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Lord Inglewood: This amendment, as was described, would remove Clause 16(9) which states that, except as prescribed, the level of remuneration cannot constitute a reason for matters such as turning down a job offer or leaving a job voluntarily. It would enable an adjudication officer to take the level of remuneration into account, determining for example whether a claimant had a good cause for refusing particular employment.

In fact, the Bill simply carries forward current provisions. The Benefits Act already provides that the level of remuneration cannot normally be adduced as good cause for refusing a job. The Government introduced this provision following the radical overhaul in 1988 of the benefits available to people in full-time work. Those benefits—family credit, housing benefit, council tax benefit, disability working allowance—enabled the great majority of people to be better off in work than remaining unemployed. Ministers provided worked examples to the committee in another place which clearly demonstrate that that is so.

This amendment seems to ignore the effect of in-work benefits. It is illogical for someone to be able to rely solely on the level of pay in a job as the reason for refusing to take it. Levels of pay take no account of family circumstances. In-work benefits do. The amendment would allow people with large families to trap themselves in unemployment indefinitely.

The 1994 IFS study showed no evidence that family credit influences wage levels. It helps over half a million families a week and has improved incentives significantly. That does not mean that we claim that the level of pay is completely irrelevant. The Bill contains two separate safeguards. First, we are carrying forward the concept of the permitted period. We believe that newly-unemployed people should be given a reasonable

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chance to return to their former type of work. Therefore, the Bill provides that people with a usual occupation have a permitted period of up to 13 weeks during which they cannot only refuse any other type of work, but also work in their usual occupation that pays less than they used to receive. Secondly, we have written into the Bill that the refusal of employment sanction can operate only if the job has been notified to the claimant by the employment officer. Ministers have made it quite clear that the Employment Service will not set out to offer people inappropriate jobs.

It is also the case that claimants cannot expect to hold out indefinitely for a level of pay that may simply be unrealistic, given their length of unemployment. As time goes on they will need to lower their expectations or they may be trapped in unemployment indefinitely. I hope and believe that these safeguards offer adequate protection. For those reasons I must oppose this amendment.

Lord McCarthy: Because it is late at night, or perhaps because the Minister has lost a piece of paper, what has been said is appalling. He has not given any answer. To refer back to 1988 is not a justification. What he means is that it has been going on for a long time, and it is dreadful. If it is said that there is no limit on what an unemployed person can say he will not accept after the prescribed period, that is appalling. To say that it has been going on since 1988 is no justification. We may as well say that we have been shooting them since 1988. If I hear him right, I think he says as much.

The Minister said that the benefits Act could not normally take levels of pay into account; in other words, exceptionally it did. Therefore, awful though it has been since 1988, it is not as awful as it is going to be. As I understand it, the clause says that it "shall be" disregarded, not "normally" disregarded. The Minister also talks about family circumstances and in-work benefit. What does that have to do with it? If he said that if there was sufficient in-work benefit and suitable family circumstances it would not be taken into account, he would not have much of a case but he would have a bit of a case. But the clause says "shall be disregarded", whether one has family or any other circumstances.

The fact is that they do not have any answer but they have no shame. One can think of dozens of examples. For example, one may have kids who are employed as waiters and are paid nothing but scruffy tips. Is that perfectly all right? If that happens and somebody says that he will not just be a waiter and get scruffy old tips, will he be told that he will have no JSA? Kids knock on my door to sell me pieces of rubbish. I have to buy it because they look so pathetic. Is that all right? I do not know whether or not they get any money, but as long as they get a farthing that will do. If they do not take that job they will have no JSA. This situation is absolutely appalling, and we will come back to this matter on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 156A not moved.]

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Baroness Hollis of Heigham moved Amendment No. 157:


Page 15, line 6, at end insert ("; provided that the level of remuneration is at least equivalent to the level of jobseeker's allowance payable").

The noble Baroness said: Amendment No. 157 pursues the same issue. However, in this case, to use a favourite phrase of the Government, the amendment is more precisely targeted on the issue of the interface with JSA allowances. It is not unreasonable to ask people, as part of a jobseeker's agreement, for what wage they are willing to work. We accept that that is a relevant piece of information. What is not reasonable is to deny people jobseeker's allowance on the grounds that the wage for which they are willing to work would make them worse off than they would be if they were on benefit.

The Government have repeatedly said—we heard it again on the last amendment moved by the noble Lord, Lord McCarthy—that the level of pay is not a good reason for refusing work. I can only ask the Minister, given the examples quoted by my noble friends Lady Farrington and Lord McCarthy, what world they live in. What world do they live in? We are not talking about unrealistic pay expectations. Nobody is saying that it is reasonable to say, "I will only work for £20,000 a year" and that that is a reason for not accepting any job which pays less. The Government are telling us that it is entirely reasonable to accept a job which, by the Government's definition, pays below the poverty line—and a very low poverty line it is.

I accept—the Minister reminded us of it earlier tonight—that for those with children there is the in-work bonus of family credit. It is obviously right that those with children, who therefore need a higher income than those without children, should not thereby be priced out of the labour market. But, what we are doing there is helping them not by subsidising their wages (which would be quite improper) but subsidising the additional cost of having children, just as we do with child benefit, because that is a social responsibility. We are not asking them to price themselves out of the market in competition with single men and women.

We know that the Minister will tell us about the proposed piloting in some places of in-work benefit for childless people. We have already expressed reservations on that. But, at the moment, those without children (both single people and couples) have the alternative of income support and related benefits to low waged work. But they will not have it any more—not after this Bill has been passed. Wages have been falling, and the abolition of the wages councils has removed the checks on that, along with the growth of part-time jobs, commission-only jobs and the pay of those under 25. We know, and my noble friend Baroness Dean reminded the Committee of it much earlier, that 1 million people now earn less than £2.50 an hour. We know that 300,000 people earn less than £1.50 an hour. A Manchester study last year showed that 50 per cent. of all jobs advertised in the local Jobcentres—I repeat 50 per cent.—paid less than £100 a week. Across the country, a third of those jobs advertised in Jobcentres paid less than £57 a week, which is the point at which one starts to pay the national insurance contribution.

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On top of that is the fact that rents, council tax, fuel costs and the like have not been falling while wages have been falling. So, those very low wages for those with children have had to be topped up with additional payments from housing benefit and council tax benefit. But at least until now income support served as a basic floor below which wages could not descend because the choice remained with the unemployed whether to accept a job or income support. It was a threshold below which wages could not fall.

If people are required to work for wages below income support and associated benefits, especially if you ensure the prospect that wages will be topped up by the state, the situation becomes very simple: employers can pitch wages wherever they wish, knowing that the state will pick up the bill and subsidise their wages for them. The Minister shakes his head but that is absolutely right. That is why it is so pernicious. At the same time that the Minister is privatising public responsibilities and passing them on to business, such as sickness and related problems, the Government are nationalising what should be a private or commercial responsibility; namely, the payment of wages. It is quite remarkable.

Why do the Government believe that the cost of in-work benefits has doubled in the past four years and now stands at £2.4 billion? One in 50 of the workforce now claims in-work benefits such as family credit. One in seven of those in catering, cleaning and hairdressing—the old wages council industries—now claim family credit. With the abolition of wages council industries those jobs no longer pay a living wage. It is quite remarkable. Here are the Government seeking to save £140 million in cuts in JSA while at the same time transposing costs onto other in-work benefits such as family credit, which will cost us all as taxpayers infinitely more than the Government will save in their costs through the Jobseekers Bill. They are willing to throw public money at employers to allow them to cut wages where they will. Instead of a problem of a dependency on benefits out of work, we will have created a new problem of dependency on benefits in work.

This policy of the Government's can only be justified on two grounds: first, where the employer really needs to face additional costs or needs subsidy to take on particular groups of working people. He may need help with aids for the physically handicapped. He may need help with a recognition of low productivity for those with learning disabilities. He may need a bonus to coax the long-term unemployed into work. We accept that there can be special circumstances and we do not object to that.

The second reason is to lower wage levels to increase the total supply of jobs available and thus take more people off social security. Is this second reason valid? There is no evidence for that and much evidence to the contrary. All that happens is labour substitution. No more people are employed but cheaper people may be employed, as has happened with compulsory competitive tendering. Because they are dissatisfied with work and pay conditions, there is a rapid turnover and there is no incentive to train them or keep them. Indeed, the Low Pay Unit found that employment in hotels actually fell after the wages councils were

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abolished. Overall, the number of jobs covered by the former wages councils has fallen by 18,000 between September 1993 and March 1994.

The argument of labour substitution and increased competition does not generate more jobs. It simply generates more profits for employers to distribute to shareholders and in options. All the evidence from Europe is that without a minimum wage to underpin the job market the Government are throwing taxpayers' money at the employer as an invitation for him to put wages where he will, knowing that the taxpayer will pick up the rest of the bill. If this week, this month and this year we are cutting JSA, the next Bill we will have to pass, because the Government will require it, is one to cap in-work benefits, which will have escalated, much to the Government's surprise, because of the workings of this one.

We object because the Bill will either push up DSS benefits or, if one cannot claim those benefits because of the 16 or 24-hour rule, it will require the single person or the couple to live well below the poverty level. Neither of those options—desperate poverty or a wage bill subsidised by the taxpayer—is acceptable. Of a pernicious Bill, this is one of the most pernicious aspects of the entire jobseeker's allowance. I beg to move.

10 p.m.

Earl Russell: When the noble Lord, Lord McCarthy, was replying to the last amendment and was talking about being compelled on pain of losing JSA to live on scruffy tips, I was very much encouraged to see the Minister shake his head. Perhaps I may invite him to put on record the reasons why he shook his head and whether those will cover the question of commission only, about which I asked him.

The point that the noble Baroness made about the lower earnings limit in national insurance is particularly important. Just as in-work benefits without a floor under wages are a financial laxity for any government, so forcing people to take jobs which pay below the lower earnings limit for national insurance is a financial swollen throat so bad that it is impossible to swallow.

When we looked at the statement about the Public Sector Borrowing Requirement last month, it was interesting to note that what was falling short was not spending rising faster than expected, but revenues not rising as fast as expected. I have a Question for Written Answer asking under what headings that shortfall happened. The point which the noble Baroness has made prompts me to ask the Minister whether he will look at the Answer to that Question and see how much of the shortfall is in national insurance. How much of that shortfall is the direct result of government policy?


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