that we have more jobs in the economy and lower taxes, so that people can keep the benefit of their hard work.

Question put.