Living Wage

Debate between Siobhain McDonagh and Carolyn Harris

Thursday 3rd November 2016 Commons Chamber

[Siobhain McDonagh (Mitcham and Morden) (Lab)]

I beg to move,

That this House recognises Living Wage Week which began on 31 October; believes that the use of the introduction of the national living wage to drive down conditions and take-home pay is against the spirit of the law; calls on the Government to close down those loopholes which make this possible; and further believes that any move to reduce the value of the national living wage to a level below the promised £9 per hour in 2020 is unacceptable.

I thank the Backbench Business Committee for granting time for this debate. Living Wage Week is about celebrating the real living wage—£9.75 in London and £8.45 outside London—which provides an income that meets a minimum cost of living.

I called the debate to highlight the inadequacies of the so-called national living wage, the new statutory minimum rate of pay. Initially, the main criticism of the wage was its name, because, at £7.20 an hour, it is far lower than the actual living wage. However, since April a growing number of high-profile companies have used its introduction to cut total pay for long-standing employees, despite the former Chancellor’s promise that

“Britain is getting a pay rise.”—[Official Report, 8 July 2015; Vol. 598, c. 337.]

Back in February, I was approached by a constituent who worked at B&Q and had been told that his contract would change. His contractual entitlement to double-time pay and seasonable bonuses meant that he would be losing £2,600 a year, after the increase in his basic pay. He is a man with two children, living in London and earning around £15,500 a year. B&Q is one of the main employers that have offset the basic pay increase with a total pay cut for employees on old contracts. It has cut the majority of its discretionary payments to staff on older contracts, stripping their pay and removing almost all their employee benefits. Although B&Q’s chief executive has promised me that all affected employees will continue to receive transitional payments to top up their pay, I know that thousands still believe that they will be significantly worse off.

It is a similarly sad story at Marks & Spencer. As one of Britain’s premier retailers, Marks & Spencer employs tens of thousands of workers across the country. It forced a consultation a few months ago to cut the terms and conditions for its employees on pre-2002 contracts. Like those at B&Q, these employees have been penalised for their long and loyal service. Their double time has been cut, as has their unsocial hours entitlement. In fact, M&S went even further than B&Q and scrapped its employees’ pension scheme at the same time.

[Carolyn Harris (Swansea East) (Lab)]

As my hon. Friend is aware, my mother was a long-time member of staff in Marks & Spencer—45 years. Such was the affection for the company that it was known by the staff, and indeed in our house, as “our shop.” Does my hon. Friend agree that this betrayal of loyalty of long-time members of staff is nothing short of, in the words of one staff member, a “kick in the teeth”?

[Siobhain McDonagh]

Absolutely, and I thank my hon. Friend for her involvement in the campaign. She will know that 11,000 employees were adversely impacted by the changes. Of those, 2,700 have lost at least £1,000 a year, 700 have lost at least £2,000 a year, and a significant proportion will lose up to £6,000 a year.

The human cost of those actions is huge. Literally hundreds of employees from across the country have contacted me in desperation. Let us consider just two examples. There is a gentleman—we will call him Connor to keep his identity secret—who has worked for M&S for more than 20 years, mainly on night shifts. He told me:

“I have enjoyed those years... getting satisfaction from delivering our goals and feeling like I was contributing greatly to achieving our targets. But as you are aware, M&S are cutting my night premium, Sunday premium and bank holiday, totalling several thousand pounds worth of shortfall in my wages per annum. On top of that, they suggest I also start to contribute into a pension. How am I going to be able to do that? I am sick but have a wonderful, large family to support, as well as a mortgage. I stand to lose everything... I have nothing to fall back on. I have given my best years to M&S... I feel cheated and betrayed.”

Let us consider Ms Smith from Yorkshire, a hard-working, low-paid mum. As a result of B&Q’s contractual changes, she is going to receive a staggering 30% pay cut and will lose £2,000 a year from 2018. She told me:

“How exactly am I going to make up this wage deficit? I have a young son to support, and next year is looking very bleak for us…I am worried about how I will support my family...I am heartbroken that the company I have worked so hard for, done 16-hour shifts for, come in on days off for, and valued greatly, has treated me like this.”

Two companies, one sad pattern of hard work and loyalty being punished. Thousands of employees at these two companies will never earn again what they earned in April. Indeed, the general public have been shocked by these actions, with a quarter of a million people signing Change.org petitions against these practices.

What is so shocking is the ease and speed with which these companies have legally cut staff pay. Both companies launched 90-day consultations, which is the statutory minimum. Neither recognises a trade union. Both targeted those workers on older contracts, and both conducted consultations that ended with these pay cuts being pushed through, regardless of the employees’ heartache and the reputational damage the companies have faced.

The consultations are a foregone conclusion. In fact, M&S’s head of retail told me that the company had been planning these changes for 18 months. M&S’s board will meet tomorrow to finalise these contractual changes, and it will be issuing notices a few weeks before Christmas to staff members who refuse to sign their new contracts. I ask the Minister to address that point in summing up.