National Minimum Wage (Amendment) Regulations 2021

Lord Liddle Excerpts

Monday 1st March 2021 Lords Chamber

[Lord Liddle (Lab) [V]]

My Lords, I will associate myself with the comments of the noble Lords, Lord Empey, Lord Bradshaw, and my noble friend Lord Hendy, who have all emphasised the need to stop abuse of the national minimum wage and to have better enforcement. However, I welcome the fact that the Government have decided to accept the recommendations of the Low Pay Commission. This is a tribute to the success of the arrangements that Labour put in place when the national minimum wage was introduced. The commission is an example of tripartism and independence, and that is something that we would cast aside at our peril.

When the minimum wage was introduced over 20 years ago, the Government then recognised that it was not in itself a solution to the problem of poverty. What it did was to try to provide a safeguard against exploitation by unscrupulous employers. The approach of the Labour Government in the early 2000s was that, in order to tackle poverty, one had to have effective social support on top of the statutory minimum, essentially through very generous tax credits. We have seen how in the past decade the problem of in-work poverty has grown. One of the reasons for that is the cuts that have been made in tax credits because you will never eliminate family poverty simply by pushing up the minimum wage.

On approaches to reform, I read a very interesting paper by the Learning and Work Institute on The Future of the Minimum Wage, financed by the Carnegie UK Trust, and I hope that the noble Lord, Lord Callanan, and his civil servant colleagues will look at it. It recommends moving to a sectoral approach to tackle where low pay is a very serious problem—sectors such as social care, hospitality and retail. There cannot be collective bargaining in these sectors at the moment, despite what my noble friend Lord Hendy says, because the trade unions have been abysmally unsuccessful in recruiting low-paid workers, particularly in the private sector. Therefore, there needs to be some statutory intervention—some public intervention—if those workers are to have dignity and respect.

I am glad that the Government do not intend to abandon the objective of raising the living wage to two-thirds of the median. However, on top of that, we need a mix of something like the old wage councils and training boards, sector by sector, to try to raise pay in those sectors by raising skills. Fundamentally, it is through improving the productivity of the workforce and its skills that employers will be able to afford to pay higher wages.

It may be that we have to give incentives to employers through national insurance and other means to get them to upgrade and upskill their workforce. This is a sensible approach, which the Government should examine. I understand the horror of what we have been through and how dreadful it is, particularly the lack of respect that low pay brings—I very much agree with my noble friend Lady Clark on that. However, we need new, innovative ways of tackling the problem.