National Minimum Wage (Amendment) (No. 2) Regulations 2023

Lord Leong Excerpts

Tuesday 14th November 2023 Grand Committee

[Lord Leong (Lab)]

My Lords, I thank the Minister for the overview and explanation of the statutory instrument. We on this side very much welcome this instrument. I thank my noble friend Lady Donaghy for her contribution and for bringing us up to speed on what happened 25 years ago.

As many noble Lords know, the national minimum wage was introduced on 1 April 1999 by the last Labour Government. It creates an obligatory threshold pay level. At the time, the party opposite argued that it would cost millions of jobs, but, 25 years later, this has not happened. In fact, the national minimum wage has had negative effects on the overall UK labour market. Today, around 1.6 million workers—roughly about 5% of all UK workers—are paid at or below the minimum wage. When there is such high inflation and a sustained cost of living crisis, this is just not good enough. Employers should be encouraged to recognise that making work pay with a real living wage and strong workers’ rights is good for growth and for the economy.

This statutory instrument removes the option for a person who resides in a domestic family home, but who is not a member of the family, to be asked to do work in a household without remuneration. This means that a potential loophole by which the unscrupulous employer could require someone living with them and treated as a member of the family to unreasonably be expected to perform jobs in the home without being paid at all. From 1 April 2024, such tasks will now have to be paid at the relevant band of the national minimum wage.

Does the Minister have figures for how many employees —nannies, au pairs and other domestic workers—can expect their income to increase as a result of this change in legislation? Can he also indicate which channels or organisations the Government plan to utilise to alert affected workers to their new rights, especially as I imagine some may not be British citizens or have any union representation? Given the sensitivity of employee-employer relationships in a domestic situation, can the Minister inform your Lordships’ House what provisions are in place to support workers who might find themselves in vulnerable situations, or even potentially homeless, if their employer refuses to recognise their right to be fairly paid as a result of these changes, since their access to legal advice may be very limited? Finally, as well as making people aware of their rights and offering support when made aware, will there be any more proactive steps to ensure that as few people as possible slip through the cracks?

[The Earl of Minto (Con)]

My Lords, I thank noble Lords for their valuable contributions during today’s short debate. These regulations will reward low-paid live-in domestic workers right across the country so that they are paid fairly for the work they do. It will give more clarity on wage regulations for the families that employ these workers, making sure they are paid the national minimum wage. It will also ensure that HMRC enforces the national living wage and national minimum wage for live-in domestic workers, in line with other sectors. The legislation will ensure that all work is treated fairly, and it will end the misuse of the exemption to exploit workers, particularly migrant women.

I will now take the opportunity to answer some of the specific questions asked by noble Lords. The noble Lord, Lord Palmer of Childs Hill, said that this is only one of the unfair anomalies in operation at the moment. The Government accept that and are working as hard as they can to ensure that this is dealt with. The question about different ages and rates is certainly something that I have always found quite difficult to come to terms with—I always paid everybody the same amount, regardless of their age. I can see the argument for bringing people up to a certain level as they leave education and start building up to a full-time job while living at home. Certainly, the Government have moved to narrow the gaps and, as I said, the full national living wage is a significant salary—that is good news. I will write to the noble Lord about the issue of less universal credit. I do not think that it is our policy to take away universal credit, but I will write to confirm that that is the case.

The noble Baroness asked about au pairs. I am advised that there are still 45,000 au pairs in this country, which is a surprisingly large figure. Although it is a small number in the total scheme of the 1.6 million workers, this is an important step to take—I suspect there are a lot of other people who are not covered by the au pair qualification. Clearly, it is the responsibility of HMRC to police this, and it has been given a substantial increase in the funds it can address towards this area. As I said, it follows up every single report it gets about this. Of course, there is a link to slavery and all sorts of things, which one worries about deeply. On the accommodation off-set, I rather like the idea of the monastery. That does reduce the national living wage but at a reasonable rate—I think it is about £1 per hour at the moment, or something like that.

The point of the noble Lord, Lord Leong, about the 1.6 million was well made. The Government have been absolutely committed to the national minimum wage and the national living wage, and they will continue to drive that through as far as possible. We will certainly encourage employers to ensure that this amendment is widely known; I will write with the detail on that. Equally, we will take seriously support for workers, particularly those who are homeless. I hope that covers the specific points raised.

I conclude by extending my thanks once again to the Low Pay Commission—it is wonderful to have an original member in our company. Thanks to its independent and expert advice on this national minimum wage exemption, we can ensure that the right balance is struck between the needs of workers, affordability for business and the wider impact on the economy and the families involved. Again, we look forward to receiving its recommendations for the 2024 rates, which will be published later this month. I commend these regulations to the Committee.