Terms and Conditions of Employment

Mike Wood Excerpts

Tuesday 19th February 2019 Commons Chamber

[Kelly Tolhurst]

I point out to the hon. Lady that we are talking about the apprentice rate.

The regulations will also change the amount employers can charge workers for accommodation without it affecting their pay for national minimum wage purposes. From April, this will increase to £7 per day.

Changing the law is the first step, but we also need to make sure all workers know they are entitled to the national minimum age and that all employers know they must pay it. The Government run an annual campaign to increase awareness of the national minimum wage and the national living wage. Last year, we spent £1.48 million reaching workers and employers through posters and billboards as well as digital and online channels. We know that most businesses are good employers and pay at least the national minimum wage, but where non-compliance exists the Government will step in and make sure that money is recovered on behalf of workers.

Since 2015, we have doubled our investment in enforcement of the regulations to more than £26 million per year. More than 420 staff in Her Majesty’s Revenue and Customs are involved in the enforcement of the national minimum wage, and they follow up every worker complaint they receive. HMRC also conducts pro-active, risk-based enforcement in sectors or areas with a higher risk of workers not being paid the legal minimum wage, including those identified by the director of labour market enforcement. In this work, it co-operates with other labour market enforcement bodies to share information and conduct joint operations where that makes sense for businesses and workers.

[Mike Wood (Dudley South) (Con)]

When businesses are repeatedly found to have breached national minimum wage regulations, will the Minister ensure that HMRC proactively investigates other cases of staff employed on similar terms and with similar contracts, rather than requiring each employee to demonstrate separately that he or she has been underpaid?

[Kelly Tolhurst]

I assure my hon. Friend that we take HMRC’s enforcement of the national minimum wage very seriously. There are many actions that we can take when people breach the law and do not pay the minimum wage. We will prosecute companies that are found not to be paying it, but our priority remains ensuring that workers who have been underpaid receive the arrears owed to them, and in such cases companies must also pay a penalty. We are committed to the enforcement of the minimum wage, which is why we have doubled our expenditure on it.

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[Chi Onwurah]

My hon. Friend makes an excellent point. The burden of debt has been shifted. We still have our public debt, but the burden has been shifted on to our poorest families. The national figures for debt are a matter of great concern for our future economic stability. As a consequence, food bank use has skyrocketed, with wages no longer covering basic living costs. In my constituency, Newcastle’s West End food bank is the largest in the country. That is not an achievement of which we are proud, but we are proud of the generous Geordies who take on the role that this Government have abandoned in feeding the most vulnerable among us.

We know that 5.2 million people are trapped in low pay, and small single-figure percentage increases in the legal minimum wage will not put an end to this misery. Shockingly, one in four employees earning the minimum wage for five years have been unable to move out of that low pay, which is the highest figure since records began. Low pay is becoming a trap, and the workers least likely to escape the low pay trap are those in the north-east and women. They are being trapped by the lack of action from this Government. Will the Minister admit that, under the Tories, low pay means that work is not a protection against poverty? I want to make it clear that, despite its name, the Government’s minimum living wage is not a real living wage. The small increase that this statutory instrument introduces will not make it a real living wage. More than 5 million people are paid less than the living wage—a huge increase from the 3.4 million people in 2009.

[Mike Wood]

The shadow Minister refers to small increases in the minimum wage. An increase of 38p in the national minimum wage is now being introduced. Can she tell the House in how many of the 10 years after the introduction of the national minimum wage the Labour Government made a bigger increase than the 38p that workers will see under this increase?

[Chi Onwurah]

When we introduced the national minimum wage, it was a transformative change for the pay of so many low-paid people, and our commitment to a real living wage of £10 an hour will also be transformative for working people.

Research by the Living Wage Foundation, which the hon. Gentleman might be interested in, revealed that one in five workers—more than 5 million people—is paid less than the living wage, which is a huge increase from 3.4 million in 2009. In Newcastle, 30% of workers who live there and 20% of those who work there are paid less than the real living wage. In the north-east, around 238,000 jobs are not paid the living wage. I am therefore particularly proud that, despite having its budget halved by reckless Tory austerity over the past decade, in January Newcastle City Council renewed its commitment to pay all staff the real living wage. After a decade of imposing austerity, this Government will still not give workers a real living wage. Will the Minister tell me why the Government will not follow Newcastle City Council’s example and raise the minimum wage to a real living wage?

The Minister said that she does not represent the Department for Work and Pensions, but she does represent the Department for Business, Energy and Industrial Strategy, which is not paying the London living wage to all its staff. Will the Minister confirm the number of employees who are not receiving the London living wage? Will she explain how we can have confidence in her ability to enforce even the national minimum wage when her own staff are striking due to the lack of a decent wage from the Government of the day?

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[Chris Stephens (Glasgow South West) (SNP)]

This is my first statutory instrument debate in the Chamber, and it is a pleasure to see you in the Chair, Mr Deputy Speaker. It is also a pleasure to follow the hon. Member for Chichester (Gillian Keegan).

When we are in this Chamber, I am sure there is always a moment when we ask ourselves whether the party of the establishment actually has a clue about what happens in real life. That moment was revealed today when my hon. Friend the Member for Glasgow Central (Alison Thewliss) pointed out to the Minister that one of the increases in the minimum wage rate was the price of a Freddo bar, and we saw that some Government Members did not know what a Freddo bar was. The Prime Minister’s Parliamentary Private Secretary—I did tell him I was going to mention him—was shouting from a sedentary position that he thought the price of a Freddo bar was 10p. What chance does the country have if someone who has advised the Prime Minister does not know the exact price of a Freddo bar? Perhaps the Library might want to do some research on the minimum wage rates we would be presented with today if the minimum wage rate had increased at the same rate as the price of the Freddo bar. I suggest that the rates would be higher than what the Government are presenting today.

[Mike Wood]

Clearly, one does not get a fine figure such as mine without knowing precisely the price of a range of chocolate bars. I am sure the hon. Gentleman will be aware, as I am from having young children, that as recently as last month Freddo bars were indeed 10p in Tesco.

[Chris Stephens]

It seems unlikely—perhaps we will ask for photographic evidence from the hon. Gentleman of the price of a Freddo bar, or make that a competition for Members of Parliament this weekend.

Statutory minimum wage rates are important because in some sectors of the economy the statutory minimum rate actually becomes the maximum wage rate. It is important that statutory minimum wage rates are enforced properly. In answer to a question, the Minister notified me that the national minimum wage compliance unit has hired 420 staff to enforce national minimum wage compliance across these islands. There are 4,754 full-time equivalent posts for staff to chase social security fraud. Yet we know that more than 200,000 workers are not paid the proper statutory wage. That is an absolutely scandalous figure that needs to be addressed, so I hope the Minister can tell us what plans the national minimum wage compliance unit has to hire additional staff to correct the current situation and to ensure that the national minimum wage rates are enforced properly, so that in the future we do not have more than 200,000 workers being paid incorrectly.

The Minister mentioned the “Good Work Plan”. It is certainly the view of SNP Members that it does not go far enough. In fact, the Minister should just pick up the Workers (Definition and Rights) Bill that I have introduced and take that forward, as it would give workers far better protection. My Bill would sort out the status of a worker, eliminate zero-hours contracts, provide protection for wages if a company ceases to trade or a company owner absconds, and deal with the increasingly common workplace situation in which workers turn up at work and are subjected to short-notice shift changes, in some cases being told, “We don’t need you today,” but in others being told, “You’re going to be working far more hours than we said when you turned up to work.” When does the Minister expect the statutory instruments relating to the “Good Work Plan” to come before the House? Will they be debated in the Chamber, like these regulations?

We welcome any increase, but these measures do not go far enough. Indeed, the Government are not dealing with age discrimination in minimum wage rates, which must end. Young people are being denied a real living wage—not the pretendy living wage—of £9 an hour, or £10.55 in London. I agree with the shadow Minister that UK Government Departments should be paying the London living wage. The fact that they are not is a disgrace.

Let us look at the percentage increases: for over 25s the increase is 4.9%; for 21 to 24-year-olds the increase is smaller, at 4.3%; for 18 to 20-year-olds the increase is 4.2%; and for 16 and 17-year-olds it is 3.6%. The apprentice rate is going up by 21p an hour, which will be scant consolation to those women born in the 1950s whom the Government keep telling they should take up apprenticeships as opposed to fighting for their pensions. They would get an apprenticeship rate of £3.90 an hour. Will the Minister tell us when this age discrimination is going to end? Does she not accept that 21 to 24-year-olds often have the same responsibilities, payment demands and bills as those who are 25 and over?

Why was the age of 25 picked for the pretendy living wage? We have never had a proper explanation of why it applies to those aged 25 or over, which seems to me to be a particularly ludicrous position. I remember the arguments that we used to use when I served on the Unison Scottish young members committee not that long ago. We argued a rather sensible position: if two individuals both work at a fast food restaurant flipping hamburgers and one is 17 and the other 37, they are both active participants in the labour market, yet the difference in pay as a result of the regulations is as much as £3.84 an hour. For an eight-hour shift the pay difference would be £30 a shift, and as much as £150 a week. It really is time for this age discrimination to end, and I look forward to the Minister telling us when that will happen.

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[Alison Thewliss]

The hon. Lady misses her own point, because the regulations are not called “The National Experience Wage (Amendment) Regulations”. The regulations discriminate by age alone, not by experience, so if the hon. Lady, as a 16-year-old, walked into a job on the same day as somesone who was 25, she would not be legally entitled to the same wage. The 25-year-old would have no more experience in that job, regardless of their experience in life. There might be 20 or 16-year-olds who are far more savvy on the first day in the job than a 25-year-old, or a 45-year-old, or a 65-year-old. We are not measuring experience here.

[Mike Wood]

Surely the hon. Lady acknowledges the Low Pay Commission’s conclusion:

“In light of this evidence we concluded when thinking about the pay floor for this age group, that it could not currently be set to the same level as the national living wage without risks to employment.”

[Alison Thewliss]

That was exactly the type of comment that the Conservatives made when the national minimum wage was introduced—that it would risk people’s employment. That has not been the case. The impact assessment says that the Government asked the Low Pay Commission to set the national minimum wage at these levels. The Government have instructed the Low Pay Commission to do this. That is quite different, and I do not buy the hon. Gentleman’s arguments at all.

The gap amounts to a difference of thousands of pounds in the take-home pay of a 16-year-old, an 18-year-old, a 21-year-old and a 25-year-old, and it is completely unjustifiable, because this is not about experience, as I said. It does not say that in the regulations; they specify the age, and age alone.

I shall quote from the excellent report by the Young Women’s Trust, called “Paid Less Worth Less?”, which I commend to the Minister. Shanae, who is 24, said:

“A 25 year-old starting out on their first job and just entering the workplace would have the same experience as a 16 year-old who is also just starting out. If companies want to pay based on experience, then that should be reflected in what they choose to pay people. But that’s different from paying us on our age.”

She is absolutely correct.

At 25 or younger, many people have families of their own to support and their own responsibilities, and in the research by the Young Women’s Trust, Tia mentions her circumstances specifically. She says:

“I am a care-leaver and I have lived independently since I was 17, so that makes my costs exactly the same as maybe like a 30 year-old who is living in a private rented flat. You have bills to pay like any other adult. Everyone gets hungry. Everyone has to pay for gas, electrics, toiletries, clothes and food. It still adds up the same. So I don’t see why there should be a pay difference.”

I do not see why there should be a pay difference either. It is completely unjustifiable.

Young people have to pay the same amount as somebody over 25 for rent, for getting the bus to work, for childcare, for the cinema, and maybe for a Freddo bar. All those prices are exactly the same. Young people are not entitled to discounts on their rent because of their age, and indeed they get less in benefits from this Government as well because of their age, so they are doubly missing out. Young people deserve the right to be paid a fair market value for their skills, and not be subject to state-sponsored age discrimination.

I mentioned unscrupulous employers. When I was at school, it was well known among my peers that some employers would employ young people right up until the point at which they would have to pay them more, and then they would let them go. That is particularly true for people on zero-hours contracts or in precarious employment, who can be let go at a moment’s notice. As soon as an employer has to pay them more, they are shown the door. There is very little by way protection, particularly for young people, who often do not know their rights and cannot afford legal representation to challenge an employer. A few years ago I met a constituent who had been working in a bar when the rate of pay went up. She was pretty sure that she was let go because she was the oldest person employed there, but she could not prove it. This Government are leaving the door open for unscrupulous employers to do that time and again to low-paid workers, often female workers in part-time jobs. This Government are aiding and abetting those unscrupulous employers.

Scotland is the best performing part of the UK when it comes to paying the real living wage. There are 1,363 real living wage employers in Scotland, and I am proud to say that the latest among them in my constituency include the Scottish Fairtrade Foundation, Silver Cloud and the spectacle manufacturer IOLLA, which has a shop in Finnieston. I am proud that those responsible employers are seeing the benefits of paying the real living wage, because it improves retention and morale. However, powers over the minimum wage are not currently devolved; they remain with this Government, who are not interested, frankly, in making the change for young people in this country. If the Minister is not interested in doing this, will she devolve the powers to the Scottish Government and let us get on with the job?