National Living Wage

Simon Danczuk Excerpts

Monday 18th April 2016 Commons Chamber

[Simon Danczuk (Rochdale) (Ind)]

It is a pleasure to follow the hon. Member for Bradford South (Judith Cummins). I thank the hon. Member for Mitcham and Morden (Siobhain McDonagh) for helping to secure this vital debate, and I hope that she gets well very soon.

Britain certainly deserves a pay rise. It has been due one since 2010. If we listened to the rhetoric from the Government, we might be forgiven for believing that the new national living wage would end all the problems of those who are struggling to make ends meet. We have heard the radio adverts in which countless actors with differing regional tones deliver sonnets about what the new national living wage entails for them. In reality, this is not a real living wage—far from it. Although many will receive a step up, some in our society will face an uphill challenge from 1 April. As chair of the all-party group on small shops, I have spent the last couple of months talking to business owners, who fear that the increase in their wage bill will be the final nail in the coffin, because they will simply not be able to meet those costs. I will come on to some of the points raised by the hon. Member for Shipley (Philip Davies).

There were some promising features in the Budget on business rates, aimed at small businesses. From April 2017, small businesses will either be taken out of the rating system completely or have a smaller burden to pay. However, 2017 is the key point.

[Mr Jim Cunningham (Coventry South) (Lab)]

The hon. Gentleman mentioned the Government’s new measures on business rates. I do not know whether he is aware of this, but some local authorities may lose out because of that. In other words, it may cost them more.

[Simon Danczuk]

The hon. Gentleman is absolutely right. That is a real concern for local authorities, and there is disparity across the country. That is a good point.

The other point about business rates is that there is an issue with the fact that the relief will not be introduced until 2017. Small businesses will struggle for a whole year before they receive the relief that is in the Budget. As I have already mentioned in this Chamber, the retail business rate relief grant has been stopped this year for small business owners as well. Small businesses employ 35% of the nation’s workforce, but they employ more than half of those who are on the minimum wage. From 1 April, small businesses will be dealt a double whammy of increased wage bills and a reduction in support from business rate grants. They will be under real financial pressure for a whole year.

[Mr Nuttall]

Will the hon. Gentleman give way?

[Simon Danczuk]

I am going to make a little bit of progress. Larger retailers will be able to offset their costs by reducing the benefits that they pay out, such as Sunday pay, as we have seen from the examples that the hon. Member for Mitcham and Morden has raised in the media recently. Smaller businesses will have to put up prices, slow recruitment or perhaps downscale their operations. Some will have to shut down because they are unable to shoulder the costs until 2017 after having struggled for years. The truth is that the new national living wage should have coincided with the changes to the business rate system.

Next I want to mention the pressures facing the social care sector, which has faced a wave of pressure from the Government over the last few years. We have heard much recently about the social care precept, which enables councils to raise council tax by 2% to pay for care costs. Senior members of Rochdale Borough Council have told me that with the introduction of the national living wage, the precept will provide very little extra funding, if any. Poorer areas such as Rochdale—this is similar to the point made about business rates—will raise only just over £1 million from the precept, because of the council tax bands of the properties in the borough. Even the Conservative-led Local Government Association has warned that the national living wage will put adult care services at breaking point.

The new change is even more worrying in view of the fact that many in the care sector are not even paid the minimum wage. Work by Unison has shown that pay structures, such as not paying travelling time, mean that those who care for our elderly loved ones are not being paid for the vital work that they do. If we want to give careworkers the wage that they deserve, it must be adequately funded. They are some of the most hard-working people, and they deserve to earn at least the minimum wage. Unless the appropriate funding is in place, that simply will not happen.

[Mr Jim Cunningham]

I was not referring to the living wage, as such. I was talking about the cost to local authorities of the change in the business rates. Some local authorities will lose out on this.

[Simon Danczuk]

I understand that point, and I agree with it completely. Britain deserves a pay rise, not some public relations stunt from a Chancellor who is obsessed with political strategy. An increase in the minimum wage must be done properly, and small businesses must be helped so that they can afford it. Most importantly, it must enable individuals to support themselves. The minimum wage remains a great Labour triumph. By the look of things, we will need a Labour Government once again to give Britain a proper pay increase.