Living Wage

Robert Jenrick Excerpts

Thursday 6th November 2014 Commons Chamber

[Robert Jenrick (Newark) (Con)]

This is a great opportunity for me to support the Living Wage Foundation. I am grateful to my hon. Friend the Member for Warwick and Leamington (Chris White) for securing the debate, in which I want to make a few brief observations. I support the living wage, and I am thankful that one of my councils, Newark and Sherwood district council, has just become a living wage employer, which is a very good and progressive step.

I want to talk briefly about wages more generally and to make a few observations about conversations I have had with employers in my constituency since becoming an MP, drawing on my previous experience as a business man, growing up in a small business family. I have believed in the minimum wage for a long time—indeed, I believed in it before my party adopted it. In recent years, I have come to believe that the minimum wage is too low and that there is room in many sectors and many regions for it to grow to somewhere between the current minimum wage and the current living wage. Sadly, I do not believe that the living wage of £7.85 is doable for many businesses, particularly those in the midlands and the north—in areas such as the Nottinghamshire constituency that I represent—but there is room to bridge the gap. I hope that our Government and future Governments will work on that and become more ambitious than they have been before.

Secondly, it may not be a matter entirely for today, but I think this country has not only a low-wage issue; the primary issue is one of tax poverty. We have taxed the working poor too heavily for far too long, and reducing the taxation on current wage levels will provide a better standard of living. It may not be a standard of living to which many will aspire, but it is certainly a priority. This is not lost on the present Government, and I do not believe it is lost on the Opposition either. We have further to go along that route. If we can increase the tax allowances and improve the thresholds, we might be able to get all workers close to, if not quite at, the living wage. That should be a priority, as was said by my hon. Friend the Member for Hexham (Guy Opperman).

There is clearly a problem—I am not immune to it in my own constituency, although much of Newark is relatively affluent—with wages. Wages have been very slack for a long time, particularly in certain sectors and in the midlands and the north. Only yesterday, I met a group of manufacturers in the heating industry in my constituency, and they reported that there has been very little pressure on wages in recent years. Many businesses were offering a small rise in wages purely to keep their work force happy and motivated—not because of significant market forces.

It has to be said that the No. 1 reason mentioned by the employers I have met to explain why wages have been kept low is immigration, mostly from continental Europe. With that, of course, come benefits such as keeping our economy competitive and keeping businesses going during the recession, but it is the primary explanation of why wages are unacceptably low for so many in this country. It is a problem, and I am concerned about the long-term prospects of low-skilled or lower-skilled workers. It is difficult to come up with easy answers to how to increase the wages of the sort of workers I meet at some of the larger manufacturing businesses in my constituency.

That said, there is scope for many businesses, even in the midlands and the north, to increase wages. I have met manufacturing businesses and SMEs that want to offer the living wage, but find it slightly too high. However, they could accommodate, as I suggested, somewhere between the national minimum wage and the living wage.

I am delighted that Newark and Sherwood district council is supporting the introduction of the living wage for its employees. There is clearly a role for public sector contracts, and I met a number of businesses that want to see local authorities making decisions—where there is some discretion on price—to promote employers who pay better wages, be it the living wage or somewhere slightly below it. They want businesses that pay more than the national minimum wage to be respected. I have encountered a number of examples of companies in direct competition with each other, with one paying just the minimum wage without trying to go any further, and the other at least trying to go further, along the lines I suggested.

Finally, I want to make a broader cultural point. On the basis of my experience in a small manufacturing business, I certainly found that one of the biggest impediments to raising wages was the cultural difference between the shop floor and the office. I have met a number of employers in whose businesses it is accepted that manual labour or shop-floor work, even if it is skilled or semi-skilled, is somehow inferior to jobs in the office next door. For many companies, that is the biggest impediment to their raising the wages of their lowest-paid workers just a little bit, to the living wage or something close to it.

We all overstate the difference between office workers and managers and those on the shop floor. I suspect that that has become worse over the last 20 years as more of us who become managers in businesses have been to a university and have no experience of life on the shop floor. Many see it as being slightly inferior. We underestimate the value of the skills involved in manual and shop-floor work. As time goes by, those workers build up very valuable skills. There is room for many ambitious companies with some imagination to raise the pay of their workers who receive the lowest wages, without necessitating increases for everyone else in the business. The biggest fear of many employers is that raising the lowest wages will mean that everyone else’s wages will have to rise proportionately. Good, imaginative managers will be capable of carrying the work force with them, and convincing office-based and higher-income workers that it is right to recognise the skills and commitment of their lower-paid colleagues. Unions will have a role in promoting that, working closely with employers.

All of us, in politics and in wider society, should try to change the attitude that has grown up and end the division between people who are on the shop floor, doing important manual labour, and people in offices. That is a message we should all convey to businesses in our constituencies.