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National Minimum Wage Bill

3.22 p.m.

Report received.

Baroness Miller of Hendon moved Amendment No. 1:

After Clause 1, insert the following new clause--


(" .--(1) If it appears expedient to the Secretary of State, he may, by order made by statutory instrument, provide for the total or partial exemption from the provisions of this Act of--
(a) any area, sector of employment, trade or industry;
(b) undertakings of different sizes;
(c) persons of different ages; or
(d) occupations or categories of persons.
(2) The power conferred by subsection (1) includes power to make such incidental, supplemental or transitional provision as appears to the Secretary of State to be appropriate.
(3) The power of the Secretary of State to make an order under this section includes the power to vary or to revoke its provisions or to limit its operation for a specified period of time by means of a further such order.").

The noble Baroness said: My Lords, in moving this amendment I shall speak to Amendments Nos. 6, 8 and 10. I find myself in the strange, and possibly unique, situation of proposing, as an Opposition spokesman, that the Secretary of State should have more powers than she is asking for in the Bill--indeed, powers that she is positively trying to deny herself. In Clauses 2(7), 3(3) and 4(2), she absolutely declines the discretionary power to make exceptions to the national minimum wage in cases of different areas, sectors of employment, undertakings of different sizes, persons of different ages and persons of different occupations.

In fact, the whole of the Government's philosophy is contained in the Title, the National Minimum Wages Bill. The Minister confirmed that to me in reply to a question I posed when he made a Statement about the report of the Low Pay Commission on 18th June. That is because of what they said in their party manifesto. What it amounts to is that, in the interests of political dogmatism, the Government are denying themselves a safety net in case anything goes wrong with their theories. The trouble is that it will not be the Government who actually need to use the safety net, but the people whose jobs and businesses may be ruined by the national minimum wage as it applies to them.

As I pointed out in the debate on Second Reading, the United States of America, which is held up by the Government as the vanguard of the minimum wage, allows many exceptions which, so far, the Government have refused to agree to. Again, in his reply to another of my questions, the Minister conceded that there were exceptions to the national minimum wage in the United States of America for small businesses whose annual turnover was less than 500,000 dollars. He said that this exception did not apply to businesses engaged in, "interstate commerce". He claimed that it meant the exemption is much narrower than it may appear. Much narrower? I wonder how many flower shops or hairdressing salons are engaged in interstate commerce.

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In any case, a narrow exemption is undoubtedly better than no exemption at all. European countries also allow exceptions depending on their national circumstances and, as I understand it, they are frequently lobbied to allow derogations, sometimes not just unilaterally by employers.

As regards this country the concept of a national minimum wage is a new one, being far removed from the old Wages Council orders. During the passage of this Bill through the other place the Government made concessions from their original concept of absolute universality with no exceptions. Share fishermen have been excepted before what is left of our fishing industry sets sail for more congenial waters. The Armed Forces have been excepted, not only because it would be impossible to define how long, say, a soldier was actually working, but more importantly, the Treasury discovered that the wages bill for the Armed Forces was likely to double.

Lastly, the Secretary of State has, somewhat grudgingly, taken a discretionary power to exempt persons under the age of 26. I say "grudgingly" because instead of biting the bullet and simply making the exception, she has merely given herself the power to do so and even then it is hedged around with the unnecessarily restrictive conditions contained in Clause 4(2), which is one of the provisions I am now seeking to remove.

The minimum wage being a new concept, it is possible that the Government may come to realise that in some respect or another they have made a mistake. I realise that with the atmosphere of omniscience, coupled with the mantra of "We have a mandate" that currently pervades the Government, this is something that they may not yet realise. Indeed, the noble Lord, Lord Clinton-Davis, at Committee stage said, in replying to Amendment No. 48 that he spoke,

    "as a Member of a Government with unshakeable confidence in its own infallibility".--[Official Report, 11/6/98; col. 1270.]

Before the noble Lord rises, I hasten to acknowledge that this was as a result of some provocation from me and was intended, of course, to be a joke. But I really do believe that it was one of those jests in which many a true word is spoken. I really believe that the Government's obstinate refusal to consider many of our amendments is based purely on the same "We-know-best" attitude which has led to the complaint that they are trying to create a nanny state.

The fact is that, so far as the Opposition are concerned, the whole Bill is a mistake. However, since we accept that the Government are entitled to have their Bill, my present amendments seek to protect the Government and, more importantly, employers, employees and the economy alike from the folly of not having a discretion should unforeseen circumstances require it.

I am not going to take up time at this moment by giving hypothetical examples. However, when I speak to Amendment No. 4 I shall tell your Lordships about a whole industry, employing some 3,000 staff and providing important facilities for 200,000 children every year, and at the same time making an important contribution to the deprived communities in which those businesses are situated. That industry and all its facilities

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will be totally destroyed unless the Secretary of State agrees to adjust some of the administrative provisions in the Bill. It is not for me to argue that industry's case--and certainly not during the passage of this Bill.

Let us assume for the sake of argument that an unanswerable case is presented to the Secretary of State for some exception of some sort to the comprehensive, sweeping and universal rule that is currently proposed. That case might be in favour of any of the categories covered by this amendment. What will happen?

The Secretary of State will say to her postulants, "Yes, I entirely agree with you, something should be done, but unfortunately my hands are tied, because the Act does not give me powers to do what we both agree is right in this case. It will take an amending Act of Parliament, and unfortunately the legislative calendar is full up for years to come". In other words, the Secretary of State has a perfect get-out from doing anything, even if she conceded that something needs to be done. In fact, she is erecting a sign saying, "Don't bother me with your problems because I can't help you".

I do not know the philosophical reasons that motivate the Secretary of State declining to give herself the power to adjust the working of the Act in the light of future experience or changing circumstances. It cannot be that she believes that what she is proposing is so perfect that, like the Laws of the Medes and Persians, it is to be unalterable. It cannot be that she believes that she is possessed of power to see into the future, and knows that there will never be a need to modify the parameters of the national minimum wage. It surely cannot be that her attitude is that, no matter how cogent the arguments may be for introducing some flexibility, no matter how much she agrees that there should be a variation--permanent or temporary--in a particular case or cases, she positively does not want the power or discretion to act.

The Opposition feel that the Secretary of State should have the power to correct anomalous or harmful situations should they arise at any time in the future, despite all the Government's confidence that they cannot and will not. The discretionary power--it is only a discretionary power--that we wish the Secretary of State to have is to make exceptions, not by new primary legislation, but by statutory instrument. The power we propose is so flexible that it can be limited in time, or be subject to further amendment or, indeed, revocation by the Secretary of State.

More important than all of this is the fact that this is simply an enabling power. It means that the Secretary of State will actually have to take the time to listen to those who wish to present a case to her, but that duty goes with the red boxes and the ministerial car. You do actually have to listen to what people are saying to you. You do have to listen to points of view that do not emanate just from Transport House.

Perhaps the Secretary of State might consider, for example, the articles that appeared in the Sunday Times on 31st May, reporting that research by the Forum of Private

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Business showed that a national minimum wage of £3.60 an hour would have a severe effect on small businesses. I quote:

    "Worst hit would be sectors such as retail, catering and care homes, and regions such as the North, Northwest and Southwest.

    It will affect the ability of 63% of small firms in the north to take on workers, compared with 15% in London.

    It is bound to affect small firms whether by reducing the number of new jobs that would be created or by shedding jobs".

Small firms are the engine for the creation of new jobs. Small and medium-sized companies, employing fewer than 250 people are estimated to provide 10 million jobs and to generate 40 per cent. of the national total of sales. Large firms, including many members of the CBI, have been shedding jobs for years.

The Secretary of State may not agree with one word of that survey. She may also not agree with the report published in June by the House of Commons Select Committee on Trade and Industry, which has severely criticised the Government's failure to give proper support for small businesses. In fact, her spokesman arrogantly dismissed the all-party report by saying,

    "the Committee is entitled to its views".

Nevertheless, in case the Secretary of State is wrong about the need for exemptions to be made from the national minimum wage and the Forum of Private Business' survey is right, she needs the power to correct the mistake that we feel she is making.

The Secretary of State does not have to exercise her discretion if she does not choose to do so. We find it inexplicable that she is adamantly against having the right to adjust the national minimum wage if circumstances demand it as, indeed, happens in other countries where there is a minimum wage. There is no reason except, as some people might suspect, a deal with the TUC that there will never, never, never be any exceptions, no matter what the circumstances.

There is, however, no justifiable reason why the Secretary of State should impose this self-denying ordinance on herself, by declining the power to think again without having to come back with an amending Act.

Finally, before leaving this amendment, I would like to remind the Minister that throughout the Committee stage he and his noble and learned friend the Solicitor-General repeatedly professed the Government's desire for what they called "flexibility" in the operation of the Act. In fact, in rejecting no fewer than six amendments, they did so on the grounds that the Bill as drafted provided greater flexibility. The noble Lord, Lord Clinton-Davis, actually used the word "flexibility" on five occasions; and the noble and learned Lord the Solicitor-General used it twice.

In this amendment, which must be the mother of all Henry VIII clauses, we propose that the Secretary of State shall have the power to amend the Act by order in no fewer than five separate ways--one for each of the flexibilities sought by the noble Lord, Lord Clinton-Davis, if, but only if, she chooses to avail herself of it. That is real flexibility. So much flexibility,

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in fact, that as well as being the Ministers' "right honourable friend", in the words of a well known credit card advert, she will also be their "flexible friend".

I now turn briefly to the other amendments in this group, Amendments Nos. 6, 8 and 10, which seek to delete the provisions of Clauses 2(7), 3(3) and 4(2) respectively. Those are the provisions which inhibit the Secretary of State from exercising any discretion over the application of this legislation. If the proposed new clause to which I have just spoken--that is, Amendment No. 1--is accepted by your Lordships, each of the subsections to which I have just referred will be inconsistent with it and will need to be removed. I beg to move.

3.30 p.m.

The Chairman of Committees: My Lords, as Amendment No. 6 has also been spoken to, I must point out to your Lordships that if that amendment is agreed to, I cannot call Amendment No. 7.

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