Terms and Conditions of Employment
Debate between Judith Cummins and Justin Madders(1 week, 2 days ago)
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The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move,
That the draft National Minimum Wage (Amendment) Regulations 2025, which were laid before this House on 4 February, be approved.
The purpose of the regulations is to increase the national living wage rate and the national minimum wage rates on 1 April 2025. The regulations were laid in draft before Parliament on 4 February and approved by the other place on 17 March.
The Government are committed to making work pay. The plan to make work pay will tackle the low pay, poor working conditions and poor job security that have been holding our economy back for far too long. Earlier this month, the House approved passage of the landmark Employment Rights Bill, which will benefit more than 10 million workers in every corner of the country and deliver the biggest upgrade to workers’ rights in a generation. Some aspects of the Bill and accompanying legislation and guidance will not come into effect for some time as the Government continue to engage with stakeholders, businesses and trade unions on its implementation. When we took office last year, however, we committed to taking immediate action where we could, and on the minimum wage we have done so.
One of the proudest achievements of the last Labour Government was the creation of the national minimum wage, which eliminated the extreme low pay that was blighting our country. We are proud to say that one of the first actions taken by this Labour Government within a month of last year’s general election was to overhaul the remit to the Low Pay Commission. For the first time, the remit now explicitly includes the cost of living as one of the key factors to be considered when making national living wage recommendations. We have begun the journey towards creating a genuine living wage, as well as extending that to all workers aged over 18 by moving towards a single adult rate.
Before turning to the precise details of the regulations, I want to extend my thanks to the Low Pay Commission. The commissioners and their officials have worked diligently and efficiently, particularly after the updates to the remit were made, and we were pleased to accept all their recommendations. That is testament to their social partnership model and expert analysis and engagement, which ensure that the Government can deliver on their ambitious agenda, but without adversely impacting on businesses, the labour market or the wider economy.
Turning to the detail of the regulations, which, after parliamentary approval, will take effect on 1 April, the national living wage rate, which currently applies to workers aged 21 and over, will increase from £11.44 to £12.21. That represents a rise of 77p or 6.7%, which is well above all measures and projections of inflation, therefore delivering real terms pay increases to an estimated 3 million workers.
We will also be delivering large increases to the other national minimum wage rates. The 18 to 20-year-old rate will increase by £1.40 from £8.60 an hour to £10 an hour. That is a record 16.3% increase for that age group. It means that a full-time worker on the 18-to-20 minimum wage rate will see their gross annual earnings increased by around £2,500 a year—a well-earned pay rise and a significant step towards parity with the headline rate. The national minimum wage rate for 18 to 20-year-olds will be equal to 82% of the national living wage in 2025, compared with 75% in 2024.
The minimum wage rate for workers above school leaving age but under 18 years old will increase from £6.40 to £7.55 an hour—a large rise of £1.15 or 18%. The same rise will apply to the apprenticeship minimum wage rate, which applies to apprentices aged under 19 or in the first year of their apprenticeship. Finally, the accommodation offset rate, which is the maximum daily amount that an employer can charge a worker for accommodation without it affecting their pay for minimum wage purposes, will increase by 6.7%, or 67p, to £10.66.
I draw Members’ attention to the comprehensive impact assessment, which the Department published alongside this legislation. As they may have noted, the impact assessment, which includes an equalities assessment, has received a green fit-for-purpose rating from the independent Regulatory Policy Committee. As I have touched on, we estimate that the increases to the minimum wage rates will deliver a direct pay increase for over 3 million workers, while an additional 4 million could benefit from the positive spill-over effects. The minimum wage has greatly reduced pay inequality in the UK, with the share of low-paid jobs in hourly terms estimated at 3.4% in 2024. That is a record low, and down from 21.9% in 1999.
But the work does not stop there, as we continue to build towards a genuine living wage and the extension of eligibility to workers aged between 18 and 20 by ending the discriminatory age bands. To that end, we will publish in due course a fresh remit to the Low Pay Commission, asking it to recommend minimum wage rates to apply from next April. As part of this, the Low Pay Commission will consult about the appropriate trajectory towards the single adult rate as we ensure that this is delivered without adverse impacts on youth employment as well as participation in training and education. Like the previous Labour Government, with their creation of the minimum wage over a quarter of a century ago, this Labour Government will be proud to leave a profound legacy for workers’ rights, because we are making work pay and we are proud to make more progress on this by supporting this instrument today. I commend the regulations to the House.
Royal Mail Takeover
Debate between Judith Cummins and Justin Madders(3 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
With permission, Madam Deputy Speaker, I will make a statement on the ongoing takeover of Royal Mail Group’s parent company, International Distribution Services plc.
Royal Mail is an iconic national institution, and this Government are committed to ensuring that it remains one. Since taking office in July, the Secretary of State for Business and Trade and I have been clear that the Government will robustly scrutinise the proposed takeover of Royal Mail and ensure that there are safeguards for its future. While a takeover bid is still ongoing and subject to the relevant regulatory processes, the purpose of this statement is to update the House on the legally binding undertakings that have now been given to the Department for Business and Trade by the bidder, EP Group. I wish to be clear that this does not mark the conclusion of the takeover, and these undertakings will become effective only if the takeover goes through. Should the takeover complete, I am pleased to announce that the Department for Business and Trade has secured significant commitments to promote a long-term and financially sustainable future for Royal Mail in the United Kingdom.
It will be helpful if at the outset I set out where Royal Mail was at the time the takeover bid was announced. Before the bid, Royal Mail’s financial position was challenging. In its financial year 2023-24, Royal Mail recorded a loss of £348 million. That loss was in part due to a long-term decline in letters, and the significant fixed costs of the universal service delivery network. At the same time, Royal Mail has not met its quality of service targets set by the independent regulator, Ofcom. Royal Mail’s performance for the 2023-24 financial year resulted in Ofcom fining it £10.5 million. While the previous Government were happy to accept decline, this Government have worked closely with the buyer to secure significant commitments to deliver the transformation of Royal Mail into a sustainable service, and hard-wired in stronger protections for Royal Mail’s identity.
When the discussions with EP Group began, my Department’s objectives were: first, to strengthen the financial sustainability of this iconic and important British institution; and secondly, to protect the customers, workers and brand of Royal Mail. Today I can confirm that we have agreed a deed that customers and the workforce alike can welcome, with significant new commitments from the buyer to the Government. This deed is a clear example of the Government’s commitment to working hand-in-hand with business to generate reform and investment in public service. It is also yet another example of this Government fixing the foundations where the previous Government did not.
I am proud to announce to the House that we have agreed that the Government will have a golden share in Royal Mail. This golden share will ensure that the Department for Business and Trade now has an ability to prevent Royal Mail from moving its headquarters abroad or moving its tax residency without Government permission. I should make it clear that that is an entirely new measure that was not in place at the time of Royal Mail’s privatisation. Except in very limited circumstances, that measure will remain in place in perpetuity, including when there is a subsequent change in ownership of Royal Mail. I want to be clear that the agreement will not give the Government any role in the day-to-day running of the business—Royal Mail remains a private entity.
Not only have we agreed a golden share, but the EP Group has made a number of other commitments in addition, which I will set out at a high level. Those commitments include a commitment to prevent value extraction unless two tests are satisfied: first, a financial test that takes into account the debts of Royal Mail, so that value cannot be extracted if the company is heavily indebted; and secondly—this recognises a key concern of the public—a quality test to ensure that value is not extracted unless specific performance targets are met.
All businesses need to adapt and improve in order to respond to change, and Royal Mail is no different. Recognising that there is a need for Royal Mail to modernise, there is a commitment from EP Group to ensure that Royal Mail has the financial means to fund the transformation of its business in the three-year period following completion of the acquisition. In addition, EP Group has agreed to take an immediate step to strengthen Royal Mail’s balance sheet by removing a significant intra-group debt, which is currently due to the remainder of the International Distribution Services group. The agreed undertakings also include a commitment to ensure that Royal Mail retains ownership or access on fair terms to those assets necessary to meet the universal service obligation.
Next, EP Group has agreed to meet all the regulatory requirements that Royal Mail Group is subject to, including ensuring that it remains the universal service provider for as long as EP Group is in control. We all know—not just in this House, but across the UK—that Royal Mail is an iconic British brand, and that is why there is a commitment to the existing brand protections in place for Royal Mail. Royal Mail is a respected and revered operator, and not just in the UK—it has various international responsibilities at international fora and with the overseas territories. Those will be respected and continued, maintaining the UK’s prestigious international position.
EP has stated its long-term commitment to Royal Mail, and the discussions have demonstrated the wide range of areas of public interest in the work of the company, so I am also pleased to confirm that EP has committed to taking steps to facilitate discussions between any future owner of the business and the Government, be that in 10 or 20 years’ time. These commitments have been offered by EP Group to the Department on a voluntary basis; nothing has been offered in exchange.
I take this opportunity to thank EP Group. I am confident that we share the same objective of a reliable and financially sustainable universal service provider, while workers and consumers are placed at the heart of a sustainable Royal Mail. I am also pleased that, as well as reaching an agreement with the Department, EP Group has today announced that it has in-principle negotiated agreements with both unions representing the Royal Mail workforce. The Government welcome those agreements, and I am confident that the constructive and collegiate approach between the unions and the buyer can represent a restart for industrial relations in the Royal Mail Group.
I have set out some of the key commitments, but there are further commitments from EP Group that I do not have time to set out in full today. I am therefore placing copies of the deed in the Libraries of both Houses. I will keep the House informed as much as I can as the takeover progresses. I commend this statement to the House.
Justin Madders
I thank the shadow Minister for her comments, and I start by joining her in thanking all those postal workers who throughout the year—not just at this time of year, when it is particular busy, but 12 months a year—come rain or shine, sleet or snow, deliver those much-needed communications from friends, family and loved ones. I was pleased to be able to go to my own depot in Ellesmere Port last Friday. I will go to another one in my constituency, in New Ferry, this Friday. All hon. Members should be encouraged to make those visits, because they really show how much we appreciate the work that our postmen and women do.
The hon. Lady is right that the Royal Mail is a service that we all depend on. I agree that performance has not been good enough in recent years. That is why we have had a number of discussions with the company and with Ofcom about how we will get things back on track. That is why the agreement is so important, because the deal will get in the investment needed to try to drive up that performance.
I turn to some of the hon. Lady’s specific questions. On guarantees of service provision, the legislative framework is already there for the universal service obligation, and I see the takeover having no impact on that. It has not been part of the discussions—it is an entirely separate issue—but Parliament will have its say on that if needed. Next year, Ofcom will have a consultation on the universal service obligation. I think it is recognised that an awful lot of work is needed to bring standards up to the level that we would like, and one of the protections in the agreement will hopefully deliver on that.
On jobs guarantees, the hon. Lady will be aware that the general secretary of the Communication Workers Union has spoken positively about the agreement reached. He believes that sufficient assurances have been given on jobs. On employee engagement, she asked whether the employees will own the company. That is not the case, but they will have a say in governance in future as a result of an agreement between the Communication Workers Union and EP Group. That is to be ratified by the Communication Workers Union executive, but that will be a groundbreaking arrangement that we did not have previously. She also asked about tax residency in perpetuity, which is what the golden share does indeed intend to deliver.
Madam Deputy Speaker (Judith Cummins)
I call the Chair of the Business and Trade Committee.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
I welcome the statement made by this hard-working Minister. I take it from the announcement that Mr Křetínský has cleared the investment screening tests that the Cabinet Office is responsible for. It would be useful to have that confirmed.
Let me press my hon. Friend about the universal service obligation. Is it his intention that beyond the initial five years he will seek six-day delivery and a universal service obligation in place for Royal Mail for as long as His Majesty’s Government retain the golden share?
Justin Madders
I thank the Chair of the Select Committee for his comments. The golden share is to deal with tax residency and headquarters being domiciled in the UK. Obviously, there will be discussions about the universal service obligation. We know that this is a fast-moving market, and that will be for determination by Ofcom some time next year.
Madam Deputy Speaker
Order. I am sorry, but the Liberal Democrats get two minutes for their response and we are quite a while after that.
Justin Madders
I assure the hon. Lady that the universal service obligation is not contingent on this deal—that is an entirely separate matter for Ofcom to be considering—but a number of commitments that we have secured in this agreement will hopefully improve standards, which in any event have clearly not been as we would all want.
Justin Madders
A number of commitments have been made that were not previously in place, and there is no doubt that we are in a much better position than we were post privatisation. As I say, this groundbreaking deal between the unions and the company includes rights in terms of governance, a profit-sharing incentive and guarantees on job security. I am sure that Members will be pleased to hear that we really have made fantastic progress.
Madam Deputy Speaker (Judith Cummins)
For the final question from the Back Benches, I call Dave Robertson.
Oral Answers to Questions
Debate between Judith Cummins and Justin Madders(6 months, 4 weeks ago)
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Justin Madders
My hon. Friend is right: the explosion of zero-hours contracts in this country has been shameful. Over 1 million people are now on zero-hours contracts, and one in five of those people report that they would like to be able to get more hours of work, so we are going to end the uncertainty of zero-hours contracts. We are going to make sure that work pays, and we are going to give those people a legal right to a contract that reflects the number of hours they regularly work over a 12-week period.
The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
The introduction of the minimum wage was one of the proudest achievements of the last Labour Government, but for too long the UK’s labour market enforcement system has been fragmented and ineffective. That is bad for workers and bad for the majority of businesses that want do to the right thing and comply with the law. That is why we will create a fair work agency to bring together employment rights enforcement, including of the minimum wage.
Madam Deputy Speaker (Judith Cummins)
I remind Members that these are topical questions, so can we have short questions and short answers?
National Living Wage
Debate between Judith Cummins and Justin Madders(8 years, 11 months ago)
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Judith Cummins
I thank my hon. Friend for giving that very good example. My right hon. Friend the Member for Enfield North mentioned the glaring example of B&Q, which has asked its workers to sign a contract that reduces a number of their benefits. It is believed that the overall result will be that many will lose thousands of pounds. The company’s response has been to introduce a temporary scheme, for just two years, to protect the value of its workers’ overall packages. That is simply not good enough, particularly as it has been reported that the parent company of B&Q, Kingfisher, may pay its chief executive officer a total package of up to £3.6 million. The numbers are jaw-dropping, as is the hypocrisy. Once again, this Tory Government are presiding over the shameful exploitation of those who are least able to make ends meet, least able to make their voices heard and least able to stand up and tell the Government that what they are doing is simply unfair and unacceptable, and that it cannot go on.
The Chancellor cannot even plead ignorance and suggest that this shameful episode is an unexpected by-product of his noble and good deeds. A ministerial answer to a written question by my hon. Friend the Member for Ashfield (Gloria De Piero) on 21 March revealed that the Government were aware of the possibility that big business would choose to fund their so-called national living wage through cuts to wider remuneration packages. The Government’s view was:
“It is for individual businesses to decide exactly how to respond to the introduction of the National Living Wage, appropriate to their circumstances. But any changes to contractual pay should be discussed and agreed with workers in advance.”
The Government simply do not get it. If the choice for workers is between unemployment and agreeing to changes designed to reduce their overall contractual benefits, most, if not all, workers—especially the lowest paid in society—will sign up.
Justin Madders (Ellesmere Port and Neston) (Lab)
My hon. Friend is making an excellent speech. Does she agree that another group of workers, namely the self-employed, are also in a difficult position? I was recently contacted by a constituent whose partner works for a courier company. Once his petrol has been paid for, he is getting paid about £260 a month for working a 50-hour week. My constituent told me that she works on the minimum wage as a pizza delivery driver, and she earns about three times as much for doing half the hours that her partner works. Does that not show that a whole group of people is being forced into an invidious position?
Judith Cummins
I thank my hon. Friend for making that important point. Big business knows that the voice of the lowest paid is easily silenced, because the fear of unemployment is a powerful tool. The Government need to step up and legislate for big business to fund the so-called national living wage not through cuts to workers’ wider benefits but by, quite rightly, sacrificing a percentage of its own profits. That is not only fair but proper, given that tax on big business profits was cut in the Chancellor’s Budget. Soon, businesses will pay just 17% tax on their profits, down from 20%. I call on the Government to legislate to require big business to use the extra cash released through reduced corporation tax to fund the so-called national living wage, not to deliver larger dividends to its shareholders in the coming years, as I fear it will. The Government must step up. They must end this injustice. This simply cannot go on.