Peter Bone
Main Page: Peter Bone (Independent - Wellingborough)Employment Opportunities Bill
Peter Bone Excerpts
Mr Chope
My hon. Friend is absolutely right, and I do not know, because I have not inquired, how many hon. Friends of the hon. Member for Manchester Central (Tony Lloyd) employ people as interns for well below what my hon. Friend and the Mayor of London would describe as the London living wage, but perhaps we will hear about that in due course.
I do not want this Bill to go forward without some focus on clause 1, because under current law we deny those foreigners seeking refugee status the right to work in this country.
Clause 2 deals with the problems that the current law restricts British citizens from selling their labour at a price of their own choosing; discriminates against those who are young, inexperienced or seeking on-the-job training; prevents people from agreeing to cut their wages to save their jobs; and imposes nationally uniform rules on the labour market, ignoring regional and local variations. All those shortcomings are tackled in the Bill, which effectively recognises the right to work.
The context for that can be found in article 23(1) of the universal declaration of human rights:
“Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.”
Article 6 of the international covenant on economic, social and cultural rights, to which the UK is a party, states:
“The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.”
I think it will come as a shock to many Members to know that currently many people are not given the right to work enshrined in those important United Nations articles. The Bill is designed to address that problem.
To make it clear to the hon. Member for Manchester Central that I have read my own Bill, I have noticed that there is a typographical error in clause 1. As a consequence, it would enable only foreigners who are in detention to work, rather than the reverse, which was the intention. I put that firmly on the record and apologise to the House. I will address my remarks to clause 1 as it should be, rather than as it is.
Clause 1 refers directly to those unlucky enough to be seeking asylum in this country as a result of persecution, and obviously to their families. Why are we depriving people who are seeking asylum of the ability to earn money while in this country, so that they can make ends meet and not be wholly dependent on the state? The shock of seeking refugee status should not be exacerbated by the humiliation of not being able to take employment and contribute to the society that is acting as their host while their application is considered.
Mr Peter Bone (Wellingborough) (Con)
Speaking as the chairman of the all-party group on human trafficking, one problem for victims who have been trafficked into this country is that if they are rescued by the police and start to recover, they are not allowed to work because they are treated as asylum seekers.
Mr Chope
I am delighted to learn that that was a useful intervention, and I am glad that I gave way. When I gave the example of my constituents, I had a Zimbabwean in such a position in mind.
Obviously, in putting forward a proposal such as clause 1, one needs a statistical basis to show how many people would be affected. It seems as though all the statistics produced by the Home Office in this regard are completely unreliable. The Daily Telegraph reported on 26 April that 25,345 new asylum cases submitted since 2008 still awaited a conclusion. The Home Affairs Committee reported on 24 May that the independent chief inspector of the UK Border Agency agreed that there was a new backlog, but did not know its extent. He advised that he might find out what the extent of it was in due course. We know that the Government were going to achieve the target of completing 90% of asylum cases within six months by December 2011. My understanding is that that target has been abandoned in favour of what is described as a “basket” of 11 alternative indicators. The National Audit Office report of 15 March indicates that up to 181,000 people might have overstayed their work, student or family reunion visas in the past four years. We also know that migrants are arriving in this country at a rate of between 500,000 and 600,000 a year. That is more than 10,000 a week.
There is a problem here. I think that the most deserving people who come in as migrants are genuine asylum seekers and refugees. However, the UK Border Agency makes it quite clear on its website, under the heading “Employment”, that asylum seekers are not allowed to work:
“You will not normally be allowed to work while we consider your asylum application, except in very limited circumstances.”
It continues:
“Currently, most new asylum applications receive a decision within 30 days.”
That is what the website says, but it is not borne out by the statistics to which I have referred. So what actually happens? Instead of allowing asylum seekers to obtain employment, we, as national taxpayers, give them support. We provide them with cash, housing, access to the health service and access to our schools when children are involved. We are paying out a lot of extra money to support people while denying them the opportunity to support themselves.
Does that make sense? In my book, it does not make any sense whatever. I therefore hope that the Government will look carefully at my proposition.
We know that in Sweden, for example, asylum seekers are given the right to work. We can contrast the situation there with that in Greece, about which I have recently received a lot of evidence in my capacity as this year’s chairman of the Committee on Migration, Refugees and Population of the Parliamentary Assembly of the Council of Europe. The situation in Greece is desperate, because the Greek authorities will not allow the tens of thousands of asylum seekers in the country to work. As a result they cannot get their cases dealt with quickly, and some have been waiting there for many years. Now there is a outbreak of lawlessness, including murder and a lot of robberies, in Athens and surrounding areas, committed by desperate asylum seekers who do not have the means or ability to lawfully seek jobs. They are locked into Greece because they cannot get into any other country. They cannot go back to Turkey, through which most of them arrived. The situation for asylum seekers there is chaotic and desperate. I do not want to see that replicated in this country.
Mr Bone
The problem in this country, at least from my experience in Wellingborough, is that although people are trying to deal quickly with new asylum cases, the backlog includes people who have been here for years and years. Their cases are not being decided because of the concentration on new applicants. That means that they have to live on benefits for years, when they want to go out and work. Often, they have married and had a family. That situation cannot be right.
Mr Chope
I am grateful to the hon. Gentleman for intervening, and I will return shortly to the figures I have now been able to find as a result of his intervention. On the training wage, I am disappointed by his intervention because it shows that he is trying to be pedantic. He is not sure whether under the contract of employment entered into voluntarily between the employer and the trainee—for want of a better expression—the training would be of a sufficient quality. However, that would be a matter between the person being trained and the employer. If that is the hon. Gentleman's only objection, I would be happy to see what could be done in Committee, but I suspect that his objection is much more fundamental, because he is on the side of producer interests backed up by the trade unions. He is not really interested in having a genuine training wage, which is what I suggest we should promote through the Bill. I do not want to appear too sceptical or cynical about what his interventions are really motivated by.
According to statistics from the House of Commons Library, in my constituency in April 2011, there were 205 jobseeker’s allowance claimants under the age of 24, which was an increase of 2.5% over the year. For those between 25 and 49, there was a reduction of 375, which was a 22.7% reduction, and for those aged 50 and over, the numbers were 150 and a 30% reduction. Those figures speak for themselves—they show that we have a real problem. While the numbers of people receiving jobseeker’s allowance in the older age groups are declining—certainly in my constituency—the same is far from true for those in the younger age range. A rational body deciding on policy would say, “There’s a problem here. We have to try and address it.” I hope, therefore, that my hon. Friend the Minister will tell us when he winds up the debate what the Government are going to do to get more young people trained and back into work, if they are not going to adopt my suggestion in clause 3.
Mr Bone
Before my hon. Friend moves on, may I use the word “scandal” about the situation with interns? People come to me asking to be interns—people with university degrees—but I cannot pay them anything because of rules set by the Independent Parliamentary Standards Authority, which means effectively that the only people whom I take on as interns are people from wealthy backgrounds. That cannot help social mobility and is wrong. IPSA needs to reconsider that specific point.
Mr Chope
I am sure that the powers that be in IPSA will be listening to every word my hon. Friend says. I agree with him. This, again, is one of the problems with having centralised bureaucracy intervening in the marketplace. Perhaps if clause 3 was on the statute book, it would provide a complete answer to the problem he has identified.
I was talking to a colleague yesterday who said that his son, a recent university graduate, was out of work. At the moment, about 20% of graduates are unemployed. That does not mean that they are unemployable—most of them want to get a leg up into the workplace, but at the moment they are being deprived of that. I had a case in my constituency of a graduate, aged about 24 or 25, who said that he would be happy to work for the so-called apprenticeships minimum wage—it will be £2.60 from October—but he is not allowed to do so because it applies only to people aged 18 or 19. That, too, is a real issue.
I promised earlier that I would refer to Mr David Frost of the British Chambers of Commerce, who said:
“The change to the national minimum wage rate is the wrong increase at the wrong time and will risk pricing young people out of work when youth unemployment is at a record high”.
As I pointed out earlier, if he thinks that a 6p an hour increase in the minimum wage for young people will break the bank, would not completely removing the constraints of the national minimum wage from young people undertaking training have an even greater impact? That is not always the case, but I do not go as far as Eamonn Butler from the Adam Smith Institute, a good friend of mine, who on 17 February called for the minimum wage for young people to be totally scrapped. He set out some cogent arguments and said that the minimum wage
“prices them out of jobs, so does them no good at all. For them, low-paid work is a way of building up some human capital that will make it easier to find a better job. But we stop them even getting that work at all—and all in the name of protecting workers.”
I very much agree with those sentiments.
The last part of my Bill deals with the need to ensure flexibility in the labour market in different parts of the country and sets out a method by which the Low Pay Commission will be required to address those problems.
I hope that this Bill will command the support of the House. However, I hope also that it will trigger a much more serious debate than we have had so far across the Chamber, among my political party, the coalition Government and the Opposition, because this issue is far too serious to be the subject of yah-boo politics—“Are you in favour of the minimum wage or are you against it?” We need to examine the issues in a rational, non-prejudiced and hard-headed way, so that we can get more people back into jobs and enable our economy to prosper.
Mr Chope
I certainly do have the guts. Should the matter arise, I would obviously need two people as Tellers, but it would be good to test the will of the House, if the Government are indeed as intransigent as it seems they are from what the Minister said in his short intervention.
Mr Bone
I hope that my hon. Friend is not missing the point. The shadow Minister—the hon. Member for Harrow West (Mr Thomas)—has been really helpful, because clearly the Opposition are fully behind the Bill and want to have a Division to help us. My hon. Friend should please not miss that point.
Tony Lloyd
I do not have to admit that, because I have not indicated that that is what I believe. Of course there are many good employers, and they should not be forced to face competitive pressures from the unscrupulous ones who would undercut them. That is the reality in the black economy; it would also be the reality if we had a differential or arbitrary minimum wage rate. That would result in the good employer who wanted to pay his or her employees a decent wage being undercut in the marketplace by the rogue employer. Of course I am not claiming that rogue employers are in the majority, but, sadly, they exist in many different areas of our national life. That is why we have to have floors through which people must not fall.
The hon. Member for Shipley asked me about unemployment rates. I cannot quote him the figures, but I am sure that when he makes his own speech, he will probably have them to hand. Let me tell him something that I know he will disagree with profoundly: nobody has demonstrated any link between the levels of unemployment in our society and the introduction of the national minimum wage. The last person who I think tried to put that concept forward was the former Member for Folkestone and Hythe and sometime leader of the Conservative party—perhaps I should call him the noble Lord Howard. He once claimed in a debate about the minimum wage that it would see the loss of 500,000 jobs, only to claim later that it would result in 1 million or 2 million job losses. When it was brought in, in 1999, we did not see that impact on employment; indeed, we saw employment levels rising.
Mr Bone
As usual, the hon. Gentleman makes a powerful speech in line with his beliefs. To put the record straight, he talks about what the then Michael Howard said, but at that time the Labour party was promising to bring in the minimum wage at a much higher rate than it actually did. If it had been brought in at that higher rate, it would have resulted in more unemployment.
Tony Lloyd
That simply does not square with the facts. I lived through that period and, more importantly, I was a member of Labour’s employment Front-Bench team that began to develop national minimum wage policy and I can think of no occasion when we over-promised on the national minimum wage. Indeed, the hon. Gentleman should know that some people now feel that the Labour party under-promised what it might have done across a whole range of issues in those early days; it certainly did not over-promise. If he went back to check the record, he might want to acknowledge that he got this wrong.
Tony Lloyd
As I do not support the Bill in the first place, I am not sure how I could be expected to support certain parts of it. However, the ambition to remove taxation from the lowest paid is an excellent one. If the hon. Member for Shipley will support me in trying to ensure that the higher paid make a bigger contribution, it will be easy for us to relieve the low paid of their burden.
The hon. Gentleman’s intervention has led me to another point that I was going to make. If the hon. Member for Christchurch were willing to drop most of his Bill while incorporating my proposal for a high pay commission to ensure that the top rate of pay is reduced, I would feel able to support the first part of it, and we might then be in business. However, I suspect that my views on high pay are as hard for him to accept as his views on low pay are for me to accept.
Let me say something about the economic arguments that the hon. Member for Shipley has invited me to consider. When the Better Regulation Executive investigated the impact of the national minimum wage, it found no link with levels of employment and unemployment. I fear that unemployment will begin to increase, but an interesting aspect of the way in which the labour market has operated recently is the fact that those in work have remained in work much more consistently than was the case during earlier recessions. That is almost certainly partly due to levels of flexible working, but it also belies the proposition that the minimum wage has served as a disincentive to employment, because had it done so the existing work force would have been undercut by would-be entrants. That throws a cloud of doubt over the argument about the operation of free markets at the bottom end of the labour market.
A more important finding by the Better Regulation Executive was that paying a national minimum wage conferred an overall benefit on our economy. The minimum wage has important regional impacts, which is why the idea of a regional differential is ridiculous. The clue lies in the phrase “the United Kingdom’s national minimum wage”. We are indeed a United Kingdom, and the national minimum wage is national. There are good and profound reasons for that. The national minimum wage prevents the dislocation, already too prevalent in our economy, between the overheated south-east and other parts of the country.
I cannot go as far as the hon. Member for Christchurch in describing those other parts of the country as the “more remote” regions. Those of us who live in such regions do not feel that they are particularly remote. However, we “remoters” feel strongly that the people whom we represent and the economies in which we work should enjoy the same level of protection and the same capacity for operation of the minimum wage, partly—indeed, if for no other reason—because it is important in creating regional demand. That is one reason why groups such as the Better Regulation Executive have found that the national minimum wage is, overall, in the national economic interest.
Mr Bone
The hon. Gentleman is, again, generous in giving way.
If we view the minimum wage in terms of what it can buy rather than the actual amount involved, it is clear that it is worth a great deal more in the hon. Gentleman’s constituency than it is in, say, London. Might that be an argument for two different rates? I do not know the answer, but I should like to hear what he thinks.
Tony Lloyd
That is a genuine issue for debate. It is obvious that it is much easier for someone to live on the minimum wage in, for instance, the north-west of England than in central London. That is why the Mayor of London has begun to advocate strongly—I think I agree with him on this—the introduction of a living wage, which does not simply enable people to operate at or below some notional national level, but recognises such factors as housing costs. However, we must still maintain a national floor through which people cannot fall.
Philip Davies
The point is that if an employer is considering two candidates, one who has disabilities and one who does not, and if they have to pay them both the same rate, which is the employer more likely to take on? Whether that is right or wrong and whether my hon. Friend would or would not do that, that is to me the real world in which we operate. The people who are penalised are those with disabilities who are desperate to make a contribution to society and who want to get on the employment ladder, but find time and again that the door is closed in their face. If they could prove themselves earlier and reassure the employer who took them on that they would not cause a problem in the way the employer might fear—I am sure that there are a lot of myths out there and that many of these people would be just as productive as those without a disability—they might well move up the pay rates much more quickly. At the moment, they are not getting any opportunities at all.
We all know that some employers break the law and pay below the national minimum wage, but it strikes me that the only way employers are likely to get away with that is if they employ illegal immigrants. If an employer is employing a British citizen or someone who is here legally and tries paying them below the minimum wage, legal action can be taken against them, they will face a huge fine and the employee can do something about it. If that employer is employing an illegal immigrant, the power rests with the employer, because they will judge that the illegal immigrant will not take up the case officially. If they do, their illegal status in this country will be exposed and they will be turfed out of the country.
One consequence of the national minimum wage is that it encourages illegal immigration into this country. Illegal immigrants know that they can get employment below the national minimum wage and are happy to do so because it is probably higher than the wage they would earn back in their country. They also know that they will have no problem getting a job because some employers will be crying out for someone whom they can pay less than the national minimum wage. I am not sure whether any research has been done on this, but I would be interested to know how much illegal immigration into this country has come about as a result of the introduction of a national minimum wage.
Whatever the effects on employment of a minimum wage are in general, its effects in a recession must be worse. My hon. Friend the Member for Christchurch may well have made this point before I entered the Chamber, as I was a few minutes late, but people will recall that at the start of the credit crunch, or recession, a couple of companies—my hon. Friend, who is more knowledgeable on this than I am, will correct me if I am wrong, but I am sure that those companies were JCB and Corus—told the people working there that the wage bill needed to be reduced by 20%, so either 20% of the staff could be made redundant or everyone could take a 20% pay cut. One way or another that wage bill had to be reduced. If I remember rightly, the workers in those places—JCB sticks in my mind in particular—got together and voted to take a 20% pay cut. They made that choice themselves. Rather than being made redundant, they chose to take a pay cut.
Mr Bone
My hon. Friend is making a very powerful speech, but does he agree that a 20% pay cut is not a 20% cut in take-home pay for those people who take the cut, because they save on the tax, and is more than a 20% saving for the employer because there is not the same on-cost? It helps both ways, but it is not quite the same.
Philip Davies
My hon. Friend is right and reinforces my point. Those people decided they would prefer a 20% cut to risking a 20% chance of being made redundant.
Philip Davies
I congratulate the hon. Gentleman on his ingenuity in trying to debate his own Bill before it gets the chance to get off the ground. I will not incur your wrath, Mr Deputy Speaker, by debating that other Bill.
Philip Davies
I will in a second.
Where the hon. Member for Manchester Central and I disagree is that I think that reducing taxation stimulates the economy and ends up giving more revenue to the Exchequer. I know that he has been about a long time. He will find that, in the golden age when Mrs Thatcher was Prime Minister, she proved beyond all doubt that, if we cut the rate of tax, we can increase the receipts from tax, because it stimulates the economy.
Philip Davies
As ever, Mr Deputy Speaker, I am grateful for your guidance. I am sure that you are right that I was in danger of being taken away from the main issue by the hon. Member for Manchester Central. I am happy to give way to my hon. Friend the Member for Wellingborough (Mr Bone), unless he feels that he will also incur the wrath of the Deputy Speaker.
Philip Davies
We are all grateful to you, Mr Deputy Speaker, for your guidance.
Mr Thomas
I will come to youth unemployment and the wider situation in the economy a little later. If the Minister bears with me, I will come on to what needs to be done.
My hon. Friend the Member for Manchester Central (Tony Lloyd) also made a series of interesting points. He rightly drew the House’s attention to the work of the Better Regulation Commission, which highlighted the complete lack of a link between unemployment and the national minimum wage. He drew attention to the membership of the Low Pay Commission, and the important role of its business representatives in analysing economic conditions and ensuring that the minimum wage reflects economic realities across the UK.
The bulk of my hon. Friend’s remarks underlined the inequality in the relationship between the employer and the employee. The vast majority of businesses are highly reputable. I recognise the point made by the hon. Member for Northampton South (Mr Binley), who is not in his place, that it is very much in the interests of the business to protect and support its staff, and to help them to gain skills. The concern rightly outlined by my hon. Friend the Member for Manchester Central is that rogue employers—there were certainly examples of this from before the introduction of national minimum wage—may well be tempted to take advantage of the inequality in the power relationship between the employer and employee, and persuade the employee to take a worse rate of pay.
The hon. Member for Shipley (Philip Davies) also made a series of interesting remarks, not least in arguing that those with mental health problems or learning disabilities face greater challenges in finding work, which I accept. However, I cannot accept the logical conclusion of his argument that we, as a country, should accept that those with learning disabilities or mental health problems should accept lower wages than others.
I cannot support the Bill presented by the hon. Member for Christchurch. It would drive a coach and horses through the national minimum wage legislation and leave low-paid workers at risk of being exploited by unscrupulous employers who want to undercut other businesses that want, perfectly legitimately, to pay the national minimum wage.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow the shadow Minister, the hon. Member for Harrow West (Mr Thomas), who put the official Opposition’s case clearly and well—I hope that he continues to do so for many years. I congratulate my hon. Friend the Member for Christchurch (Mr Chope) on introducing such an interesting and productive Bill that has found support on both sides of the House—not in total, but in part. On the decision whether to vote on the Bill today, I should say that I, as a parliamentarian, believe that the will of the House should be expressed. However, I completely understand why the shadow Minister is jumping up and down asking for a vote. He does not really care whether this gets a Second Reading. He has already written a press release that says, “Nasty Tories divided over minimum wage. The real Tories want to abolish it”, which is nowhere near the truth, of course—the Bill in no way abolishes the national minimum wage. I shall, at the moment, be supporting the Bill wholeheartedly.
Tony Lloyd
Having quoted this press release—“Nasty Tories divided over the minimum wage”—the hon. Gentleman seemed to challenge the division over the minimum wage, not the concept of them being nasty Tories. Can he clarify that?
Mr Bone
I am not sure I really understand the hon. Gentleman’s point, but “nasty Tory” is clearly an oxymoron.
I plan, at the moment, to support the Bill, but of course we have not heard from the most important person in the House, the Minister. Many people would say that the Minister is one of the best in Parliament, and I would entirely agree with that. In fact, others would say that he is the Jim Hacker of Parliament. His Ministry is the closest to the Department for Administrative Affairs in “Yes Minister”, and he is responsible for getting rid of regulation and red tape, which is in part what this Bill would do. Everybody thinks that “Yes Minister” shows what really happens in this place, but of course, Jim Hacker went on to become Prime Minister, so I hope that the Minister will not forget me in future.
I refer Members to my entry in the register and the fact that I am a fellow of the Institute of Chartered Accountants in England and Wales. I want to take the politics out of this debate, or at least out of my speech. I have never doubted Opposition Members’ sincere concern about low-paid people and the unemployed; I just think that the policies that they propose do the opposite of what they want. Every Labour Government have left power with unemployment higher than when they came to power. That is not because Opposition Members set out to do that or because they did not care passionately about unemployment; it is because their policies lead to unemployment.
I happen to have with me the Library figures for the constituency of the hon. Member for Blaenau Gwent (Nick Smith). In April 2006, unemployment in his constituency was 1,917, but in April 2010, when Labour left power, it was 3,202, which is an enormous increase. After a year of this successful coalition Government, the figure has dropped to 2,955. I do not say that in any way to make a political point; I just think that the policies that the Opposition pursue sound good, but result in more unemployment.
Nick Smith
I fundamentally disagree with the hon. Gentleman’s point. Unemployment has gone up in Blaenau Gwent because of the recession and the banking crisis. Until then, the Labour Government did a very good job of boosting employment in my area, and I am proud of their policies.
Mr Bone
For many years I lived close to the hon. Gentleman’s constituency. It is a very nice constituency, made up of fine, hard-working people; there are just not enough jobs there at the moment, and I take a different view from him on how they might be created.
I thought that I could add most to this debate by not talking from within the Westminster bubble. I spent many years before I came to this place as an employer. I employed hundreds of people in both the manufacturing industry, and the service and travel industries. What particularly attracts me to this Bill is clause 3, which deals with the training wage. One thing that has been a problem for both parties for many years is this idea that we must get more and more people going on to university, because that is the way forward and the way we must progress. However, there are many young people who do not want to go to university. They want to leave education as soon as possible, get a job, work hard and progress in a career.
In the 1990s, when I was running a travel company, I was known as the meanest boss in Britain, because I made some points at a party conference that were translated into the claim that I was paying people less than £1 an hour. That is the level of debate that really frustrates me. We are talking about the kind of young people who used to come into my office. They were really bright young people, but they just did not like school. They wanted to get out of school as soon as possible, they wanted a job, they wanted training and they wanted a career. At that time, the travel industry had a good scheme in place whereby people were taken on and paid a nationally agreed wage—at that time it was, I think, £30 a week, although we are going back to the 1990s. For part of the time that they were working, they received on-the-job training, but they also went away to be trained in a classroom, which was paid for by my professional body, which I subscribed to through fees.
What we finished up with after two years were young people with national vocational qualifications who knew everything about the travel industry first hand. Furthermore—I can say this now, but I could not say it then—those young people have progressed and are now in senior positions across the country. One of the people I employed went on to become a director of my company.
We seem to have forgotten those young people who are not necessarily wealthy and who do not want to go on to university, but who want proper training and a proper career. The problem is that, if I were an employer now, I could not take on such people without paying them the minimum wage. I could not then afford to give them on-the-job training or to let them go off to college. I would also not be able to afford to let them travel to America to see how the operation worked there, as I used to do. That is a real problem, but it is addressed totally by the Bill. I freely accept, however, that there are many things in the Bill that might need to be changed.
Mr David Hamilton
May I put the converse argument to the hon. Gentleman? He is making a good argument for his particular circumstances, but I also used to be the chief executive of a company. I employed people and training took place. In the 1980s, companies such as Wimpey had hundreds of apprentices. They were operating in competition with other companies, and they had to stop taking on apprentices because the cost factor for them was far greater than it was for their competitors. A line has to be drawn, so that the same conditions apply to all companies. Surely that is the fair way forward.
Mr Bone
I am sorry that I cannot comment on that situation; I can comment only on what I know about.
There is a problem at the moment in that we are not providing those young people who want employment but do not want to go on to university with the opportunities that they need. The Government have moved forward with the apprenticeships scheme and a training rate of £2.50 an hour, but that rate is limited to those on apprenticeships. I am talking about providing good quality training in the classroom and on the job, as well as allowing the person to earn some money. That is why I would like the Bill to move into Committee.
The hon. Member for Manchester Central (Tony Lloyd) made a good point about asylum seekers, with which I entirely agree. The Bill also contains provisions relating to that. He is an outstanding parliamentarian, and I hope that he will vote for the Bill and seek to amend it in Committee. That would get around the silly business of the official Opposition saying that the Tories want to abolish the minimum wage. That is not what the Bill is about. I recently visited the British Footwear Association in Northamptonshire. Its representatives told me that they had a real problem getting people to come into the industry because there was no method by which to attract them. Clause 3 of the Bill could address that problem.
My hon. Friend the Member for Northampton South (Mr Binley) is an employer of many people. There is a fundamental misunderstanding on the part of people who have never employed anyone. They do not understand that the most important thing for an employer is to look after their employees. They are the company and the family, and the employer must ensure that they are looked after. The minority who do not do so is very small. Any company that does not look after its employees will go bust. It has frustrated me for years in this place that I cannot say, “Look, it is just not like that out there. We look after our employees. We want them to do the best they can. Yes, they might start on a very low wage, but we want them to progress within the business and go on to jobs elsewhere.”
I shall tell the House about something that has really wound me up about this place. In the first five years I was here, I never employed an intern. Our budget was high enough to pay people to do all the work that we as Members of Parliament had to do. Our constituency postbags are now getting bigger and bigger, and when the constituencies get even larger, we will have more to do. Then the dear old Independent Parliamentary Standards Authority came along and cut the staffing budget, which meant that we had to make people redundant. This is wholly relevant to the Bill as it concerns the minimum wage and training. I have recently taken on an intern. Two people approached me who were first-class people with university degrees. By the way, if anyone is looking for a researcher, those two are still available; they are very good. The problem is that I cannot pay them anything less than the minimum wage, so they would have had to work for free.
The real scandal is that unless people’s families can afford to allow them to work for free in this place, they cannot come here. There will be equally well qualified and good people, some of whom have come out of university, who cannot afford to take an internship, making them worse off when it comes to getting a job in the future. That cannot be right, but clause 3 would allow those people to be paid at least something while they are working to become interns. As I say, that is the real scandal. As for IPSA, many good things can be said about it—[Interruption.] No, they cannot. I withdraw that remark, Mr Deputy Speaker, as I was clearly wrong. There are some good things about IPSA, but on this issue, they have got it totally wrong.
In conclusion, my hon. Friend the Member for Christchurch has done a great job in introducing this Bill. It has created cross-party interest and arguments within the parties. The excellent Minister intervened earlier to tell him that he should not hold his breath. I also recall my hon. Friend the Member for Christchurch saying that he was previously winded when the Government accepted his Bill. I think that the worst thing that could happen to someone would be if they were holding their breath and then got winded. I expect the Minister to welcome the Bill.
Mr Edward Leigh (Gainsborough) (Con)
I apologise for being delayed and missing the start of this debate, Madam Deputy Speaker. I wish to congratulate my hon. Friend the Member for Christchurch (Mr Chope)—he is also an actual friend—on doing a signal service to the House by courageously raising this issue, as it is important that we have an honest debate about it.
There are many arguments in favour of what my hon. Friend is trying to do. That applies both in terms of the Bill’s wider context, which I shall deal with in a moment, and what he is specifically trying to do on the minimum wage. The first relates to the tragedy of youth unemployment, which is an increasing problem. In addition, businesses undoubtedly need to respond to the marketplace, because they are in the marketplace and they cannot avoid it. It is also undoubtedly better for people to work for less than be unemployed, because work helps people to get training, make contacts, gain experience and so on.
My hon. Friend has also said that we are talking about a voluntary process, but it is precisely on this point that his Bill has difficulty. As was well said by the hon. Member for Harrow West (Mr Thomas), who leads for the Opposition, this issue may well be a show-stopper that prevents the Bill from becoming law. There is undoubtedly a mismatch in power between an employee who is desperate for a job and an employer. Although my hon. Friend the Member for Christchurch assures the House that the process is entirely voluntary, one can undoubtedly envisage many situations in which there will be problems. My hon. Friend the Member for Shipley (Philip Davies), who has unfortunately been called away for a moment, mentioned the example of disabled people, who often find it more difficult to get jobs because what the employer has to pay them is on a level with people who are not disabled. As I said to my hon. Friend, the employer might summon the disabled person and say, “I’m sorry, but you have this disability and you are not quite as capable as doing this job as other people, so please sign on the dotted line to be paid less, as this provision is now law.” One has to assume that these Bills will become law, so we need to tease out these important points.
In other circumstances, an employer might say to employees that there are severe problems and that the marketplace is very difficult, so employees will have to sign on the dotted line and take less than the minimum wage. It is a bit simplistic—and, dare I say to my hon. Friend the Member for Christchurch, a bit naive—to assume that the process is entirely voluntary. I am not sure that the marketplace works like that.
Mr Bone
It was quite wrong of me to call my hon. Friend a shocking leftie on this issue—I clearly got that wrong. He makes a very fair point about the Bill needing to be considered carefully in Committee. The original version contained the idea of limiting the period for which someone could opt out of the minimum wage. Perhaps that would reassure my hon. Friend.
Mr Prisk
Absolutely. The vast majority of decent employers are keen to ensure that they get the brightest and best, and are willing to pay for that. We should not allow any characterisation of employers in this country as always wanting to do down their employees. That is not my experience, and I hope Opposition Members will not tolerate such a characterisation in future.
Clause 3 seeks to exempt a person from the minimum wage as long as they receive a training wage. We have had a constructive discussion on apprenticeships, training and the importance of helping young people, to which the clause is relevant. Ever since the Low Pay Commission’s first report in 1998, it has been argued that young people should be treated differently from their older counterparts. The rationale is that the threat of unemployment because of too-high wages is greater for younger people than it is for older people. Clearly, young people often lack experience in the workplace, and are therefore more likely to be both on lower earnings than older workers, and to work in lower-paying sectors.
Young people are therefore more likely to be more vulnerable in the labour market. We have seen that, sadly, in the last couple of years. If I may say, it is encouraging that since May of last year, there has been an improvement in youth unemployment. I am pleased that I can confirm today that youth unemployment is lower than that which we inherited. I hope that Opposition Members will acknowledge that, because it is an important issue on which we agree.
The current rate for workers aged 16 to 17 is £3.64 an hour, and the rate for those aged 18 to 20 is £4.92 an hour. That contrasts with the adult rate for those aged 21 or above, which is currently £5.93. In recommending minimum wages for young people, the commission aims to ensure that the rates neither provide an incentive for young people to leave education or training—that is an important balancing act—nor harm the employment prospects for those who decide to work. As well as the minimum wage rates for young workers, we last year accepted the commission’s recommendations to end the exemption from the minimum wage for apprentices under the age of 19, or those aged 19 and over in the first year of their apprenticeship.
We have hence introduced a new minimum pay rate for those people within that framework, which has ensured—for the first time, I believe—that all apprentices in the UK get the protection of the minimum wage. It gives them a fair deal, and therefore protects them from exploitation, but it does not deter businesses from taking them on. As we have heard, that apprentice rate is currently £2.50 an hour.
Mr Bone
The Minister is making a well-constructed argument, but on that specific point, the Government have accepted that there should be a different minimum wage for apprentices, like a training wage. Why cannot we extend that differentiation to the travel industry, which I mentioned in my speech, and other industries?
Mr Prisk
My hon. Friend is a few inches ahead of me, but he is right that that is the kernel of the argument on clause 3.
Let me give a little background, and then I shall address specifically how we expand our provisions and encourage young people in training and apprenticeships. The point about the apprenticeship rate is that it recognises that employers invest significantly in apprenticeships, and that apprentices—quite naturally, given where they are in their working cycle—are less productive than other skilled employees. In addition, young people who complete an apprenticeship derive significant long-term advantages. They know that by accepting a lower wage when training, they will enjoy future higher earnings and better job security. That fits into another Government policy, namely the significant expansion of apprenticeship places—we have increased spending by £250 million to encourage 75,000 extra places.
Is a training wage such as the one in clause 3 feasible? The clause states that someone who is contractually entitled to a training wage, and to training in skills relevant to their employment, does not qualify for the national minimum wage. However, the Bill does not specify what would be an appropriate training wage level. As the Bill stands—that is all we have to debate—employers would therefore be free to pay a training wage at any rate. In addition, individuals receiving those low wages would, as workers, be carrying out work or services for the employer.
The danger is that the provisions could be open to widespread abuse by unscrupulous employers—that small minority that look to pay exploitatively low wages.
Mr Prisk
I can understand that frustration, but the moment we make law on the basis of one instance, we create difficulties for the scrupulous. That is the risk we are talking about.
I turn to work experience and interns. I understand the frustration and concerns of my hon. Friend the Member for Gainsborough. Work experience, whether as a paid or unpaid intern, can be a valuable way for young people to get the experience, skills and confidence they need to start up. The Government want as many internship opportunities as possible to be made available, but we are clear that those who are entitled to the national minimum wage should get it. The example he gave of how he works as an employer accurately describes exactly that position.
Mr Prisk
My hon. Friend has made a powerful point about those working longer term. We want to ensure that the law is upheld.
Before I return to clause 1, which deals with the unlawful prevention of employment, let me turn to the four clauses at the back end of the Bill, namely clauses 4 to 8. These relate to the regional minimum wage, the idea being that we should move away from a national rate, towards a more flexible, regional structure. It is worth looking briefly at how the existing law works. Under the National Minimum Wage Act 1998, workers of compulsory school age are entitled to be paid at least the national minimum wage, although there are some exceptions. Different treatment may be permitted in relation to different sectors of employment and for people of different occupations. However, having different areas poses practical problems.
Clause 4 sets out the role of the Low Pay Commission. It provides that the commission
“must consider and take evidence on the availability of employment opportunities and the impact of the national minimum wage on job creation and access to employment in…areas where the average level of unemployment in the preceding year has been above the national average”.
The commission must then
“consider in the light of that assessment whether to recommend that the minimum wage in any such area should be set at a level below the national minimum wage.”
It is not clear from clause 4 what happens if a lower minimum wage is applied to a travel-to-work area and the unemployment level of that area subsequently falls below the national average. We presume—although it is unclear from the Bill—that the lower minimum wage could no longer apply, and that the national minimum wage would therefore apply. It is also not clear whether the Bill envisages more than one lower minimum wage rate. For example, would the same lower rate apply regardless of the extent to which average unemployment in an area was greater than the national average?
Clause 5 sets out the duties of the Secretary of State in the event of the Low Pay Commission recommending that the minimum wage in a particular area should be set at a level below the national minimum wage. Perhaps peculiarly, clause 5 provides that the Secretary of State has no discretion in the matter, but must make regulations to bring the commission’s recommendations into force. I note that this is different from the Secretary of State’s position in respect of the national minimum wage, where it is for him to decide on the appropriate rate, based on the Low Pay Commission’s recommendations. It is unclear why the Secretary of State should have the discretion to implement the commission’s recommendations on the national minimum wage, which would affect around 1 million people, but not where its recommendations could affect a far smaller number of people.
Clause 6 provides that a change to the minimum wage in an area to a level below the national minimum wage would not affect existing contracts of employment. I will come to the issue of fairness later; I merely note now that this provision is another instance of allowing an employer to pay two workers different wages for doing the same job. It could also encourage employers to get rid of workers who were being paid at the national minimum wage and replace them with people paid at a lower rate.
Clause 7 presents significant practical challenges. It provides that a travel-to-work area is
“an area so defined by the Office for National Statistics.”
This point is crucial, because it affects the way in which the final four clauses operate. Ideally, a self-contained labour market is one in which all the commuting occurs within the boundary of that area. However, in practice it is not possible to divide the UK neatly into separate labour markets based on commuting patterns. They are just too diffuse. Our concern is that the opportunity for complexity and continuous change would make the operation of the proposed system significantly more challenging than at present. Speaking as an employer—which I continue to be—I am concerned about how this would work within and on the edges of those regions.
There are currently 243 travel-to-work areas. They were defined in 2007 using the old 2001 census data, so there is already a problem of time delay. The areas vary considerably in size. For example, Anglesey has two such areas, while Greater London has only one. I hope that no one will ask me why, because I do not have the answer. If we moved to a system of regional rates based on travel-to-work areas, the real problem would be the complexity that that would generate for employers. As someone who wants to see less regulation, I would be very much opposed to that. I hope that the House will acknowledge the specific practical problems associated with each of the clauses, especially relating to the way in which this part of the Bill would operate.
Clause 1 deals not with the minimum wage but with the question of unlawful prevention in relation to foreign nationals. It relates to foreign nationals above compulsory school age who are legally residing in the UK, and provides that such individuals shall not be prevented from undertaking paid employment unless certain conditions apply. The first condition is where the foreign national has only a visitor’s visa. The second is where the foreign national’s most recent application for entry into the UK has been refused. The third is that the foreign national’s most recent application to stay in the UK has been refused. Like my hon. Friend the Member for Christchurch, I noticed the typo in subsection (4), for which he has graciously apologised. The effect of the subsection as drafted would be to exempt foreign nationals who were not in detention. The problem that that would create is self-evident.
The Government support the principle that everyone of working age who has the legal right to work in this country should have the opportunity to gain a living by work which they freely accept. That is set out in article 6 of the international convention on economic, social and cultural rights, and the Government are committed to fulfilling our obligations under the convention. The problem is that the provisions in the Bill are contrary to the Immigration Act 1971. The fact that the Bill does not provide for the repeal of the relevant provisions of the Act raises an important technical issue. When we debate these Bills, we are debating whether they should become the law of the land. While I understand that points of principle are involved, we also need to ensure that we get the legislation right.
Mr Prisk
The problem is that the practicalities affect the principle. That is an important point for my hon. Friend to bear in mind.
Section 3 of the Immigration Act provides for a foreign national’s lawful stay to be subject to conditions preventing his employment or occupation in this country. That is the basis of the UK’s controls on access to the labour market. Foreign nationals who are admitted specifically for the purpose of employment may be subject to conditions of stay which require them to seek authorisation to change their employment. Those who enter for another purpose—study, for example—may be subject to conditions which require them to seek a variation of their conditions of stay if they wish to remain for the purpose of work. The provisions in the Bill are the basis for arrangements for determining the circumstances in which an individual would be allowed to take employment or not, depending on their skills.
My hon. Friend’s proposal appears to remove any legal basis for the operation of an effective control on migrants’ access to the labour market, including the operation of a labour market test in respect of a migrant’s employment, except at the point at which they initially seek entry to the UK. The Bill would therefore significantly undermine the Government’s ability to regulate the entry and stay of foreign nationals, other than at the point at which they seek entry, or to protect the interests of resident labour.
My hon. Friend might well have intended the provisions in clause 1, in respect of recent refusals of applications to enter or stay, to protect against such issues. However, they would not satisfactorily achieve that effect. It is also difficult to see how such provision could be reconciled with the effective operation of transitional restrictions, to which the Government are committed, on labour market access to nationals of new member states of the European Union who are not subject to immigration control but, as foreign nationals, would be covered by the Bill.