Russell Brown
Main Page: Russell Brown (Labour - Dumfries and Galloway)Department Debates - View all Russell Brown's debates with the Department for Education
(10 years ago)
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Mr Chuka Umunna (Streatham) (Lab)
I beg to move,
That this House notes that the value of the National Minimum Wage has been eroded since 2010 as working people have been hit by the cost-of-living crisis and are on average £1,600 a year worse off; recognises that the fall in the real value of the minimum wage since 2010 is now costing the public purse £270 million a year in additional benefit and tax credit payments; further notes that the Chancellor of the Exchequer cruelly misled working people by saying he wanted to see a minimum wage of £7 while the Government has no plans to reach this goal; calls on the Government to set an ambitious target for the National Minimum Wage to significantly increase to 58 per cent of median average earnings, putting it on course to reach £8 before the end of the next Parliament; supports action to help and encourage more firms to pay a living wage through “make work pay” contracts to boost living standards and restore the link between hard work and fair pay so that everyone shares in the UK’s wealth, not just a few at the top; and further calls on the Government to set a national goal of halving the number of people on low pay by 2025.
We are a great country with some of the most hard-working and creative people in the world, but there are challenges and problems that must be addressed. We are the sixth largest economy in the world, yet too many people do not have secure, fulfilling jobs that provide dignity, respect and a wage that they can live on. Most people who are living in poverty in this country have a job. If people do the right thing, play by the rules and work hard, day in, day out, they should not have to live in poverty in this country; but the reality in 2014 is that they do. More than 5 million people do not earn a decent wage.
We can see the economic data and, yes, on paper, GDP growth is better than it was two years ago, but the reality of people’s lived experience suggests otherwise. Just in the past fortnight, the much respected Resolution Foundation has produced research that paints a different picture. Tens of thousands of people are trapped in low-paid jobs with little hope of a pay rise. Among those minimum wage employees who have been employed for at least five years, a record one in four has failed to progress off the minimum wage for the entirety of that period. That compares with just one in 10 minimum wage workers a decade ago.
That is the background to our motion. What each party says it will do to address that situation and to make work pay will provide the context in which the next general election is fought. Before I set out what the Labour party would do if elected next year, I will remind people what we have already done. I have said it before and I will say it again: in 2010, this party left the country in an immeasurably better state than we found it in 1997. [Interruption.] If the Minister waits, he will get his time in a moment. One of the many reasons for that was our utter determination to end the outrage of people being exploited at work, which led to our establishment of the national minimum wage in the face of opposition from Conservative Members.
In 1997, the current Secretary of State for Work and Pensions—I note that he is not here—told the House that if we introduced the national minimum wage, it would
“negatively affect, not hundreds of thousands but millions of people.”—[Official Report, 4 July 1997; Vol. 315, c. 526.]
In the same year, the current Defence Secretary told the House that the Conservative party had “always resisted” the minimum wage and that he thought there were “other better solutions” to extreme low pay. Then, of course, there was the Conservative party leader—now the Leader of the House—who said that a minimum wage would be
“either so low as to be utterly irrelevant or so high that it would price people out of work.”—[Official Report, 17 March 1997; Vol. 308, c. 618.]
They and their Conservative colleagues made those claims and arguments to justify inaction at a time when some people in this country were earning as little as £1 an hour.
We had the good sense to ignore the Conservatives, and in my view establishing a national minimum wage was one of our greatest ever achievements. As a consequence, between 1997 and 2001 extreme low pay fell from 6.9% to 1.5% of the work force, and we are proud of that. All the evidence shows that the minimum wage boosted earnings considerably, without causing the unemployment that we were told would follow. So when people say that we are all the same, I point to the establishment of the minimum wage to illustrate our very different instincts as parties, our different approaches and the kind of difference that a Labour Government make when in office.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I served on the Committee that considered the National Minimum Wage Bill, and the only other person in the Chamber who did that is you, Mr Speaker. We spent many long hours through the night—
Mr Umunna
I thank my hon. Friend; that is interesting and I look forward to hearing his comments on who took what position at that time.
Yesterday, I revisited an interview with the great Sir Ian McCartney, a former Member of this House, who was the Minister at the Department of Trade and Industry and pushed the National Minimum Wage Bill through the House. He said that he would have “died in the ditch” to ensure that we got it through, and—my hon. Friend the Member for Dumfries and Galloway (Mr Brown) will remember this—we had a record sitting of the House to get the national minimum wage through in the face of resistance from Conservative Members.
I distinctly remember Sir Ian McCartney at a press conference with the Westminster lobby, explaining why we were doing what we were doing. He was a former kitchen worker and earned poverty wages. I remember seeing the news report of him weeping at that press conference, explaining how he was paid something like 1p or 2p per potato that he put in a bag in that kitchen, and asking the lobbying journalists, “How can you defend that in our country in this day and age?”
As I said, Labour Members are rightly proud of the national minimum wage, and we make no apologies for reminding people of the resistance that we met when we introduced it, and of the difference that a Labour Government make to people’s lives.
Matthew Hancock
It is absolutely true that the long-term and fundamental way to support the increase in productivity is to ensure more rigorous education and more skills, which is why we increased the number of apprenticeships. We are on track to have 2 million apprenticeships started in this Parliament, and we are clear that we will deliver 3 million in the next Parliament. The hon. Gentleman is absolutely right that education and skills underpin the long-term advance of prosperity for everyone in this country. I suggest that he would support the Government’s policies to strengthen education if he was truly interested in supporting a long-term increase in productivity.
We have discussed enforcement, the increase in the budget for enforcement and the Small Business, Enterprise and Employment Bill. We have quadrupled the maximum penalty to £20,000—per worker, not per firm. As a result, the amount from enforcement has increased from £2.6 million in 2003 to £4.6 million today. We know that a strong minimum wage must be properly enforced.
My third and final point is that the true champions of the low-paid know that the minimum wage is only one tool among many. We are reforming welfare so that it supports people into work rather than trapping them in poverty, and we are letting people keep more of what they earn. Thanks to our rise in the tax threshold, a typical taxpayer already pays £700 less income tax than in 2010. The tax bill of someone working a 30-hour week on the minimum wage has been cut by two thirds. In the next Parliament, we will abolish income tax for those working full time on the minimum wage. We can do that only because we are prepared to make difficult decisions on spending.
It seems that the Labour party does not want to make those difficult decisions. Perhaps the shadow Minister will explain why all we have heard from it is taxes on jobs, taxes on business, taxes on homes, pensions, investments, taxes on driving and now even taxes on death.
Mr Russell Brown
Does the Minister recognise that the economic recovery he talks about is not being witnessed in many parts of the country? He talks about people coming out of the tax bracket, but the reality is that in many parts of the country less than half the work force works anywhere near enough hours to pay tax.
Matthew Hancock
Absolutely. I recognise that as we get the recovery moving we must ensure that it benefits all parts of our country. That is why we are ensuring that the jobs recovery is spread throughout the country. This morning’s jobs data show that unemployment is falling in all regions, and in the hon. Gentleman’s constituency it has fallen by 28% in the last year. Instead of pointing fingers, he should congratulate the Government on that effort.
The Labour party forgets that we do not support the incomes of those at the bottom by making the whole country poorer. Tax cuts and welfare reform are both essential, but ultimately must go hand in hand with strengthening education and skills.
The Government support work and our record shows that we deliver work. We have a plan that will work. A strong minimum wage is possible only with a strong economy. We passionately support the minimum wage, not for a headline, but for the benefit of those who rely on it. It is just one part of our long-term plan to restore the health of the British economy from the ruins of the past. Instead of that past, we will build an economy that works for all and secures a brighter future for Britain.
Heather Wheeler
I will have some difficulty in accepting that. The point is that 1 million fewer people are unemployed. There are more people in employment now than ever before. There are more women employed than ever before. I want people to understand that getting a job and looking after their family is their No.1 priority, and that is happening.
Obviously, I have looked at the statistics for South Derbyshire. Fewer than 7% of workers in South Derbyshire are on the minimum wage. That is because we have made a real effort to get manufacturing in South Derbyshire and to get a supply chain for the manufacturers. We have made a real effort to get apprenticeship training schools in South Derbyshire. We have worked like—let me find a nice phrase for this. We have worked very hard to ensure that people do not just say, “Do you know what, I do that because my dad and my grandfather used to do that.” It is about lifting horizons.
I totally agree that we need all our public services to ensure that we have clean streets, bins that are emptied and street lights that stay on. People should understand the value of working. I find it so depressing that all we ever get from Labour is this business of layering on regulation and doom and gloom. The right ideas that we heard at conference include raising the tax threshold to £12,500. The horizon of my hon. Friend the Member for Elmet and Rothwell (Alec Shelbrooke) is to raise it to more than £14,000. We are not talking about people being grateful that we are only going to tax them at 10%. We want everybody lifted up out of that level. It is outrageous that people should even contemplate that that might be in a Labour manifesto.
Mr Russell Brown
I know I am about to make a contribution after the hon. Lady, but let me make this point. There are people who are not working enough hours to come anywhere close to paying income tax. The people who really benefit from what the coalition Government are doing are she and I and everyone else on high salaries. We benefit from increasing the personal allowance. Some people do not even earn half of that personal allowance a month.
Heather Wheeler
I completely accept the hon. Gentleman’s point of view and it is completely fair to say that people who were unemployed are now working a few hours, but I remember the great outcry about changing working hours from 16 to 20. There was massive outcry and we were told that it would never happen, but I have not had a single constituent come to me to tell me that they are worse off because they are now working 20 hours or because they are working towards those 20 hours. I think that things have changed.
Mr Russell Brown (Dumfries and Galloway) (Lab)
It is a pleasure to follow the hon. Member for South Derbyshire (Heather Wheeler), who is, dare I say, one of the jovial characters in this place. She speaks much sense. She speaks about doom and gloom among Labour Members, and I try as best I can to be upbeat, but I am sure that she would recognise that the economic recovery that Government Members talk about is not being seen across the country. I have said it time and again, and I hate to say it, but I will not let people forget that 13 or 14 months ago the average wage in my constituency in rural south-west Scotland was 24% beneath the UK average. Thankfully, that has improved and it is now at about 17% or 18%, but people are struggling.
Across the country, working people have seen their wages fall by an average of £1,600 a year, because under what I—and my colleagues, I am sure—see as the Government’s failing plan, the recovery is benefiting a privileged few and most families are not seeing the green shoots of any kind of economic recovery. The real value of the national minimum wage has fallen and one in five employees are low paid. That impacts not only on low-paid workers but on their families, their communities and the local economy. It piles up across the country as more people in work have to rely, as has been said this afternoon, on the social security system to make ends meet.
My hon. Friend the Member for Westminster North (Ms Buck) mentioned the Campaign to End Child Poverty and the work done by the centre for research and social policy at Loughborough university. The figures out today for my area are soul destroying. The figure for the number of children living in poverty is now 23.2%. Those figures include more than 3,000 children affected by in-work poverty, whereas 1,200 are affected by out-of-work poverty. A massive shift is going on and we are seeing more and more families affected—families with children. We should all be saying that we are going to do something about that together to get children out of poverty. The situation is pretty desperate in some areas, and I recognise that my hon. Friend cited even higher figures from her London constituency.
The hon. Member for South Derbyshire mentioned colleges. I have to tell her that the college system and the further and higher education systems are different north of the border. I have a new college in my constituency that is only two or three years old, but the budget has been cut by the Scottish Government. Over the years, about 30% of the young students going into that college have had no formal qualifications whatsoever. The formal education system has failed them, but the college offers them a second chance that many of them have seized. However, the budget for our further education colleges is being cut—that is not the fault of Government Members, because it is a devolved issue—and so courses are being cut. That means that young people who need that second chance are being deprived of the opportunity.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Does the hon. Gentleman accept that the number of apprenticeships in Scotland is at a record level and that targeting funding at policies that will get young people into work, rather than at an endless cycle of college courses that do not lead to work, is a better use of scarce public money at a time when the block grant has been cut and when public finances are under immense pressure?
Mr Brown
I recognise that finances are under pressure, but I would say the same to the hon. Lady as I said to the hon. Member for South Derbyshire. The situation is not the same across the entire country. Youth unemployment in my area sits at some 5.3% whereas the Scottish average is 4.8% and the UK average is 3.8%, as there are so few job opportunities. When young academically inclined people in my area manage to get off to college or university, 90% never come back because the quality jobs that the hon. Member for South Derbyshire has spoken about are simply not there. It is a rural economy—tourism is the other major employer—but the growing job market is in the care sector as people come to the area to retire. We have a vastly different economy to other places, although similar economies exist.
I want to move on to the issue of the national minimum wage. I said in an intervention on my hon. Friend the Member for Streatham (Mr Umunna), the shadow Secretary of State, that I served on the Committee for the National Minimum Wage Bill. As I said at the time, the only other person who served on the Committee who was in the Chamber at the time at which I made the intervention was Mr Speaker. There were some long nights. Indeed, I remember two particularly lengthy sittings: one that started at 4.30 on a Tuesday afternoon and ended at 1 o’clock the following afternoon, and another that started at 4.30 on a Thursday afternoon and finished at 6.30 the following morning. But it was really worth it. I remember campaigning in Lockerbie when the figure of £3.60 an hour was announced, and one guy I met on the doorstep asked, “Is this figure of £3.60 right?” I said yes and asked whether it would affect him. “Of course it will,” he said. He was working the best part of 50 hours a week in the forests—heavy, dirty and dangerous work—but taking home only about £112 a week.
Andy McDonald (Middlesbrough) (Lab)
I just want to congratulate my hon. Friend on the work he did to introduce the national minimum wage, because I remember that there were adverts in my local press for security guards, and they read, “£1 an hour. Bring your own dog.”
Mr Brown
I thank my hon. Friend. Yes, we have moved on, but the fear among Opposition Members is that we are starting to slip back. In those days it was women, in particular, who were having to hold down two or three jobs in order to make ends meet. I see the same thing returning but, more worryingly, it is not only women, but men who are having to hold down two or three jobs.
Mr Brown
Yes, this is about the whole employment method. We cannot deal with this just with a stand-alone national minimum wage. When we came to office we had the windfall levy on the privatised utilities, which allowed us to introduce the new deal programme for young unemployed people, the long-term unemployed, the disabled and lone parents, and then we introduced the tax credits system. It was about pulling together two or three strands to make things work, and that led to a step change in people’s standards of living.
Ian Swales (Redcar) (LD)
I certainly support the work that the hon. Gentleman’s Government did on the national minimum wage, but does he not regret the fact that when they left office people earning the minimum wage were paying £1,000 a year in tax? By April they will have seen that figure cut by £800 through the work of the Liberal Democrats. [Interruption.]
Mr Brown
I refer to the coalition Government in that regard—credit where credit is due—and I will come to that point later.
With regard to the reduced levels of unemployment, we need to look at the figures from the Office for National Statistics for the weekly average number of hours worked across the country and compare them with the number of people working over the past 12 to 18 months. Although more people are working, we have not seen an increase in the number of hours being worked on a pro-rata basis. What we are seeing—this relates to the point about zero-hours contracts—is that more people are in part-time work or working shorter hours. Some people are desperate to grab four or six hours in order to supplement a job they are doing elsewhere. The unemployment figures might be falling, but the overall number of hours being worked across the country is not increasing at the level we would have expected for the number of people now in employment.
People need job security, but we are seeing a scale of job insecurity in this country that we have not seen for many years, so I challenge Government Members to say that we have not gone backwards in some respects. I hate to say it, but there are some unscrupulous employers who are prepared to exploit zero-hours contracts and short-term working for people who are prepared to do a hard day’s work if given the chance. I also want to mention migrant workers, because I was talking about that with three or four guys I met five or six weeks ago. They were very angry, and not about the migrant workers they were working with, but about the fact that their employer was exploiting the situation in order to keep wages low, with local indigenous workers paying the price.
I want to mention the personal tax allowance again, because it is a big issue. I applaud the aim of taking people out of tax. I have challenged Treasury Ministers on this, as has my hon. Friend the Member for Edinburgh East (Sheila Gilmore), because many people are not working enough hours to come anywhere close to paying tax. The fact is that it is the rich, or those in well-paid jobs, who reap the benefits of the personal allowance changes. I also recognise that there is always a narrow band of people who benefit, and if we shift or change tax bands and tax rates, some people will be more heavily penalised than others.
Mr Donohoe
This is an increasingly important subject. We must also consider the fact that north of the border, as my hon. Friend will know, many local authorities are talking about not only a minimum wage, but a living wage, because of the problems associated with the minimum wage. Does he agree?
Mr Brown
Yes, I think that it is about a step change. We need to recognise that we should do whatever we can to increase the quality of life and lessen the impact of the cost of living on households. My local authority will be looking long and hard at that issue and imploring the businesses it offers contracts to—we know that we cannot demand it—to pay a living wage.
In 1997, we were told that we would lose millions of pounds as a result of a national minimum wage, but my party had clearly done our homework while in opposition, because the figures showed that when we give £1 million to the lowest-paid people in any community, they will go out and spend it, which creates 35 to 40 jobs in the community. That is what we saw. Some people in my area saw businesses shedding jobs, because the type of work they were doing was coming to the end of its life, and they could not understand why unemployment levels were still low. Unemployment was falling simply because we were putting money into the local economy.
I will return to a point that was made when we were discussing the benefits increase earlier this year. The figures clearly show that freezing benefits for the lowest-paid people over a three-year period took £6 billion out of the local economy. Giving some of the poorest paid extra money stimulates the local economy.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman is making a good speech. I agree with his point about the economic multiplier effect of a minimum wage, and indeed of increasing benefits. The economist Paul Krugman makes the economic argument that increasing benefits adds to the economy by creating demand among the people who are likely to spend.
Mr Brown
Absolutely. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) said earlier, low-paid workers do not salt the money away but go out and spend it, and that is what we need. I honestly believe that that is where the coalition Government, to a certain extent, have failed. They have taken money away from some of the poorest communities and households, and there is no doubt that if we had left money in their hands, it would have been spent.
Mr Brown
Mr Deputy Speaker is looking at me and I want to draw to a conclusion.
I want to mention “make work pay” contracts. In November last year, the Leader of the Opposition announced
“that a future Labour government would encourage employers to pay the living wage through new ‘Make Work Pay’ contracts.
Firms which sign up to become Living Wage employers in the first year of the next Parliament will benefit from a 12-month tax rebate of up to £1,000—and an average of £445—for every low paid worker who gets a pay rise.
This measure will be entirely funded from the increased tax and National Insurance revenue received by the Treasury when employees receive higher wages. Additional savings in lower tax credits and benefit payments, as well as increased tax revenues in future years, will cut social security bills and help pay down the deficit”—
as we all want to do. That, without a shadow of a doubt, is a commitment that an incoming Government would make the desperate moves that have to be made to reduce the deficit.
Mr Brown
I am going to finish now.
I am proud that when I came into this House I was one of a team of people who took forward the National Minimum Wage Bill. I have always said that even if I do nothing else in life, I can say that I played that part in what that Labour Government did. With no doubt whatsoever, I will be supporting our motion. I would like to think that one or two Government Members who have spoken will support us too.