Draft National Minimum Wage (Amendment) Regulations 2018

Laura Pidcock Excerpts

Wednesday 21st March 2018 General Committees

[Laura Pidcock (North West Durham) (Lab)]

I have a somewhat different take on the state of the economy from the Minister. Real wages, excluding bonuses, are still down by 0.2% and are still £15 a week lower than 10 years ago. That is a starkly different picture from the one painted by the Minister.

No one would expect me to oppose this increase in the minimum wage for working people, and the increases to the minimum hourly rate. However, this small rise in the minimum wage cannot go without comment or critical analysis; I wish that the Government would do some critical analysis of the growth in employment, the nature of that employment, and how precarious, insecure and low-paid it still is, specifically in the north-east, the region I represent.

I acknowledge that this increase in the minimum wage will be helpful, but it certainly will not be transformative for the many who are the lowest-paid. The Government seem obsessed with keeping the minimum wage at the lowest level at which it is possible to maintain a subsistence existence—it is called the Low Pay Commission for a reason. Perhaps the Government do that because they mistakenly believe that keeping wages low is good for business, or that it is not the state’s job to set wages, but rather the law of the markets that does that.

What the Government fail to acknowledge is that increasing wages, particularly of the lowest-paid, will immediately increase demand in the economy, which in turn will stimulate production, retail and services. It will also decrease Government expenditure on subsidising low pay, while increasing Government revenue—for example, where tax thresholds are exceeded. Improving the quality of life and economic wealth of the least well-off is not a cost, but an investment in society.

No Government should ignore—though the Minister did ignore it—the huge pressure on wages due to the fact increases in the cost of food, energy and transport, and other living costs, have outstripped increases in wages over recent years. The 33p an hour increase for those over 21 is, I repeat, a help, but not the transformational change we need to help working people in very difficult times.

Let us briefly talk about what might bring about that transformation. I am sure the Minister has read the Labour party’s manifesto in depth, so he will know that Labour would set the minimum rate of pay at £10 an hour by 2020.

There can be no more inspirational story about low pay than that of the striking McDonald’s workers. I met some of them on Monday evening, when they eloquently expressed the hardship that they endure working for the minimum wage. What an injustice it is that people work extremely hard each week to create enormous wealth for the McDonald’s corporation, yet their pay scarcely affords them an existence. Will the Minister join me in congratulating those workers who took industrial action and achieved a 6% pay rise, and will he encourage fellow fast-food workers, and indeed any group of workers, to take collective action against their employers if their pay does not afford them an existence?

On an associated point, what exactly is the rationale for the sharp decrease in minimum wage when we move between age brackets, and in particular for the difference between the rates for those in the 18 to 20 bracket, and those in the 21 and above bracket? It would be really helpful if the Minister set out the assumptions that led the Government to conclude that workers aged 18 to 20 should be paid a different rate from those aged 21, for exactly the same work. That would be instructive; that way, the the voting public, young and old, could understand our different political positions on this. As he knows, the Labour party is committed to a minimum wage of £10 an hour for all workers aged 18 and over by 2020.

The pay changes that will take place in April are a result of recommendations by the Low Pay Commission, as has been said. It is important that the state sets a minimum rate of pay based on the commission’s recommendations, but does the Minister agree that it would be so much better, and so much more dignified, if workers had direct control over setting their pay, through national sectoral collective bargaining? It is workers who understand their work intimately, and who ultimately are best placed to bargain over what they are paid for that work, within a negotiating framework.

[Andrew Griffiths]

I am listening to the hon. Lady’s speech, and she is making some very powerful points, but could she clarify something? Does the Labour party support the Low Pay Commission or not? From what she is saying, I am beginning to doubt that it does support the commission.

[Laura Pidcock]

I have said twice in this short speech that of course a rise in wages is welcome, but we have a completely different philosophy on how wages should be increased.

[Andrew Griffiths]

And the Low Pay Commission?

[Laura Pidcock]

I will address the Minister’s point: we support the Low Pay Commission’s making these recommendations; that is absolutely right. However, we would prefer that power to be in the hands of workers, through national collective sectoral agreements, so that they could bargain over their terms, pay and conditions. Our position is that that would be preferable.

I support these increases—I say that for the third time—but it is my priority and responsibility to be critical of low pay in this nation. The Minister must acknowledge that even with these changes, there will still be people in poverty, struggling, and that there are other solutions to low pay. I support these increases within the limited parameters of today’s discussion and decision-making process.

--- Later in debate ---

[Laura Pidcock]

It is not a victory to take people out of tax if they are still so low-paid. Would the Minister not prefer that they were paid more and therefore paid tax?

[Andrew Griffiths]

What I am concerned about is ensuring that the lowest-paid in society keep more of their money, so that they have more money to decide what to do with and to look after their families with.