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Mr. Byers: Well, there we have it. I admit that I had some sympathy for the right hon. Member for Wells (Mr. Heathcoat-Amory) at the beginning of his response, because he had to accept that the Conservative party agree with the decision that the Government took, having opposed, day in and day out, the introduction of a national minimum wage.

The people of this country know the Conservative party's approach to the national minimum wage--it disagrees with it in principle, and it would allow it to wither on the vine. That is why the right hon. Gentleman said that the minimum wage would deal a body blow to low earners. That is his view of the national minimum wage, and he knows that it has not changed. The hon. Member for Rutland and Melton (Mr. Duncan) called it a "cretinous" policy. Well, he should know--but the reality is that 1.5 million people have benefited from its introduction. The right hon. Gentleman said little on the details of the proposals that we have announced this afternoon.

On the impact on small businesses and, in particular, on the private care sector, the Low Pay Commission has considered in detail the impact of the increase, sector by sector, and has decided that it would be prudent to adopt a significant increase to £4.10. That increase will make a real difference to those who receive it, but it will not have an adverse impact on either the economy or employment levels. That is the position. If the right hon. Gentleman looks at the areas where we have had the biggest increase in employment growth, he will see that they happen to be those that have traditionally been in the low-paid sector. That is the reality, as he will know.

Yet again, we have heard the cry about burdens on business. It is about time that the right hon. Gentleman made a distinction between red tape and bureaucratic

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burdens and decent, minimum standards. Today's announcement is about decent, minimum standards. The right hon. Gentleman will not challenge directly the basic standards that the Government are providing because he knows that they have broad and popular support. Instead, a code is used--the right to time off in emergencies involving children, the right to four weeks' paid holiday and the right to a national minimum wage is all red tape and bureaucracy. Well, it is not; it is what people should expect at the beginning of the 21st century. Under this Government, they will get those decent minimum standards; under the right hon. Gentleman, they would be taken away.

Mr. Dennis Skinner (Bolsover): It is like having two Budgets in a week.

Is my right hon. Friend aware that no Labour Government with a majority in Parliament have ever introduced a minimum wage? The Attlee Government did not achieve it; neither did the Wilson nor the Callaghan Governments. That is why it is important that my right hon. Friend has made a statement today, even though the Tories do not want to hear the truth. Is he aware that this minimum wage is vital to people in areas where the bosses have got the whip hand and where the pits were shut and people were paint spraying at £2.10 an hour? I went through those Lobbies glad to vote for the minimum wage, muttering "£5" as I went through, and I look forward to the day when, in the next Government, my right hon. Friend will take the figure up to £5 an hour. Then he will get another plaudit from me.

Mr. Byers: We shall probably have to wait for the Low Pay Commission to report. However, I can tell my hon. Friend that we have decided to make the commission permanent--it had been reappointed on an annual basis. However, under this Government, the minimum wage is here to stay, which is why the Low Pay Commission is to be made a permanent body.

My hon. Friend is right to point out that the minimum wage is significant for individuals. I know from my own constituency of many hundreds of people who have benefited from the minimum wage. I remember vividly a security guard coming to my advice surgery. He pulled out his wage slips and he showed me that he was paid £1.80 an hour for working evenings and weekends. He said, "Now, because of what you have done, I am being paid £3.60 and hour", which was the rate at the time. He added, "This has simply made a difference to my life that I could not have believed before you introduced it." That is why the Labour party and this Government are committed to retaining the minimum wage and ensuring that it will not wither away.

Dr. Vincent Cable (Twickenham): May I welcome the announcement, particularly on behalf of my colleagues who represent constituencies in the south-west, the north-east and Wales, where wages are below the national average?

Although I was given 20 minutes to read the Government's 170-page report, I have several questions for the Secretary of State about it. First, table 4.2 suggests that one of the main beneficiaries of today's announcement will be the Chancellor of the Exchequer because there will be a substantial saving in benefit payments amounting to about £100 million plus increased

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tax and national insurance contributions. As the reduced working families tax credit payment amounts, in effect, to a tax on business, what plans does the Chancellor have to feed back the money from the Treasury to business?

Secondly, what analysis has the Secretary of State conducted of the impact of the changes specifically on the competitiveness of manufacturing industry? Table A.3.1 in appendix 3 suggests that, at the present level of exchange rates, we now have the highest minimum wage of any country in Europe apart from Luxembourg. What assessment has he made of the impact of that on the unit costs of manufacturing and what proposals has he to enable British manufacturers, who have to compete for trade, to sustain the increase in costs?

Finally, although most groups in society will benefit from and appreciate the increase, some specialist groups have concerns. I am sure that the Secretary of State has read the Mencap report on people with learning difficulties. What thought has been given to the impact of the minimum wage on Mencap and associated groups and how does he propose to deal with their particular problems?

Mr. Byers: The Low Pay Commission is considering the hon. Gentleman's final point about therapeutic workers and that will form part of its recommendations in volume two of the report, which we expect to receive in a few months.

On the hon. Gentleman's question about the tax and benefits position, we should probably all wait until my right hon. Friend the Chancellor of the Exchequer makes his Budget statement on Wednesday. That may have an impact on these matters.

The hon. Gentleman also asked about the competitive position. The Low Pay Commission was particularly tasked with the responsibility of ensuring that any increase would be significant to individuals, but would not effect the competitive position of British business. That balanced approach is important, and I am confident, from the Government's analysis, that the commission's recommendation of an increase to £4.10 will not affect the competitive position of British manufacturing.

Mr. Tony Baldry (Banbury): Does the Secretary of State agree that it is axiomatic in his statement that, if the Low Pay Commission gets it wrong, that could have an adverse effect on employment and the economy? Is not the simple fact that, if the minimum wage is set below market levels, it is otiose and, if it is set above market levels, it will simply result in job losses in the economy? Does the Secretary of State agree that either the minimum is not needed at all or that, if it is applied in this way, it will result in job losses?

Mr. Byers: The hon. Gentleman is repeating what he said in the House on 4 May 1997.

Mr. John Bercow (Buckingham): It was not on 4 May--that was a Sunday.

Mr. Byers: It was 14 May--the hon. Gentleman is right. We all remember that weekend very well.

When the Labour party took office, we announced the introduction of the national minimum wage in the Queen's Speech. The hon. Member for Banbury

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(Mr. Baldry) shows that Conservative party policy has not changed; the Conservatives still fundamentally disagree with a national minimum wage.

It is important to have a significant increase that helps individuals without producing the adverse consequences that the hon. Gentleman mentions. A minimum wage of £3.70 has made a difference to people who receive it, and an increase to £4.10 in October will be significant. That bold move can be afforded. It is manageable because of the economy and its strengths. I think that we have achieved the correct balance. We are not threatening the economy or jobs; rather, we are increasing the national minimum wage to a decent level.

Mr. Gerald Kaufman (Manchester, Gorton): Is my right hon. Friend aware that when I asked his counterpart in the previous Government what a constituent of mine was to do because his hourly pay as a security guard had been reduced to £2-plus and his average working week had been increased to 70 hours, he said that my constituent had the choice of resigning, even though the constituency had some of the worst unemployment in the country and the worst youth unemployment in England? Is my right hon. Friend also aware that, by capping the working week, providing minimum pay and cutting unemployment vastly--youth unemployment has fallen by two thirds in my constituency--the Government have transformed many of my constituents from virtual menial slaves to respected working people who contribute to society?

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