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House of Commons
Friday 17 June 2011
The House met at half-past Nine o’clock
Mr Peter Bone (Wellingborough) (Con): On a point of order, Mr. Deputy Speaker. We see today in the newspapers that the Government are announcing new measures on public sector pensions. It is in the media and we have seen the Chief Secretary to the Treasury being interviewed about it, but unfortunately there has been no notification on the Annunciator or the Order Paper that an oral statement will be made at 11 o’clock. Is that an error, and in fact a statement will be made?
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Employment Opportunities Bill
I am delighted that my hon. Friend the Member for Worthing West (Sir Peter Bottomley) is here, because the Bill incorporates the Training Wage Bill, which he has expressed support for, and he has expressed concern in the House that on a previous Friday I chose not to put that Bill forward for debate, which I did because I was anticipating this occasion today. I am grateful for his presence and support, as I am grateful for the presence and support of other hon. Members. I know that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is particularly enthusiastic about clause 1, if not about the whole of the Bill. Obviously, the message to all those who like parts of it but not the whole is that the Bill should be given a Second Reading so that it can be filleted as appropriate in Committee.
Sir Peter Bottomley: My hon. Friend refers to clause 3, which I am sure he will get to, but as I have to leave the Chamber to meet some young people, I hope he will allow me to make a point now. I do not think that the clause is broad enough. Clearly a training wage matters, but when I was a teenager and often taking casual work, it was not the training I was after, it was the work experience, being with people and earning money instead of spending money. I hope he will think of broadening the Bill in Committee so that it allows people to take worthwhile work, whether or not there is training, with a wage. That work should also be worthwhile to the employer and the customer.
Mr Chope: My hon. Friend makes a brilliant point, and I hope very much that he will be willing to serve on the Committee when that occasion arises. I am sorry that he will not be able to participate fully in the debate, but I understand that he is seeing constituents. His long-standing interest in common sense applies particularly to work opportunities for young people and is well known and respected across the House.
Mr Denis MacShane (Rotherham) (Lab): Perhaps later on the hon. Gentleman could give us an example of socialism in Britain. Some Opposition Members might be interested to find out more about this new invention. Should not the Bill properly be called the increase in working poverty Bill, because the assault on the minimum wage—that thin line that protects the poorest workers from employer exploitation—which is the thrust of the Bill, is the meanest most miserable act from a mean and miserable party that hates the working people of this country?
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Mr Chope: The right hon. Gentleman once again demonstrates his bitterness and his socialist credentials. When I introduced the Employment Opportunities Bill in the 2009 Session, I had, by this stage on the Friday morning, been inundated by hostile e-mails from various vested interests in the trade unions. The fact that that has not happened on this occasion shows that there is now a completely different climate of opinion out there, and that the trade unions realise that the minimum wage is of less significance than the fact that too many of their potential fellow workers and, particularly, too many young people do not have jobs. The right hon. Gentleman has failed to catch up with that change in the climate of opinion and the desire of most of us to ensure that we have increased international competitiveness and, as a result, higher standards of living and greater employment.
Mr Chope: I doubt it, frankly. I am delighted to see the Minister of State on the Front Bench, but we do not have a Conservative Government, we have a coalition Government, and that is the Achilles heel. In due course we will see that my hon. Friend speaks not from a Conservative party brief but from a coalition Government brief. None the less, I and, I hope, some of my colleagues will be able to speak freely on behalf of the Conservative party.
The hon. Member for Harrow West (Mr Thomas) will recall that back in 1997-98, when his party introduced the minimum wage legislation, the Conservative party strongly opposed it on principle and on the basis that it would prove to be counter-productive and not in the long-term interests of Britain’s competitiveness or, indeed, of people wanting to get into work.
The initial level at which the minimum wage was brought in was so relatively low that it did not bite as acutely as some people had feared it might, but since then the level has risen by the best part of 70%, far ahead of average earnings and of inflation, and as a result it bites a lot more than it used to. That is why I hope that my hon. Friend the Minister and, certainly, my party will look again at the issue and see what is happening in the real world as a result of the minimum wage legislation that we have.
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Mr Chope: My hon. Friend is second to nobody in his knowledge of parliamentary history and, in particular, of the Liberal Democrats, and I am grateful to him for reminding us of that and for putting it fairly and squarely on the record. I saw that at the same time as he was doing so the Deputy Leader of the House moved from his place to chat to Mr Deputy Speaker—perhaps so that he might feel absolved from the requirement to intervene.
Sir Peter Bottomley: We recognise that the Deputy Leader of the House is still here as an invigilator and monitor, but has my hon. Friend noticed that the hon. Gentleman’s Liberal Democrat Back Benchers—our allies—have kindly trusted my hon. Friend to do what he wants? He should do what he wants and not hold back.
Tony Lloyd (Manchester Central) (Lab): I appreciate that the hon. Gentleman is only in the foothills of his speech, and I am sure that we will enjoy every moment of it—at least its comedy, if not in reality. On a serious point, however, he notes correctly—as far as I am aware—that both the Lib Dems and the Conservative Front Benchers have never formally stood up in Parliament and said that they recognise the validity of the minimum wage. Does he believe that his Front Benchers have now changed their minds, or are they, like him, waiting for the right time? How does he square that with the position of Boris Johnson, who is not simply in favour of the minimum wage but wants to go higher and put people on the living wage?
Mr Chope: The hon. Gentleman makes a good point, but I think that the Mayor of London would be very supportive of clauses 4 to 6, which basically call on the Low Pay Commission to look at the impact of different wage levels on regions and travel-to-work areas, because the Mayor recognises that the cost of living in London is much higher than in other parts of the country. In order to afford that cost of living, people on the whole in London need to have higher levels of minimum wage, or higher levels of wages, than people in other parts of the country. At the moment, the rigidities of the national minimum wage legislation and the regulations made thereunder exclude that flexibility.
Tony Lloyd: That is very helpful, because the hon. Gentleman says that in London people need to have a minimum wage, so I think he is buying into the concept of the necessity of the minimum wage. We may be debating this rather unhappy idea of a regional differential, but it is interesting that he is making progress in his support for the minimum wage.
The hon. Gentleman will know that my Bill does not actually abolish the minimum wage; it enables freely consenting adults to opt out of it and calls on the Low Pay Commission to look at the market for labour throughout the country, having regard to the differences in individual travel-to-work areas. I hope therefore that, if he wants to oppose the Bill, he will do
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so on its merits, but following his intervention I am bound to observe that on today’s Order Paper he has his own maximum wage Bill.
I do not know whether that Bill is designed to curb the excesses of footballers or what, but as always he seems keen to intervene in the market rather than to allow the market to dictate what should happen and to allow people to make free agreements. I am as much in favour of allowing footballers to agree with their clubs terms that to most of us seem incredibly generous. Why should they not be able to do so if those terms are agreed freely? In the same way, why should not people who are willing to work for less than the minimum wage be allowed to do so freely?
Tony Lloyd: Has the hon. Gentleman read his own Bill? He said that the Mayor of London might want a minimum wage in London set higher than the national minimum wage, but that is not what clause 4 states. It allows for a recommendation
“that the minimum wage in any…area should be set at a level below the national minimum wage,”
Mr Chope: If we have a national minimum wage, we should be able to opt out of it. If the hon. Gentleman is arguing that there should be not a national minimum wage but a regional minimum wage, that is a completely different proposition, and it would need a different Bill, but I suppose that my Bill might be amended to reflect his wishes, were that the wish of the House.
Mr David Nuttall (Bury North) (Con): Is there not some confusion between the “national minimum wage” and what is described in London as the “London living wage”? That is something entirely different and, as I understand it, something set annually here in London, not by the Low Pay Commission.
Mr Chope: My hon. Friend is absolutely right, and I do not know, because I have not inquired, how many hon. Friends of the hon. Member for Manchester Central (Tony Lloyd) employ people as interns for well below what my hon. Friend and the Mayor of London would describe as the London living wage, but perhaps we will hear about that in due course.
Clause 2 deals with the problems that the current law restricts British citizens from selling their labour at a price of their own choosing; discriminates against those who are young, inexperienced or seeking on-the-job training; prevents people from agreeing to cut their wages to save their jobs; and imposes nationally uniform rules on the labour market, ignoring regional and local variations. All those shortcomings are tackled in the Bill, which effectively recognises the right to work.
“Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.”
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“The States Parties to the present Covenant recognize the right to work, which includes the right of everyone to the opportunity to gain his living by work which he freely chooses or accepts, and will take appropriate steps to safeguard this right.”
I think it will come as a shock to many Members to know that currently many people are not given the right to work enshrined in those important United Nations articles. The Bill is designed to address that problem.
To make it clear to the hon. Member for Manchester Central that I have read my own Bill, I have noticed that there is a typographical error in clause 1. As a consequence, it would enable only foreigners who are in detention to work, rather than the reverse, which was the intention. I put that firmly on the record and apologise to the House. I will address my remarks to clause 1 as it should be, rather than as it is.
Clause 1 refers directly to those unlucky enough to be seeking asylum in this country as a result of persecution, and obviously to their families. Why are we depriving people who are seeking asylum of the ability to earn money while in this country, so that they can make ends meet and not be wholly dependent on the state? The shock of seeking refugee status should not be exacerbated by the humiliation of not being able to take employment and contribute to the society that is acting as their host while their application is considered.
Mr Peter Bone (Wellingborough) (Con): Speaking as the chairman of the all-party group on human trafficking, one problem for victims who have been trafficked into this country is that if they are rescued by the police and start to recover, they are not allowed to work because they are treated as asylum seekers.
Mr Chope: My hon. Friend is absolutely right. Of course, that treatment also prevents people who are being held in prison-like conditions by the person who is looking after them from breaking out, for fear of a worse penalty being sustained.
Philip Davies: As my hon. Friend knows, he and I agree on virtually everything. However, as I reflect on the delicious irony of the Labour party stacking up to oppose a Bill that would allow asylum seekers to work, I wonder whether he thinks that his measure would be a further magnet for vexatious attempts to claim asylum in this country.
Mr Chope: If it would be, I certainly would not put it forward. In fact, I want it to be the complete reverse. I want the Bill to put pressure on the Home Office to deal with asylum applications a lot more quickly than it does. If asylum applications were regularly dealt with within a few weeks, the issue of asylum seekers being unable to work and support themselves would not be as serious. However, I have had constituents come to me—I am sure my hon. Friend has had similar experiences—and say that they have been waiting for seven or eight years to have their asylum cases dealt with. That goes back to the days when the Government of the hon. Member for Harrow West were trying to run the country. That puts asylum seekers in an impossible position. They want to work, but they are prevented from doing so by the law of the land.
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Tony Lloyd: Or it may not. The hon. Gentleman might be interested to know that I have long held the view that he is putting forward. It is ludicrous that there are Zimbabweans whom we will not return to Zimbabwe—quite rightly because of the situation in that country—but who are prevented from working for themselves, their families and, frankly, the rest of the country. That makes no sense. He might be surprised to learn that there is a lot of support for that view among Opposition Members.
Obviously, in putting forward a proposal such as clause 1, one needs a statistical basis to show how many people would be affected. It seems as though all the statistics produced by the Home Office in this regard are completely unreliable. The Daily Telegraph reported on 26 April that 25,345 new asylum cases submitted since 2008 still awaited a conclusion. The Home Affairs Committee reported on 24 May that the independent chief inspector of the UK Border Agency agreed that there was a new backlog, but did not know its extent. He advised that he might find out what the extent of it was in due course. We know that the Government were going to achieve the target of completing 90% of asylum cases within six months by December 2011. My understanding is that that target has been abandoned in favour of what is described as a “basket” of 11 alternative indicators. The National Audit Office report of 15 March indicates that up to 181,000 people might have overstayed their work, student or family reunion visas in the past four years. We also know that migrants are arriving in this country at a rate of between 500,000 and 600,000 a year. That is more than 10,000 a week.
There is a problem here. I think that the most deserving people who come in as migrants are genuine asylum seekers and refugees. However, the UK Border Agency makes it quite clear on its website, under the heading “Employment”, that asylum seekers are not allowed to work:
“You will not normally be allowed to work while we consider your asylum application, except in very limited circumstances.”
“Currently, most new asylum applications receive a decision within 30 days.”
That is what the website says, but it is not borne out by the statistics to which I have referred. So what actually happens? Instead of allowing asylum seekers to obtain employment, we, as national taxpayers, give them support. We provide them with cash, housing, access to the health service and access to our schools when children are involved. We are paying out a lot of extra money to support people while denying them the opportunity to support themselves.
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We know that in Sweden, for example, asylum seekers are given the right to work. We can contrast the situation there with that in Greece, about which I have recently received a lot of evidence in my capacity as this year’s chairman of the Committee on Migration, Refugees and Population of the Parliamentary Assembly of the Council of Europe. The situation in Greece is desperate, because the Greek authorities will not allow the tens of thousands of asylum seekers in the country to work. As a result they cannot get their cases dealt with quickly, and some have been waiting there for many years. Now there is a outbreak of lawlessness, including murder and a lot of robberies, in Athens and surrounding areas, committed by desperate asylum seekers who do not have the means or ability to lawfully seek jobs. They are locked into Greece because they cannot get into any other country. They cannot go back to Turkey, through which most of them arrived. The situation for asylum seekers there is chaotic and desperate. I do not want to see that replicated in this country.
Mr Bone: The problem in this country, at least from my experience in Wellingborough, is that although people are trying to deal quickly with new asylum cases, the backlog includes people who have been here for years and years. Their cases are not being decided because of the concentration on new applicants. That means that they have to live on benefits for years, when they want to go out and work. Often, they have married and had a family. That situation cannot be right.
Is my hon. Friend going to talk about the black economy? One problem with the employment law he is talking about is that it enlarges the black economy. There is certainly evidence of that in Greece, and from my experience there is evidence of it in Northampton, too.
Mr Chope: My hon. Friend is absolutely right about the black economy, and indeed I will refer to it in due course. The Low Pay Commission itself accepts that there are more than 1 million operating in the black economy at below the national minimum wage. That demonstrates that the minimum wage legislation is not working anyway and is widely ignored.
Jacob Rees-Mogg (North East Somerset) (Con): It occurs to me that one advantage of what my hon. Friend proposes is that the mood towards asylum seekers in this country would improve dramatically. Many people feel that if asylum seekers are coming here and claiming benefits, claiming benefits was their reason for coming here. If asylum seekers were working and contributing, the British people would regard them more sympathetically
My hon. Friend makes a really good point. This month we are celebrating 60 years of the UN refugee convention. One of the problems of public perception is that although everybody supports refugees—I think almost everybody would say that we are happy to
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look after refugees—they do not regard all asylum seekers as genuine refugees. They now think of asylum seekers as what are called illegal or irregular migrants. If we were able to give the genuine asylum seeker enhanced status, as he says, that would raise the esteem in which they are held in this country and their own self-esteem.
I turn now to clause 2. You will know, Mr Deputy Speaker, that the minimum wage is currently £5.93 an hour for an adult over 21, but this October it will rise to £6.08 an hour for such an adult, to £4.98 for those aged 18 to 20 and to £3.68 for those aged 16 or 17. In addition, for apprentices who are within a particular age range there will be a minimum wage of £2.60 from this October. To illustrate the consequences of my Bill, I will use the October figures rather than the current ones.
Defenders of the minimum wage argue that it represents the minimum living wage, but if so, why do hundreds of thousands of self-employed people work for far less, and why does the state tax the minimum living wage? I am enthusiastic about the coalition Government’s tax policy, which recognises that the minimum wage is so basic that it should not be taxed, but we are a long way from that at the moment. From October, the minimum wage for a 40-hour week will amount to £12,646 a year, whereas even the enhanced tax-free allowance for a single person will be £7,475. That means that even somebody on the minimum wage is paying tax on more than £5,000 of their income. In consequence, far from actually receiving a minimum wage of £6.08, the amount that people who are working full-time can take home is more like £5.
Mr Chope: My own view is that the Government got it wrong—I will be blunt about it. There is no point in beating about the bush. I know that I am supported in that opinion by a lot of other commentators. I will discuss later one comment on the increase of 2.5% for adults and an even smaller percentage for young people, which is that it will be disastrous for young people. If that modest increase in the minimum wage is going to make an enormous difference to young people, what would be the consequences of introducing the flexibility in my Bill? It would be nirvana for young people who do not currently have work and are seeking it. We need to consider the matter in context, and I think there is a much bigger issue than whether the minimum wage should be raised by 2.5%, as it has been this year.
Raising the personal allowance will do a lot more to help people on the minimum wage than the 2.5% increase. The effect of the interaction between the minimum wage and income tax is that about 8% of the income of somebody working on the minimum wage will be taken in tax, plus what is taken in national insurance contributions.
If a single adult is out of work, he is entitled to an out-of-work benefit payment of between £60 and £70 a week—well below £2 an hour, even for a 35-hour week. However, the minimum that he can be paid if he works for 35 hours is more than £200 a week. That is a big gap.
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If he is offered, and willing to take, 35 hours’ work for, say, £140 a week, which is twice what he can get on the dole, the state does not allow him to take it despite the fact that it would save the state a significant amount of money. I put this to the House and to the Government: how ludicrous, mad and silly is that situation? Why can we not allow somebody who would otherwise try to exist on benefits of between £60 and £70 a week to go out and obtain gainful employment and double his remuneration? Currently, we do not allow that.
The freedom to work for less than the minimum wage would not be attractive to everyone, which is why the Bill does not seek to abolish the minimum wage but to facilitate an opt-out by mutual consent. That freedom would not be attractive to everybody. Some might choose to invest some of their time looking for much better paid work rather than undertaking work below the minimum wage.
Jacob Rees-Mogg: It just occurred to me that somebody who refused a job who had not opted out of the minimum wage could exclude themselves from receiving jobseeker’s allowance. Would that be the case, or could the Bill make provision for that?
Mr Chope: The Bill could make provision for that—I certainly intended to make provision for that, but it is not expressed in the current wording. My hon. Friend makes a good point, because we do not want to introduce more disincentives to opting out of the minimum wage, such as putting people in a position in which they are not entitled to any benefits should their circumstances change.
Another reason why people may not want to opt out of the minimum wage is that unemployment benefit or jobseeker’s allowance provide access to passported benefits—meaning that they bring with them money for dependents and help towards housing costs and so on—so people could be worse off working for less than the minimum wage than if they were on benefits. My question is why should these people not have the freedom to decide for themselves whether or not they wish to work for the minimum wage?
Many self-employed people earn far less than the annualised minimum wage for full-time work, thereby avoiding the constraints of the national minimum wage legislation and fixed penalties. There are fixed penalties, which can run into thousands of pounds, for employers who take people on at below the minimum wage, even if that person wants to work for less than the minimum wage.
Of course, not everybody wants to become self-employed. Another argument that I expressed when the minimum wage legislation was originally before the House in the late 1990s was that it discriminates unfairly and disproportionately against people who are not classified as fully disabled—for the purposes of this argument, I shall describe such people as conscientious plodders. It might take such people a bit longer to do a given bit of work than it would take the average person, but by having a national minimum wage we are putting them at a significant disadvantage, because they might otherwise be able to work longer hours for less money per hour to achieve the same objective. If they did that, they would take pride in being able to work and contribute to our society. I do not have the figures with me, but I believe
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that the proportion of disabled people who are unable to get a job is rising rapidly. That might well be linked with the advent of the national minimum wage.
What would be the consequences of enabling people to opt out? There are many examples of people who offer work to others, such as window cleaning, gardening and car washing, that is not worth as much as the minimum wage. I am not talking only about what we used to know as boy scouts’ bob-a-job week jobs—it is probably more than a bob a job these days. Many people would be willing to offer something less than the minimum wage for a job, but they are currently not allowed to do so. If the price is right, a potential employer will be willing to provide work. I am sure that there is a lot of opportunity out there in the marketplace. People would offer work to people if the wage demanded were not as high as it is currently under the minimum wage. That is particularly true in the more remote regions of the country.
Mr Thomas: I am grateful to the hon. Gentleman for being so generous in giving way. As part of his preparations for today’s debate, has he had the opportunity to study a paper published by the National Institute of Economic and Social Research that suggests that the minimum wage has helped to increase rather than reduce employment?
Mr Chope: I did come across a document that seemed to say just that, but I am not sure whether it was the one to which the hon. Gentleman refers. I read it, but I was not convinced. Indeed, I shall refer in due course to an article that I believe is much more in tune with my views on this matter. It is interesting that he refers to documents from that body, which includes in its title the words “social research”. If anybody should examine this issue, I would have thought it should be the Low Pay Commission and objective, independent commentators.
Philip Davies: On that point, is it not bizarre that the previous Labour Government used to believe that if we put the price of something up, we would get less of it? Hence they fervently increased the price of tobacco, because they thought that would mean that fewer people would smoke, and increased the price of alcohol on the basis that fewer would drink. Surely by the same logic, if we increase the cost of employment, there will be less employment.
Mr Chope: My hon. Friend is absolutely right. It is certainly true that we would get less official employment, which goes back to the point made by my hon. Friend the Member for Northampton South (Mr Binley) on the black economy. If the minimum wage results in higher numbers of people in work, why are more than 1 million people working in the black economy below the minimum wage, as the Low Pay Commission assesses?
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Mr David Hamilton (Midlothian) (Lab): What would the hon. Gentleman say to the many employers in my area in small and micro companies who want to pay a fair wage, and indeed do so, if they were undercut by an unscrupulous employer down the road who did the same work? In the latter’s profit margins, one factor would be the lowest wage possible. What would he say to the good employer who wants to pay a fair wage because he knows his employees personally?
Mr Chope: That is happening in the real world anyway. Employers in the black economy do not pay tax or national insurance, or offer basic health and safety protection, but they compete with employers such as the ones to which the hon. Gentleman refers.
Let us consider my situation. In the House of Commons, I happen to employ a researcher/intern and pay them more than the national minimum wage, but I do not feel that I am at a competitive disadvantage compared with those colleagues who pay interns nothing or significantly less than the national minimum wage. If employers in the hon. Gentleman’s constituency have good quality employees and look after them well and reward them appropriately, all other things being equal, they can prosper in the marketplace. Currently, many jobs go to countries in the third world that do not have minimum wages or wages anything like as high as we have. However, if we are to provide good-quality jobs in this country, we need the freedom to allow people to compete, and we need to allow people the freedom to work and reach an arrangement with their employer, if they want to.
Let us imagine that one of the constituency firms to which the hon. Member for Midlothian (Mr Hamilton) referred was up against it, had had a big drop in its order book, was facing problems with the bank and all the rest of it. If these people were on the minimum wage and the employer went to them and said, “Look chaps, we’ve got this financial crisis in the company, so we need to come to an agreement whereby we all reduce our wages and salaries if we are to get through this crisis”, that would not be allowed to happen. How inflexible and absurd is that? I hope that the hon. Gentleman will consider this issue in a different light following this debate, and discuss these important issues with employers in his constituency and, more importantly perhaps, people in his constituency who are currently not working but willing to work for less than the minimum wage, if allowed to do so.
The right to work covers not only remuneration, but how many hours are worked. I will not go into this, but obviously there are considerable worries about restrictions on the ability to opt out of the 48-hour working week. That brings me on to clause 3, which incorporates the training wage into the Bill. I am sure that I speak for many colleagues in saying that I could fill my office with unpaid volunteers and interns. Large numbers of organisations now rely on getting young people into their workplaces for no remuneration at all, even when they have to work in London. That is grossly unfair, but one of the reasons it is happening is that there is no flexibility for such people to be paid something between zero and a national minimum wage. If a person is inexperienced and lacking in qualifications, they will obviously be at a disadvantage in the labour market compared with somebody who has got experience and
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better qualifications. We should be encouraging, facilitating, enabling these people to join the labour market, rather than acting to exclude them.
That is particularly the case for young people. Record and rising numbers of young people are out of work. There was a blip in the figures published this week, but the trend is unmistakable—the number of people between 18 and 24 who are out of work is rising exponentially. Figures for my constituency show that in the period up to May the number of under-24s out of work was rising, whereas the numbers for those in the older age groups were falling.
Mr Thomas: I rise to enable the hon. Gentleman to find the figures from Christchurch, and gently to make the point that perhaps abolition of the future jobs fund, which I think he supported, might not have been such a good idea after all. May I draw his attention to clause 3(2), in which he talks about an
“entitlement to training from the employer in skills relevant to the employment”?
There is no sense in the clause of a quality threshold for that training. Is that not a further reason for the scepticism of those in the House and outside who worry that this part of the Bill would also undercut the minimum wage and allow, as my hon. Friend the Member for Midlothian (Mr Hamilton) hinted at just now, rogue employers to undercut the quality jobs offered by the many, many good businesses in this country?
Mr Chope: I am grateful to the hon. Gentleman for intervening, and I will return shortly to the figures I have now been able to find as a result of his intervention. On the training wage, I am disappointed by his intervention because it shows that he is trying to be pedantic. He is not sure whether under the contract of employment entered into voluntarily between the employer and the trainee—for want of a better expression—the training would be of a sufficient quality. However, that would be a matter between the person being trained and the employer. If that is the hon. Gentleman's only objection, I would be happy to see what could be done in Committee, but I suspect that his objection is much more fundamental, because he is on the side of producer interests backed up by the trade unions. He is not really interested in having a genuine training wage, which is what I suggest we should promote through the Bill. I do not want to appear too sceptical or cynical about what his interventions are really motivated by.
According to statistics from the House of Commons Library, in my constituency in April 2011, there were 205 jobseeker’s allowance claimants under the age of 24, which was an increase of 2.5% over the year. For those between 25 and 49, there was a reduction of 375, which was a 22.7% reduction, and for those aged 50 and over, the numbers were 150 and a 30% reduction. Those figures speak for themselves—they show that we have a real problem. While the numbers of people receiving jobseeker’s allowance in the older age groups are declining—certainly in my constituency—the same is far from true for those in the younger age range. A rational body deciding on policy would say, “There’s a problem here. We have to try and address it.” I hope, therefore, that my hon. Friend the Minister will tell us when he winds up the debate what the Government are
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going to do to get more young people trained and back into work, if they are not going to adopt my suggestion in clause 3.
Mr Bone: Before my hon. Friend moves on, may I use the word “scandal” about the situation with interns? People come to me asking to be interns—people with university degrees—but I cannot pay them anything because of rules set by the Independent Parliamentary Standards Authority, which means effectively that the only people whom I take on as interns are people from wealthy backgrounds. That cannot help social mobility and is wrong. IPSA needs to reconsider that specific point.
Mr Chope: I am sure that the powers that be in IPSA will be listening to every word my hon. Friend says. I agree with him. This, again, is one of the problems with having centralised bureaucracy intervening in the marketplace. Perhaps if clause 3 was on the statute book, it would provide a complete answer to the problem he has identified.
I was talking to a colleague yesterday who said that his son, a recent university graduate, was out of work. At the moment, about 20% of graduates are unemployed. That does not mean that they are unemployable—most of them want to get a leg up into the workplace, but at the moment they are being deprived of that. I had a case in my constituency of a graduate, aged about 24 or 25, who said that he would be happy to work for the so-called apprenticeships minimum wage—it will be £2.60 from October—but he is not allowed to do so because it applies only to people aged 18 or 19. That, too, is a real issue.
“The change to the national minimum wage rate is the wrong increase at the wrong time and will risk pricing young people out of work when youth unemployment is at a record high”.
As I pointed out earlier, if he thinks that a 6p an hour increase in the minimum wage for young people will break the bank, would not completely removing the constraints of the national minimum wage from young people undertaking training have an even greater impact? That is not always the case, but I do not go as far as Eamonn Butler from the Adam Smith Institute, a good friend of mine, who on 17 February called for the minimum wage for young people to be totally scrapped. He set out some cogent arguments and said that the minimum wage
“prices them out of jobs, so does them no good at all. For them, low-paid work is a way of building up some human capital that will make it easier to find a better job. But we stop them even getting that work at all—and all in the name of protecting workers.”
The last part of my Bill deals with the need to ensure flexibility in the labour market in different parts of the country and sets out a method by which the Low Pay Commission will be required to address those problems.
I hope that this Bill will command the support of the House. However, I hope also that it will trigger a much more serious debate than we have had so far across the Chamber, among my political party, the coalition Government and the Opposition, because this issue is far too serious to be the subject of yah-boo politics—“Are
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you in favour of the minimum wage or are you against it?” We need to examine the issues in a rational, non-prejudiced and hard-headed way, so that we can get more people back into jobs and enable our economy to prosper.
Mr Thomas: I am grateful to the hon. Gentleman for giving way, as he is clearly winding up to his summary and peroration. With all due respect to him, he has a tendency to march his troops up the hill on a Friday, only to march them straight back down just a little bit later. If those on the Government Front Bench do not share his analysis, will he force a vote on the Bill, or will he once again march his troops back down the hill?
Mr Chope: The hon. Gentleman is uncharacteristically disparaging, if not insulting. First, I am not aware of having any troops. Secondly, if he is referring to the fact that I withdrew my two earlier Bills—the Training Wage Bill and the Minimum Wage (Amendment) Bill—he makes a fair point. However, I withdrew those Bills from the Order Paper because their provisions are incorporated in the Employment Opportunities Bill word for word. Having the good fortune to have secured a debate that could go on for five hours, I thought it better to have one, proper debate, rather than three separate debates. If it is the hon. Gentleman’s accusation that I withdrew those two Bills so that they could be incorporated into this Bill, I plead guilty.
So far as forecasting what will happen after the Minister has spoken, I cannot do that. When the Whips ask, “How will you be voting?”, I always say, “I’m going to wait and hear what the Minister says,” because I have an open mind on these issues. The Minister may well announce that he will support my Bill. Indeed, I had the wind taken out of my sails last Friday when a Minister said just that, and my Bill was unopposed on Second Reading.
Mr Chope: I am disappointed about that, because it sounds as though my hon. Friend may have come to the Chamber with his hands tied—perhaps by the coalition strings—and unable to address the arguments that have been deployed. Perhaps he will tell us a little more about that in due course.
Mr Chope: I certainly do have the guts. Should the matter arise, I would obviously need two people as Tellers, but it would be good to test the will of the House, if the Government are indeed as intransigent as it seems they are from what the Minister said in his short intervention.
Mr Bone: I hope that my hon. Friend is not missing the point. The shadow Minister—the hon. Member for Harrow West (Mr Thomas)—has been really helpful, because clearly the Opposition are fully behind the Bill and want to have a Division to help us. My hon. Friend should please not miss that point.
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Mr Chope: A Division puts people’s positions on the record. For example, the hon. Member for Manchester Central (Tony Lloyd), who says that he supports the Bill—certainly clause 1, if not all of it—might be forced into the position of voting against it, but that would then be on the record. If he wants to vote against the Bill, I hope that he will have the opportunity to do so. I cannot remember how many Bills of mine have gone to a Division this Session—my hon. Friend might know the exact number—but quite a lot of them have. I assure the hon. Member for Harrow West that there is no deal between me and the Government to discuss the Bill and for me then tamely to withdraw it, but obviously I am conscious of the fact that we can have a Division on the Bill only if it is not talked out beyond 2.30 pm. We would also need to take into account the other, equally meritorious Bills seeking debate this morning.
Nick Smith (Blaenau Gwent) (Lab): I would encourage the hon. Gentleman to have a Division on his Bill, which I see as a bob-a-job wages plan. In Blaenau Gwent we would definitely be against his plans to allow, as he put it previously,
“freely consenting adults”
“opt out of the minimum wage”.—[Official Report, 10 February 2009; Vol. 487, c. 1258-59.]
Mr Chope: I do not have time to look up the unemployment figures in the hon. Gentleman’s constituency, but I am sure that all those without jobs who are seeking them will be really pleased to know that they have his full-hearted support for opening up the labour market and giving them better employment prospects.
This Bill is about the fundamental freedom, liberty and right to work. It also has consequential benefits for the competitiveness of our economy. Clause 1 would save quite a lot of money for the taxpayer, and the other clauses would generate more employment and less dependency on benefits. This is a really good Bill, and I commend it to the House.
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
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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.
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
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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.
Mr Nuttall: I am pleased to hear the hon. Gentleman’s welcome for clause 1. Does he think that asylum seekers and others covered by the clause should have the right to work for less than the minimum wage if other people should not?
Tony Lloyd: No. If that is what the hon. Member for Christchurch is proposing, I have absolutely no sympathy with that view. The reason for having a floor is the ambition to prevent the undercutting of wage rates for individuals, whether they are born nationals, as the hon. Gentleman would have it, or asylum seekers. The suggestion that the hon. Member for Bury North (Mr Nuttall) has just made lacks merit because it would erode the whole concept of a minimum floor below which people ought not to be expected to fall.
I want to deal with the argument put forward by a number of Conservative Members that it is legitimate to do away with that floor. They have cited reasons of competitive pressure and the black economy, to which the hon. Member for Northampton South (Mr Binley) referred. Of course we know that the black economy exists and that it exerts a dangerous influence at the bottom end of the labour market, but we do not want to make it a model for how we deal with the whole economy. We should be seeking to get rid of the black economy, rather than institutionalising it by getting rid of social protection relating to wage rates.
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That same black economy erodes health and safety standards at work. In my somewhat distant youth, I worked for companies that thought health and safety was an optional extra, and that put my life and those of other employees seriously at risk. The minimum wage and health and safety legislation all form part of the same debate, which we have had many times. I know that different views exist, but I believe in a proper floor below which people in a decent society should not be allowed to fall.
Mr Binley: Does not the hon. Gentleman recognise that most employers want good employees? If they want good employees, they have to look after them. The great majority of employers in this country, certainly in the small and medium-sized enterprise sector, think in that way. The suggestion that all employers are evil, which seems to be emanating from the hon. Gentleman, is absolute nonsense. Will he admit that?
Tony Lloyd: I do not have to admit that, because I have not indicated that that is what I believe. Of course there are many good employers, and they should not be forced to face competitive pressures from the unscrupulous ones who would undercut them. That is the reality in the black economy; it would also be the reality if we had a differential or arbitrary minimum wage rate. That would result in the good employer who wanted to pay his or her employees a decent wage being undercut in the marketplace by the rogue employer. Of course I am not claiming that rogue employers are in the majority, but, sadly, they exist in many different areas of our national life. That is why we have to have floors through which people must not fall.
The hon. Member for Shipley asked me about unemployment rates. I cannot quote him the figures, but I am sure that when he makes his own speech, he will probably have them to hand. Let me tell him something that I know he will disagree with profoundly: nobody has demonstrated any link between the levels of unemployment in our society and the introduction of the national minimum wage. The last person who I think tried to put that concept forward was the former Member for Folkestone and Hythe and sometime leader of the Conservative party—perhaps I should call him the noble Lord Howard. He once claimed in a debate about the minimum wage that it would see the loss of 500,000 jobs, only to claim later that it would result in 1 million or 2 million job losses. When it was brought in, in 1999, we did not see that impact on employment; indeed, we saw employment levels rising.
Mr Bone: As usual, the hon. Gentleman makes a powerful speech in line with his beliefs. To put the record straight, he talks about what the then Michael Howard said, but at that time the Labour party was promising to bring in the minimum wage at a much higher rate than it actually did. If it had been brought in at that higher rate, it would have resulted in more unemployment.
That simply does not square with the facts. I lived through that period and, more importantly, I was a member of Labour’s employment Front-Bench team that began to develop national minimum wage
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policy and I can think of no occasion when we over-promised on the national minimum wage. Indeed, the hon. Gentleman should know that some people now feel that the Labour party under-promised what it might have done across a whole range of issues in those early days; it certainly did not over-promise. If he went back to check the record, he might want to acknowledge that he got this wrong.
Mr Thomas: As ever, my hon. Friend makes a strong and powerful case. Given his experience in helping to devise the minimum wage policy, does he recall the decision at the conference of the Federation of Small Businesses in 1997 to support a national minimum wage sensibly negotiated? Is that not a sign of the support that existed for the introduction of the national minimum wage at the time and a reason why it continues to have strong support from business?
Tony Lloyd: To be totally frank with my hon. Friend, I do not remember that, but I am very grateful to him for reminding me. He makes a very important point. The idea that the minimum wage is some kind of creation by the ultra-left or the most luddite of trade unions is ridiculous. The minimum wage has had support and continues to have support across a whole range of different groups in our society, including groups representing small businesses. The Low Pay Commission comprises people not just from one side of the employment divide; employers are represented on it and they play a constructive part. As Conservative Members will know, those employers have been supportive of the changes in the level of the minimum wage over time.
Mr Binley: I recognise the hon. Gentleman’s great experience in these matters. He will remember—I believe this to be true—that the Federation of Small Businesses did not come to that position until after the will of the Government had been made absolutely clear, when it became politic from its perspective to adopt it. Is that not the truth of the matter?
Tony Lloyd: I am in some difficulty there in that having admitted that I did not remember the FSB making the decision in the first place, I am reluctant to claim that I know how it made that decision.
Let me use the hon. Gentleman’s point as an important example. He is describing circumstances where groups of people can be coerced by political pressure into making a decision that runs counter to their own best interests. That is the line of argument he adopts about the FSB—that it was dragooned by greater power into making that decision. Is that not precisely the problem with what the hon. Member for Christchurch wants in the workplace? Cannot unscrupulous employers say to weak individual employees—people weak in the sense of their bargaining position relative to their employer—something like, “I, your employer, want to persuade you that it is in your interest to drop your wages below the minimum wage”? It is very difficult to accept that as a legitimate element in the Bill, as we know that unscrupulous employers do that to their employees. I think the hon. Member for Christchurch referred to “the regular plodders” or used some term like that. Some people in our society do have genuine social difficulties in negotiating their wages and they need our protection; they do not want us to take away the minimum floors that protect their wage rates.
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Mr Binley: I thank the hon. Gentleman again for being generous in giving way, but is he not perverting the meaning of the clause, which makes it quite clear that this happens only when an employee, not an employer, wants to argue for a lower wage. Is that not the truth of the matter? Is the hon. Gentleman saying that unscrupulous employers throughout the nation will go out to their employees and in some way victimise them and force them to argue for that? Is that what he expects us to believe?
Tony Lloyd: I do not know what the hon. Gentleman believes as it can be quite difficult to work it out, but I suspect that we do not have much in common on these issues. Yes, I do think there is a real danger of that. I know it, as I have worked for employers who were extremely dubious in their labour practices. I know that when people are young and inexperienced and they need the work, it is difficult for them to say to an employer, “No, I will not do that.” The hon. Gentleman might be surprised to find out that that is why trade unions grew up—because people needed collective protection. It is why trade unions and political parties like the Labour party campaigned for a national minimum wage—because people at the margins in our economy need that collective support, through collective action or by legal support. Indeed, it is why the Government Front-Bench team has been persuaded of the need for a national minimum wage. If the Government did not believe in the need for a basic floor below which people cannot fall, they would not have opposed the Bill and supported the national minimum wage.
There is a gulf in understanding of how the world of work works between the hon. Member for Northampton South and myself—and ever may it remain thus, as our experience might have been different. Perhaps he has met only benign and happy employers—I am sure he was one of them—but I have met some quite malign and quite nasty employers. One day, I will perhaps buy the hon. Gentleman a half pint of our subsidised beer and tell him all about it.
Mr Binley: I look forward to that and thank him for the half pint. Does the hon. Gentleman not recognise, however, that unless an employer has working people who want to do the job and want to be involved, he will not get the sort of work out of them that he clearly needs—especially in the SME sector?
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.
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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
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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.
If we view the minimum wage in terms of what it can buy rather than the actual amount involved, it is clear that it is worth a great deal more in the hon. Gentleman’s constituency than it is in, say, London. Might that be an argument for two different rates? I do not know the answer, but I should like to hear what he thinks.
Tony Lloyd: That is a genuine issue for debate. It is obvious that it is much easier for someone to live on the minimum wage in, for instance, the north-west of England than in central London. That is why the Mayor of London has begun to advocate strongly—I think I agree with him on this—the introduction of a living wage, which does not simply enable people to operate at or below some notional national level, but recognises such factors as housing costs. However, we must still maintain a national floor through which people cannot fall.
Nick Smith: I congratulate my hon. Friend on what I consider to be a sensible defence of the minimum wage. Does he agree that the Bill’s “bob a job” wages plan would dramatically undermine it, particularly in areas such as mine in south Wales, where it helps to boost local economies?
Tony Lloyd: That is the point that I was making about the word “national”. It ought to be recognised that, in one nation—whether we measure it from the tip of Scotland to the far south or from the west to the east—we are all in this together. We cannot have an economy that is dislocated. Although the last Labour Government got some things right and introduced some valuable measures, they failed to wrestle successfully with the regional impact of economic decisions. The dash for the City over-emphasised the needs of a particular region of the south-east at the expense of the rest of the economy. The level of the pound proved disadvantageous to manufacturing industries: it hurt south Wales, parts of the north of England, and even parts of the traditionally industrial midlands. There are significant reasons for our failure to operate entirely effectively in relation to the national economy, and, as my hon. Friend suggests, we should not lose sight of the important role of the national minimum wage in that context.
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Let me say something about the training opt-out. The hon. Member for Christchurch did not mention the fact that when the minimum wage was first introduced in 1999, there was also a six-month training discount called the development rate. In 2005, the Low Pay Commission recommended that it should be discontinued, because it had become totally discredited. Not only was there no evidence that employers claiming the discount were training employees; there was evidence that they were not training. As my hon. Friend the Member for Harrow West (Mr Thomas) pointed out to the hon. Member for Christchurch, the Bill contains no provision guaranteeing the quality of even the quantity of training.
There are important issues that the House should debate in relation to how we train in our society. I have strong views with which even my party’s Front Benchers may not always agree. For instance, I still believe that we should consider imposing a training levy on those who will not train. As things stand, a freeloading bad employer can undercut a good employer by refusing to train, and can then poach the product of the good employer’s training. We ought to think about those issues, but I do not think that we should do so in the way proposed by the hon. Gentleman. I do not believe that the Bill will produce different results from the old development rate. There were good reasons for getting rid of that, and I think that he should think carefully about what he has advocated in his Bill. It simply would not work. It would operate as a perverse incentive for rogue employers, and I do not think that we should give them incentives.
This has been an interesting debate, and I shall now draw my remarks to a conclusion as I know that other Members wish to contribute to it. In a way, I hope the hon. Gentleman does press the Bill to a Division, as it will be interesting to count Members through the Lobbies, although I suspect that there will not be enough of us around today for that to be a defining moment in the political history of our Parliament and the economic history of our society.
I do not think the hon. Gentleman is a mean-spirited human being; I say that genuinely, although I cannot say it of all the people who advocate effective gouging of the minimum wage structures. I think his view of how the modern economy works is profoundly wrong, however. It is important that we debate this matter from time to time because although some Conservative Members do not believe this, it is a tough, tough world out there for those at the bottom. We should not return to a tough world in which young kids are paid less than £1 an hour, and adults are paid between £1 and £2 an hour, because that kind of society is both irresponsible and, at best, amoral. We want a society that has basic social standards for all our citizens, and where we can say to our young people, “Get into the world of work because you will be paid well.” We want a society where the “regular plodders” to whom the hon. Gentleman referred are not forced to work hour after hour to take home an unacceptable level of pay, but can be paid a dignified wage because they contribute in the best way they can. That is the kind of society to which we ought to be aspiring, and it is not so very difficult to achieve, but it would be a lot more difficult if we were to accept the premise of the Bill.
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Mr Edward Leigh (Gainsborough) (Con): On a point of order, Mr Deputy Speaker. Have you received any request from the Government this morning to give an urgent statement on the crisis in the eurozone? This is urgent and important. President Sarkozy and Chancellor Merkel are locked in discussions, the Commission is battling to reach an agreement, the Greeks are being prevented from devaluing, and our own people are threatened with having to pay for a £1 billion bail-out. Are Treasury Ministers coming here today to give a statement so we can question them on this important matter?
Mr Deputy Speaker (Mr Lindsay Hoyle): I have no knowledge of a statement to the House being prepared; I have not been given notice of that. As the hon. Gentleman knows, it is not for me to ensure such a statement is given; that is up to the Government.
Mr Binley: Further to that point of order, Mr Deputy Speaker. We may be in a very serious crisis indeed. Greece is no doubt bankrupt. In addition to our international obligations, our banks are owed tens of billions of pounds, and that will impact massively on Britain’s own financial standing. How can we use our abilities through you, Mr Deputy Speaker, to ensure there is a statement not later than Monday of next week?
Mr Deputy Speaker: The hon. Gentleman knows that that is not a point of order and it is not a matter for the Chair, but I am sure people in high office are listening, and that his comments will have been taken on board.
Philip Davies (Shipley) (Con): It is bizarre that the hon. Member for Manchester Central (Tony Lloyd) thinks that it is appalling for young people to be going out to work for low wages, and that he would therefore prefer them to be sat at home watching Jeremy Kyle and “This Morning” and visiting their local amusement arcades, rather than having gainful employment. That is a matter for him, of course, and we all have our own views on what we think is best for people to do. I think that working is better than doing as the hon. Gentleman suggests, but he obviously disagrees.
I have risen to support my hon. Friend the Member for Christchurch (Mr Chope), and to commend his courage, because there are certain political views people are not allowed to hold. The principle of free speech fell away in this country a long time ago, and it certainly went out of British politics a long time ago. Over time, a situation has arisen whereby we are not allowed to express certain views in polite company, such as questioning the merits of sex education in schools. Also, in the previous Parliament nobody was allowed to question the benefits of the Climate Change Act 2008.
It is impossible to have any sensible debate on the national health service, too, as it has become a kind of religion. We have had a catastrophic health statement this week, ruling out competition. There are clearly no-go areas in the arena of public debate, on which the two Front-Bench teams join together so there is no proper debate as to how we can best take matters forward. On the NHS, for instance, the social insurance systems on the continent are far superior
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and give patients a much better deal, but there is no proper debate of how we might introduce such insurance systems.
Philip Davies: Mr Deputy Speaker, you would not want me to start talking about the national health service in this debate, so I shall resist my hon. Friend’s tempting offer, but he is absolutely right that it is considered unacceptable in politics to argue for certain unpopular causes. I always ask people to celebrate anybody in politics who will stand up and say something controversial or unpopular, because I think they are doing a great service to our democracy, even though they may be insulted by Labour Members. I therefore commend my hon. Friend the Member for Christchurch on bringing this important issue before the House, and for trying to generate a grown-up debate about the benefits, or otherwise, of a fixed national minimum wage that people are not allowed to get out of.
I have always believed that a political consensus is usually a precursor to a disaster. Every party in this House supported joining the exchange rate mechanism, yet it turned out to be a complete disaster. The setting up of the Child Support Agency had cross-party support and it was seen as a great thing, but it has been a complete fiasco. Everyone across the political divide has had to support the setting up of tax credits, too, yet anybody who has had any dealings with the system knows that it has been a complete fiasco as well. The fact that there is political consensus in support of a measure does not mean to say it is good, therefore; it just means to say the measure is likely to be politically expedient.
Mr Chope: My hon. Friend makes a good case. Does he agree that that problem is not confined to our Parliament? The political consensus getting it wrong is precisely what happened in Greece: there was cross-party consensus that the country should join the euro, and what a mess they have made of it!
Philip Davies: My hon. Friend is absolutely right. We should never allow political expediency to prevent a serious debate about what is right, which is why I particularly commend my hon. Friend for raising this issue.
I apologise for not having been present in the Chamber for the beginning of my hon. Friend’s speech. He may well have said then what I am about to say now, but if he did not, I certainly wish to do so. We must acknowledge that the introduction of the national minimum wage has been a huge benefit to a lot of people in employment. As a result of the national minimum wage, the pay of a lot of people who were being paid a low wage went up, so it has been a great success for them. It would be churlish to argue otherwise. I certainly would not pretend that the national minimum wage has been a total disaster for everybody, because it clearly has not. However, just as I would not argue that, I think it would be churlish for Labour Members to put on their political blinkers and just see the benefits that have been accrued by certain people, without being open-minded enough to look at the potential downside of a national minimum wage in its current form. If Labour Members do not think there are any downsides whatever from having a national minimum wage, they are either totally blinkered in their view or they do not live in the real world.
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Mr Thomas: Given the hon. Gentleman’s strong support for the Bill, does he think there should be a vote on it, or will he encourage his hon. Friend to back down in the face of his Front-Bench team’s opposition to it?
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
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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
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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.
“minimum wages may cause a transfer of jobs between groups such as the substitution of more skilled for less skilled workers”.
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place a great disservice if we did. I am appalled that Labour Members, who supposedly—as they claim—represent the most vulnerable in society, are perfectly happy for those people never to be given the opportunity to get a job as a consequence of Labour’s policies either on this matter or on benefits.
Mr Leigh: My hon. Friend is making an important contribution and it is important that we have this debate, but let me ask him a question as a critical friend. Let us forget the fact that there is a minimum wage at the moment. Why should a disabled person work for less than £5.93 an hour? It is not a lot of money, is it?
Philip Davies: The point is that if an employer is considering two candidates, one who has disabilities and one who does not, and if they have to pay them both the same rate, which is the employer more likely to take on? Whether that is right or wrong and whether my hon. Friend would or would not do that, that is to me the real world in which we operate. The people who are penalised are those with disabilities who are desperate to make a contribution to society and who want to get on the employment ladder, but find time and again that the door is closed in their face. If they could prove themselves earlier and reassure the employer who took them on that they would not cause a problem in the way the employer might fear—I am sure that there are a lot of myths out there and that many of these people would be just as productive as those without a disability—they might well move up the pay rates much more quickly. At the moment, they are not getting any opportunities at all.
We all know that some employers break the law and pay below the national minimum wage, but it strikes me that the only way employers are likely to get away with that is if they employ illegal immigrants. If an employer is employing a British citizen or someone who is here legally and tries paying them below the minimum wage, legal action can be taken against them, they will face a huge fine and the employee can do something about it. If that employer is employing an illegal immigrant, the power rests with the employer, because they will judge that the illegal immigrant will not take up the case officially. If they do, their illegal status in this country will be exposed and they will be turfed out of the country.
One consequence of the national minimum wage is that it encourages illegal immigration into this country. Illegal immigrants know that they can get employment below the national minimum wage and are happy to do so because it is probably higher than the wage they would earn back in their country. They also know that they will have no problem getting a job because some employers will be crying out for someone whom they can pay less than the national minimum wage. I am not sure whether any research has been done on this, but I would be interested to know how much illegal immigration into this country has come about as a result of the introduction of a national minimum wage.
Whatever the effects on employment of a minimum wage are in general, its effects in a recession must be worse. My hon. Friend the Member for Christchurch may well have made this point before I entered the Chamber, as I was a few minutes late, but people will recall that at the start of the credit crunch, or recession,
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a couple of companies—my hon. Friend, who is more knowledgeable on this than I am, will correct me if I am wrong, but I am sure that those companies were JCB and Corus—told the people working there that the wage bill needed to be reduced by 20%, so either 20% of the staff could be made redundant or everyone could take a 20% pay cut. One way or another that wage bill had to be reduced. If I remember rightly, the workers in those places—JCB sticks in my mind in particular—got together and voted to take a 20% pay cut. They made that choice themselves. Rather than being made redundant, they chose to take a pay cut.
Mr Bone: My hon. Friend is making a very powerful speech, but does he agree that a 20% pay cut is not a 20% cut in take-home pay for those people who take the cut, because they save on the tax, and is more than a 20% saving for the employer because there is not the same on-cost? It helps both ways, but it is not quite the same.
Mr Leigh: Again, it is very important that we tease out these arguments. Those people took a pay cut, but presumably it still did not reduce their wage below the minimum wage. What worries me about my hon. Friend’s argument is that although I know the Bill says that everything will be voluntary, will there not be massive pressures from employers? Might they not tell staff that they are in awful trouble and ask whether they will consider taking less than the minimum wage? Might they not say to a disabled person, “You’re not quite so good at doing this job; will you please take less than the minimum wage?” Although the provision is ostensibly voluntary, there will be pressure on the employed to take less than the minimum wage.
Philip Davies: My hon. Friend might think that such choices should be available only to people who are highly paid, but a firm in which all the staff are paid the minimum wage might be faced with the same predicament. Why does he think that the only people who should have the choice are highly paid people? Why should more lowly paid people not have the same option to take a pay cut or to be made redundant? Why does he want to deprive them of that choice? Why does he think that only highly paid people are capable of making that decision? Why are not more lowly paid people capable of doing so, if they feel it is in their best interests? To force those people to be made redundant in such circumstances is, I think, an outrage. It is an outrage that we would not allow them to make the choice themselves. The whole principle is that the Government and state know best and know what is best for everybody, so they will not even allow anybody to make the choice for themselves.
My hon. Friend knows that our hon. Friend the Member for Gainsborough (Mr Leigh) can be a bit paternal at times, but I wonder what he would think of what happened in Ireland? Owing to the centralised situation to which my hon. Friend the Member for
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Shipley (Philip Davies) refers, the Government decided to reduce the minimum wage in order to get out of a financial hole.
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.
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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.
Jacob Rees-Mogg: I was concerned about my hon. Friend’s attack on the Victorian age, which was one of the finest ages in British history, when most employers were benevolent, kindly, good and not out of a Dickens novel: they were more Trollope than Dickens by and large.
Philip Davies: I can always rely on my hon. Friend to speak up for the Victorian age. In fact, he usually speaks up for an age before the Victorian age, so I commend him for being so modern, but he is right. In passing, I should say that I know that better than most, because in my constituency, I have Saltaire, which is a world heritage site made famous by Sir Titus Salt, who had his mill in Saltaire, built houses all around the factory for his employees and was the epitome of a benign Victorian mill owner, so I thank my hon. Friend for allowing me to give a plug to Saltaire in case people are looking for a great place to visit.
My hon. Friend the Member for Christchurch made a point about tax. It is perverse that hon. Members can be so wedded to the idea that it is outrageous for anyone to be paid below £5.93 an hour, yet in the next breath be perfectly happy for those people to be taxed. If we are going to have a national minimum wage, if it is a minimum that people can be expected to earn and live on as an employment wage, surely those people should not be taxed on whatever happens to be the minimum wage.
I cannot make a logical case for why the minimum wage should be taxed. It is not that people are taxed by just a bit. People in full-time employment on the minimum wage are taxed, if income tax and national insurance contributions are combined, at about £1,500 a year. If people want to argue for a minimum wage, that is a perfectly respectable position to hold, but surely those same people should be arguing that people on that wage should not pay any income tax. If Labour Members want to confirm now that they agree that people earning the minimum wage should not be taxed, I will happily give way.
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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.
Where the hon. Member for Manchester Central and I disagree is that I think that reducing taxation stimulates the economy and ends up giving more revenue to the Exchequer. I know that he has been about a long time. He will find that, in the golden age when Mrs Thatcher was Prime Minister, she proved beyond all doubt that, if we cut the rate of tax, we can increase the receipts from tax, because it stimulates the economy.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I have looked at the Bill and I am not sure where it deals with taxation. I know that it is about the minimum wage but we are drifting into the area of taxation, to which I know the hon. Gentleman would not want to take us.
Philip Davies: As ever, Mr Deputy Speaker, I am grateful for your guidance. I am sure that you are right that I was in danger of being taken away from the main issue by the hon. Member for Manchester Central. I am happy to give way to my hon. Friend the Member for Wellingborough (Mr Bone), unless he feels that he will also incur the wrath of the Deputy Speaker.
Mr Thomas: On the question of take-home incomes for low-paid workers, and given the hon. Gentleman's enthusiasm for tax cuts, I wonder whether he saw the comments yesterday of my right hon. Friend the Member for Morley and Outwood (Ed Balls), the shadow Chancellor, calling for a temporary drop in VAT. That is surely a perfectly sensible way of meeting the objectives that the hon. Gentleman wants to achieve.
Philip Davies: Mr Deputy Speaker, I fear that I would incur your wrath again if I were respond to that, so may I just say in passing that I thought what the shadow Chancellor said yesterday was drivel. I will now move on to the rest of the Bill.
My point is that the minimum wage could be reduced by about a pound an hour, which would be a great benefit to employers and may encourage some of them to take on more people. If tax rates were adjusted accordingly and those people currently earning the
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minimum wage of £5.93 an hour were taken out of tax, they would not be any worse off. Therefore, no one would be penalised by that. Those people would still take home the same rate of pay as they do now, yet it would be a great fillip to employers, many of whom are struggling; as my hon. Friend the Member for Wellingborough helpfully pointed out, there would be benefits in terms of the employment contributions that they have to make as well.
Mr Leigh: Equally, there is a perfectly coherent point, coming from a Conservative direction, that it is good that low-paid people should pay some tax, because that is how they involve themselves in the running of the country and paying for the country.
Philip Davies: I have heard that argument. I do not want to be sidetracked, but I do not agree with my hon. Friend. The fewer people at the lower end who pay tax the better. I do not see why we should expect the lowest paid in the country to contribute to taxes. They should be allowed to take home and keep what they earn. It is very rare that I say this to my hon. Friend, but I simply do not agree.
Jacob Rees-Mogg: People on the minimum wage, regardless of their income tax position, will also pay VAT, council tax, tax on cigarettes particularly, tax on alcoholic beverages and often tax by playing the lottery. They will be contributing, even on the minimum wage.
Philip Davies: My hon. Friend is absolutely right; many of those people already pay an excessive amount of tax through their spending, as he says. The best thing that we could do is give them some relief in the income tax that they pay. There is an easy way of ensuring that we can help to stimulate the economy without penalising anybody in the amount that they take home. If the only purpose of the minimum wage is to ensure that people take home a certain amount of money each week, I do not see what objection there could be to people taking home exactly the same amount of money.
I could talk about the provisions in the Bill on asylum seekers. I am not entirely persuaded of the case made by my hon. Friend the Member for Christchurch, because I wonder whether the Bill might unintentionally encourage even more people to come here falsely claiming asylum. He did go some way to persuading me of the merits of his case, so I would not allow that to be an objection to my supporting the Bill. I would be happy to support the Bill because of the minimum wage provision that allows people to choose whether they wish to be subject to it or not, and I would perhaps try to delete the part on asylum seekers in Committee. If hon. Members support the provision to allow asylum seekers to work and to be paid, they could equally support the Bill on Second Reading and attempt in Committee or on Report to delete the part on the minimum wage that they do not like. Given that that opportunity is there for them, I hope that we will not hear any weasel words from people who will be seen to have voted against allowing asylum seekers to work and to be paid. They are voting against that just as much as they are voting against anything else in the Bill. I hope that the hon. Member for Manchester Central will not try to weasel his way
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out of the fact the he is in danger of voting against something that he claims that he enthusiastically supports. He could try to delete the part he does not like at a later stage.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. This has been an important debate, but we are in danger of overstepping the mark. “Weasel” is right on the edge, and I do not want the debate to deteriorate. It is a good debate and we should not insult each other.
Jacob Rees-Mogg: I encourage my hon. Friend to elaborate a little on his views on clause 1, as it is tremendously important. I know that the people of Shipley will be interested, and I am pretty sure that the people of North East Somerset would like to know what he thinks.
Philip Davies: My hon. Friend tempts me. I have no problem in principle with what my hon. Friend the Member for Christchurch said in terms of people being allowed to work, particularly when they have been here for so long. There is a massive issue—the hon. Member for Manchester Central also made this point—where people have been waiting years and years for their cases to be heard and in some cases have set up a family and are still deprived from being able to work. I would prefer to tackle that by speeding up the process, rather than by accepting that the process will take ages and allowing them to work. That is my preferred solution. That is why I am not so enthusiastic about this part of the Bill. However, I will not allow that to prevent me from supporting the Bill if my hon. Friend puts it to a vote.
I appreciate that the national minimum wage is popular, I understand perfectly that it is politically expedient not to oppose it in any shape or form, and I absolutely accept that many people in this country have benefited from the national minimum wage and have seen their pay rise as a result. I do not want to undermine that point. Many people in my constituency and others have benefited from it. But in politics it is crucial that we do the right thing, even if it is sometimes unpopular to do it or to say it. It is essential that we have a proper, sensible debate about these issues to ensure that we get them right. Instead of engaging in a sensible debate where we all agree that everyone has the best interests of the public and low-paid people at heart, those who disagree with us on these matters tend to engage in some rather childish name calling and abuse, often through a lack of reason in their debates.
We want the best for everybody, and although Government Members might have different ways of going about it and a different perspective on it, nobody should be under any illusion, because we want the best for low-paid workers and people who are out of work just as much as Labour Members. I do not decry their different perspective, and I hope that they will not decry ours but instead be grown-up enough to accept that the national minimum wage has made it harder for some people to access the jobs market. If Labour Members are not prepared to accept even that, we are not going to get anywhere with trying to tackle the scourge of unemployment.
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The hon. Member for Manchester Central either would not answer my question or did not know the answer to it, but the fact is that unemployment has gone up since the national minimum wage was introduced. When it was introduced, unemployment was at 1.7 million and youth unemployment was 1.1 million, and now unemployment is at 2.43 million and youth unemployment is at 1.5 million. That has happened since we have had the national minimum wage. Whether people like it or not, and whether it is convenient to point out those facts or not, they are the facts of the matter.
I am sure that all Members want everybody to have the opportunity to get a job, to develop their career and for it to flourish in every possible way, but for some people the national minimum wage may be more of a hindrance than a help, and if those people—in my view, some of the most vulnerable people in our society—consider it a hindrance and feel that for a short period taking lower pay to get on the first rung of the jobs ladder is a good thing, I do not see why we should stand in their way.
I hope that we can have that sensible debate, so that we can help everybody in society—not just people in work, but those people who are really struggling to secure their first opportunity on the jobs ladder.
Mr Gareth Thomas (Harrow West) (Lab/Co-op): I rise to set out the Opposition’s view on the Bill. In so doing, I congratulate the hon. Member for Christchurch (Mr Chope) on securing such a desirable spot to set out his views on how the laws of this country should change. No one in the House is remotely surprised that he should have secured this spot; he is a skilful exploiter of House procedure and an essential Friday participant.
This is probably my first opportunity to exchange views with the hon. Gentleman on private Members’ Bills since our positions were reversed some time ago—he was leading for Opposition Front Benchers one Friday and I was hoping to secure the support of the House for reforms to modernise co-operative law. I fear that I cannot be as helpful to him today as he was to me then.
Let me be clear, however, that I hope that there will be a vote, and that the hon. Gentleman will have the courage of his convictions and encourage the House to divide. I suspect that he does not have the courage of his convictions and will not put his Bill to a vote. Nevertheless, during the debate he has made a number of interesting points, and I shall touch on them briefly.
The hon. Gentleman mentioned the significance of training for future of employment, and I very much agree with that. He also touched on the growing crisis of youth unemployment, and rightly challenged his Minister to explain what the Government will do if they will not support his Bill. That may have been his coded way of echoing the Opposition’s call for a plan B on the economy.
The hon. Gentleman also mentioned the concern that some 20% of graduates are out of work. I simply pose the question, do we want more people in work? Of course we do, but should the Government direct the bulk of their efforts at encouraging low-paid, low-skilled jobs, as he appears—by moving this Bill—to imply they should; or should they encourage higher-skilled jobs for
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graduates to enter? That is one of the tragedies of the Government’s refusal to provide a loan to Sheffield Forgemasters.
The hon. Gentleman lamented the delay in the Home Office’s consideration of asylum applications. Sadly, with some 5,200 jobs set to go in the Home Office over the next two or three years, I suspect that his aspiration and that of most Back Benchers and Labour Front Benchers for the Government to clear the backlog of asylum applications is unlikely to be realised any time soon.
My hon. Friend the Member for Manchester Central (Tony Lloyd) also made a series of interesting points. He rightly drew the House’s attention to the work of the Better Regulation Commission, which highlighted the complete lack of a link between unemployment and the national minimum wage. He drew attention to the membership of the Low Pay Commission, and the important role of its business representatives in analysing economic conditions and ensuring that the minimum wage reflects economic realities across the UK.
The bulk of my hon. Friend’s remarks underlined the inequality in the relationship between the employer and the employee. The vast majority of businesses are highly reputable. I recognise the point made by the hon. Member for Northampton South (Mr Binley), who is not in his place, that it is very much in the interests of the business to protect and support its staff, and to help them to gain skills. The concern rightly outlined by my hon. Friend the Member for Manchester Central is that rogue employers—there were certainly examples of this from before the introduction of national minimum wage—may well be tempted to take advantage of the inequality in the power relationship between the employer and employee, and persuade the employee to take a worse rate of pay.
The hon. Member for Shipley (Philip Davies) also made a series of interesting remarks, not least in arguing that those with mental health problems or learning disabilities face greater challenges in finding work, which I accept. However, I cannot accept the logical conclusion of his argument that we, as a country, should accept that those with learning disabilities or mental health problems should accept lower wages than others.
I cannot support the Bill presented by the hon. Member for Christchurch. It would drive a coach and horses through the national minimum wage legislation and leave low-paid workers at risk of being exploited by unscrupulous employers who want to undercut other businesses that want, perfectly legitimately, to pay the national minimum wage.
Mr Bone: The shadow Minister is keen to have a vote. Therefore, if my hon. Friend the Member for Christchurch (Mr Chope) seeks to withdraw the motion, will the official Opposition oppose that withdrawal and call for a Division?
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Mr Thomas: It is for the hon. Member for Christchurch to press his Bill to a Division or not. We are ready to vote, and we will vote to oppose it. I look forward to finding out whether the hon. Member for Wellingborough (Mr Bone) intends to encourage the hon. Member for Christchurch to force a vote.
Nick Smith: One of the good things about being here for this debate is that it has reinvigorated my interest in politics, because it is an opportunity to argue against the pile it high, sell it cheap attitude that Government Members have towards working families in this country.
Mr Thomas: I welcome my hon. Friend’s attendance at and participation in this debate. If I am able to secure your indulgence, Mr Deputy Speaker, I hope to set out at greater length what the Opposition think would be a proper way to help working families, as opposed to this legislation.
Crucially, the Bill would enable the minimum wage to be lowered in areas of relatively high unemployment. It would undermine the national nature of the minimum wage, enabling rogue employers to compete on the basis of lower and lower wage rates. I recognise that the hon. Member for Christchurch, as he set out, has always been an unreconciled opponent of the minimum wage—he has been commendably consistent in his views. He must know, however, that with unemployment rising, the Bill would make it easier for minimum wage protection to be eroded.
As I hinted in an intervention on the hon. Gentleman, under clause 3, on the training wage, there would always be ways for employers to claim that training was being undertaken. There would be absolutely no quality control, and there would be a risk of lower wages as a result. Given the Government’s acceptance of the Low Pay Commission’s recommendation of an apprentice rate of £2.50 an hour, there is even less need for the training rate for which he argues. The apprentice rate recognises that someone is not yet up to maximum productivity, but the apprenticeship ensures that proper training is being undertaken, with the employer showing a genuine commitment to quality training.
The Bill would leave low-paid workers even more vulnerable to in-work poverty, and we certainly cannot support that. I gently suggest to Government Members that the minimum wage has been a huge success. It helped to raise pay for more than 2 million people when it was introduced, and some 50,000 low-paid teenagers received a boost in income when a minimum wage for 16 and 17-year-olds was introduced in 2004. When the Conservative party opposed the minimum wage back in 1997, it claimed that it would cost some 2 million jobs. In practice, 3 million extra jobs were created in the following 10 years.
Members may be interested to know how many people benefit from the minimum wage at the moment. Some 1,080,000 individuals were benefiting from it as of last October. In the south-east, where the hon. Gentleman’s constituency sits, there were some 110,000 individuals benefiting from it. In Yorkshire and the Humber, where the constituency of the hon. Member for Shipley is, there were some 100,000.
Philip Davies: I am enjoying the hon. Gentleman’s selective use of figures. Will he confirm that unemployment among adults and youths is now higher than it was when the national minimum wage was introduced?
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Mr Thomas: I do not have the figures to hand, but I believe that the hon. Gentleman is right. What I do not accept is a causal link between the national minimum wage and unemployment. I will come to that in a moment.
The enthusiasm of the hon. Member for Shipley for figures encourages me to set out that in London, some 80,000 people benefit from the minimum wage. I have given a series of examples that give a sense of the sheer scale of the benefit that it has brought our country.
Mr Chope: The hon. Gentleman talks about people who benefit from the national minimum wage, but I presume that what he means is that they are being paid no more than the national minimum wage. That is not to suggest that they would be any worse off without it. He is not suggesting that, is he?
I understand that there remains a significant problem of underpayment of the national minimum wage. The hon. Gentleman and the hon. Member for Northampton South alluded to that in their reference to the black economy. There is a real need for a continued effort to ensure proper enforcement of the minimum wage legislation. I hope that the Minister will explain how the Government intend to tackle that.
I worry that allowing employers to drop the requirement to adopt completely the minimum wage will begin to have another impact on the public purse, because the Government and the taxpayer will have to help, through the benefit and tax credits system, even more than they currently do those on poverty wages. One must ask why the taxpayer or indeed parents, as my hon. Friend the Member for Manchester Central alluded to in a sedentary intervention, must pick up the tab more than they do for the actions of rogue employers, as egged on by Government Members.
Where is the evidence that there would be a significant increase in employment if the Bill became law? In its most recent report, the Low Pay Commission says, and I paraphrase, that the evidence suggests that the minimum wage has not cut employment to any significant degree. The commission also argues that although the number of jobs overall in the economy has continued to fall, the number of jobs in low-paying sectors has increased since the end of the recession. There is therefore no significant evidence to suggest either that the minimum wage has led to job cuts or that economic recovery is being held back by the continued existence of the national minimum wage.
Undermining the national minimum wage would also have an impact on inequality in this country. We face continuing challenges to reducing inequality, and reducing the pay for the very poorest would only exacerbate inequality. Surely nobody in the House wants that.
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In preparation for this debate, I read the report of the Second Reading debate on the National Minimum Wage Bill from back in December 1997. The then Secretary of State, my right hon. Friend the Member for Derby South (Margaret Beckett), highlighted the impact that the abolition of wages councils had had on jobs in the 1990s. The right hon. and learned Member for Rushcliffe (Mr Clarke), who was then probably strongly supported by the right wing of the Conservative party—he probably is not now—had originally explained, when he was a member of the Government of the noble Baroness Thatcher, that they abolished wages councils to create employment opportunities, especially for young people and, in his words, to create an
“efficient labour market, where there are the minimum of constraints on the rights of employers and employees to agree to offer and accept jobs on contractual terms that suit them both.”—[Official Report, 11 February 1986; Vol. 796, c. 91.]
“Abolition of the councils…saw earnings in those industries covered, particularly for the new entrants, fall in real terms. But employment in those sectors did not increase relative to the rest of industry.”—[Official Report, 16 December 1997; Vol. 303, c. 164.]
The evidence from that period fits with more recent evidence that confirms that the national minimum wage has helped to increase employment. I referred in an intervention on the hon. Member for Christchurch to a paper published by the National Institute of Economic and Social Research, “The UK Minimum Wage at Age 22”, which was authored by Richard Dickens, Rebecca Riley and David Wilkinson. The paper examines the effect of the increase in the minimum wage at age 22 and various labour market outcomes. The conclusion is that there was a 2% to 4% increase in the employment rate of low-skilled individuals, and that unemployment had declined, in particular among men.
Before the introduction of the national minimum wage, there were many horror stories about low pay. Before 1997, the low pay unit found an example of someone working in a chip shop in Birmingham and taking home just 80p an hour. It also found a factory worker earning some £1.22 an hour and a residential home worker earning just £1.66 an hour. I ask the Government Members who are championing the Bill this question: do we really want a return to those days, because that would be the impact of the Bill?
Mr Chope: The hon. Gentleman has completely misrepresented the contents of my Bill, which would not abolish the minimum wage, but enable people, by mutual consent as adults, to opt out of it if they want to.
Mr Thomas: With all due respect to the hon. Gentleman, the situation is as my hon. Friend the Member for Manchester Central set out: by definition there is an inequality in the relationship between the employer and the employee, and a rogue employer wanting to take advantage of that inequality could force wages down, undercutting the wages paid by reputable—and the vast majority are reputable—businesses in this country that want to adhere to the national minimum wage.