National Minimum Wage (Workplace Internships) Bill

Lindsay Hoyle Excerpts

Friday 4th November 2016 Commons Chamber

[Philip Davies]

Does my hon. Friend agree that we and our hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) are on exactly the same side when it comes to social mobility and wanting to extend opportunities, but that we feel that the Bill will restrict opportunities rather than enhance them? If I can catch your eye later, Mr Deputy Speaker, I might be able to suggest to my hon. Friend how we can work together to extend opportunities, as we both seek to do.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am sure that you will be able to catch my eye, Mr Davies, subject to the length of Mr Nuttall’s speech.

[Mr Nuttall]

I have not started my speech yet, Mr Deputy Speaker.

I entirely agree with the brief point made by my hon. Friend the Member for Shipley (Philip Davies). What I want to do in making the points that I will shortly make is to do all I can to try to increase the number of opportunities available to young people. My genuine fear is that, rather than enhancing those opportunities, the unintended consequence—I entirely appreciate that this is not the intention of my hon. Friend the Member for Elmet and Rothwell—is that what is likely to happen if the Bill reaches the statute book is that those opportunities will be reduced.

I accept that at first sight the purpose of the Bill—the idea that by passing legislation we can somehow ban unpaid internships—might superficially appear to be a good idea, but I am genuinely concerned that on closer scrutiny we will find that that is not the case.

My hon. Friend cited a number of examples as evidence to support his contention that young people are being taken advantage of—I think that is a fair summary of what he said—because the national minimum wage legislation apparently does not apply to young people undertaking internships.

My hon. Friend has been lucky not only because he came third in the ballot for private Members’ Bills, but because this debate has fallen during Living Wage Week, which was marked by a debate in this Chamber only yesterday. This House has therefore had two consecutive debates, sandwiched on either side of yesterday’s Adjournment debate, on the minimum wage. Living Wage Week, which runs until Saturday, is a nationwide celebration of 3,000 employers who have voluntarily committed to ensuring that employees and sub-contracted staff working on their premises earn a real living wage.

I draw the House’s attention to that because, as my speech will show, the whole problem with the Bill revolves around how we define contracts of employment and a minimum wage. I should say at the outset that, personally, I do not like the word “intern”. It is not a word with which I was familiar previously. I did not grow up with it and I do not like the word “internship” either. I think that it is an American import—I can see hon. Members nodding in approval. I will be honest about it: I have nothing against our friends on the other side of the Atlantic, but I grew up with the term “work experience”, which I think more accurately describes the issue under discussion.

When I was at school, there was a work experience scheme called Trident. I do not know whether any colleagues have been on a Trident course. I do not think that I was able to secure a Trident placement—I certainly do not recall having had the opportunity to go on one—but many people I was at school with did have such an opportunity. Under the scheme, someone approaching the end of their compulsory school life was given the chance to go on a three-week placement with a local employer, but it was work experience, not an internship.

I want to consider, much as my hon. Friend did in promoting the Bill, how we arrived at this problem. Last Friday, we considered a Bill that was 18 pages long. This Bill is just two pages long. Unfortunately, it does not contain the answers to the problem it seeks to address. Indeed, it raises more questions than it provides answers.

The whole problem with the Bill revolves around the definition of three key terms: “work”, “internship” and “work experience”. Someone who is deemed to be a worker will have the right to be paid the national minimum wage—that is already the position. The regulation of wages in this country can be traced back to the end of the 19th century and then to the Trades Board Act 1909. After the second world war, wages councils arrived on the scene, with the Wages Council Act 1945. At their peak, 3.5 million people were covered by those councils. After they were abolished in 1993, pressure began to build for a new national scheme of a minimum wage. Despite the view of the Confederation of British Industry, which said in 1995 that

“even a low minimum wage would reduce job opportunities and create major problems for wage structures in a wide range of companies”,

two years later the Labour party included in its manifesto ahead of the 1997 general election a commitment to introduce a national minimum wage. To be fair, immediately upon election, it set about putting that into law, and the national minimum wage that we have today is still governed in primary legislation by the National Minimum Wage Act 1998, while the most recent secondary legislation is the National Minimum Wage Regulations 2015.

Section 54 of the 1998 Act gives the key definitions of employees, workers and contracts of employment. Subsection (2) states categorically that

“‘contract of employment’ means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing.”

Subsection (3) defines a worker—again I quote so that we have it absolutely accurately—as someone

“who has entered into or works under…a contract of employment; or…any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual”.

Workers are already, under the existing law, entitled to be paid the correct minimum wage if they are part-time, casual labourers, including even someone hired for one day, agency workers, workers and home workers who are paid by the number of items they make, trainees, workers who are on a probation period, disabled workers, agricultural workers, foreign workers, seafarers and offshore workers. Apprentices, who are separately provided for, are entitled to be paid a special apprentice rate, if they are either under 19 or 19 and over but in the first year of their apprenticeship. Apprentices over the age of 19 who have completed their first year are then entitled to be paid the actual minimum wage, depending on their age.

The Government set out the national minimum wage after considering the advice of the Low Pay Commission, an independent advisory, non-departmental body, sponsored by the Department for Business, Energy and Industrial Strategy. The commission is comprised of a chairman—currently Sir David Norgrove, a former private secretary to Margaret Thatcher—and a further eight low pay commissioners, who are drawn from a range of employee, employer and academic backgrounds and who make recommendations to the Government on appropriate pay.

Failure by any employer to pay at least the national minimum wage to those whom I have listed as employees is an offence and in breach of the national minimum wage legislation. To secure compliance with the legislation, the Government have introduced a naming procedure. In August, they published a list of 197 companies that had failed to pay one or more entitled workers the national minimum wage. Between them, those companies owed a total of £465,291 in arrears, and the most significant example was £99,541.98 owed to 30 workers. The naming and shaming scheme was introduced by the coalition Government in October 2013.

Those companies, which have been publicly identified and will undoubtedly have received negative publicity, may suffer an impact on their future relationships with customers and suppliers. Some 687 employers have been publicly listed as having failed to pay the national minimum wage to workers, and the wage arrears owed to staff have exceeded £3.5 million. That appears to be—

Proceedings interrupted (Standing Order No. 11(4)).