Mark Prisk
Main Page: Mark Prisk (Conservative - Hertford and Stortford)Employment Opportunities Bill
Mark Prisk Excerpts
Mr Thomas
I meant, “I am very grateful to the hon. Gentleman for giving way.” I am sure his time will come again.
Does the hon. Member for Christchurch (Mr Chope) think the climate of opinion has changed among his Front Benchers? Does he think that they will be tempted to support his Bill this morning?
Mr Chope
The hon. Gentleman is uncharacteristically disparaging, if not insulting. First, I am not aware of having any troops. Secondly, if he is referring to the fact that I withdrew my two earlier Bills—the Training Wage Bill and the Minimum Wage (Amendment) Bill—he makes a fair point. However, I withdrew those Bills from the Order Paper because their provisions are incorporated in the Employment Opportunities Bill word for word. Having the good fortune to have secured a debate that could go on for five hours, I thought it better to have one, proper debate, rather than three separate debates. If it is the hon. Gentleman’s accusation that I withdrew those two Bills so that they could be incorporated into this Bill, I plead guilty.
So far as forecasting what will happen after the Minister has spoken, I cannot do that. When the Whips ask, “How will you be voting?”, I always say, “I’m going to wait and hear what the Minister says,” because I have an open mind on these issues. The Minister may well announce that he will support my Bill. Indeed, I had the wind taken out of my sails last Friday when a Minister said just that, and my Bill was unopposed on Second Reading.
Mr Chope
I am disappointed about that, because it sounds as though my hon. Friend may have come to the Chamber with his hands tied—perhaps by the coalition strings—and unable to address the arguments that have been deployed. Perhaps he will tell us a little more about that in due course.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I rise to set out the Opposition’s view on the Bill. In so doing, I congratulate the hon. Member for Christchurch (Mr Chope) on securing such a desirable spot to set out his views on how the laws of this country should change. No one in the House is remotely surprised that he should have secured this spot; he is a skilful exploiter of House procedure and an essential Friday participant.
This is probably my first opportunity to exchange views with the hon. Gentleman on private Members’ Bills since our positions were reversed some time ago—he was leading for Opposition Front Benchers one Friday and I was hoping to secure the support of the House for reforms to modernise co-operative law. I fear that I cannot be as helpful to him today as he was to me then.
Let me be clear, however, that I hope that there will be a vote, and that the hon. Gentleman will have the courage of his convictions and encourage the House to divide. I suspect that he does not have the courage of his convictions and will not put his Bill to a vote. Nevertheless, during the debate he has made a number of interesting points, and I shall touch on them briefly.
The hon. Gentleman mentioned the significance of training for future of employment, and I very much agree with that. He also touched on the growing crisis of youth unemployment, and rightly challenged his Minister to explain what the Government will do if they will not support his Bill. That may have been his coded way of echoing the Opposition’s call for a plan B on the economy.
The hon. Gentleman also mentioned the concern that some 20% of graduates are out of work. I simply pose the question, do we want more people in work? Of course we do, but should the Government direct the bulk of their efforts at encouraging low-paid, low-skilled jobs, as he appears—by moving this Bill—to imply they should; or should they encourage higher-skilled jobs for graduates to enter? That is one of the tragedies of the Government’s refusal to provide a loan to Sheffield Forgemasters.
The hon. Gentleman lamented the delay in the Home Office’s consideration of asylum applications. Sadly, with some 5,200 jobs set to go in the Home Office over the next two or three years, I suspect that his aspiration and that of most Back Benchers and Labour Front Benchers for the Government to clear the backlog of asylum applications is unlikely to be realised any time soon.
Mr Thomas
I will come to youth unemployment and the wider situation in the economy a little later. If the Minister bears with me, I will come on to what needs to be done.
My hon. Friend the Member for Manchester Central (Tony Lloyd) also made a series of interesting points. He rightly drew the House’s attention to the work of the Better Regulation Commission, which highlighted the complete lack of a link between unemployment and the national minimum wage. He drew attention to the membership of the Low Pay Commission, and the important role of its business representatives in analysing economic conditions and ensuring that the minimum wage reflects economic realities across the UK.
The bulk of my hon. Friend’s remarks underlined the inequality in the relationship between the employer and the employee. The vast majority of businesses are highly reputable. I recognise the point made by the hon. Member for Northampton South (Mr Binley), who is not in his place, that it is very much in the interests of the business to protect and support its staff, and to help them to gain skills. The concern rightly outlined by my hon. Friend the Member for Manchester Central is that rogue employers—there were certainly examples of this from before the introduction of national minimum wage—may well be tempted to take advantage of the inequality in the power relationship between the employer and employee, and persuade the employee to take a worse rate of pay.
The hon. Member for Shipley (Philip Davies) also made a series of interesting remarks, not least in arguing that those with mental health problems or learning disabilities face greater challenges in finding work, which I accept. However, I cannot accept the logical conclusion of his argument that we, as a country, should accept that those with learning disabilities or mental health problems should accept lower wages than others.
I cannot support the Bill presented by the hon. Member for Christchurch. It would drive a coach and horses through the national minimum wage legislation and leave low-paid workers at risk of being exploited by unscrupulous employers who want to undercut other businesses that want, perfectly legitimately, to pay the national minimum wage.
The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)
I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on securing parliamentary time for the Bill. I confess that I have not been a regular attender on Fridays and I found this to be—how can I put this nicely?—a different style of debate.
We began with some rather florid language. I think there was talk of gouging and the crushing hand of state socialism by stealth—a particular favourite of mine—which presumably is the opposite of the hand which Adam Smith liked to talk about. Perhaps more predictably, we had some early fireworks from the right hon. Member for Rotherham (Mr MacShane) in response to that. Then there was a wide-ranging debate, ably chaired, Madam Deputy Speaker, by your fellow Deputy Speaker. We visited small business in Wellingborough, asylum seekers in Zimbabwe, and, at one point, the Victorian age, possibly in person, though my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is not here now. Two topics which I suspect, although I am happy to be corrected, may be popular on a Friday morning—the EU and IPSA—also seemed able to be drawn into the heart of debate, all within order, of course. There was, just for a moment, the prospect of an unholy alliance between the hon. Member for Manchester Central (Tony Lloyd) and my good friend the hon. Member for Christchurch, but as my hon. Friend rightly concluded, this is an important debate to our constituents, and in many senses too serious for yah-boo politics. I will seek to address the range of issues that have been highlighted during the past three and a half hours.
There are four elements to the Bill. Clause 1 provides that no foreign national lawfully resident in the UK who is above compulsory school age can be prevented from engaging in remunerated employment. The rest of the Bill concentrates on the national minimum wage. Clause 2 provides an opt-out, clause 3 exempts a person who is getting a training wage from the minimum wage, and clauses 4 to 8 provide for the introduction of a regional minimum wage. As the Bill principally concentrates on the national minimum wage, I will discuss those provisions first, but I will address clause 1 as well.
I am pleased that the debate gives me the opportunity to remind hon. Members that the Government are committed to the national minimum wage. We believe that it gives protection to low-income workers and provides incentives to work, and we made that clear in our coalition agreement. As the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), who has responsibility for these matters, made clear, the aim of the national minimum wage is to establish fairness in the workplace and to make sure that work pays. It does that by ensuring that all workers receive at least the hourly minimum rates set. As well as helping workers, the minimum wage also helps business by ensuring that competition is based on the quality of goods and services provided, and not on the lowest price potentially based on exploitative low rates of pay.
Hon. Members will be familiar with the fact—we have talked about it in the debate—that the level of the minimum wage is recommended to the Government by the Low Pay Commission. The commission has widespread support, not just from the trade union movement, but from employers. It is independent of Government and comprises nine commissioners, and the aim is simply stated as to
“have a minimum wage that helps as many low-paid workers as possible without any significant adverse impacts on inflation or employment.”
Those impacts have been raised in the debate, and I will address them specifically because I know that they are of concern to right hon. and hon. Members.
Commissioners receive submissions and take oral evidence from a wide range of representative organisations. They also visit businesses throughout the UK. That puts them in direct contact with businesses in low-paying areas and areas with unemployed and low-paid workers and their representatives, so that they can understand the realities of the circumstances in the workplace. That consultation supplements the commission’s analysis of high quality and extensive research and official data, so the basis of the agreement that commissioners represent to Government is robust evidence. Since the introduction of the national minimum wage, the commission has carefully monitored its impact on the economy in general and the labour market in particular. It looks at a range of issues and variables, including profits, prices, productivity, investment and business creation.
Clause 2 provides that a person who would otherwise qualify for the minimum wage may elect to opt out of such an entitlement. It makes it clear that any such election must be made by an employee in writing to their employer and must be signed by both the employer and the employee. I believe that the proposals in clause 2 are flawed in a number of serious ways. First, they make it easier for workers to be exploited. My hon. Friend the Member for Christchurch stressed that he is talking about arrangements for freely consenting adults, but how will he ensure that that is in fact the case in every place of work? Low-paid workers who may be fearful of losing their jobs are unlikely to have that free choice—that equal position—over whether they should accept a pay cut taking them below the national minimum wage.
Some people might feel that that is far-fetched, but it is worth looking at the first evidence that the Low Pay Commission established. In its June 1998 report, it states:
“Most workers in the UK have seen an increase in their real earnings over the past two decades. But increases have not been uniform. Average earnings have increased much more rapidly than the earnings of lower-paid workers, and the earnings of the skilled have increased relative to those of the unskilled. Certain groups of workers are much more likely to be low paid than others: these include women (particularly those who work part time) as well as young ethnic minority and disabled workers. Temporary workers and male part-time workers are also more likely to experience low pay.”
The report concludes:
“We met many workers who felt trapped on low pay because of lack of skills, mobility or opportunities. They feared that their only alternative was unemployment.”
The commission also found examples of “gross exploitation”. In its report it cited the example of a woman employed in a bar who routinely worked what was described as a “four hour” evening shift for £12 gross. The four hours reflected only the time that she was serving, however; they did not include the requirement for her to spend another two hours after closing in order to clear up the bar. That time was not paid for at all. Those instances do occur, and we need to ensure that when we frame legislation we respect all of them.
There is no guarantee that an employer’s motives for getting a worker to accept pay below the minimum wage will be based on ensuring the business’s survival. That has come out in the debate from a number of contributors, and it goes to the heart of the economic reasons underpinning a national minimum wage. In technical terms, that would be described as monopsonistic competition, but in less technical language it is about market power, and several hon. Members, including the hon. Member for Manchester Central and my hon. Friend the Member for Gainsborough (Mr Leigh), have highlighted that issue.
Vulnerable workers—those with few qualifications, those who are in fact functionally illiterate and those with work-limiting disabilities—do not have equal bargaining power when compared with their employer. There is a mismatch, and there is that risk of exploitation, and the problem with clause 2 is that it does not take account of that potential problem. We believe that it could reinstate the problems that led to the introduction of the minimum wage in the first place.
That is not the only problem, however, important as the issue of vulnerable workers is, because the Bill’s proposals could be bad for business as well. The Low Pay Commission found in its first report that competing simply on the basis of low pay can lead to a damaging downward spiral of low wages and poor standards, which would be bad for businesses and workers. This was recognised by the British Chambers of Commerce, which stated in its evidence to the commission that
“businesses recognise that a low wage policy leads to a vicious circle of low morale, low performance and low productivity”.
It is important to remember that, although the vast majority of employers seek to do the right thing and do the right thing, there will always be that minority, and the danger of shifting away from that is one that affects employers and employees. That is not just my own view, or indeed that of the Government. I am in good company, because Winston Churchill made the point that
“the good employer—
without minimum wage protection—
“will be undercut by the bad, and the bad employer will be undercut by the worst.”
There is also no evidence that the provisions in clause 2 are necessary. I have mentioned what the Low Pay Commission set out, but it is also worth looking briefly at the balanced way in which it has implemented the national minimum wage over its lifetime. I know that there was much discussion about the expectations that were or were not raised prior to the introduction of the minimum wage, but the commission’s approach has been reasonably cautious. It has been cautious in difficult times, but, yes, it has balanced that with more generous rate recommendations in better times.
Mr Binley
Will my hon. Friend help me? I need to understand something, because under the previous Government—it could only have been under the previous Government—the minimum wage increased by twice the rate of inflation. Is that where this Government want to go with the minimum wage, or will it not increase at that rate under my hon. Friend’s jurisdiction?
Mr Prisk
I am saying that the Government will seek from the Low Pay Commission a careful assessment of the market conditions year on year, whether they are good or bad: what is affordable and where the balance can best be struck between ensuring that the minimum wage is reasonable for those who are affected and not having an unreasonable effect on businesses as a whole. The Government cannot set it in advance or seek for it to double.
Mr Binley
Perhaps my hon. Friend can help me further, because he did not answer my question. We all recognise that the double-inflation increase has had the effect of raising wages throughout the system. Given that, does the Minister understand why it is important, particularly at this time, to ensure that the minimum wage does not rise above the rate of inflation?
Mr Prisk
Absolutely; we will be careful to ensure that the recommendations we receive from the Low Pay Commission take that point into account. It should consider not only the conventional measures of inflation, but the costs that affect businesses, who are also the employers. This is a year-on-year process because flexibility is needed as the market changes.
In 1999, the commission set the rate at £3.60 an hour, which was pretty cautious. In the early years of the minimum wage, the commission continued to take that cautious approach. I do not propose to go through each and every year, although it is tempting. Since 1999, we have seen good times and bad, and I think it is worth considering how the commission has responded in those different contexts.
In 2001, the commission recommended that in 2001 and 2002 the adult minimum wage should increase to the level that it would have reached if it had always been raised in line with average earnings. In other words, at the start when things were challenging, the commission did not want to raise it too early. However, as the market improved and became more robust in labour terms, it was able to add to the minimum wage in a way that related to the costs of businesses.
In 2007, the commission came to the conclusion that a more cautious approach was again required. It looked at the pay differentials, particularly in the retail and hospitality sectors, both of which were progressing. That was coupled with concerns about price inflation feeding into wage inflation. The commission reported for the first time that it was concerned that the minimum wage was biting in that way.
In the most recent reports in 2009 and 2011, the commission was clearly dealing with a very different economic environment. By the time of the 2009 report, the UK was clearly in significant economic decline and recession, accompanied by sharp increases in unemployment and a fall in total employment. The decline in economic activity was much sharper than had been anticipated by most economists, never mind those working for the commission. That is why the commission recommended that the adult minimum wage should increase by only 1.2%—much less than in previous years.
The report published in April 2011 reflects the fact that the UK economy is recovering following the recession. The labour market has continued to show the resilience it had in the recession and unemployment remains below the median levels forecast at the time of the 2009 recommendations. The commission concluded that its approach needed to recognise the continued economic uncertainty, while protecting the lowest-paid workers from falling further behind—hence the recommended increase in the adult minimum wage of 2.5% to £6.08, which is broadly in line with average earnings and pay.
Those points in time—1999, 2001, 2007, 2009 and 2011—were all at different points in the economic cycle. The review that I have undertaken in preparing for this debate has demonstrated that the commission has been sensitive to the different market conditions. Sometimes it was able to be more generous and sometimes it had to be more restrictive. That is the right balance.
Many Members have raised the impact of the minimum wage. I will deal first with its impact on earnings and labour costs. Businesses react in different ways to labour costs. If they rise, some businesses absorb them by reducing non-wage benefits or adjusting their pay structures, as we have heard from several hon. Members. However, the employment picture is a little different from the one that has concerned several Members. In fact, I say in particular to my hon. Friend the Member for Shipley (Philip Davies) that since the minimum wage was introduced in April 1999, aggregate employment has grown. Despite the recession, it was still higher last September than it was prior to the introduction of the minimum wage. That occurred through the boom, through the Labour bust and back into the new coalition Government’s recovery. During that period, the number of employee jobs has increased by 1.1 million and the number of employees by 1.4 million. The number of hours worked has increased by 3.1%.
My hon. Friend—I do not see him in his place at the moment, but I will continue my point for the benefit of the House—asked the eminently sensible question whether the impact of the minimum wage on those on lower incomes had been adverse by comparison with the rest of the economy. I have sought the answer to that question. In the same period, from the introduction of the minimum wage in 1999 to the first quarter of 2011, the number of employee jobs in the low-paying sectors has actually increased by 366,000, which is 4.8%.
Nick Smith
Does the Minister agree with the suggestion of the hon. Member for Shipley (Philip Davies) of a drop in the minimum wage of £1 an hour, or nearly 20%?
Mr Prisk
Of course not. I hope that my reference to the figures on the employment impact will make people reconsider what I suppose is the natural suspicion that if all wages rise, people will be squeezed out of the labour market. The evidence suggests otherwise. The size of the labour market has changed since the minimum wage was introduced, and a series of factors have changed its character, but I take some comfort from the fact that the figures are heading in the right direction. However, we need to be continuously careful that the minimum wage does not start having a negative impact.
The consensus of the research on the impact of the national minimum wage is that it has greatly affected the distribution of earnings but not had a significantly adverse impact on employment, including of those on lower income.
Mr Chope
In trying to undermine clause 2, my hon. Friend has concentrated on the position of those who are already in employment. Does he accept that there are people who are out of employment who are looking for work and genuinely willing to work for less than the minimum wage? Why is he intent on preventing them from entering into an agreement with a potential employer to do so?
Mr Prisk
That brings us back to whether it is actually a choice to do so. I totally respect my hon. Friend’s point that there are people on the edge of the labour market who are keen to work. However, if we open up the system and return to competition based on the lowest pay, we will go back to the original problem. I agree that we must ensure that we do not have undue inflexibility in the system, but I believe that returning to the position that the Bill suggests would create more problems than it solved.
Mr Binley
I am most grateful. Does my hon. Friend recognise that most employers, and certainly my company, try very hard to set the wage levels for their low-paid employees above the market rate, to attract the very best labour? That is the major concern of most small and medium-sized enterprises. I recognise that a very few rogue employers would not do that, but does he accept that in the main, companies wish to pay more to attract better labour?
Mr Prisk
Absolutely. The vast majority of decent employers are keen to ensure that they get the brightest and best, and are willing to pay for that. We should not allow any characterisation of employers in this country as always wanting to do down their employees. That is not my experience, and I hope Opposition Members will not tolerate such a characterisation in future.
Clause 3 seeks to exempt a person from the minimum wage as long as they receive a training wage. We have had a constructive discussion on apprenticeships, training and the importance of helping young people, to which the clause is relevant. Ever since the Low Pay Commission’s first report in 1998, it has been argued that young people should be treated differently from their older counterparts. The rationale is that the threat of unemployment because of too-high wages is greater for younger people than it is for older people. Clearly, young people often lack experience in the workplace, and are therefore more likely to be both on lower earnings than older workers, and to work in lower-paying sectors.
Young people are therefore more likely to be more vulnerable in the labour market. We have seen that, sadly, in the last couple of years. If I may say, it is encouraging that since May of last year, there has been an improvement in youth unemployment. I am pleased that I can confirm today that youth unemployment is lower than that which we inherited. I hope that Opposition Members will acknowledge that, because it is an important issue on which we agree.
The current rate for workers aged 16 to 17 is £3.64 an hour, and the rate for those aged 18 to 20 is £4.92 an hour. That contrasts with the adult rate for those aged 21 or above, which is currently £5.93. In recommending minimum wages for young people, the commission aims to ensure that the rates neither provide an incentive for young people to leave education or training—that is an important balancing act—nor harm the employment prospects for those who decide to work. As well as the minimum wage rates for young workers, we last year accepted the commission’s recommendations to end the exemption from the minimum wage for apprentices under the age of 19, or those aged 19 and over in the first year of their apprenticeship.
We have hence introduced a new minimum pay rate for those people within that framework, which has ensured—for the first time, I believe—that all apprentices in the UK get the protection of the minimum wage. It gives them a fair deal, and therefore protects them from exploitation, but it does not deter businesses from taking them on. As we have heard, that apprentice rate is currently £2.50 an hour.
Mr Bone
The Minister is making a well-constructed argument, but on that specific point, the Government have accepted that there should be a different minimum wage for apprentices, like a training wage. Why cannot we extend that differentiation to the travel industry, which I mentioned in my speech, and other industries?
Mr Prisk
My hon. Friend is a few inches ahead of me, but he is right that that is the kernel of the argument on clause 3.
Let me give a little background, and then I shall address specifically how we expand our provisions and encourage young people in training and apprenticeships. The point about the apprenticeship rate is that it recognises that employers invest significantly in apprenticeships, and that apprentices—quite naturally, given where they are in their working cycle—are less productive than other skilled employees. In addition, young people who complete an apprenticeship derive significant long-term advantages. They know that by accepting a lower wage when training, they will enjoy future higher earnings and better job security. That fits into another Government policy, namely the significant expansion of apprenticeship places—we have increased spending by £250 million to encourage 75,000 extra places.
Is a training wage such as the one in clause 3 feasible? The clause states that someone who is contractually entitled to a training wage, and to training in skills relevant to their employment, does not qualify for the national minimum wage. However, the Bill does not specify what would be an appropriate training wage level. As the Bill stands—that is all we have to debate—employers would therefore be free to pay a training wage at any rate. In addition, individuals receiving those low wages would, as workers, be carrying out work or services for the employer.
The danger is that the provisions could be open to widespread abuse by unscrupulous employers—that small minority that look to pay exploitatively low wages.
Mr Prisk
I will come to internships later. It is important that we get right the balance between internships and work experience.
I want to continue my point about training. Another problem with the Bill is that what is meant by
“an entitlement to training from the employer in skills relevant to the employment”
is unclear. A contractual entitlement to training does not mean that the worker is actually receiving any useful training. Under the Bill, for example, a worker could, if they were working in, let us say, a cold-call centre, undertake that work—that would be allowed—because it could be deemed the best way to learn on the job and be trained. In other words, if an individual’s work involved cold-calling, they could become skilled, as described in the Bill, simply by doing the job, and not actually having a separate training programme with accreditation requirements. The question then is: would this mean that they are entitled to a minimum wage? The Bill is unclear. Under the Bill, two people doing the same job could have different contracts. Consequently, one would be entitled to the minimum wage, but the other, having a contract for a training wage, would not. The danger therefore is that these provisions could be open to abuse.
I turn to the question of how we could go beyond apprenticeships. This involves the question of whether we have some form of accreditation, which is a real problem that the Bill does not seem to address. Were we to have accredited training in certain circumstances, we would probably end up going down the route of the old development rate, which was set out in 2006, and under which there were complex rules and conditions seeking to determine exactly what the training was. That would create real problems for employers, who would want to know what the conditions were and how they would work. Would the opportunities they are providing qualify for the training wage? We would have all these grey areas and loopholes sitting between the existing minimum wage and the training wage. That is a practical problem about which I, as a former employer in the private sector—obviously I remain an employer as a Member of Parliament—would be very anxious. I would not want to find that I am unintentionally breaking the rules or finding that the guidance from the Government has to be so specific and complex that I spend too much time trying to comply with a new set of regulations, when in fact the original system was simpler—so there are real practical problems with this suggestion.
Mr Chope
Instead of putting up Aunt Sallies, why can the Minister not address the question put to me by one of my constituents who is out of work? He is aged 24 and says that he would be willing to work as a trainee for less than the minimum wage—in other words, at a training wage—but at the moment is not allowed to do so. No employer can let him, because the apprenticeship wage only applies to much younger people.
Mr Prisk
I come back to the point that were we to consider expanding this provision, we would need to put in place a system robust enough not to create either the complications I described or the uncertainties that I, as an employer, would not want. The Bill fails to do this. I agree that we need to encourage training, but to be blunt with my hon. Friend, I do not think that his Bill fulfils that task.
Mr Chope
Will my hon. Friend specifically answer my point, because I will be writing to this constituent to set out the Government’s response to his plea that he should be given the freedom to take a training job at less than the minimum wage from somebody prepared to offer him that training?
Mr Prisk
I can understand that frustration, but the moment we make law on the basis of one instance, we create difficulties for the scrupulous. That is the risk we are talking about.
I turn to work experience and interns. I understand the frustration and concerns of my hon. Friend the Member for Gainsborough. Work experience, whether as a paid or unpaid intern, can be a valuable way for young people to get the experience, skills and confidence they need to start up. The Government want as many internship opportunities as possible to be made available, but we are clear that those who are entitled to the national minimum wage should get it. The example he gave of how he works as an employer accurately describes exactly that position.
Mr Leigh
This issue is important, because we are talking about people who are being exploited. They are working 60 to 80 hours a week for big companies, big legal firms or big merchant banks all over the place, and they are being exploited. They are not training; they are working, and they should get paid. The Government should step in and do something about it.
Mr Prisk
I understand that, but as we have heard today, the Government are strongly of the belief that we should ensure that where people are entitled to the minimum wage, they should receive it. However, we would not want to intrude in the more informal areas that several Members have described, such as a week of work experience, and so on.
Mr Prisk
My hon. Friend has made a powerful point about those working longer term. We want to ensure that the law is upheld.
Before I return to clause 1, which deals with the unlawful prevention of employment, let me turn to the four clauses at the back end of the Bill, namely clauses 4 to 8. These relate to the regional minimum wage, the idea being that we should move away from a national rate, towards a more flexible, regional structure. It is worth looking briefly at how the existing law works. Under the National Minimum Wage Act 1998, workers of compulsory school age are entitled to be paid at least the national minimum wage, although there are some exceptions. Different treatment may be permitted in relation to different sectors of employment and for people of different occupations. However, having different areas poses practical problems.
Clause 4 sets out the role of the Low Pay Commission. It provides that the commission
“must consider and take evidence on the availability of employment opportunities and the impact of the national minimum wage on job creation and access to employment in…areas where the average level of unemployment in the preceding year has been above the national average”.
The commission must then
“consider in the light of that assessment whether to recommend that the minimum wage in any such area should be set at a level below the national minimum wage.”
It is not clear from clause 4 what happens if a lower minimum wage is applied to a travel-to-work area and the unemployment level of that area subsequently falls below the national average. We presume—although it is unclear from the Bill—that the lower minimum wage could no longer apply, and that the national minimum wage would therefore apply. It is also not clear whether the Bill envisages more than one lower minimum wage rate. For example, would the same lower rate apply regardless of the extent to which average unemployment in an area was greater than the national average?
Clause 5 sets out the duties of the Secretary of State in the event of the Low Pay Commission recommending that the minimum wage in a particular area should be set at a level below the national minimum wage. Perhaps peculiarly, clause 5 provides that the Secretary of State has no discretion in the matter, but must make regulations to bring the commission’s recommendations into force. I note that this is different from the Secretary of State’s position in respect of the national minimum wage, where it is for him to decide on the appropriate rate, based on the Low Pay Commission’s recommendations. It is unclear why the Secretary of State should have the discretion to implement the commission’s recommendations on the national minimum wage, which would affect around 1 million people, but not where its recommendations could affect a far smaller number of people.
Clause 6 provides that a change to the minimum wage in an area to a level below the national minimum wage would not affect existing contracts of employment. I will come to the issue of fairness later; I merely note now that this provision is another instance of allowing an employer to pay two workers different wages for doing the same job. It could also encourage employers to get rid of workers who were being paid at the national minimum wage and replace them with people paid at a lower rate.
Clause 7 presents significant practical challenges. It provides that a travel-to-work area is
“an area so defined by the Office for National Statistics.”
This point is crucial, because it affects the way in which the final four clauses operate. Ideally, a self-contained labour market is one in which all the commuting occurs within the boundary of that area. However, in practice it is not possible to divide the UK neatly into separate labour markets based on commuting patterns. They are just too diffuse. Our concern is that the opportunity for complexity and continuous change would make the operation of the proposed system significantly more challenging than at present. Speaking as an employer—which I continue to be—I am concerned about how this would work within and on the edges of those regions.
There are currently 243 travel-to-work areas. They were defined in 2007 using the old 2001 census data, so there is already a problem of time delay. The areas vary considerably in size. For example, Anglesey has two such areas, while Greater London has only one. I hope that no one will ask me why, because I do not have the answer. If we moved to a system of regional rates based on travel-to-work areas, the real problem would be the complexity that that would generate for employers. As someone who wants to see less regulation, I would be very much opposed to that. I hope that the House will acknowledge the specific practical problems associated with each of the clauses, especially relating to the way in which this part of the Bill would operate.
Clause 1 deals not with the minimum wage but with the question of unlawful prevention in relation to foreign nationals. It relates to foreign nationals above compulsory school age who are legally residing in the UK, and provides that such individuals shall not be prevented from undertaking paid employment unless certain conditions apply. The first condition is where the foreign national has only a visitor’s visa. The second is where the foreign national’s most recent application for entry into the UK has been refused. The third is that the foreign national’s most recent application to stay in the UK has been refused. Like my hon. Friend the Member for Christchurch, I noticed the typo in subsection (4), for which he has graciously apologised. The effect of the subsection as drafted would be to exempt foreign nationals who were not in detention. The problem that that would create is self-evident.
The Government support the principle that everyone of working age who has the legal right to work in this country should have the opportunity to gain a living by work which they freely accept. That is set out in article 6 of the international convention on economic, social and cultural rights, and the Government are committed to fulfilling our obligations under the convention. The problem is that the provisions in the Bill are contrary to the Immigration Act 1971. The fact that the Bill does not provide for the repeal of the relevant provisions of the Act raises an important technical issue. When we debate these Bills, we are debating whether they should become the law of the land. While I understand that points of principle are involved, we also need to ensure that we get the legislation right.
Mr Prisk
The problem is that the practicalities affect the principle. That is an important point for my hon. Friend to bear in mind.
Section 3 of the Immigration Act provides for a foreign national’s lawful stay to be subject to conditions preventing his employment or occupation in this country. That is the basis of the UK’s controls on access to the labour market. Foreign nationals who are admitted specifically for the purpose of employment may be subject to conditions of stay which require them to seek authorisation to change their employment. Those who enter for another purpose—study, for example—may be subject to conditions which require them to seek a variation of their conditions of stay if they wish to remain for the purpose of work. The provisions in the Bill are the basis for arrangements for determining the circumstances in which an individual would be allowed to take employment or not, depending on their skills.
My hon. Friend’s proposal appears to remove any legal basis for the operation of an effective control on migrants’ access to the labour market, including the operation of a labour market test in respect of a migrant’s employment, except at the point at which they initially seek entry to the UK. The Bill would therefore significantly undermine the Government’s ability to regulate the entry and stay of foreign nationals, other than at the point at which they seek entry, or to protect the interests of resident labour.
My hon. Friend might well have intended the provisions in clause 1, in respect of recent refusals of applications to enter or stay, to protect against such issues. However, they would not satisfactorily achieve that effect. It is also difficult to see how such provision could be reconciled with the effective operation of transitional restrictions, to which the Government are committed, on labour market access to nationals of new member states of the European Union who are not subject to immigration control but, as foreign nationals, would be covered by the Bill.
Mr Prisk
I think the challenge is to make sure that the asylum system works properly, which is what my colleagues in the Home Office and elsewhere are doing—and doing very ably—despite the mess they inherited. That is the challenge we face.
The national minimum wage is a key part of the Government’s overall strategy to establish fairness in the workplace and to make work pay by ensuring that all workers receive at least a set hourly minimum rate. The minimum wage has brought substantial benefits to a large number of workers, especially women and part-time workers, and it has established basic minimum standards in the labour market. To make the minimum wage optional, as clause 2 suggests, could undermine those achievements and leave some vulnerable low-paid workers open to exploitation.
The Government also believe that the proposals in clause 3 are unnecessary. There are already options available to employers who wish to offer training but not to pay the minimum wage. Certain apprentices are entitled to a lower minimum wage rate. There are some specific exemptions in the law that relate to training—where, for example, an individual is on a specified Government or European scheme, individuals acting in that context as volunteers are not, of course, entitled to the minimum wage.
Making the minimum wage more complex through the introduction of regional rates would have adverse effects on workers and businesses, and make the task of setting and enforcing the minimum wage far more complex. The proposal would introduce potential unfairness for workers, particularly those located near to the boundaries between regions. It is worth noting that when one looks at the evidence, one sees that there is already significant variety within those regions.
As for clause 1, we believe that it would have an adverse effect on the operation of an effective control on migrants’ access to the labour market and would significantly undermine the Government’s ability to regulate the entry and stay of foreign nationals and so to protect the interests of resident labour.
For those reasons, if my hon. Friend seeks to press his Bill to a Division, I have to tell him and the House that the Government cannot not support its proposals.