National Minimum Wage

Mel Stride Excerpts

Wednesday 15th January 2014 Commons Chamber

[Rachel Reeves]

Work by the Institute for Fiscal Studies has shown that, taking account of all the changes to taxes, tax credits and benefits since the Government came into office, the average worker is now £850 worse off. The hon. Gentleman points to one thing, but the VAT increase means that people are worse off, as do the tax credit changes. Overall, when all those things are added up, people are worse off, not better off. I hope that he will stay a little longer than his colleague to hear a bit more of the debate.

We know that we need to build on the success of the national minimum wage, because today we face a new challenge: getting our economy working for working people and tackling the worst excesses of insecurity and exploitation in our labour market.

[Mel Stride (Central Devon) (Con)]

Further to the point made by my hon. Friend the Member for Braintree (Mr Newmark), does the hon. Lady not accept that the pressure on living standards is a function not just of wages, but of the costs that average families face? Will she thank the Government, as I do, for having frozen council tax during the period we have been in office, unlike her party, which doubled it during its period in office?

[Rachel Reeves]

If the hon. Gentleman looks at what has happened to living standards, he will see that the average worker is £1,600 worse off than they were in 2010. I am surprised that he applauds what the Government are doing—I certainly do not—because workers in his constituency are worse off, not better off, after three and a half years of Conservative government.

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[Mr William Bain (Glasgow North East) (Lab)]

Nothing speaks more to how the economy simply does not work at the moment for ordinary people in this country than this Government’s record of dither and inaction on low pay. It should be genuinely shaming for every Member of this House that the United Kingdom had the fifth worst levels of poverty pay in the OECD in 2013. We should also remember today the tireless work of living wage campaigners, trade unions and those enlightened employers across the United Kingdom who accept that our country has no future as a low-skill, poverty-wage economy and who have achieved fairer deals for workers from the financial services sector through to local government.

Now the Government must meet their share of the responsibilities by using the procurement system more effectively to secure the living wage for workers through Government contracts wherever that is possible, because although the burden of poverty pay falls most heavily on the working poor, who are now using food banks in record numbers, it is paid for by every single taxpayer in this country. They are subsidising, through the tax and benefit systems, unacceptable levels of low wages paid by bad employers. That also damages the interests of good employers.

Over the past three decades, the share of growth finding its way into the pay packets of ordinary workers on the lower half of the income scale has slumped to just 12p in every £1 of GDP growth generated. Having denied for months that there is a cost of living crisis in our country, the Business Secretary and the Government now ring their hands, for ever pledging change in the future but failing to take the action needed now to enforce the minimum wage properly, to reverse its real-terms fall in value under this Government, or to produce any long-term plan to restore the broken link between growth, productivity and wage growth, which is vital to generating a lasting uplift in living standards for millions of people across our country.

The Chancellor has been sending out mixed messages over the past few weeks ahead of his Budget. He has briefed some newspapers that a significant uplift in the minimum wage is on the way, but other newspapers have received a different story. Whatever he announces on 19 March will be weighed against the fact that under his stewardship since May 2010 the real-terms value of the adult minimum wage has fallen by 50p an hour. He is also launching a £600 million stealth raid on work incentives for the low-paid through the freeze in the work allowance of universal credit for the next three years. A single parent with children will be up to £230 a year worse off as a result of that sneaky change buried deep in the documents that accompanied the autumn statement.

Business investment is flatlining, exports are poor, productivity is weak, the squeeze on wages is extending into 2015, and people are working longer hours than they did in 2008 but have a lot less to show for it. This is not a Government who can say that they have a credible long-term plan to boost the living standards of ordinary working people in Britain.

The Government should be enforcing the minimum wage better. The hon. Member for East Dunbartonshire (Jo Swinson) said that bad employers would be named and shamed, but we have seen nothing of that so far. The Office for National Statistics told me at the end of last month that nearly 300,000 people across our country are being paid less than the minimum wage, including 17,000 in Scotland, yet we have seen only two prosecutions over the past four years, and the average fine for each breach was only £1,500.

[Mel Stride]

Does the hon. Gentleman not welcome, as I do, the fact that we are moving from a fine of up to £5,000 per company to a fine of up to £20,000 per employee who does not receive the minimum wage? If 50 employees in a company were affected, presumably the fine could be as much as £1 million.

[Mr Bain]

I am grateful to the hon. Gentleman for his intervention, but that would simply mean that the maximum fine was only 40% of the maximum fine for fly-tipping in this country. Is he genuinely saying that there should not be an equivalence between the maximum fine for fly-tipping and the maximum fine for failing to pay the national minimum wage? I urge him to think again.

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[Mr Brooks Newmark (Braintree) (Con)]

I am delighted to follow the robust speech by the hon. Member for Derby North (Chris Williamson). I am probably the first Conservative in the Chamber to begin mine by supporting the first part of the Opposition motion, which states:

“That this House celebrates the 15th anniversary of the introduction of the National Minimum Wage”.

I support the minimum wage, as I believe all Government Members do, because it is important to make work pay, to boost living standards and to tackle in-work poverty. I cannot, however, support the rest of the motion.

The Secretary of State for Business, Innovation and Skills recently said:

“Anyone entitled to the national minimum wage should receive it. Paying anything less than this is unacceptable, illegal and will be punished by law. So we are bringing in tougher financial penalties to crackdown on those who do not play by the rules. The message is clear—if you break the law, you will face action. As well as higher penalties, we have made it easier to name and shame employers who fail to pay their workers what they are due.”

[Mel Stride]

Does my hon. Friend agree that it is a significant step forward that the fines will now relate to the individuals who have not received the minimum wage, rather than to the companies?

[Mr Newmark]

I thank my hon. Friend for that intervention. I will go into that matter in a little more detail in a minute.

The Government are taking strong action to deal with the last Labour Government’s failure to have a robust system of enforcement for the national minimum wage. I welcome this week’s announcement that tougher financial penalties will be brought in to crack down on those who do not play by the rules.