Terms and Conditions of Employment

Mark Sewards Excerpts

Tuesday 25th March 2025 Commons Chamber

[Mark Sewards (Leeds South West and Morley) (Lab)]

I am very grateful to the Minister for giving way. The Low Pay Commission previously said that about 300,000 people are not being paid the minimum wage despite being on it—they are being underpaid. Will he update the House on the Government’s progress to ensure that all people on the minimum wage are paid the minimum wage?

[Justin Madders]

My hon. Friend makes a very important point that those rights are only as good as the ability of the Government to enforce them. As we know, His Majesty’s Revenue and Customs has a very effective system to deliver on the minimum wage and we will shortly be releasing our latest round of naming and shaming of those employers who have not done the right thing. We hope that the fair work agency, when it is established, will be even more effective at delivering fairness across the country and ensuring that everyone gets the minimum wage they deserve. We know there are particular sectors where there are acute challenges.

I turn to the points made by the Scottish National party spokesperson, the hon. Member for Dundee Central (Chris Law), about the bills and costs of an 18-year-old being the same as those for an adult. That is something I absolutely understand. It is why we changed the Low Pay Commission’s remit to ensure that we eventually get parity for that age group on the full adult rate. It is also why we have changed the remit of the Low Pay Commission to move towards a real living wage for all adults. We understand that that is such an important thing for us to deliver on. He may feel that we are not quite there yet, and we must ensure we take evidence as we go along from businesses on how it impacts on particular sectors and particular parts of society, but 18 to 20-year-olds are getting a £2,500 pay rise this year as a result of the regulations. That is something I am sure he will welcome.

My hon. Friend the Member for Newton Aycliffe and Spennymoor (Alan Strickland) raised very well the regional impacts of the wage increase in his part of the world. It is the case that the regulations will mean 140,000 workers in the north-east, or 14.5% of the total workforce in that region, will benefit from the increase. We should all be absolutely delighted about that.

My hon. Friend the Member for Kettering (Rosie Wrighting) also raised in-work poverty. That is why the remit is being changed. We want to ensure that in-work poverty is consigned to the history books.

My hon. Friend the Member for Hendon (David Pinto-Duschinsky) set out in stark terms the figures associated with the regulations. I may mention them again at some point before I finish. They are the bold numbers that will go directly into people’s pockets and that we can show as tangible proof of a Labour Government delivering for working people.

My hon. Friend also raised the matter of the empty Opposition Benches. I do not want to equate that with meaning that the Conservatives do not support these increases, as I think the shadow Minister, the hon. Member for West Worcestershire (Dame Harriett Baldwin), said that they did. I do put her on notice, though, that her party leader has been less than full in her support for the minimum wage, so I hope that the shadow Minister’s support for today’s measures has not damaged her career prospects. It may well be that there is another leader in a few months anyway, and that things will be looking up. We do hope that the Conservatives continue to support the minimum wage as we move forward and that they do not change tack now that they have entered opposition.

However, the shadow Minister did raise a number of important questions, which I will now try to address. She raised the impact on public sector workers. Of course, pay for most frontline workers is set through pay review body processes, which do take account of national living wage increases as part of their processes. We do not believe that many public sector workers will be directly affected by this change, but it is something the Departments will take into account when they set their budgets.

The shadow Minister also asked about the cumulative impact of the changes. The impact assessment does show that this year’s upratings will represent a 0.14% increase in the UK-wide wage bill, which I think is incredibly good value for what we are delivering into people’s pockets. Of course, the total impact of the Employment Rights Bill is, at most, 0.4% of the total wage bill.

The hon. Lady raised questions about burdens on SMEs. The Low Pay Commission does take into account the impact on business as part of its operations. It looks at the competitiveness of individual businesses, the labour market and the wider economy, drawing on extensive labour market pay analysis and stakeholder evidence when recommending rates, and we would expect the commission to do exactly the same next year. Small businesses have, of course, had support from this Government. We have increased the employment allowance from £5,000 to £10,500, meaning that 865,000 employers will pay no national insurance contributions at all, and more than half of employers will gain or see no change from this measure. We have also extended business rates relief for the retail, hospitality and leisure sectors.

The hon. Lady raised concerns about the impact of the measures on young people. The youth guarantee will ensure that every young person has access to education or training to help them to find a job, and we are transforming the apprenticeship levy to ensure that young people get the opportunities they deserve.

The shadow Minister raised concerns about the overall labour market. I would just make the point that payroll employment is actually higher now than it was this time last year, and the latest labour force survey last week showed record numbers of people in work. Perhaps the negative headlines that we have been seeing are not actually the reality of the situation. I like to deal with facts, Madam Deputy Speaker, and the facts are that these regulations will put more money into the pockets of workers around the country—around 200,000 workers in Scotland, 160,000 workers in Northern Ireland and 150,000 workers in Wales. This will make a real difference to people: £1,400 for a full-time worker and £2,500 for someone on the 18-to-20 rate.

This is truly a worthwhile exercise, and we thank the Low Pay Commission for its work, as well as HMRC, which enforces on behalf of the Department, and ACAS, which offers impartial advice and expertise to ensure that workplace disputes can be resolved and workers’ rights can be upheld. This is a meaningful change being delivered by this Government that delivers a powerful message: this Government, and indeed this Parliament, are committed to making work pay. These real-terms increases to the minimum wage will end insecurity at work. I commend these regulations to the House.

Question put and agreed to.

Resolved,

That the draft National Minimum Wage (Amendment) Regulations 2025, which were laid before the House on 4 February, be approved.