Taylor Review of Modern Working Practices

Debate between Lord Brooke of Alverthorpe and Lord Prior of Brampton

Tuesday 11th July 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, the noble Baroness is clearly right about the lower tax take. Clearly, if earnings are higher, the tax take will be higher. It is rather shocking. These are the figures in America: in 1970 the average median salary among the lowest-paid 90% of people was $34,000; in 2013 it was $31,000—it has gone down. This is the problem that all western economies face: earnings are stagnant and falling. Our children’s generation may be facing a less prosperous future than we do. This is the huge dilemma that we all face. When she says there will be a lower tax base, she is absolutely right. The whole point of improving productivity is to improve earnings. It is in all our interests to improve earnings—to see wages grow.

The noble Baroness also talked about the confusion between the living wage and the national minimum wage. She has now confused me so I shall have to write to her. She went on to talk about the Low Pay Commission. When the previous Government brought in the living wage and the trajectory for it, that was a political decision; it was not made by the Low Pay Commission. One of the criticisms of the minimum wage is that politicians cannot resist the temptation to get involved in it. To some extent, the Low Pay Commission has been subverted by politics. I guess that was inevitable. Actually, the increase in the living wage was one of the great triumphs of the coalition Government.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, I have not read the report yet, so I would be grateful if the Minister could put me right. Not all western countries are in the difficulties that the States and the Anglo-Saxon type economies are in. Sweden does not have the kinds of problems that we have. It has some, but not on the scale that we have. The major difference between Sweden and similar countries is that the difference in income between those at the top and those at the bottom has not widened in the way that it has in the UK and the States. To start to address this, we have to look at that as well—not just the quality of the work but the totality of the distribution of income in the workforce. Do the Government have any plans for doing that?

[Lord Prior of Brampton]

The noble Lord is right that the disparities in Sweden are smaller than in the US, the UK and other parts of the world. They are smaller but they are not non-existent. It is a big issue in the Scandinavian countries as well. We intend to address that through our industrial strategy. The second issue that the noble Lord touched on is that growth in productivity, in so far as there has been any, used to trickle down into the incomes of all people—everyone was brought up by improvements in productivity. That link seems to have been greatly weakened over the years, so that when there is growth, it goes to the top 10% and not to the 90%. The noble Lord is quite right that we need to look at that very carefully.