Draft National Minimum Wage (Amendment) (No. 2) Regulations 2016

Debate between Nia Griffith and Michael Fabricant

Thursday 8th September 2016 General Committees

[Nia Griffith (Llanelli) (Lab)]

I was pleased to hear the Minister speak of strengthening enforcement, which is essential both to protect workers and to stop unscrupulous employers undermining responsible ones, but she must keep up the pressure to ensure that better enforcement becomes a reality. When the former Chancellor, the right hon. Member for Tatton (Mr Osborne), announced the so-called living wage of £7.20 an hour, which I consider to be simply a new minimum wage, I was disappointed to note that it would apply only to the over-25s and not to those aged 21 and over, as the national minimum wage did. By the time that young people are 21, they may have finished their higher education course, or they may have been in work for a couple of years. They may be married and they may have children. They should be receiving the same as those aged 25 and over.

I point out to the hon. Member for Lichfield that when Labour introduced the national minimum wage in 1999, the full rate applied to those aged 22 and over, not 25 and over as he indicated. Twenty-two was reduced to 21 some 10 years later.

[Michael Fabricant]

I am grateful to the hon. Lady for correcting me on that point, but she will concede that the age was changed to 25 under a Labour Government. Gordon Brown felt that in that way, the Government could keep under-25s nearer to full employment.

[Nia Griffith]

The national minimum wage was introduced for 22-year-olds and over, not for 25-year-olds and over, in 1999. That is the important point.

[Michael Fabricant]

Yes, but 10 years later—

[Nia Griffith]

Ten years later, it was reduced from 22 to 21.

If there is a valid argument that there is a higher unemployment rate among 21 to 25-year-olds and that depressing the wages of this group compared with the wages of those aged over 25 will make employers more likely to employ them, it is very exploitative and very unfair, both because it discriminates against younger adults by setting a lower rate of pay, and because it could prejudice the chances of over-25s getting work, as they may be seen as more expensive. We should instead address the underlying reasons for it being more difficult for this group to get work. We know that there have been far fewer openings in recent years, with confidence still low in the private sector, with the recovery patchy across the country, and with swingeing cuts in the public sector, which means there is little expansion in many areas. Retiring workers are often not replaced, or are replaced only by casual workers on zero-hours contracts or other such arrangements.

Moreover, there is an argument that raising the minimum wage would save the public purse by lowering the tax credit bill; that argument applies equally to those under 25. When Labour introduced the minimum wage, in the face of fierce opposition from the Conservatives, we had to proceed cautiously. The hope was that, once introduced, rates could be gradually improved. I have consistently argued for less of a differential for 18 to 20-year-olds and for 16 to 18-year-olds, with higher annual percentage increases for these groups.

When the new over-25s rate was set at £7.20, it was an increase on the existing national minimum wage of some 7.5%, whereas the proposed new rate for 21 to 24-year-olds is an increase of only 3.7%. If the Government are not minded to give the full £7.20 to that age group, they could at least use this opportunity to raise the rate by more than 3.7%. Likewise, looking at the 4.7% increase for the 18 to 20-year-olds, from £5.30 to £5.55, and the 3.4% increase for 16 to 17-year-olds, from £3.87 to £4, the gap is now widening, not narrowing, between the three groups of younger workers and the over-25s.

I want a concerted effort to increase the 18 to 20-year-old rate by a greater percentage, to reduce the differential and bring the rate up to that for the 21 to 24-year-olds, and then to that for the over-25s, for the reasons I have already alluded to. Of course, many young people now work to fund their studies. I also want a greater percentage increase and a lesser differential for the 16 to 17-year-olds, and I feel that today’s legislation is a missed opportunity to begin on this path.