DRAFT National Minimum Wage (Amendment) REGULATIONS 2017

Neil Gray Excerpts

Tuesday 14th March 2017 General Committees

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to serve under your chairmanship, Sir Alan, and it is a genuine pleasure to follow the hon. Member for Birmingham, Erdington, who made a very good speech setting out our shared views.

We must be clear that the UK Government’s so-called national living wage is not the real living wage and it should not be referred to as such. It is not national, because disgracefully it does not cover under-25s, and it is not a living wage, because it falls well short of the real living wage, which is independently set by the Living Wage Foundation and based on living standards, the history of which was set out so well by the hon. Gentleman. The current real living wage is £8.45 an hour outside London and £9.75 an hour in London. The minimum wage premium rate under discussion is £7.50 an hour, which is a welcome rise from £7.20, but it is almost £1 an hour short of the rate outside London and more than £2 short of that in London.

I also note the proposed percentage pay rise for the different age brackets. The rate for over-25s will go up by 4.2% annually, which is welcome, but why is there not a fair rise across the board, to match that for over-25s? The apprentice rate will go up by 4.5% annually, which is fine, but that is the only special age-related rate that matches the rise for over-25s.

[Mhairi Black (Paisley and Renfrewshire South) (SNP)]

As hon. Members may know, I am under 25. Does my hon. Friend agree that it would be ridiculous to suggest that I should be paid less than anyone else in this room, purely on the basis of when I was born?

[Neil Gray]

Absolutely. I thank my hon. Friend for her intervention, which highlights perfectly the flaws in the Government’s argument—we will probably hear it shortly—that, somehow, someone who is under 25 does not have the experience or expertise to carry out their job. She personifies the argument that someone who is under 25 can be more than capable of doing their job just as well as, and possibly better than, someone who is over 25. She has made my point perfectly.

Turning to 18 to 20-year-olds, they will get a 0.9% rise of 5p an hour, which is an annual increase of 3.1%, while that for 16 to 17-year-olds will be just 2.8% annually. Given that they are already receiving significantly less, often for doing the exact same work, how can the Government justify a proportionately lower increase in their minimum rates? I refer again to my hon. Friend’s intervention.

This is important. In response to last week’s Budget, Katherine Chapman of the Living Wage Foundation said:

“Low-paid workers will be the worst hit by the rise in inflation set out in today’s budget forecasts.”

Rowena Mason from The Guardian has suggested that the rise in the minimum wage is not enough even to hit the Government’s trajectory to reach £9 an hour by 2020. We also need to consider these rises in the context of what Paul Johnson from the Institute for Fiscal Studies said last week:

“On current forecasts average earnings will be no higher in 2022 than they were in 2007…This is completely unprecedented”.

The Resolution Foundation has said that the period from 2011 to 2020 will have the worst record for pay growth in 210 years.

Although everyone accepts that employment is the best route out of poverty, it is no longer enough. We are seeing sharp rises in in-work poverty as the perfect storm of poor wage growth, social security cuts and rising inflation squeezes family budgets. For our part, Scotland remains the best performing of the four nations in the UK with the highest proportion of employees getting paid the real living wage—79.9%. That is because the Scottish Government have embraced the real leaving wage and championed it. We now have about 750 Scottish-based accredited living wage employers and we are pushing hard for more to sign up. We have championed the real living wage campaign while this Government try to undermine it by labelling their minimum wage premium in such a cynical way.

Requiring employers to pay their staff the living wage is a key part of Scottish public sector pay policy and since 2013-14 we have invested more than £1.5 million a year in the living wage rate across the public sector where the Scottish Government controls the pay bill, benefiting about 3,000 workers each year. I urge the Minister to look at the example being set by the Government up the road and to go further than what is being proposed today.

--- Later in debate ---

[Stella Creasy]

I rise to ask a simple question of the Minister that seems to be at the heart of this statutory instrument. What difference does £2 make? That is the difference between what is being proposed and what a living wage actually is. I want to tell the Minister why that £2 makes all the difference to the communities we represent.

We are now living in a country where real wages are still, on average, below what they were a decade ago. It is not only a problem in the metropolitan, gold-plated streets of London, where 60% of our children are living in households that are in poverty. Across our country, whether in Portsmouth, Aldershot, Aberavon, Pontypridd or Bristol, there are families for whom £2 an hour would make all the difference to their problems.

We face a very simple challenge as a country: wages have not kept up with prices. There is too much month left at the end of people’s money. For the families on low wages that the statutory instrument will affect, this kind of change makes all the difference, because it does not include that extra two quid. Young people are cruelly discriminated against by our legislation. I wholeheartedly concur with the hon. Member from Scotland, whose constituency evades me; I am sure it is a wonderful place.

[Neil Gray]

Airdrie and Shotts.

[Stella Creasy]

Exactly. It is completely inconceivable that age rather than proficiency should define someone’s employability.

There is an issue for us here about whether the statutory instrument will help Britain. We have to acknowledge a word that seems to be missing from the Government’s vocabulary but will in fact define these issues: Brexit. Our economic position is so uncertain. The chances are that inflation will continue to rise; that is clear to the Opposition. The question of what difference £2 makes will be all the more important in the years ahead that the legislation provides for.

In 4 million households in this country people are in work but in poverty. The point behind the living wage campaign, which I am so proud to have been a small part of in my part of town in east London, where all the best things come from—I will fight you all for that—is that it is not simply about living to work or working to live, but living a life worth living. That is why having a living wage makes a difference. This is about the cost of living. Just as inflation has risen and wages have not—for the first time wages have not kept up with growth in our country—so the costs of living are extraordinary.

I have the dubious distinction of representing the part of the country with the most estate agents per square mile. My part of town has had the highest rise in house prices of any part of the country. The Minister looks shocked, but Kirstie and Phil are the harbingers of doom for many people in my community because the cost of living, which their wages have to cover, is going up and up. That is why having a real living wage matters. Not having one means that we as a society have to deal with the consequences in a number of ways. We have to try to help people cover the cost of living, keep a roof over their head, feed their kids, put money in their electricity meter and take their kids to school. We also have to deal with the consequences of debt that we are now seeing in our country.

I look at these proposals in the context of the impact: 24% of people in this country now have mental health issues because of their personal finances and 41% of families are worried about their debt and whether their wages are going to cover such costs. One in six of those people is worried because they have borrowed money from a family friend or member. There are real human consequences to not having a real, genuine living wage: families are torn apart.