Job Insecurity

Debate between Vince Cable and Brian H. Donohoe

Wednesday 5th February 2014 Commons Chamber

[Vince Cable]

I do not have those figures, but I am sure we could get them. I am sure my colleague the Secretary of State for Work and Pensions will dig them out for him. I am sure that they reflect the pattern I describe that, certainly over the last year, full-time employment is rising relative to part-time employment.

[Mr Donohoe]

Will the Secretary of State give us the figures for those who are on zero-hours contracts?

[Vince Cable]

As the hon. Gentleman knows, we have had official figures from the Office for National Statistics and there has been a very wide range of surveys. The reason I have embarked on a formal consultation, which will be concluded at the end of March and will lead to policy action on the issues to which the shadow spokesman referred, is that we need to have a proper understanding of the scale before legislation is initiated. The simple answer is that nobody knows how many people are on zero-hours contracts—indeed, nobody can precisely define what they are.

National Minimum Wage

Debate between Vince Cable and Brian H. Donohoe

Wednesday 15th January 2014 Commons Chamber

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I beg to move an amendment, to leave out from “House” to the end of the Question and add:

“notes that since 2010, the Government has increased the National Minimum Wage each year, despite the worst recession in living memory, to protect the income of the low paid and increase their wages relative to average earnings, and is cutting taxes for the low paid to boost take home pay by £705 a year, taking 2.7 million out of income tax altogether; welcomes increased employment under this Government, which is at its highest ever level; notes that the Secretary of State for Business, Innovation and Skills has asked the Low Pay Commission for an assessment of how it might achieve a higher National Minimum Wage in the future without damaging employment; further notes that the Government has maintained a central enforcement body that covers all areas of the UK and ensures a consistent approach and high quality service; and further notes that the Government is quadrupling fines for employers in breach of paying the National Minimum Wage and has already made it easier to name and shame employers who flout the rules.”.

I am delighted to have the opportunity to move the Government amendment. Before I get down to the detailed substance of the motion, I want to say that this debate gives us the opportunity to discuss in more detail the regulations that, following my announcement before Christmas, I have laid today to increase penalties for non-compliance with the minimum wage by a factor of four. I also want to reinforce my earlier commitment that we will not merely do that but will proceed to introduce primary legislation to enable fines to be applied per worker, rather than per company, which will make them a great deal more forceful.

[Mr Donohoe]

Will the Secretary of State give way?

[Vince Cable]

I will take an intervention later.

The shadow Secretary of State, the hon. Member for Leeds West (Rachel Reeves), misadvised one of her Back Benchers, the hon. Member for Westminster North (Ms Buck), who quite rightly intervened, in relation to care workers, about there being no payment between jobs for social workers carrying out domiciliary care. That is actually an abuse of the minimum wage legislation. It has now been recognised as an abuse, and colleagues in the Department of Health, as well as my Department and Her Majesty’s Revenue and Customs, are making efforts to ensure that the regulations are properly enforced.

[Mr Donohoe]

Will the Secretary of State give way?

[Vince Cable]

Let me carry on for a few minutes. The hon. Gentleman knows that I always take interventions. Let me just build an argument and then I will allow him to respond.

Let me start with the very basics. It is a little difficult to do so in the face of the relentless tribalism that we have just heard, but I would say at the outset that the introduction of the national minimum wage was a real achievement of the previous Government. There were not many achievements, but two will stand the test of time: the establishment of the independent Bank of England and the establishment of the national minimum wage. [Interruption.] Indeed, there were others, but those were the two main ones in the economic field.

Having said that, I attempted to be constructive about the motion, but one blindingly obvious point is that the centrepiece of the national minimum wage legislation—the establishment of a non-partisan, non-political Low Pay Commission—did not even merit a mention. The shadow Secretary of State referred to it only in response to an intervention. That is rather important, because it suggests one of two things. The first possibility is that Labour Members do not understand how their own system works. Indeed, I heard a Labour Member cry out earlier, “Why don’t you make it increase the minimum wage?”, so there are clearly people who do not understand the mechanism. The second possibility is that Labour Members do not respect the basis of the system, which is independent advice from a non-partisan body. That advice has been followed consistently by successive Secretaries of State, including my Labour predecessors. That is the strength of the system and that is why there is political consensus behind it.

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[Vince Cable]

Yes, it is now the law. Of course we support enforcement of the law. I do not understand the question.

[Mr Donohoe]

Will the Secretary of State tell us why he came to the conclusion that the fine should go from £5,000 to £20,000, rather than the £50,000 that would deter all those gangsters out there who are not paying the minimum wage?

[Vince Cable]

The rise to £20,000 is a fourfold increase. However, the big difference is in applying that fine per worker rather than per company. That is a considerable escalation of the penalties. I hope that we will have the support of Opposition Members in voting that through.

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[Vince Cable]

On the last point, the hon. Gentleman may well be right, although I have seen an analysis suggesting that, because of the effect on corporate taxation, which offsets those gains, he is not. However, on the more substantive point about politicians intervening to override the Low Pay Commission, I believe that we should not be dogmatic about it. In the overriding majority of cases, it behoves the Secretary of State to listen carefully to the Low Pay Commission and it would be unusual to override it. He cites one case, and I have actually overridden the Low Pay Commission—on the apprenticeship wage, which I thought was excessively low, giving the wrong signal to young people and others who wanted to do apprenticeships. I made a decision on that specific issue to intervene and disregard the advice of the Low Pay Commission. If that became a habit, however, and if its advice were overridden on a major issue of pay policy, the minimum wage structure would crumble from being politicised in that way.

[Mr Donohoe]

To ask a simple question, what is the minimum wage for apprenticeships?

[Vince Cable]

I think it is £2.68, and it was going to be frozen at £2.65. [Interruption.] It is a very small increase, but there was an issue of principle involved, which is why I intervened to change it.

Let me proceed on the issue of the mandate. The Low Pay Commission has consistently regarded jobs as an important objective of policy—rightly, and we must respect that judgment because it is based on serious analysis. Let me quote a good study carried out by the Resolution Foundation, and I believe the National Institute of Economic and Social Research was involved, too. It analysed the effects of a general increase to the living wage level, which Labour Members would like to see happen.

The analysis suggests that if other things were equal and if all low pay were increased to the level of the living wage, there would be a net loss of 160,000 jobs. Worse than that, there would be a loss of 300,000 jobs among the unskilled and among young workers, because massive substitution would take place. That does not mean that the living wage is a bad idea as a voluntary principle, but it does spell out very brutally what would happen if Governments ignored the Low Pay Commission and took a cavalier view of the impact of the minimum wage on jobs.

Zero-hours Contracts

Debate between Vince Cable and Brian H. Donohoe

Wednesday 16th October 2013 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

It is exactly that practice that happens in railway maintenance, only because certification is needed. Surely in such circumstances it should not be legal for people to be forced into a situation in which they do not get any work for weeks on end.

[Vince Cable]

I am sure the hon. Gentleman has given a totally genuine example. I am not a lawyer, but there is at present a common law defence against exclusivity. I can see the practical problems of bringing a legal case against big companies, but none the less some legal protection exists. I accept that in many cases exclusivity may be highly undesirable, and in our consultation we will try to establish what concrete action, if any, we can take about it.

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[Vince Cable]

The hon. Gentleman is right to view the matter in that broader context. Several Members, including the hon. Member for Streatham, have already given the example of domiciliary visits in the care sector. I have encountered cases in my constituency involving people whose working conditions are very poor, who are on zero-hours contracts, whose pay is very low, and for whom there is no chance of progression. When we dig into such cases, as I did on one occasion, we may discover that the companies concerned are not profit-making companies but charities, and that the real cause of the problem is the very poor price at which they took the contract. The origin of the problem therefore lies in local government. The zero-hours contracts and, indeed, the minimum wage issues are symptoms rather than causes.

Let me list some of the matters that we will be considering in the consultation, and explain how we will approach them. It is important for us not to close down options. First, there is the issue of exclusivity. We could do nothing, and rely on existing law; we could ban it; or we could provide effective information and guidance requiring employers to justify it. A number of legal interventions are possible.

Secondly, we must consider the cases of people who are employed on zero-hours contracts for very long periods when they do not choose to be. Should we introduce a system requiring employers to offer permanent employment at some stage?

Thirdly—and probably most important—there is the issue of transparency. We can argue in favour of fairness, and we can also argue that, for the economic purposes of a flexible labour market, if rational people know what they are doing, that is a considerable improvement. The problem that we have discovered, and to which many Members have already referred, is that when people accept a job offer they are often not clear about the obligations and limitations that are involved. Should we introduce a code of conduct requiring proper transparency and information? Should it be voluntary, should it be a Leveson-style code with statutory underpinning, or should it be controlled by a stronger sanction-based body? We have a range of options, and we will view them with an open mind and act accordingly.

[Mr Donohoe]

Given that many employees have recently been denied access to tribunals, what the Secretary of State has said is surely illogical.

Business and the Economy

Debate between Vince Cable and Brian H. Donohoe

Monday 14th May 2012 Commons Chamber

[Vince Cable]

I would be here for much of the afternoon if I listed all of them, but I am sure that my hon. Friend will be familiar with some of the big and high-profile investments, including those in the car industry by companies such as Nissan, Jaguar Land Rover and others, which are important not just in themselves, but because they involve a long-term investment commitment to the UK and bring behind them a large supply chain of small companies.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

But is it not the case that specifically in Scotland, as a consequence of the delays that are being created by the nats, inward investment is faltering?

[Vince Cable]

No doubt there is uncertainty in Scotland because of the political situation there. I have been in Scotland supporting new inward investment. Scotland is participating in the substantial increase in investment that is taking place.

The policies required to sustain this growth of tradeable activities, such as manufacturing and creative industries, lie in aspects of economic policy that are not part of the Queen’s Speech, but they do provide the context to explain why the enterprise and regulatory reform Bill is at the heart of the forthcoming legislative programme.

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[Vince Cable]

I do not see why we should not do that, but I do not think that legislation is required to make that possible. We will certainly see whether it is feasible.

Small businesses also tell us that the fear of employment tribunals is a real disincentive to expanding and to taking on new staff. An employment tribunal is often a costly and stressful process for all concerned. I am fully persuaded that there has to be a balance between the legitimate expectations of workers that they will be protected from abusive employers and the legitimate expectation of businesses, especially small companies, that they can dismiss underperforming staff and not face costly and bureaucratic procedures. That balance is best pursued not through an adversarial system but by fostering conciliation in the workplace.

Our reforms will therefore promote the early resolution of disputes through the greater use of early conciliation and settlement agreements, so that fewer disputes end up in a tribunal. A tribunal is an admission of failure, so we want tribunals to be a last resort.

[Mr Donohoe]

Is the right hon. Gentleman saying, in that respect, that the trade unions have a major part to play, and that people should join them so that they are protected against the legislation?

[Vince Cable]

The unions certainly have a part to play, and I will continue to discuss the proposals with the TUC and affiliated unions, as well as with the employers’ groups.

One area in which good regulation strengthens a market economy is competition policy, so the Bill establishes a new competition and markets authority, bringing together the competition functions of the Office of Fair Trading and the Competition Commission. It will be the principal competition authority with a remit to tackle anti-competitive behaviour and to ensure dynamic and open markets. Competition processes will be faster, with clearer time frames bringing greater certainty and reduced burdens on business.

Higher Education Fees

Debate between Vince Cable and Brian H. Donohoe

Thursday 9th December 2010 Commons Chamber

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Will the Secretary of State give way?

[Vince Cable]

No, I will not. I will give way later, when I have finished my point.

The right hon. Member for Southampton, Itchen (Mr Denham), who is the Opposition spokesman on this matter, rather helpfully sent a circular letter to MPs yesterday in which he sketched out the basic economic framework within which these decisions have been made. He said that

“MPs have been asked to vote on increasing the fee cap to £9000”—

he did not mention the £6,000, but never mind—

“because the Government is choosing to make a disproportionate cut to the university teaching budget…in a spending review with an average cut of 11%”.

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[Vince Cable]

Let me proceed. Of course increasing the graduate contribution is bound to have an effect—it is an additional cost—to graduates. I therefore want to summarise the steps we are taking to make sure that this happens in a fair and equitable way. First of all, no full-time students will pay upfront tuition fees and part-time students doing their first degree will for the first time—unlike under the last Government—have the opportunity to obtain concessional finance under the student loan scheme arrangements.

Yesterday, after discussing the issue with the Open university and others, I made a further announcement that we will increase the range of that access from students spending a third of their time in education, as originally proposed, to those spending a quarter of their time in it. That will widen enormously the number of part-time students who will have access to supporting finance in order to pursue their education.

[Mr Donohoe]

Will the Secretary of State give way?

[Vince Cable]

Thirdly, we will introduce a threshold for graduate repayment of a £21,000 salary—a significantly higher level than before—and it will be uprated annually in line with earnings. It is important to emphasise that point because under the Labour Government, there was a threshold of £15,000, but it was never uprated on any basis whatever. I wish to communicate what I said yesterday—that students who were pegged at that £15,000 threshold under the current arrangements established by the Labour Government, will in future have annual uprating in line with inflation. Those existing students whom the last Government did absolutely nothing to protect will have inflation-proofing in future.

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[Vince Cable]

As well as the measures we have taken to improve access for low-income families, as opposed to the separate problem of low-income graduates, we have made it clear that additional grant provision will be made, as I said in response to an earlier intervention. In addition, universities wishing to move to a higher threshold will have demanding tests applied to their offer requirements in respect of access.

It is worth recalling the situation that we have inherited. There are a lot of crocodile tears from Labour Members, so let me remind them that social mobility, judged by the number of people from disadvantaged backgrounds getting into Russell group universities, has deteriorated over the last decade. There are currently 80,000 free school meal pupils, of whom only 40 made it to Oxbridge —40 out of 80,000. That is fewer than from some of the leading independent schools. That is a shameful inheritance from people who claim to be concerned about disadvantaged backgrounds—and we intend to rectify it.

Let me conclude in this way. I do not pretend—none of us pretends—that this is an easy subject. Of course it is not. We have had to make very difficult choices. [Interruption.] Yes, we have. We could have taken easier options, but we were insistent that at the end, we would make a substantial—

[Mr Donohoe]

On a point of order, Mr Speaker. Did not the Secretary of State say that he was going to give way? Why is he not doing so?

[Mr Speaker]

I understand what the hon. Gentleman has said, but that is not a point of order; it is a point of frustration.

[Vince Cable]

rose—

[Mr Donohoe]

Will the Secretary of State give way?

[Vince Cable]

I have given way to several of the hon. Gentleman’s colleagues and several of my own, and I now wish to summarise where we are.

As I was saying, there have been difficult choices to make. We could have made a decision drastically to cut the number of university students; we could have cut student maintenance; we could have cut the funding to universities, without replacing it. Instead, we have opted for a set of policies that provides a strong base for university funding and makes a major contribution to reducing the deficit, while introducing a significantly more progressive system of graduate payments than we inherited. I am proud to put forward that measure to this House. [Interruption.]