Living Wage (Farmers)

Debate between Tom Tugendhat and Gordon Henderson

Wednesday 28th October 2015 Westminster Hall

[Gordon Henderson]

As I was saying before we were so rudely interrupted, while horticultural businesses employ large numbers of workers, they are in the main low-turnover, small to medium-sized outfits, which leaves them exposed to the impact of the living wage. As my hon. Friend the Member for Faversham and Mid Kent (Helen Whately) pointed out, profitability levels in the industry are low and having to pay the living wage will push many producers over the edge and out of business. Unless the Government step in and help farmers, we are likely to see the loss of British-grown produce and an increase in imported food, which would have serious long-term consequences for not only the British economy but our country’s food security.

Farmers also face a couple of other problems. Accommodation provided by an employer can currently be taken into account when calculating the national minimum wage. It is not clear, however, whether that arrangement will continue under the living wage. If it does not, many employers who provide accommodation will face rising wage bills without the benefit of a reduction in the amount that they pay to subsidise that accommodation. It might help if the Minister confirmed whether and how the living wage will differ from the national minimum wage in that respect.

Another problem is that the introduction of the living wage comes at a time when farmers, like other businesses, are facing increased costs from other employment legislation, including pension auto-enrolment and an increase from 1% to 2% in the employer contributions that will come into effect in 2017. Farmers believe that the rise in wages under the living wage will lead to a growth in contributions to auto-enrolment pensions. Assessing a complex, changing workforce and calculating contributions for short periods for seasonal workers who stay with a business for just over the current 12-week postponement period will add to farmers’ costs.

To help British farmers in general, and my local farmers in particular, I want the Government to consider several possible mitigating measures. First, supermarkets could be encouraged to work with farmers to help ensure that they receive a fair price for their produce. Ministers could do that by convening a meeting between the management of our major supermarkets and farmers’ representatives to put together a long-term plan for the industry. Secondly, the exemption from the living wage for workers under-25 could be widened to include seasonal workers. Thirdly, employment allowance could be changed so it is based on individual workers and not a business. Fourthly, we could introduce staged increases for the level of accommodation offset that counts towards an employer’s payment of the national minimum wage and, presumably, the living wage. Fifthly, the cumulative and disproportionate administration burden associated with auto-enrolment duties could be reduced by extending the current three-month postponement period to six months to help capture seasonal workers in the postponement period.

Sixthly, the starting point for national insurance could be aligned with the starting point for income tax. In 2011-12, the class 1 NI threshold was set at almost 95% of the income tax starting threshold. Today, it is just 76%. Finally, the review cycles for the national minimum wage and the living wage could be aligned to reduce complexity. As I asked earlier, will the Minister perhaps confirm whether and how the living wage will differ from the national minimum wage? In addition, will he provide clarity on how the two wage rates will co-exist and whether the various rates can be simplified?

Agriculture and horticulture are important to Britain. They are particularly important to Kent, which, in addition to being the garden of England, just happens to be God’s own county.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

My hon. Friend speaks for many of us who represent some of the fantastic areas of the kingdom of Kent. I am delighted to hear his comments, which forcefully express the importance of agriculture to our region. In my constituency is Hugh Lowe Farms, which grows the strawberries for Wimbledon, and the community there has done a great deal to develop not only the farm but the economy around it. Marion, who runs the farm, raised the possibility of considering the Australian piece rate, which is a concept that would see the average employee wage be 25% above the minimum. If my hon. Friend is not going to come on to that point, will the Minister consider it anyway?

[Gordon Henderson]

I welcome that intervention because I was not going to mention the concept, so it is just as well that my hon. Friend did.

In conclusion, I want to see a thriving farming industry in Kent that provides food security for future generations. To achieve that, however, we need the Government to back British produce.