National Minimum Wage (Amendment) Regulations 2017

Lord Mendelsohn Excerpts

Tuesday 28th February 2017 Grand Committee

[Lord Jones (Lab)]

My Lords, I thank the Minister for her helpful and cogent introduction. Low wages have been the bane of certain regions of the United Kingdom. I think most of all of Wales and the north-east. The minimum wage has been a very good measure for the people of Wales, and Prime Minister Blair has good grounds for being very proud of enacting it. My recollection is that it was opposed in another place, but it is now acknowledged universally as a just, helpful and necessary measure.

Who now chairs the Low Pay Commission and how many members does it have? Although this is a beneficial measure, does the Minister have any statistics to exemplify its beneficial effects, particularly in Wales? How many will benefit from the helpful measure that she has spoken to in the Committee? Will it be of particular help to the tourism industry, which is important and widespread throughout the Principality? How many people in Wales are benefiting from the national minimum wage, and how many will benefit from this measure?

[Lord Mendelsohn (Lab)]

I thank the Minister for her introduction and my noble friend Lord Jones for his contribution, which raises the important question of Wales, and agree that the Minister’s case was cogently put. It presents an important annual ritual of ensuring that the national minimum wage and the national living wage are uprated.

I commend the policy and want to say how important this has been as a measure to create a real basis for enhancing the opportunities and life chances of people, and for ensuring that employers are unable to use inequality and asymmetry of power to the detriment of people who are giving up their labour. The way this has been presented and the detail behind it is outstandingly thorough. It is a perfect measure. All the complaints that I have had about other measures are more than adequately addressed by what is an outstanding piece of analysis of not just why this policy decision was made, but previous policy decisions, what alternatives could be chosen and challenges to the assumptions on which it was based. All of this is contained in the accompanying documents to the statutory instrument, which are of outstanding quality. I commend the department for its work in putting it all together and, in particular, the Low Pay Commission, which has done an outstanding job. We are truly blessed to have a mechanism that seems to work well, that people understand and that tends to comes to sensible and just decisions.

I wish to raise two areas for the Minister to consider. First, as we look to expand the apprenticeship programme and increase the number of young people who can move into employment through the use of this mechanism, so that they can adopt skills and become much more focused on the needs of businesses or even public sector organisations now the duty is on them, I would be very interested to know whether any evaluation is being made on what the likely impact of that will be—especially as we may create a cascade effect—to make sure we do not affect the employment opportunities of those at younger ages. I would also like to evaluate whether this is now distorting the opportunities at younger ages, and whether it is worth reviewing in the next review of the national minimum wage and the national living wage.

Secondly, I again ask the Minister whether the enforcement mechanisms she has outlined are sufficient. It is to be welcomed that the Government are applying more resources and a little bit more focus on making sure that companies meet their national minimum wage obligations. It is very instructive to see the number of incidents that take place in large organisations and companies with very prodigious finance departments. It shows a sense not just of non-compliance, but of callous disregard—of the abdication of duty in the most extraordinary fashion. To use an example I mentioned earlier, which I am more than happy to mention again, it is utterly shocking that Debenhams was able to get away with what it did and that its chief executive was able to take his bonus. Look at the explanation of the long-term incentive plans in company reports. Look at the reports to shareholders about remuneration for the senior executives—in particular how it affected the chief financial officer and the chief executive officer—and at the number of consultants that they brought in to make sure they got the right remuneration. I know that they spent time with their remuneration executives to make sure that they can play their games with the board to do this. The sheer fact that they have allowed their employees to suffer in this abject way is absolutely appalling.

Unless we have mechanisms that address the problems of culture, of having effective measures to counterbalance it and incentives that affect people, then we will have this terrible story time and again. I applaud the Government for putting more towards the enforcement, but the measures have to be targeted in the right way. If you run a company, you run it properly. If your duty is to pay people, you pay them properly. If you do not, you bear the consequences.

[Baroness Buscombe]

I thank noble Lords for their very helpful contributions to this short debate. I begin by responding to the noble Lord, Lord Jones. The measure that was introduced back in I think 1998 was a huge step change in clarity, fairness and respect for people who are low paid.