National Minimum Wage Regulations 2015

Lord Popat Excerpts

Monday 2nd March 2015 Grand Committee

Moved by

[Lord Popat]

That the Grand Committee do consider the National Minimum Wage Regulations 2015.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments

[Lord Popat (Con)]

My Lords, before turning to the reason for this debate, I will focus on the success of the national minimum wage. Recognition must be given to the Labour Party for introducing the national minimum wage, which last year was voted the most successful government policy of the preceding 30 years.

The key reason for its success is its simplicity. An independent Low Pay Commission provides balanced advice to the Government about minimum wage rates. But setting the rate is just the start. The Government have taken action to create the conditions for economic growth and higher living standards. Since the election, an extra 1.88 million people are now in work, and wages are now growing faster than inflation.

The Government also have a major role to play in ensuring that the minimum wage is enforced. That is why we have increased enforcement budgets by 50% over this year and next. There are now tougher penalties. We have increased the financial penalty percentage from 50% to 100% of unpaid wages owed, and the maximum penalty from £5,000 to £20,000. Provisions in the Small Business, Enterprise and Employment Bill will change the scope of the maximum penalty from a per business basis to a per worker basis.

There are also reputational consequences. The Government have already named 162 employers who have not complied with the national minimum wage. Such bad publicity will be an additional deterrent to employers who might otherwise be tempted not to pay the national minimum wage.

I turn to the reason for this debate. An important element of ensuring compliance is the clarity and accessibility of information. Since their introduction 17 years ago, the regulations have been amended numerous times, resulting in 27 separate sets of regulations. For such important legislation that is directly relevant to so many workers and their employers, lack of clarity could result in people not being paid what they are legally entitled to. This draft instrument consolidates the 27 sets of regulations into one in order to make the rules clearer and more workable for employers and workers alike.

In response to an eight-week consultation last summer, most of the 22 respondents told us that, while they welcomed the consolidation, even greater clarity would be welcome, particularly in the guidance. We agree. Once these regulations take legal effect, we will review the guidance during 2015 in order to improve the information available to individuals and employers. I commend the draft regulations to the Committee.

[Baroness Donaghy (Lab)]

My Lords, these proposals seem to be eminently sensible and are to be welcomed—and it is very good to have cross-party agreement on the success of the national minimum wage. As the Minister will know, I served as one of the first members of the Low Pay Commission; we established the first figure for the minimum wage. More importantly, we established the framework for what was included—and what was not—in the minimum wage, such as overtime, London weighting and all the other important details that have led to the continuing success and recognition of the minimum wage.

I do not think that it is remembered now what pressures there were before the minimum wage was established—political pressures and also pressures on the Low Pay Commission—for absolute secrecy, because any leaks would have undermined the whole venture. I remember one of the away weekends that the Low Pay Commission had in its first few months. It was in the days before everybody had a mobile phone. We were incommunicado in this particular place. Relatives could get through only by ringing the residential place we were staying in and using the code word “chrysanthemum”. Has the world not changed in 17 years? It seems laughable that so few people had mobiles. I am not sure how many relatives of mine could even have said the word “chrysanthemum”.

Nowadays, we underplay—not deliberately, because it is so well established on a cross-party basis—the importance of the minimum wage. I very much hope that it will remain a cross-party venture and that we do not play politics too much with this issue. The Low Pay Commission does a very important job representing, on a tripartite basis, all the interests involved in the world of employment—and long may that continue.

[Lord Young of Norwood Green (Lab)]

My Lords, I, too, welcome this particular statutory instrument and the introduction by the Minister. I thank my noble friend for her historical assessment. I am sure that her relatives could have said “chrysanthemum”. They might have had trouble spelling it, but that is another matter.

I thank the Minister for recognising that we introduced the minimum wage—though, I have to say, that was against the wishes of some and with dire predictions about the millions of jobs that would be lost. I am glad that we have put that behind us and I welcome the enthusiasm now.

Obviously, anything that simplifies and clarifies is to be welcomed. I welcome the point about the enforcement budgets being increased. I am interested in whether the statistic of 162 employers being named is, as I presume, for 2013-14. Maybe I missed the precise date. I just wonder whether the number of employers being reported is going up. Is the number of queries to workers’ rights helplines increasing?

I note from the Explanatory Memorandum that the Minister is due to clarify the guidance this year. It is really important that we get that right. As a matter of interest, are we keeping any statistics on the fact that, over the recent past few years, we have now had introduced the concept of a living wage? I do not expect the Minister to have any information on that, but I wonder if we are keeping any statistical evidence on it. If he has something on it, better still. Other than those questions and comments, I am happy to support this.

[Lord Popat]

I thank the noble Lord, Lord Young, and the noble Baroness, Lady Donaghy, for their contributions to this debate. As I said in opening, this was the best legislation we have had in 30 years. I hope the noble Lord will believe that when I got the Motion from the officials, I insisted on putting the point that this was Labour Party policy and the best legislation we have had in some years. I thank the noble Lord for his approval of this Motion.

I commend the noble Baroness, Lady Donaghy, for her work on the national minimum wage and the work that she did with the Low Pay Commission. What a success story. I am glad that it is cross-party issue and that as a Government we are doing something for the people in this country who are at the bottom end of the market in terms of the wages that they are on. I am glad that my Government have raised the allowance for people to have that extra money. The personal allowance has gone up from £6,000 to roughly £10,000 in the past five years.

The noble Lord, Lord Young, made a point about the employers named in 2013 and 2014. We are naming more employers. The revised naming and shaming scheme came in in October 2013. The new rules are part of the Government’s efforts to toughen up the enforcement of the national minimum wage and increase compliance. The 162 employers were mentioned earlier. Between them they owed substantial sums in arrears to their workers, and by naming and shaming employers it is hoped that bad publicity will be an additional deterrent to employers who would otherwise be tempted not to pay the national minimum wage. We received more complaints about the national minimum wage through the helpline during 2014-15 and we continue to increase awareness of the national minimum wage among employers and employees. I commend the regulations to the Committee.

Motion agreed.