Employment Opportunities Bill
Debate between Tony Lloyd and Philip Davies
Tony Lloyd (Manchester Central) (Lab)
The hon. Member for Christchurch (Mr Chope) has an almost unique parliamentary role. I am never quite sure whether he is like an interesting piece of baroque architecture—delightful to look at, although I am not absolutely certain what the real purpose is—or whether he is at the dangerous end of the Conservative party, dragging it back to where it feels most comfortable. I feel sometimes that he is the latter. I know that he will be disappointed by the Minister’s indication of opposition to the Bill, but I hope that the Minister will indeed oppose it, because although I would support parts of it, this Bill is essentially a retrograde, unfortunate and, in the end, quite dangerous little piece of social legislation.
Nevertheless, there is a real debate to be had on these issues. It is a debate that ought to take place from time to time, if only to remind people of two things: first, why we need the national minimum wage; and secondly, just how unsympathetic and unreconstructed parts of the parties of Government are on such issues. The hon. Member for Christchurch and one or two of his hon. Friends who are going to speak later represent a significant body of opinion, not in the nation generally, but in the Conservative party. That ought regularly to be put on record to remind my own constituents and, for example, those of the hon. Member for Shipley (Philip Davies) just what a rotten, nasty party the Conservative party can be.
Philip Davies
I would be grateful if the hon. Gentleman could get away from the insults and on to the issues. Given that the national minimum wage has clearly been such a triumph, will he tell us what the adult and youth unemployment figures in this country were when the minimum wage was introduced, and what they are now?
Tony Lloyd
Those were not insults; they were matters of fact. We can debate facts, but we should not trade insults; that would not be reasonable. Mr Deputy Speaker, I am sure that you would deplore my insulting hon. Members, and the fact that you did not call me to order suggests that the basic fact that I have just described has now been established and placed on the public record.
Let us talk about the real impact of the minimum wage—
Tony Lloyd
Will the hon. Gentleman please be patient?
I shall begin by examining the Bill sequentially. I want to talk first about the part of it that I agree with. The hon. Member for Christchurch began his speech by talking about the impact of clause 1, and I had a lot of sympathy with what he said. We really ought to have a serious debate about this in the House, and I have urged the previous Government and this one to take the issue seriously. It makes no sense in a country such as ours to force into unemployment those asylum seekers who are willing to work and to make a contribution to their families, the wider community and the taxpayer. Sometimes, they are forced into worse than unemployment. As we know, the fact that we push asylum seekers into destitution is one of the drivers of prostitution and some types of crime. The hon. Member for Wellingborough (Mr Bone) made a valid point about women who are being trafficked into our society, and we ought to take that issue seriously.
Governments classically respond to the argument in favour of allowing asylum seekers to work by pointing out the danger of creating a magnet that will attract further waves of asylum seekers. The hon. Member for Christchurch was absolutely right to say, in response to the hon. Member for Shipley, that the problem with our asylum system is not that it operates as a magnet, but that we deal so slowly and incompetently with the processing of asylum cases. This was the case all through the years of the Labour Government, and, sadly, it is still the case now. We need rapid resolution of those cases.
Let us take the example of a woman who is legitimately claiming asylum because she has been forcibly trafficked from the far parts of eastern Europe, or wherever, and forced into prostitution in our society. She has no capacity to return home and genuinely fears for her life and for her family back home. We need to be able to say to that woman, “Yes, you are a genuine asylum seeker and you can play a constructive role in our society.” We also need to say to the illegitimate, bogus asylum seeker, “Please return quickly to where you came from.”
There is real merit in having this debate. Even though I disagree fundamentally with everything else in the Bill, I profoundly agree with the hon. Member for Christchurch that we need to have a debate on this subject. We need to debate not only what a civilised society ought to be, but what is practical and proper for our society. In fact, I would go further and suggest that there should be an expectation on legitimate asylum seekers to begin a process of finding work, because that shows commitment to the values and the ethos of our society. That would create a good two-way set of responsibilities, which relates to the proposal in clause 1. Alas, the rest of the Bill does not have the same merit as that first part.
It is always delightful to listen to the hon. Member for Christchurch. He always offers us an entertaining race around the now rather worn and old economics textbooks from the 1920s, the 1870s and the 1850s. Those books are now a little thumbed at the corners, but they are still interesting to read because they shed some light, not so much on the working of a real economy in the 19th century, and still less in the 21st, as on the thinking of those who suggest that the Bill is about freedom. It is not about freedom; it is about taking away social protection for vulnerable people in our society, and that is what we need to talk about.
That is the nub of the intellectual debate about the merits of free-market economics versus what the hon. Gentleman would call the crushing hand of state socialism. Were the minimum wage an example of the crushing hand of state socialism, some Labour Members might be a little happier with the direction of travel in our society’s support for the vulnerable and its recognition of the relationship between those in the most powerful economic positions and those at the bottom of that pile.
Tony Lloyd
The hon. Gentleman rightly pushes me to refer to some of the realities. Let us go back to the time before the national minimum wage. Let us go back to a time when young hairdressers in cities like Manchester were being paid under £1 an hour. Why did they take that work? Because they were young people who felt that they had to buy into the workplace. They had to accept way below any acceptable level of remuneration and way below an income that anyone could seriously live on in the hope that it would give them the experience to carry on in the trade. That was wrong then and it would be wrong if we were to bring it back again. That is the reality of what the Bill would do. It would take the clock back to a time when bad employers were prepared to compete unscrupulously against the better employers at the expense of their employees.
I am totally on board with the hon. Member for Northampton South in advocating the point that good employers work well with their employees. In many cases, good employers train, pay reasonably and provide acceptable working conditions. I have worked for good employers: but not all employers are good; not all employers are acceptable; not all employers operate proper health and safety standards; not all employers offer an acceptable wage for people to live on. That is why we have a floor through which people should not fall.
Philip Davies
I assume from the hon. Gentleman’s earlier comments that he accepts that unemployment is higher now than it was when the minimum wage was introduced, although he could not bring himself to say so. Does he also accept what was said by my hon. Friend the Member for Christchurch (Mr Chope), namely that if the level of the minimum wage is so important, the hon. Gentleman will support the Government in ensuring that people who earn it need not pay any income tax or national insurance?
Tony Lloyd
As I do not support the Bill in the first place, I am not sure how I could be expected to support certain parts of it. However, the ambition to remove taxation from the lowest paid is an excellent one. If the hon. Member for Shipley will support me in trying to ensure that the higher paid make a bigger contribution, it will be easy for us to relieve the low paid of their burden.
The hon. Gentleman’s intervention has led me to another point that I was going to make. If the hon. Member for Christchurch were willing to drop most of his Bill while incorporating my proposal for a high pay commission to ensure that the top rate of pay is reduced, I would feel able to support the first part of it, and we might then be in business. However, I suspect that my views on high pay are as hard for him to accept as his views on low pay are for me to accept.
Let me say something about the economic arguments that the hon. Member for Shipley has invited me to consider. When the Better Regulation Executive investigated the impact of the national minimum wage, it found no link with levels of employment and unemployment. I fear that unemployment will begin to increase, but an interesting aspect of the way in which the labour market has operated recently is the fact that those in work have remained in work much more consistently than was the case during earlier recessions. That is almost certainly partly due to levels of flexible working, but it also belies the proposition that the minimum wage has served as a disincentive to employment, because had it done so the existing work force would have been undercut by would-be entrants. That throws a cloud of doubt over the argument about the operation of free markets at the bottom end of the labour market.
A more important finding by the Better Regulation Executive was that paying a national minimum wage conferred an overall benefit on our economy. The minimum wage has important regional impacts, which is why the idea of a regional differential is ridiculous. The clue lies in the phrase “the United Kingdom’s national minimum wage”. We are indeed a United Kingdom, and the national minimum wage is national. There are good and profound reasons for that. The national minimum wage prevents the dislocation, already too prevalent in our economy, between the overheated south-east and other parts of the country.
I cannot go as far as the hon. Member for Christchurch in describing those other parts of the country as the “more remote” regions. Those of us who live in such regions do not feel that they are particularly remote. However, we “remoters” feel strongly that the people whom we represent and the economies in which we work should enjoy the same level of protection and the same capacity for operation of the minimum wage, partly—indeed, if for no other reason—because it is important in creating regional demand. That is one reason why groups such as the Better Regulation Executive have found that the national minimum wage is, overall, in the national economic interest.
Philip Davies
The hon. Gentleman should know that my hon. Friend is never swayed by my opinion on anything, so whatever I say will not influence his decision. I do not know why the hon. Gentleman thinks everybody else is as lily-livered as he clearly is on controversial matters. All I can say to him and to my hon. Friend is if my hon. Friend does decide to press the Bill to a Division, I will vote for it. I do not think I can make my position any clearer than that.
When the national minimum wage was introduced it was not supported by my party or the Liberal Democrats, as we had a principled objection to it. Like my hon. Friend the Member for Christchurch, I am interested to hear the Minister’s view on this. Mine is that that principled objection turned into expedient support for the minimum wage, but I am sure that the arguments that were relevant then remain relevant today.
We were told that the minimum wage would not make any difference to employment levels. Given that over the following eight years there were higher levels of employment and lower levels of unemployment, it was taken as read that the national minimum wage must have no negative impact on employment. Given that we all want people to be properly rewarded for the jobs they do and that no politician wants to argue for lower pay for people, we have a political consensus on this matter. However, during those eight years there were high levels of economic growth, so it was inevitable that employment levels would rise in that period, with or without a national minimum wage. This clearly has not crossed the minds of Labour Members, but even more employment may well have been created if there had not been a national minimum wage. I used to work in the supermarket industry and retailers in that sector made it clear that about 100,000 extra jobs would probably have been created without a national minimum wage during that time. The fact that the employment level rose during that time does not mean that it was caused because of the minimum wage; it probably occurred despite the impact of the minimum wage.
The real test of a national minimum wage was always going to come when we came to an economic slow-down. It is very easy for employers to maintain those employment rates in good times, but the test was always going to come during a downturn. There are legitimate concerns now about the effect of the national minimum wage, and it would be irresponsible for us to ignore them, even if it would be expedient to do so.
I must make the point that I was never supportive of the principle of the national minimum wage. I think that the payment of an employee by an employer should be a private matter and that if someone is happy to do a job for a certain wage, it should not be any business of the Government to prevent them from doing that job. However, I have to accept that that philosophical argument was lost some time ago, so my concerns are now based on the minimum wage’s practical and unforeseen impact on some of the most vulnerable people. The people who are most disadvantaged by the national minimum wage are not the unscrupulous employers. As my hon. Friend the Member for Christchurch so eloquently said, such employers are still alive and kicking in the black economy; they are still employing people and paying them below the minimum wage. The people who are most disadvantaged by the national minimum wage are the most vulnerable members of society. My concern is that the minimum wage prevents those people from being given the opportunity to get on the first rung of the employment ladder.
The great myth when the minimum wage was introduced was that people who are paid low wages are paid those low wages for the rest of their career. Many people have been paid a low wage to begin with and that has given them some work experience which has allowed them to move up the employment ladder to get higher quality jobs and better wages. My concern is that the first rung on the jobs ladder is far too high for many of the most vulnerable people ever to reach and they are thus unable to move further up. I shall set out an example that I am able to give, having spoken to people in this field.
Let us consider an employer who needs to take someone on and can choose between a former prisoner and someone who has never been to prison. In the real world, who is the employer going to take on, given that they would have to pay both these people the same wage? I suggest that 99 times out of 100 the person who has not been to prison will get the job. As the employer would have to pay both these people the same wage, why would they give the person who has been to prison a chance? The only way the former prisoner would be given a chance by the employer is if the employer was able to say, “I’ll give you a smaller amount for a certain period of time and we’ll see how it goes. If you prove yourself, I’ll move you up.” The employer is not being given that opportunity as that flexibility is not available, and that is preventing certain people from being able to access employment. Consequently, many of these people—even the ones who want to get a job—cannot find employment and so they commit crime again and add to the problems in society.
I went to visit a charity called Mind in Bradford a few years ago. One of the great scandals that the Labour party would like to sweep under the carpet is that in this country only about 16%—I stand to be corrected on the figure—of people with learning difficulties and learning disabilities have a job. The others are unemployed, but why is that? I spoke to people at Mind who were using the service offered by that charity, and they were completely up front with me about things. They described what would happen when someone with mental health problems went for a job and other people without these problems had also applied. They asked me, “Who would you take on?” They accepted that it was inevitable that the employer would take on the person who had no mental health problems, as all would have to be paid the same rate. Given that some of those people with a learning disability cannot, by definition, be as productive in their work as someone who does not have a disability of that nature, and given that the employer would have to pay the two people the same, it was inevitable that the employer would take on the person who was going to be more productive and less of a risk. The situation was doing the people with learning difficulties a huge disservice.
As I said at the start of my remarks, the national minimum wage has been of great benefit to lots of low-paid people. However, if the Labour party is not even prepared to accept that the minimum wage is making it harder for some of those vulnerable people to get on the first rung of the jobs ladder, we will never get anywhere in trying to help these people into employment.
Tony Lloyd
The hon. Gentleman’s arguments are always seductive—they are wrong, but they are very seductive. How low would he be prepared to drop those wages? If someone with learning difficulties was only a quarter as productive as the competing would-be employee, would he be prepared to drop their pay rate to a quarter of the minimum wage? Should it drop to less than a quarter? What is his floor?
Philip Davies
I made my position clear in my earlier remarks but, given how uninteresting I am, I forgive the hon. Gentleman for perhaps nodding off during that section. I did make it clear at the outset that I did not agree with the national minimum wage in principle. I said I thought that what somebody was prepared to work for and what somebody was prepared to pay was a private matter between two people and it should not be interfered with by the Government. The big difference between him and me is that I would much prefer the person with the learning disability to be given the opportunity to get a job, do something worth while and contribute in a way that they want to, whereas he would prefer them to be sat at home, unable to get a job in the first place. He may think that he is taking the moral high ground by believing that it is far better for these people to be sat at home unemployed without any opportunity, but I do not
Tony Lloyd
The hon. Gentleman avoids the question. If there is no floor, people will be paid wages that would be an outrage in our society. If he wants to protect people, he can do so in other ways—he can offer supported employment and he can offer subsidised employment. As you know, Mr Deputy Speaker, our society has on many occasions offered the concept of the “sheltered workshop”—that may not be a good modern term—and we ought to think about that.
Philip Davies
I will tell the hon. Gentleman what is an outrage. It is an outage that in 1997, 47,000 people had been on incapacity benefit for five years or more, but by the time his party had ruined the country that figure had risen to 1.5 million. That is an outrage that he should be reflecting upon. He should think about the fact that so many people were either priced out of the jobs market or were just out of that market as a result of his Government’s policies. That happened either because of the national minimum wage or because the benefits system penalised people for going out to work. That is the real outrage, rather than what he is pointing out.
Philip Davies
My hon. Friend raises an interesting point. As I have said, I have lost the philosophical argument and so I think some of the practical arguments should be explored. He pre-empts my speech—I am not sure whether he has been looking over my shoulder—because I was about to make the point that, although a national minimum wage might well be sustainable during periods of economic growth, the Government ought to consider introducing some flexibility to the system during an economic downturn. For example, during a recession they could consider suspending the minimum wage or reducing it. If we are to try to help people into employment during difficult economic times, it is obvious to everybody—bar Labour Members, it seems—that it will be easier without a national minimum wage.
Let me return to the point I made in an intervention. The Opposition have based their whole policy on a number of things on the argument that if we increase the cost of something as much as possible, we will reduce its consumption. For example, the argument goes that if we increase the tax on tobacco and alcohol, we will have fewer people smoking and drinking alcohol to excess. The same principle must apply to employment: if we increase the costs of employment, we will see a reduction in it. That follows the same logic. If the Opposition have decided that if we tax something more, we will not see less of it, I would welcome their conversion, but they cannot have it both ways. They cannot say one thing about tobacco and alcohol and think that the principles are somehow completely different as regards employment.
I want to return to the point made by my hon. Friend the Member for Christchurch about the tax and benefits system, because he was on to something. He powerfully made the point that many people who are self-employed in this country do not earn anything like the minimum wage, particularly when their business faces financial problems or uncertainty. I never hear Labour Members speaking up for those people and arguing that they are being underpaid. It is usually those people who are criticised by Labour Members for trying to reduce the wages of their staff, glossing over the fact that the person who runs and owns the business may well not be making any money at all at that time. It comes back to a point made by my hon. Friend the Member for Northampton South (Mr Binley) about the attitude of Labour Members. I will be charitable and put it down to a simple lack of understanding of what it is like to run a business. I am sure that they are not really nasty people; they are just misguided. They do not understand, because so few of them have ever employed anyone, run a business or faced the pressures of that. They simply do not understand what it is like.
Philip Davies
I have given way enough to the hon. Gentleman. I want to crack on because other Members want to speak. I put Labour Members’ attitude down to their being misguided. I know that the hon. Gentleman was a university lecturer. I am not sure that I class that in the wealth-creating sector. Perhaps we will debate that in the Tea Room afterwards.
Labour Members have the attitude that basically the only way for businesses to make a profit is to screw the customers and the employees into the ground as much as possible; that that is the secret for businesses in making as much money as possible; and that, if it were not for the Labour party intervening at every possible opportunity, across the country the customer and the employee would be squeezed and fat cat businesses would make massive profits. I genuinely think that that is their view of the world. That may be the view in the Victorian age that the hon. Gentleman lives in, but in the modern world that is not how business works. That is not how to make money as a business.
In the real world today, the hallmark of successful companies—the thing that they have in common—is that they look after their customers and their employees. The thing that failed businesses have in common is that they do not look after their customers and their employees. That tends to be what differentiates successful and failed businesses. I am sorry that, still in this day and age, the Labour party has not woken up to the fact that, to be successful in business, people have to look after their staff and customers and that, if they do not, they will go out of business.
Tony Lloyd
I think that the hon. Gentleman is proposing that we should not have taxation below the levels of about £11,000 or £12,000 a year. I think I would go along with that, but there would be a consequence: we would have to find the tax elsewhere and it would probably mean looking at those on high incomes, not those on middle incomes, to fill that gap. I wonder whether he would join me in saying that there should be a bit more tax on the high earners and a lot less on the low earners. We might have a good deal.
Philip Davies
I congratulate the hon. Gentleman on his ingenuity in trying to debate his own Bill before it gets the chance to get off the ground. I will not incur your wrath, Mr Deputy Speaker, by debating that other Bill.