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The Parliamentary Under-Secretary of State for Employment (Mr. Patrick Nicholls) : Obviously, I will deal as best I can with the points that have been made by the hon. Member for Alyn and Deeside (Mr. Jones). My right hon. Friend the Secretary of State for Wales is presently engaged abroad, promoting the interests of the Principality. My hon. Friend the Under-Secretary of State for Wales has been with me for almost the entire debate and has also worked closely with me. I understand the pressures that the Pontypridd by-election places on the hon. Gentleman, but I must make that explanation in response to his somewhat uncharacteristically ungenerous remarks about my hon. Friend.

Many hon. Members have made important contributions to the debate. In the time available, I shall answer as many points as I can. Certainly, this argument cannot be won solely by bandying around a stream of statistics. Far more important are the positive things that we have done to help those who actually are in need.

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At least two points are crucial to the debate. First, by any definition, there will always be those in society who are lower paid than others, or those who have lower household incomes than other people. Attempts to change that are doomed to failure, and for a good reason : it is impossible to do so. In a society of millionaires, anybody on £500,000 a year would be counted poor. Secondly, it must surely be true that, as a rule, a job is better than no job, and low pay is better than no pay. That is what the Opposition have conveniently chosen to ignore, and that is what the Government are putting right.

Our record in encouraging the creation of more jobs, helping more people back into work, and laying the foundations for a successful and growing economy cannot simply be pushed aside as irrelevant. Furthermore, despite everything that Opposition Members have said, the Government do not ignore the lower paid, the less well off or those households that live on the margins of economic viability. All the evidence bears out that proposition to the hilt. Since the Government took office, employment opportunities have increased by leaps and bounds. Jobs are increasingly available, and so is the training that helps people to get them.

The real blight is not the blight of low pay ; it is the blight of no pay at all and the depression and despondency that can go with it. For all their protestations, Opposition Members do no service to the people of this country by crying out for measures that would ultimately deprive many people of the pay that they now have.

Mr. Win Griffiths : Will the hon. Gentleman give way?

Mr. Nicholls : I shall not give way. I have been here for the whole debate. If the hon. Gentleman will allow me, I want to press on. My hon. Friend the Member for Thurrock (Mr. Janman) referred to wages councils, and so did the hon. Member for Orkney and Shetland (Mr. Wallace) and other hon. Members. Some points must be reiterated. The first should be self-evidently true, but it is apparently not so to the Opposition. It is that the situation in 1909 was vastly different from what it was in 1986, and from the present position. To listen to Opposition Members, one would think that the wages council structure as we now have it has achieved precisely what they want. But everything that we have heard from Opposition Members has demonstrated that the present system does not work. Therefore, the idea that the structure of the wages councils in some way deals with low pay simply does not wash. Even Opposition Members would have to concede that.

Mr. Ian Bruce : Will my hon. Friend give way?

Mr. Nicholls : If my hon. Friend will allow me, I will not give way. I shall certainly give him due credit. My hon. Friend also made the point that the present system simply does not work.

My right hon. Friend has made it clear that there is a consultation period and we cannot know what the result of that will be. Some of the consequences of the present system really should be looked at by anyone who has a genuine interest in the fate of the low paid. On average, since 1986, the yearly increase in the rates awarded by wages councils has been about 8.6 per cent. I

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urge Opposition Members to imagine what it must be like to be running a business and to be told that the least skilled in that business must be paid an increase of, for the sake of argument, 8.6 per cent. It does not stop there. Differentials are completely eroded because that figure must be paid throughout the business. Therefore, the idea that simply paying percentage rates to the lowest paid has no knock-on effect is simply wrong.

Several hon. Members, typically including the hon. Member for Birmingham, Ladywood (Ms. Short), have said that there is widespread evidence that employers are underpaying.

Mr. Ronnie Campbell (Blyth Valley) : Of course they are.

Mr. Nicholls : The hon. Gentleman bawls out from a sedentary position, "Of course they are", but the facts do not bear that out. It is clear from visits made by wages inspectors--the numbers of which have been constant under both Labour and Conservative

Governments--that about 97 per cent. of workers covered by wages councils are paid the correct rate. Opposition Members seem to be completely prosecution-minded and say that that is not enough and they want to see more prosecutions. I should have thought that the Opposition would be more concerned about doing something to ensure that the present structure of wages councils was abided by. If an inspector finds that due to a genuine misunderstanding-- [Laughter.] Hon. Members may laugh, but we are talking about the real world, not the world of their fevered imaginations. If the inspectors find that an employer has underpaid because of some misunderstanding about his duties, and he makes it clear that he wants to comply with the law, what would be the point in saying that there should automatically be a prosecution?

As 97 per cent. of people who are covered by wages councils are being paid the correct amount, for the Opposition to maintain that the law is being widely flouted simply will not work. That shows that the system does not work in improving low pay, but that is another matter.

The hon. Member for Orkney and Shetland made several points about wages councils and he referred to the debate on 28 April 1909 on the Trade Boards Bill. As Liberals are wont to do, he sought his inspiration from events that took place the best part of a century ago. He was apparently harking back to the golden days of 1909 when the system worked correctly. However, if he looks at the speech which followed that of Sir Winston Churchill, he will not find great approbation being given to the system. A Mr. T. F. Richards says : "we regret exceedingly that we are not in the schedules. I certainly should have liked to see the boot and shoe industry in the schedule".--[ Official Report, 28 April 1909 ; Vol. IV, c. 394.] If the hon. Gentleman thinks that people in 1909 were satisfied with the structure of wages councils, he is not correct.

Ms. Short : Will the hon. Gentleman give way?

Mr. Nicholls : No, I shall not give way. Time does not permit. Wages councils simply do not have the effect that Opposition Members would have us believe.

Let me deal now with something that we have not heard much about. The hon. Members for Newham, North-East

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(Mr. Leighton) and for Ladywood rather let the cat out of the bag. The cat that they released was the Labour party's policy. If I am wrong I shall give way immediately to the hon. Member for Oldham, West (Mr. Meacher), but I do not think that he said one word about the Labour party's policy on the low paid. They cannot intend to maintain the wages councils in their present form, because they do not work. Labour party policy is for a national minimum wage. I do not know whether the hon. Member for Oldham, West dissociates himself from that policy. One knows that, at times, he has trouble with particular aspects of Labour party policy. However, he is on record as saying as recently as 5 October 1988 that :

"a top priority for the next Labour Government must be a national minimum wage."

I do not know why the hon. Gentleman did not mention that, because it goes down well with his right hon. and hon. Friends. Perhaps he forgot that it was in the Labour party manifesto. I remind him--and one must hand it to Labour for their optimism--of what it said : "We will implement a comprehensive strategy for ending low pay, notably by the introduction of a national statutory minimum wage." Apparently, that is the policy which a Labour Government would operate. The hon. Gentleman told the House nothing about that. If he wonders how it goes down with some of his right hon. and hon. Friends, a number of them have shown already that they go along with it. However, there is a problem for the Labour party when it comes to a national minimum wage. I will intrude for a moment or two on some of the Labour party's private griefs. Presumably the hon. Member for Oldham, West will take account of comments by his right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley)--that great economist--who writing as recently as 1987 in his book "Choose Socialism" observed :

"If the law requires employers to pay a statutory minimum rate, and if workers in more highly paid industries negotiate to preserve their relative position, there can only be one possible outcome. The low paid remain low paid at a higher rate of inflation."

Just in case the message has not sunk in, the right hon. Member for Sparkbrook added :

"The real danger comes from the pretence that a national minimum wage could be introduced cheaply or easily."

Other Opposition Members could have told the hon. Member for Oldham, West about the fallacies in his thinking. He might have discussed them with his hon. Friend the Member for Birkenhead (Mr. Field), who could have explained the problems that a national minimum wage can cause. I refer to an article by the hon. Member for Birkenhead in The Times, in which he wrote :

"The higher statutory minimum wage has the drawback that it increases employers' costs. If implemented it will lead to significant increases in unemployment and a big jump in the rate of inflation."

Even if we do not agree with the analysis of the hon. Member for Birkenhead, at least he speaks in debates with great authority. His article went on :

"I calculate that the higher minimum wage target could result in a loss of more than 400,000 women's jobs, a 4.4 per cent. rise in the total wage bill, together with a 2 to 2.5 per cent. rise in prices." In case the hon. Member for Oldham, West is still not convinced about the efficiency or otherwise of a national minimum wage, he can do no better than talk to a former Minister of State for the Department of Employment who, when rejecting such policies, commented :

"blanket provision across the board, by its failure to discriminate, will not tackle the pockets of poverty which

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undeniably exist. It is better to have a discriminatory approach in the provision of social security benefits, perhaps supplemented by fiscal policies."--[ Official Report, 1 March 1977 ; Vol. 927, c. 164.]

If the hon. Member for Oldham, West is wondering which Minister of State that was, I can tell him that it was none other than his right hon. Friend the Member for Doncaster, Central (Mr. Walker), speaking from this Dispatch Box in 1977.

We can well understand why the Labour party's preferred policies, set out in their manifesto and endorsed by the hon. Member for Oldham, West, received not one single word of praise from the Front Bench today but had to be let out of the bag by other Opposition Members. What would be the effect of a national minimum wage? It would destroy jobs by increasing wages without increasing output. Employers' costs would increase, competitiveness would lessen, the total number employed would drop, and differentials would be artificially compressed--causing pressure to restore them, which would add to wage costs and erode competitiveness.

Ms. Short : Will the hon. Gentleman give way?

Mr. Nicholls : Out of misguided gallantry, I give way to the hon. Lady.

Ms. Short : Can the Minister explain why every other country in western Europe can afford a national minimum wage and Britain cannot? Has he seen the study by Cambridge Econometrics which examined every sector of the economy where there is low pay and showed in detail that a national minimum wage is not only affordable but creates greater efficiency?

Mr. Nicholls : The reason why other countries can get along with a national minimum wage is simply by ignoring it and refusing to uprate it. That is how they cover that side of the argument.

There was also reference to the European decency threshold. Listening to Opposition Members, one would think that it was a law or a policy adopted by every other country in the European Community and that only this country failed to abide by it. Let us look for a moment at what the so-called decency threshold is. It was suggested by a committee of independent experts in the Council of Europe which thought that it should be 68 per cent. of the national average wage, but it has never been endorsed by any member state, nor does it appear in the European social charter. It has not been endorsed by the governmental committee on the European social charter, and the charter does not refer to a percentage of average earnings regarded as an acceptable minimum. In other words, the idea that Europe has set a decency threshold is complete and utter nonsense.

Again it illustrates the fallacy which Opposition Members have shown throughout the debate in believing that what matters in the interests of the poor is the gap between rich and poor. Of course, the poor cannot live off the gap. The poor are not interested in the distance between themselves and those who are earning a great deal more ; they need to know what is in it for them. They need to know the relative strength of their position.

If the hon. Member for Newham, North-East wants to know what has happened to the lower paid in recent years, may I tell him that for a single person earning 50 per cent. of average male earnings, the real take-home pay has increased by 27.9 per cent. during the lifetime of the

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Government. For a married couple with one earner and two children, earning 50 per cent. of average male earnings, take-home pay has increased by 22.7 per cent. Those are the figures which matter. Those are the figures which the working poor can rely on. To say that it is the gap which matters shows a total lack of understanding. The debate was supposed to be about the blight of low pay, but for too many of our citizens the legacy of the Socialism of the 1960s and the 1970s was the blight of no job in the 1980s. Through the policies and efforts of the Government that blight has steadily receded. The debate has served to remind us that even now there is waiting in the wings a party which has learnt nothing from the past and which promises for the future merely the fruits of its own blinding ignorance. For the sake of the low paid and of those who are still without a job, Labour's miserable inadequacy has to be exposed. With their customary incompetence the Opposition have given us that opportunity. It was said of the French kings that they had learnt nothing and that they had forgotten nothing. The Opposition have gone one better. They have shown us that they have learnt nothing and forgotten everything. That is what the Opposition offer us today. One appreciates the demands that the Pontypridd by-election have imposed on the hon. Member for Alyn and Deeside, but let me remind him of the facts. If he had cared to tell us about the position in his constituency, he could have said that in just the last year the rate of unemployment has fallen by no less than 30 per cent. The hon. Gentleman failed to tell us that. If he is so concerned about average real earnings in Wales, why did he not tell us that during the period of the Labour Government the average earnings of male employees in Wales rose by a miserable 4.6 per cent. and that under this Government they have gone up by 15.9 per cent? Surprisingly the hon. Gentleman did not mention that. Again, if he looks at some of the other figures, he will see that they show a massive increase in expenditure in Wales. Why did the hon. Gentleman not remind us that the Welsh Development Agency's budget for 1989 -90 is £130 million, 15 per cent. higher than in the previous year?

Mr. Robert N. Wareing (Liverpool, West Derby) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to. Question put accordingly, That the original words stand part of the Question :--

The House divided : Ayes 201, Noes 275.

Division No. 71] [10.00 pm

AYES

Abbott, Ms Diane

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

Archer, Rt Hon Peter

Armstrong, Hilary

Ashley, Rt Hon Jack

Ashton, Joe

Banks, Tony (Newham NW)

Barnes, Harry (Derbyshire NE)

Barron, Kevin

Beckett, Margaret

Beggs, Roy

Beith, A. J.

Benn, Rt Hon Tony

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Brown, Ron (Edinburgh Leith)

Bruce, Malcolm (Gordon)

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Buchan, Norman

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Cook, Frank (Stockton N)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Crowther, Stan

Cryer, Bob

Cummings, John

Dalyell, Tam

Darling, Alistair

Davies, Rt Hon Denzil (Llanelli)

Davis, Terry (B'ham Hodge H'l)

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Duffy, A. E. P.

Dunnachie, Jimmy

Dunwoody, Hon Mrs Gwyneth

Eadie, Alexander

Eastham, Ken

Evans, John (St Helens N)

Fatchett, Derek

Fearn, Ronald

Field, Frank (Birkenhead)

Fisher, Mark

Flannery, Martin

Flynn, Paul

Foot, Rt Hon Michael

Foster, Derek

Foulkes, George

Fraser, John

Fyfe, Maria

Galbraith, Sam

Galloway, George

Garrett, John (Norwich South)

Gilbert, Rt Hon Dr John

Godman, Dr Norman A.

Gould, Bryan

Graham, Thomas

Grant, Bernie (Tottenham)

Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)

Grocott, Bruce

Hattersley, Rt Hon Roy

Healey, Rt Hon Denis

Heffer, Eric S.

Henderson, Doug

Hinchliffe, David

Hogg, N. (C'nauld & Kilsyth)

Holland, Stuart

Home Robertson, John

Hood, Jimmy

Howarth, George (Knowsley N)

Howell, Rt Hon D. (S'heath)

Hoyle, Doug

Hughes, John (Coventry NE)

Hughes, Robert (Aberdeen N)

Hughes, Roy (Newport E)

Hughes, Simon (Southwark)

Illsley, Eric

Ingram, Adam

Janner, Greville

Jones, Barry (Alyn & Deeside)

Jones, Ieuan (Ynys Mo n)

Jones, Martyn (Clwyd S W)

Kennedy, Charles

Kinnock, Rt Hon Neil

Lamond, James

Leadbitter, Ted

Leighton, Ron

Lestor, Joan (Eccles)

Lewis, Terry

Livingstone, Ken

Livsey, Richard

Lofthouse, Geoffrey

Loyden, Eddie

McAllion, John

McAvoy, Thomas

Macdonald, Calum A.

McKelvey, William

McLeish, Henry

McTaggart, Bob

Madden, Max

Mahon, Mrs Alice

Marek, Dr John

Marshall, David (Shettleston)

Martin, Michael J. (Springburn)

Martlew, Eric

Maxton, John

Meacher, Michael

Meale, Alan

Michael, Alun

Michie, Bill (Sheffield Heeley)

Michie, Mrs Ray (Arg'l & Bute)

Mitchell, Austin (G't Grimsby)

Moonie, Dr Lewis

Morgan, Rhodri

Morley, Elliott

Morris, Rt Hon A. (W'shawe)

Morris, Rt Hon J. (Aberavon)

Mullin, Chris

Murphy, Paul

Nellist, Dave

Oakes, Rt Hon Gordon

Orme, Rt Hon Stanley

Patchett, Terry

Pendry, Tom

Pike, Peter L.

Powell, Ray (Ogmore)

Prescott, John

Primarolo, Dawn

Quin, Ms Joyce

Radice, Giles

Rees, Rt Hon Merlyn

Reid, Dr John

Richardson, Jo

Robertson, George

Robinson, Geoffrey

Rooker, Jeff

Ross, Ernie (Dundee W)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Shore, Rt Hon Peter

Short, Clare

Sillars, Jim

Skinner, Dennis

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton & F'bury)

Smith, Rt Hon J. (Monk'ds E)

Snape, Peter

Spearing, Nigel

Steel, Rt Hon David

Steinberg, Gerry

Strang, Gavin

Straw, Jack

Taylor, Mrs Ann (Dewsbury)

Taylor, Matthew (Truro)

Thomas, Dr Dafydd Elis

Turner, Dennis

Vaz, Keith

Wall, Pat

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