Zero-hours Contracts

Lord Watson of Wyre Forest Excerpts

Wednesday 16th October 2013 Commons Chamber

[Vince Cable]

That is precisely why I am in touch with the head of the ONS, so that we can get some high-quality and consistent data. That is the whole point of the exercise.

[Mr Tom Watson (West Bromwich East) (Lab)]

Does the Secretary of State agree that the problem is exacerbated when zero-hours contracts are taken in combination with the decreasing value of the minimum wage? That has created conditions under which, either consciously or inadvertently, rather large companies have developed business models that rely on top-up benefits to subsidise a work force whose take-home pay is not large enough to cover their monthly bills. That means we end up with a multinational company such as McDonald’s, with up to 83,000 staff on zero-hours contracts, being subsidised by the taxpayer to the tune of about £200 million a year. We need to find a way of dealing with these contracts in order to deal with the taxpayer interest in the situation.

[Vince Cable]

That depends on what the hon. Gentleman means. I think he is merely saying what is obvious, although it may need restating—that we are dealing in the wake of the financial crisis with very weak labour markets, and not just in the UK. This has had impacts on wages and on the nature of contracts. The question for the Government and legislators is whether the problems around zero-hours contracts are the symptom or the cause. The hon. Gentleman is right that the problem interacts quite powerfully with the minimum wage issue. I have made it clear that I want the Low Pay Commission to look at the minimum wage in a more positive way, but it is, of course, an independent commission and it is not my job to tell or prescribe to it how the minimum wage could evolve. I want to respect the institution that the hon. Gentleman and his Government set up.

--- Later in debate ---

[Vince Cable]

Such abuses are highly relevant, but people may come forward and explain, as I have done, that for certain contexts, groups of workers and sectors, such a contractual arrangement is necessary and positive and it would be unhelpful to take action. We have an open mind. We are not trying to close down the debate.

[Mr Watson]

On remedies, the Secretary of State raises an important point. He referred to the success of the Low Pay Commission earlier. Could one outcome be a new and enduring institution—a triumvirate model that involves employers, trade unions and Government—to resolve the complex issues that will continue to face industry in years to come, after the consultation is over?

[Vince Cable]

It could be, but I know from my interaction with them that setting the minimum wage is a complicated enough issue in itself, but I will certainly bear the suggestion in mind.