Trade Union Bill (Discussions)

Debate between Nick Boles and Kevin Brennan

Thursday 28th April 2016 Commons Chamber

[Nick Boles]

May I start by saying that I have the greatest respect for the passion and commitment, which have lasted for not just years but decades, that my hon. Friend has brought to the cause he advocates with such vigour—that we leave the European Union? I have nothing but total respect for that passion and commitment.

I just want gently to correct my hon. Friend on a few points of fact, because he focused so much on the important question he raised that a number of the things he suggested about the current mechanism for union members’ subscriptions to the political fund were not absolutely correct.

The first point to make is that it is not the case that somebody who has recently joined a trade union, and to whom the new requirement for an opt-in will therefore not apply, will never be asked whether they want to pay into the political levy—very far from it. There is a long-standing legal requirement that they are offered an opt-out from that political levy and that that is communicated clearly to them. That opt-out is not just a one-time thing; it is not something they are offered only when they join—it is something they can exercise at any time, and they need to be reminded of it regularly.

The other thing to say is that, while estimates from different unions vary, the overall estimate is that roughly 13% to 14% of all trade union members joined in the last year. I am not going to suggest that all trade union members will have needed to opt in to the political fund over this Parliament, but a substantial proportion will have.

I am afraid my hon. Friend is also not correct to say that we are talking about a Labour amendment. The amendment was moved by Lord Burns—somebody for whom I know my hon. Friend has the greatest respect, as a fearsomely independent former permanent secretary. The amendment flowed out of a Committee in which there was some very fearsome representation of all parties. It was clearly inspired by Lord Burns’s argument that it is not reasonable to ask people who have signed up to an arrangement in good faith then to have to sign up again through a different process simply because we have changed the law later on. I did not agree with that argument, and nor did we in this House, but what happened often happens when the House of Lords feels very, very strongly on an issue, when there is a very, very large majority against the Government’s position, and when an Independent Member of the House of Lords has moved an amendment that has secured support not just from the official Opposition and from the Liberal Democrats but from a huge number of Cross Benchers—and not just from Cross Benchers but some very significant members of our own party.

I urge my hon. Friend to look at the people who spoke in the debate and voted, or very assertively chose not to vote, in support of the Government’s position. They included not just Lord Cormack and Lord Balfe but Lord Forsyth, who supports the same campaign on the European Union that my hon. Friend has supported and who, both privately and publicly, said that he thought it was a profound error for us to pursue a compulsory opt-in for all existing members. So it is not right to say that it was just a Labour position.

My hon. Friend suggested that it was inappropriate for the Government to do anything in terms of making changes to legislation to further private interests, and of course he is right. However, it is not right, and not even in the passion of the moment is it fair, to categorise the official policy of Her Majesty’s Government in that way. We support the proposition that the United Kingdom should remain a member of the European Union. He disagrees, honourably and valiantly, but it is not a private interest—it is Government policy.

[Kevin Brennan (Cardiff West) (Lab)]

It is very good to have this further opportunity to re-emphasise our implacable opposition to the execrable Trade Union Bill, which is entirely unnecessary, bad for workers, and bad for businesses. As the Minister said, the Lords set up a cross-party Committee chaired by Lord Burns to look at the unworkable proposals on trade union political funds and party political funding. That Committee came up with a series of Salisbury-convention-compliant recommendations that were voted for by an overwhelming majority of peers from all parties and from none.

Will the Minister confirm that he recently met Lord Burns, who made clear the strength of feeling in the other place on this matter? Will he also confirm that he has received overwhelming representations from all quarters, including the trade unions? By the way, it is hardly surprising, given that this is the Trade Union Bill, that he should receive representations from the unions. Is it not the case that all these various representations made it clear that the proposals on political funding were unworkable and breached the long-established convention that major changes to the funding of a political party should happen only by agreement?

It would appear, at least partially that the Minister listened—well done—but he should have listened earlier, and he needs to keep listening. Will he therefore have a few more meetings with trade unions, which have made entirely reasonable proposals on e-balloting and facility time that still remain in the Bill? There is still time for him to think again.

[Nick Boles]

I can confirm that, as the hon. Gentleman said, earlier this week I held a meeting, at my request, with Lord Burns in which I discussed with him an amendment to the Bill that we had put down and were intending to move. That amendment would still have applied the compulsory opt-in to existing members of trade unions but would have built a longer period of transition for trade unions to implement it and would also have changed the arrangements on the requirement for renewal of their opt-in to align it with the political fund ballots that need to take place every 10 years.

I had hoped that Lord Burns would feel, if not enthusiastic about that compromise, at least able to indicate that he would not actively oppose it when the Bill went back to the upper House in the next stage of ping-pong. Lord Burns, who is a man for whom I have huge admiration and a great deal of liking, was very clear to me that that was not an acceptable compromise and that not only would he not support it, but he would actively propose the reinstatement of his amendment, which excluded existing members.

Lord Burns made it very clear that his judgment was not so much a political one—it was certainly not particularly inspired by questions about the balance of party funding. It was simply based on his experience in the financial services industry, where he said it was very unfair to ask people to sign up to new things when they have already expressed an opinion on that very same question by a means that was previously legal. He said that that applied in this case; he thought that it was wrong and he could not support it. We then reflected on Lord Burns’s position and tabled the amendments that we passed last night.

As for the comments made by the hon. Member for Cardiff West (Kevin Brennan) about the rest of the Bill, I want to be very clear with him and other Labour Members: this Bill is going to dramatically improve the state of employment relations and the state of industrial action. At the moment, a trade union, including various education trade unions, can hold a strike three years after a ballot has been passed with a turnout of less than 20% of their members and close more than 1,000 colleges. That is currently legal. When the Bill—which will pass through this House with the support of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin); I anticipate that the noble Lords will pass it next week—receives Royal Assent, it will no longer be possible to inflict on hard-working parents the closure of a school in the middle of the week on the basis of a tiny turnout secured several years ago. That is why I am proud of this Bill and why my hon. Friend can be proud of it: we have secured our manifesto commitments for all working people.

Trade Union Bill

Debate between Nick Boles and Kevin Brennan

Ping Pong: House of Commons
Wednesday 27th April 2016 Commons Chamber

[Nick Boles]

I have been generous and I will be generous again, but I shall try to make some progress.

As I indicated, the amendment provides that the cap may be disapplied for as long as necessary and to the extent necessary for individual employers. This would enable a temporary lifting of the cap for one or more specific employers, and we propose to use it in circumstances where the employer and Ministers consider it necessary. We envisage that should a particular employer experience a need for more facility time, perhaps during a period of change or following a particular incident, Ministers can allow this so that facility time can be increased to respond to the circumstance. The reserve power that this amendment would deliver is considerably improved from the version that was deleted in the other place, and I urge the House to support it. I commend the amendments to the House.

[Kevin Brennan (Cardiff West) (Lab)]

I want to make it clear right at the outset that we remain opposed to this Bill. Despite some of the changes that it has undergone in another place, it remains a dreadful, mean-spirited, partisan, petty piece of legislation. Having got that off my chest, I recognise that Members in another place have made a valiant attempt to make a silk purse out of this particularly malformed sow’s ear, so that after today it may end up being a slightly less ugly sow’s ear than it was, but it will remain a malodorous porcine lug, for all their lordships’ noble efforts.

Many of the changes that peers made are welcome if we consider the crudeness of the Bill in its original form. On the first group of Lords amendments and the Government’s response to them, Lords amendment 2 was passed in the other place by 320 votes to 181, requiring the Government to commission a review of electronic voting in industrial action ballots within six months of Royal Assent. After the review, amendment 2 would require the Government to publish a strategy for rolling out electronic voting.

Government amendment (a) would revise Lords amendment 2 so that Ministers are required only to publish a response to the review, but need not take further action to actually introduce e-balloting. The Government have consistently resisted e-balloting on the grounds that they still had concerns about the safety of electronic voting, despite the fact, as many hon. Members have pointed out, that the Conservative party used electronic ballots for the selection of its London mayoral candidate, although I suppose the Conservatives may now be regretting that, given the poor performance of the candidate they selected using that method. Perhaps that explains the Government’s concern.

It is clear that the Government’s real objection to e-balloting and, indeed, to workplace balloting, which we argued for unsuccessfully in this House and in the other place, has been that they do not want high turnouts because their new threshold barriers could be more easily reached if more people were more easily able to vote.

Not only will all ballots for industrial action require a minimum 50% turnout under the Bill, but those working in the loosely defined “important public services group” will face an additional hurdle of needing a 40% yes vote from all those eligible to vote. That means that these thresholds place higher requirements on those industrial action ballots than on any other democratic process within the UK. For example, the 50% turnout threshold was not reached for the last London Mayoral election or most local government and devolved elections.

The Government have agreed that Ministers should be required to commission an independent review of the use of e-ballots for industrial action within six months of Royal Assent. They have agreed that it will be possible to run pilots as part of that review, as the Minister said, but the Government are proposing that after the review Ministers would need to publish a response, but not necessarily to take any further action. There would be no requirement to publish a strategy for rolling out electronic voting.

--- Later in debate ---

[Kevin Brennan]

I do not know whether future Prime Minister Gove will appoint the Minister to the Cabinet—we shall have to wait and see—but the right hon. Gentleman is exactly right. That is why the Government’s amendment is unnecessary and dilutes the effect of accepting the rest of this Lords amendment. However, I am seeking to put on record the fact that, should any future Minister take another path, having had a clear recommendation in the report, one could only interpret their intentions as less than honourable.

[Nick Boles]

On a point of order, Mr Deputy Speaker. Could you advise me whether it is in order for the House to spend quite so much time talking about my career prospects, because I do not feel that that is really helping?

Draft Conduct of Employment Agencies and Employment Businesses (amendment) Regulations 2016

Debate between Nick Boles and Kevin Brennan

Wednesday 23rd March 2016 General Committees

[The Minister for Skills (Nick Boles)]

I beg to move,

That the Committee has considered the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016.

It is a pleasure to serve under your chairmanship, Mr Wilson.

We need a strong and efficient labour market—a market that gives people opportunities to find appropriate jobs and that gives employers access to the kind of labour that matches their skills needs—to maintain our economic growth and job creation. The recruitment sector plays an important role in making that happen by matching the demand for jobs to the demand for workers.

The sector is regulated by the Employment Agencies Act 1973 and the Conduct of Employment Agencies and Employment Businesses Regulations 2003—the conduct regulations. It is important that we reduce the regulatory burden on employment businesses and employment agencies as far as is possible, while increasing the opportunities for British workers to apply for British jobs.

Last year, the Government consulted on a package of measures, building on the previous consultation under the coalition Government, to remove a number of business-to-business regulations and to strengthen the existing legislation that prevents employment agencies and businesses from advertising jobs in other European economic area countries without advertising them in Great Britain and in English. I was inclined to skate over the specific deregulatory measures in the hope that the Committee would not be that interested in each of them, but I find myself facing the hon. Member for Cardiff West, who will have some very tricky questions for me, so I will detain the Committee with a little more detail on each of the deregulatory measures.

Regulation 9 of the conduct regulations, which is being removed, prevents employment agencies and employment businesses from claiming to be acting on one basis to the work-seeker, while stating something different to the hirer. There is little evidence that the regulation serves a useful purpose. We do not need free-standing regulations to underpin a standard that would be enforceable to some extent through contract law or, in cases of fraud, through general criminal law.

Regulation 11 ensures that employment agencies and employment businesses cannot enter into a contract with a hirer on behalf of a worker, and vice versa. The regulation applies to all agencies and businesses, but it is mainly relevant to those operating in the entertainment and modelling sectors. We are removing the regulation because there are sufficient protections in other parts of the conduct regulations, including regulation 16.

Regulation 17, which is also being removed from the conduct regulations, requires employment businesses to obtain agreement to terms with hirers. Although it is important for employment businesses to agree terms with hirers, we believe that it is a business-to-business arrangement and that the two parties should have more flexibility when agreeing such terms.

Regulation 23(1) of the conduct regulations covers situations in which more than one agency or employment business is involved in the supply of a work-seeker. We propose to remove the provision that requires agencies and employment businesses to make checks on one another. We also propose to remove the requirement for them to agree the capacity in which they are acting, which will be done as part of the business-to-business relationship, without the need for regulation.

We will keep the provisions in regulation 23(1) on sectors in which fees may be charged to work-seekers, which generally happens only in the entertainment and modelling sectors. However, we propose to amend the regulation to remove the references to employment businesses. Employment businesses—organisations that place workers on a temporary basis and continue to employ them while they are on assignments—are not widely used in those sectors. Additionally, if an agency in those sectors uses an employment business to supply a work-seeker, regulation 12 should ensure timely payment for the worker in any case.

We also propose to remove from schedule 4 to the conduct regulations the requirement to include certain particulars in the records kept by employment agencies and employment businesses relating to work-seekers. Those records will no longer need to include the date on which the application was received, details of any requirements specified by the work-seeker in relation to taking up employment, and the date on which the application was withdrawn or the contract terminated.

The final deregulatory measures that we are proposing will amend schedule 5 to the conduct regulations and remove schedule 6, thereby eradicating the requirements to include certain particulars in the records kept by agencies and businesses relating to the hirer. Those records will no longer need to include the date that the application was received; the hirer’s name, address and location of employment, if different; the terms offered in respect of the position the hirer seeks to fill; a copy of the terms between the employment agency or business and the hirer; and any document recording any variations, names of work-seekers introduced or supplied, and details of each resulting engagement and the date from which it takes effect.

Removing schedule 6 will eliminate the requirement for agencies and businesses to keep particulars relating to any other employment agency or business. The amendments proposed to schedules 4 and 5, and the removal of schedule 6, will remove the burden of unnecessary record-keeping on agencies and businesses, while having no detrimental impact on the protection of workers.

I turn to the banning of overseas-only recruitment. The current regulation 27A prevents employment agencies and businesses from advertising specific vacancies for a job based in Great Britain in other European economic area countries without advertising it in Great Britain and in English either before or at the same time. As part of last year’s consultation, we sought views on extending the regulation to apply to generic recruitment campaigns. That will close a loophole and increase the opportunities for British workers to apply for British jobs. The proposal will not stop agencies recruiting overseas or in additional languages; we are just trying to ensure that there is a level playing field for British workers by giving them equal access to work through agencies.

[Kevin Brennan (Cardiff West) (Lab)]

We agree with that part of what the Minister is proposing. However, does he acknowledge that, in response to the Government’s consultation, only two organisations in the whole country said that they had information about jobs that had been advertised solely in other EEA countries? Is there any further evidence that there is a genuine problem?

[Nick Boles]

I am happy to get back to the hon. Gentleman if there is any further evidence, but even two is two too many. The measures will reassure people. Even if the loophole is not necessarily being abused a great deal, the provision will reassure people that British workers are being given a fair crack at any job opportunity that opens up in this country.

That brings me to the conclusion of my introductory comments, and I hope that the Committee will support the regulations.

--- Later in debate ---

[Nick Boles]

I anticipated that the forensic zeal of the hon. Member for Cardiff West would not be wanting today; it has never been lacking in any of our previous engagements. As ever, he asked some extremely good questions.

We are entirely at one in recognising that agency workers are potentially vulnerable and open to exploitation. When we started this process, we asked ourselves which laws and regulations protect those potentially vulnerable workers, whether they are being enforced effectively, and by whom. We may end up discovering that the only difference of opinion is that we do not think that the regulations that we propose to repeal or amend are, in practice, necessary to protect potentially vulnerable agency workers from exploitation, because there are other, more effective protections that can be and are being enforced.

I hope that our good faith is underlined by the fact that, as the hon. Gentleman noted, although we originally proposed to remove regulation 27, we listened to the feedback in the consultation, in which respondents raised concerns that it might disadvantage work-seekers if we removed the specification of what should be included in job adverts, and concluded that we should not remove it.

Let me turn to the regulations that we are proposing to remove or amend. I will do my best to reassure the hon. Gentleman. Regulation 9 prevents agencies from acting on one basis for work-seekers and stating something different to hirers. The reason we do not believe that removing it will put work-seekers at risk is that we have not received any evidence of that through the work of the employment agency standards inspectorate or from most of the responses. I acknowledge that the Trades Union Congress took a different view, but no specific evidence has been provided that employment agencies and businesses do claim to act in a different capacity. Therefore, we do not believe that the removal of the regulation will have a negative impact.

I guess that, if there is a philosophical difference between the Government and the Opposition, it is that we do not want to have regulations that are theoretically useful, but unnecessary in practice. We want to be persuaded that regulation is necessary in practice. I am advised that there are existing protections in contract law to protect people, for instance, from misrepresentation by an agency or employment business that cover the sort of abuses the hon. Gentleman is worried about. I repeat that the employment agency standards inspectorate, which sits within the Department for Business, Innovation and Skills, has not given us any evidence of this particular situation arising.

Regulation 11 ensures that agencies cannot enter a contract with a hirer on behalf of a worker, and vice versa. It would most likely protect work-seekers in the entertainment and modelling sectors. The reason we have decided to remove regulation 11 is that we believe that sufficient protection already exists in those sectors through regulation 16, which ensures that an agency that is permitted to charge work-seekers a fee for finding them work must agree the specific terms with the worker, including whether the agency is entitled to act on their behalf in concluding a work contract. Given the existence and retention of regulation 16, we do not believe that the removal of regulation 11 is likely to have a significant impact.

The hon. Gentleman asked about the removal of regulation 17, which requires employment businesses to obtain agreement to terms with hirers. He raised the concern that that would leave work-seekers at risk of not being clear what terms of employment businesses had agreed with hirers. Again, we believe that the terms agreed between the employment business and the hirer are properly part of the business-to-business relationship, and that the two parties should have more flexibility when agreeing terms. The existing regulation imposes a potential criminal liability, which we think is disproportionate for such a business-to-business relationship.

The work-seeker would not be affected by the removal of regulation 17, as the terms of employment between the work-seeker and the employment business would still need to be agreed in line with regulations 14, 15 and 18, all of which we are not proposing to remove. We believe that the work-seeker’s interests are explicitly protected and that the agreements between the employment business and the hirer are, in a sense, a matter for them.

The hon. Gentleman asked about the amendment to regulation 23. It may be that there is a slight lack of clarity on our part here, although I hope not. We believe that we are amending the regulation to remove employment businesses from its scope. That is because this regulation mainly affects those in the entertainment and modelling sectors, where employment businesses are not widely used. If an employment business is used in such a capacity, we believe that sufficient provision exists in regulation 12, which ensures that a work-seeker is paid, so there will not be a lack of protection, even though we do not believe that employment businesses generally operate in the relevant sectors.

I hope that I have given the hon. Gentleman some reassurance, but I am happy for him to come back to me if not.

The hon. Member for Airdrie and Shotts asked about the extent to which there have been discussions with the Scottish Government. The consultation was public and open to anyone to respond to. As he will be aware, employment law is a reserved matter, so we believe that most of the consultation respondents, both positive and negative, including the TUC, were acting as representatives of workers in Scotland and the other devolved Administrations, because employment law is devolved. We did not specifically consult the Scottish Government because this is a reserved matter.

If there are no further questions, I hope the Committee will see fit to support the regulations.

[Kevin Brennan]

I thank the Minister for his comprehensive and thorough response, and for the courteous way in which he has dealt with the questions from the Opposition. To reiterate, we support the proposed change to regulation 27A, although he did not offer further evidence that it was a widespread and serious issue.

The problem for the Opposition is that we do not feel that it is proportionate and appropriate to remove the other regulations, given that we are talking about members of the workforce and work-seekers who are in the most vulnerable positions. If anything, this is a group of workers that is becoming larger as the labour market and employment practices and patterns change across the country. We are not here to debate why that is happening, but I think we would all acknowledge that it is. As I indicated in my remarks earlier, my constituency casework has involved increasing numbers of people who are concerned about how they have been treated in the workplace after being employed via an agency.

Notwithstanding my gratitude to the Minister for his thorough and serious response, it is right that we register our opposition to the changes that he is proposing to the regulations, other than regulation 27A, by dividing the Committee.

Question put.

Draft National Minimum Wage (Amendment) Regulations 2016

Debate between Nick Boles and Kevin Brennan

Monday 11th January 2016 General Committees

[The Minister for Skills (Nick Boles)]

I beg to move,

That the Committee has considered the draft Minimum Wage (Amendment) Regulations 2016.

It is a pleasure to serve under your chairmanship, Ms Vaz. The proceedings of Delegated Legislation Committees are not always diverting or a cause for celebration on all sides, but I hope that for once we might all agree that this is a very good day and a very good set of measures, because the purpose of the draft regulations is to implement the new national living wage and to secure greater compliance by increasing the penalty for the underpayment of minimum rates of pay.

I am going to do a dangerous thing, which is to try and anticipate what will be said by my opponent in this discussion, the hon. Member for Cardiff West, who is a friend—

[Kevin Brennan (Cardiff West) (Lab)]

Don’t ruin my career!

[Nick Boles]

If it needed any ruining.

I know that the hon. Gentleman will stand up and say, “Well, you opposed the minimum wage, which is a Labour invention, so this is a shockingly hypocritical act by the Government.” I have made it plain in a number of previous discussions that the Conservative party did indeed oppose the minimum wage, perhaps for reasons that were understandable at the time—if we look at the debate in Germany, which has only just concluded, there has been consistent opposition to the introduction of a minimum wage for similar reasons—but we were wrong. We were wrong to oppose it; we have said that we were wrong to oppose it; and, with the zeal of converts, we are now among its most passionate advocates. It is therefore entirely appropriate for a majority Conservative Government, the first for a long time, to be introducing not only an increase to the national minimum wage, but a whole new level through a national living wage to benefit people aged 25 and over.

Since the introduction in 1999 of the national minimum wage, it has been a clear and unqualified success in supporting the lowest-paid British workers. It has increased faster than both average wages and inflation without any adverse effect on employment, even during recession. The UK labour market and economy are now experiencing a number of unique highs: employment rates are at a record 73.9%, the highest since records began in 1971; real wages have grown by 2.4% over the past year, a rate not seen since before the most recent recession; we have the joint highest GDP growth among the G7 countries; more than 2 million jobs have been created since 2010; and 1.1 million more jobs are forecast by the Office for Budget Responsibility to be created by 2020.

That is why the Government believe that now is exactly the right time to go further and to build on the achievement of the national minimum wage, to move to a higher-wage, lower-tax and lower-welfare society, and to introduce the new national living wage to ensure that low-wage workers receive a greater share of the gains from economic prosperity.

The Government intend to set the initial national living wage at £7.20 an hour, with the aspiration for the rate to reach over £9 by 2020. The Government are setting the first rate so that we may make progress towards that ambition. We are also undertaking an internal review to assess the case for aligning the national minimum wage cycle with the national living wage and tax year. The initial national living wage rate is an increase of 50p per hour—

[Kevin Brennan]

Will that review involve a public consultation or will it be entirely internal, with no opportunity for people to contribute to it?

[Nick Boles]

The hon. Gentleman asks a very good question to which I do not know the answer immediately. However, before we conclude, I am sure I will have time to give him the full answer that he properly demands.

The initial national living wage rate is an increase of 50p per hour on top of the current adult national minimum wage for all workers aged 25 and over. That is an increase of 7.5% on the current adult rate and 10.5% since the start of this Government. This means that a full-time worker will receive £910 more a year. Although ambitious, it is worth noting, for those who retain any concerns about economic impact, that that increase is not without precedent. In 2001, the national minimum wage increased by 10.8% in a single year and by more than 30% in the following four years without any significant adverse effects on employment.

Our ambition is for the national living wage to reach 60% of median earnings by 2020, subject to sustained economic growth. According to the forecast produced by the Office for Budget Responsibility, a full-time national minimum wage worker will earn more than £4,700 more from the national living wage in cash terms by 2020. Some 2.75 million low-wage workers are expected to benefit directly and up to 6 million in total could see their pay rise as a result.

The Government have asked the Low Pay Commission to recommend increases to the national living wage towards 60% of median earnings by 2020. However, we recognise that the national living wage needs to be affordable for businesses, which is why we have chosen a proportion of median earnings that is the same as leading experts recommend.

In making its recommendations for the national living and minimum wage rates, the Low Pay Commission will continue to provide independent advice. That will include consideration of the pace of increases and will account for potential blockages to higher rate increases or constraints to specific areas in relation to low pay. The Government’s stated ambition will not require a change to the Low Pay Commission’s terms of reference or to the National Minimum Wage Act 1998.

The Government are absolutely clear that anyone entitled to be paid the minimum wage should receive it. To ensure that people receive the pay that they are entitled to, we are announcing a package of measures that will build on Government action to date and strengthen the enforcement of the national minimum and national living wages. That includes increasing the calculation of penalties from 100% to 200% of the arrears an employer owes, which these regulations will bring into force from 1 April. By increasing the penalties for underpayment, it is intended that employers who would otherwise be tempted to underpay comply with the law and that working people receive the money that they are legally due. As with the current penalty regime, it is our intention that the penalty would be reduced by half if employers pay within 14 days, but we are ensuring that non-compliant employers always face a penalty at least equivalent to the arrears that they owe.

We can only afford the national living wage because our long-term economic plan is working. We want everyone to benefit from the economic recovery that has been secured by long and hard work by the British people. That is why we believe that the national living wage is the appropriate step up for the hard-working people of this country. I recommend the regulations to the Committee.

[Kevin Brennan]

Thank you, Ms Vaz. It is a great pleasure to serve under your chairpersonship for, I think, the first time, and I look forward to many more such occasions in future, hopefully.

The Minister started by saying it is a good day, but it is rather a sad day for some of us who are David Bowie fans, because of the announcement we heard today. Nevertheless, I understand the spirit in which the Minister made that comment, as he did so in relation to the measures that he is announcing. We welcome any attempt to enforce the national minimum wage more effectively, which is part of the purpose of the regulations, and any measures that result in better wages for some of the lowest paid in our economy. All those things are very welcome.

The Minister is wrong; I am not going to go over the fact that the Conservative party kept us up all night back in the days when we were trying to get the national minimum wage put into legislation. I will not mention at all that we were kept up night after night, because we all welcome conversion to a righteous cause, and the Government have now accepted that the national minimum wage is a good thing. The Minister gave a mea culpa with regard to the decisions taken and the fears expressed back then about the national minimum wage, which resulted in the bitter and difficult parliamentary battle to get the legislation through that I will not mention today.

We welcome any such attempt, and it is not our intention to divide the Committee on the regulations, so the Government Whip can safely send away all the troops he has assembled without any fear—I give him my word—that we will spring a surprise vote on Government Members at the end. They are, however, welcome to stay if they want to.

I have a number of questions, as the Minister might have anticipated, one of which I have already asked and on which he might have received some in-flight refuelling. I will allow him to come back on that after I have finished my remarks, although he is free to intervene if he wants to.

The point I raised in my intervention is that there is some concern that the review will simply be an internal one, setting a single date for increasing all the rates; the word is that it might be April 2017. It would be better to have a short public consultation, rather than the Government simply changing the rules by fiat and having an internal—I will not use the word “secret”, because I do not think it is meant to be—and private review. Will the Minister reflect on that, if he has had advice from his officials to the contrary?

[Nick Boles]

It might be more efficient to answer that question directly. We are not proposing a formal public consultation. We are currently consulting both trade unions and employer associations on the changes to the cycle, and we are obviously talking with the Low Pay Commission about its view of the proposed alignment.

[Kevin Brennan]

On the surface, that sounds welcome, but others may want to ask further questions and we reserve the right to pursue that in future. If dates are to be tidied up, proper care needs to be taken in order to ensure that no group of workers has its minimum wage increase delayed by any process of realignment. There are real issues that need consultation, and I hope the Minister has taken that observation on board.

I have a number of other questions. As the Minister rightly said, the penalty for employers that fail to pay the national minimum wage will increase under the regulations from 100% of the total underpayment to 200%, while a reduction if there is prompt payment by the errant employer will be maintained. I note that the maximum penalty of £20,000 per worker is not being changed. The reason given in the Government’s impact assessment is that the maximum penalty can only be changed through legislation—presumably primary legislation, rather than secondary legislation such as the regulations before us. Will the Minister clarify whether that £20,000 maximum penalty remains adequate, given that the legislation is now nearly 18 years old? In that time, the national minimum wage has been uprated, as the Minister rightly pointed out, on a significant number of occasions. Do the Government have any plans to uprate the maximum penalty in future through legislation or some other legislative vehicle that might become available along the way? I would be grateful for any thoughts he has on that.

Will the Minister clarify whether the reduction for prompt payment within the 14 days, which he proposes to retain under the regulations, is proving effective? How many employers actually pay up quickly as a result of that provision? Any information on that would be helpful for the Committee. Will he also clarify whether particular sectors of the economy are serial offenders in failing to pay the national minimum wage? It would obviously be useful to the Committee, if we are doubling the rate from 100% to 200%, to know which sectors are most likely to be affected. If it proves to be the deterrent the Minister hopes, it may bring those sectors more into line in paying the national minimum wage properly in the first place. Clearly, it would be useful to the Committee to know which sectors are the most likely offenders and, therefore, most likely to be impacted by the Government’s proposed change.

On the impact of the national living wage, which also forms part of the regulations, the Government’s impact assessment suggests that the cost to employers of introducing the national living wage will be in excess of £1 billion—perhaps the Minister can confirm that. It also suggests that there will be benefits of £137.5 million, split between employees, who will receive greater pension contributions as a result of their minimum wage payments being increased, and the Exchequer, which will receive higher national insurance contributions as a result of the increase in the minimum wage through the Government’s national living wage proposal. There is a similar split in the impact assessment of a £46.2 million benefit estimated to accrue to employees and the Exchequer as a result of the so-called ripple effect.

I am at a loss as to why the Government put those two together. There is no breakdown of the £137.5 million benefit to workers and the Exchequer that the Government say that there will be and no breakdown of the £46.2 million benefit to employees and the Exchequer that they say there will be from the ripple effect. Surely that is something we need to know. Is it the case that of the £137.5 million, £135 million will be a benefit to the workers and £2.5 million a benefit to the Exchequer? Is it the other way round, or half and half, or 60:40, or 70:30? Why have the Government chosen to put together in the impact assessment the £137.5 million benefit to employees and the Exchequer without telling us how much will go to the workers and, perhaps significantly, how much will go to the Chancellor?

I think we are entitled to know that figure and I hope the Minister will be able to provide the breakdown. If it is not readily available, I hope he will give a commitment to provide it as soon as possible after our deliberations to every member of the Committee. Perhaps he could also tell us why the figures were presented in such a way instead of being broken down between workers and the Chancellor.

Will the Minister tell us the Government’s assessment of the possible impact of the introduction of the national living wage on migrant labour entering the United Kingdom from Europe, as I could not find it in the impact assessment? Obviously, the debate about the free movement of labour across the European Union is a significant and live issue in the House of Commons, in Parliament and across the country at the moment. The Government propose to increase the minimum wage in a significant way, calling it the national living wage for over-25s. Surely they have made an impact assessment of the likely draw factor for workers from the European Union who want to exercise their right to free movement of labour and to work in the United Kingdom.

Some commentators believe that the impact of the increase in the national living wage will be far greater than any impact of restricting the availability of non-contributory benefits to European Union workers seeking to come to work in the United Kingdom. Can the Minister tell us his estimate, or whether the Government have attempted an estimate—I will find it rather shocking if they have not—of the impact of the national living wage on the movement of labour from European Union countries into the United Kingdom?

Of course, the national living wage is a confusing term, because it is not a living wage at all. The Chancellor stole the term for a piece of political theatre in the House of Commons, but of course the living wage was a pre-existing construct, determined independently and based on what it actually costs to live—whether in London, where it is currently set at £9.15 per hour, or in other parts of the country, where it is set at £7.85 per hour.

It is welcome that the national minimum wage for the over-25s will rise to £7.20 in April as a result of the regulations before the Committee, but that is well short of the estimated living wage for places outside London, leaving aside the living wage for London. However, I appreciate that the national minimum wage is set for the whole country and that there is no separate rate for London. We might note in passing that as the term “living wage” has been adopted by the Chancellor, it might, some might say deliberately—I would not say so, but it is possible—cause significant confusion when it is introduced, as people confuse the national living wage and the living wage. I wonder whether Ministers have any plans to try to help the public to understand the difference between the two ideas and the two things.

The age limit for the national living wage has been set at 25, and it is understandable that the Government have chosen that age. It is specified in the original legislation, but it is a relatively high figure in comparison with other countries. In fact, many countries with minimum wages have youth rates, but it is almost unprecedented to wait until workers reach the age of 25 before paying them the full rate. It is, I believe, only Greece in the European Union that makes people wait so long before getting access to the maximum minimum wage, to coin a phrase, so the only available comparator in this context for our treatment of younger workers is, apparently, Greece.

It is important that the messages about the new national living wage do not leave younger workers behind. I would like the Minister to explain the Government’s position, in the light of the creation of the so-called national living wage, on the growth of the minimum wage for under-25s. Do they intend, through the creation of the so-called national living wage, to create a larger differential between the minimum wage paid to under-25s and that paid to over-25s, in the longer term? If that is part of the policy intention of the change, there will be a significant impact on younger workers—and on older workers—and it would only be fair for the Minister to explain that to us.

[Nick Boles]

I shall try to answer as many of the questions as I can with the information available to me.

First, the hon. Gentleman asked about the maximum penalty per worker of £20,000. It is important to point out that that was increased in May 2015 through the Small Business, Enterprise and Employment Act 2015, so it is not the same as it always has been. There are very few cases that would go over £20,000 per worker but that is something that will be kept under review. If it becomes completely outdated, it can be further amended in future legislation.

The hon. Gentleman asked which sectors would most likely be affected by the enhanced enforcement measures being introduced in the regulations. Without singling out any sector absolutely, we know that low-paid work is most prevalent and that, in certain instances, there have been problems with a failure to implement minimum wage legislation in the care sector, retail and some other service sectors. I do not want to suggest or imply that there is not a majority in all those sectors of responsible employers who always abide by minimum wage legislation.

The hon. Gentleman will have seen that we do a regular naming and shaming exercise of employers who have failed to abide by minimum wage legislation. We intend to continue that. Sometimes we single out particular sectors for a spotlight and for investigation by Her Majesty’s Revenue and Customs’ resources because we know that they have a greater tendency of being close to the minimum wage for many of their workers. Care, retail and other service sectors would be first in that.

The hon. Gentleman asked about the estimate of some of the benefits from the national living wage and identified a figure. I think the total figure for the two elements is £183.7 million, by which the employees and the Exchequer will benefit from employer pension and national insurance contributions. Those are not stripped out because, in a sense, employees ultimately benefit from increased employer pension contributions as they then receive the pension, and from national insurance contributions because that is how we support employees’ rights to state pensions.

The benefits that employees receive directly through the wage impact are captured elsewhere. That figure—the total increase of wages of £932 million—and the other payments do not immediately go to employees. They go to private pensions or to national insurance contributions, but they ultimately benefit employees. It does not make sense to try to strip out how much the Exchequer benefits and how much employees benefit because, ultimately, employees benefit from all of it through the pensions that national insurance contributions support.

[Kevin Brennan]

I accept that that is the Minister’s answer for now but I will probably want to press him further on another occasion because I am interested—and it is in the public interest—to know what is coming into the Exchequer as a result of the changes so that we can scrutinise them effectively. Obviously, I could pursue that through written parliamentary questions but if the Minister wants to reflect further on it, I am happy to let him do so.

[Nick Boles]

If there is any information about the breakdown, or if that can be arrived at, I will certainly write to the hon. Gentleman. I will copy other members of the Committee into any letter I write.

The hon. Gentleman made the point about 25 being a relatively high age for the transition to the maximum rate for a minimum wage. He is right about that but he will be aware that, as well as not wanting to leave younger workers behind on wages, we do not want to leave them behind in employment. Unemployment rates are significantly higher for people under 25 than for those who are over 25. Given that this is a relatively substantial jump in the minimum wage payable, we thought it was right to set the transition age at 25. By that age, most people who will have been affected by minimum wage legislation will have amassed a sufficient level of experience to start commanding that level of wage. As we introduced the national living wage, we absolutely did not want to see employers refusing to employ young people because they have relatively less experience, and favouring older workers.

The hon. Gentleman asked about the differential between the national living wage and the national minimum wage, and whether there was any intention for the differential to grow. First, there is no intention that the differential should not be relatively stable. Ultimately, on all these questions, as indeed on the rate of increase for the national living wage, we will take advice from the Low Pay Commission. It is important, although we have set a level for the starting point of the national living wage, that the level for the point at the end of this Parliament should be a very clear aspiration to move on to 60% of median wages, but the path by which we get there is one on which we want the Low Pay Commission’s advice to be critical. The same is true for the commission’s judgments on the national minimum wage.

Ultimately, it is not inconceivable that the Low Pay Commission might at some point make different recommendations for increases in the national living wage and the national minimum wage that would apply to under 25-year-olds. Obviously, if the commission ever did that, we would want to understand why it thought it appropriate. The hon. Gentleman will be aware that, on occasion, we disagree with the commission’s recommendations, as we did on the apprentice minimum wage. Such disagreements are quite rare, and we would rather not disagree—we think that the commission does excellent work, and we generally want to be guided by it—but if it were to recommend an increase in differentials, we would want to test why it thought that was necessary and appropriate to ensure that the minimum wages supported the economy as well as the low pay of working people.

Finally, the hon. Gentleman asked about the effect on the incentives for migrant workers to come from other European Union countries. He will want to take into account the Prime Minister’s ongoing negotiation with the European Union on access to working benefits, particularly tax credits. Obviously, in isolation, the national living wage may be a pull factor in one direction but, when combined with a reduction in access to tax credits, which is a core objective in the Prime Minister’s negotiation, it might play in the other direction. Given that there is not long to wait, we should probably wait to see the outcome of that negotiation before estimating any relative effects on migrant flows from other European Union countries.

[Kevin Brennan]

I do not want to labour the point, but the Government should have some sort of view on what they expect the net impact of those two changes to be and on whether the pull and push factors will be equal or whether one will be greater than the other. The Government should be doing some work on that and should have something public to say. I will press further on that when I have an appropriate opportunity.

[Nick Boles]

The hon. Gentleman is anticipating the conclusion of the negotiation. Although I am confident that the negotiation will be an absolute triumph, I would not want to put a figure on it, let alone start commissioning research on the impact. He will have to wait a little longer. His general point is that an increase in wages for all workers in a certain age group will, needless to say, increase the attractiveness of employment in this country, but the improvement in the state of the economies of many continental European countries relative to two, three or four years ago also has an extremely positive impact on people’s desire to get into secure employment in their own country. It is a complex picture, and it would be a mistake to think that any one factor is determinative in an individual’s decision to come and work in the UK.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Minimum Wage (Amendment) Regulations 2016.

National Minimum Wage: Sports Direct

Debate between Nick Boles and Kevin Brennan

Monday 14th December 2015 Commons Chamber

[Nick Boles]

I thank my hon. Friend for pointing out, from direct experience, how good the ACAS hotline is. On the national living wage, which is coming in next April, a substantial Government communication campaign will start in the new year. We feel that it is in the months leading up to its introduction that communication will be most effective in making sure that employees and employers know that it is coming in, know what is required and begin to work out how to implement it in their systems.

[Kevin Brennan (Cardiff West) (Lab)]

The Sports Direct scandal has occurred even though the national minimum wage has become a national treasure. Everyone supports it now, but, like all great social reforms, it had to be fought for in the teeth of bitter, all-night opposition in this House. Even when great social reforms become part of the political consensus, they still have to be fought for. The battle to sustain and enforce the minimum wage must be continuous and, frankly, requires more than just warm words from Ministers.

The TUC estimates that at least 250,000 workers are not being paid the minimum wage. What is the Minister’s estimate? Have the Government even made one? In the last Parliament, it was revealed that just nine firms had been charged for non-compliance with the minimum wage. Will he update the House on how many legal proceedings are under way against firms for non-compliance? Can he even tell us how many workers have received the money that they are owed after a notice of underpayment has been issued by HMRC, because up to now the Government have failed to provide those data? Will he order an urgent investigation into Sports Direct concerning the alleged abuses, which have led the Institute of Directors to label it

“a scar on British business”?

The Minister says that he is acting, but where are the results? How will he get results with the closure of so many HMRC offices? It is easy to talk the talk on low pay, but it means nothing to millions of low-paid workers, whose labour employers feel they can turn on and off like a tap, unless Ministers walk the walk on the minimum wage. When will we see real action to enforce it?

Oral Answers to Questions

Debate between Nick Boles and Kevin Brennan

Monday 30th November 2015 Commons Chamber

[Nick Boles]

Proposals for individual sixth form colleges to become academies will be considered alongside other recommendations from the relevant area reviews, which are taking place between now and March 2017. When a college’s application is approved, it will be eligible for VAT reimbursement as soon as it has been re-established with 16-to-19 academy status. Once all the area reviews have been completed, we will of course review which sixth form colleges have not yet taken up the option and what course they want to take.

[Kevin Brennan (Cardiff West) (Lab)]

What justification is there for treating sixth form colleges differently from other schools for tax purposes?

Trade Union Bill

Debate between Nick Boles and Kevin Brennan

Tuesday 10th November 2015 Commons Chamber

[Nick Boles]

I understand my hon. Friend’s argument, but of course the choice would be made by the employer and the union, not the individual members. I have not yet been persuaded by his arguments, and will resist his amendment, if he pushes it, but I hope I can reassure him that we absolutely do not intend the measure to be a way of making life difficult for unions or of reducing their membership. We will double the time trade unions have to transfer members from the existing check-off arrangement to the new direct debit arrangement from six months to one year. That will not satisfy him and those who support his amendment, but I hope that it will at least reassure him that we do not intend this to be a way of making life difficult for unions. If there is anything further we can do on that point, I am happy to have further discussions with him.

On that basis, I hope that my hon. Friend will be persuaded not to press his amendment. We will talk about this more. I hope that I have reassured him that trade unions will have time to form the direct relationship with their members that the Bill seeks to provide.

[Kevin Brennan]

I just wish to confirm that we wish to push amendment 6 to a vote.