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Column 178
Squire, Robin (Hornchurch)Steinberg, Gerry
Stevenson, George
Strang, Dr. Gavin
Straw, Jack
Taylor, Mrs Ann (Dewsbury)
Thompson, Jack (Wansbeck)
Tipping, Paddy
Trimble, David
Turner, Dennis
Vaz, Keith
Walley, Joan
Wardell, Gareth (Gower)
Wareing, Robert N
Watson, Mike
Welsh, Andrew
Wicks, Malcolm
Wigley, Dafydd
Williams, Rt Hon Alan (Sw'n W)
Wilson, Brian
Winnick, David
Wise, Audrey
Worthington, Tony
Wright, Dr Tony
Tellers for the Noes :
Mr. Eric Illsley and
Mr. Gordon McMaster.
Question accordingly agreed to.
New clause 3
Report to Parliament on pay and working conditions
.--(1) The Secretary of State shall present annually to both Houses of Parliament a report on the pay and working conditions of employees in industries formerly covered by wages councils and in the security and private residential care industries, after having consulted the Trades Union Congress, the Confederation of British Industry, the representatives of employers and employees in the industries concerned and such bodies concerned with low pay and equal opportunities as he shall think fit.
(2) The first such report shall be presented within 12 months of the day on which Royal Assent to this Act is given.'.-- [Mr. Dobson.]
Brought up, and read the First time.
Mr. Frank Dobson (Holborn and St. Pancras) : I beg to move, That the clause be read a Second time.
Mr. Deputy Speaker : With this it will be convenient to take new clause 12-- Protection for workers in former wages council industries --
--. Should the abolition of wages councils lead to wage increases in former wages council industries falling behind the pay increases recorded in the Index of Average Earnings published with the monthly unemployment figures for two successive years, it shall be the duty of the Secretary of State to present a report to Parliament giving details of the relevant wage rates and what action he proposes to take to secure the restoration of the value of pay settlements in former wages council industries.'.
Mr. Dobson : The Bill proposes the abolition of wages councils, which set minimum wages for 2,700,000 of the worst paid people in Britain. They are employed mainly in the hotel, catering, retail and hairdressing industries, and about 2 million of them are women. Apparently, they have got to make sacrifices to save the British economy. The Government propose no action on City fraudsters, no action on currency speculators, and no action on property speculators, but the country is in a bad way so the lowest paid are to be paid even less than they are being paid now. It was not people serving in shops or hotels and it was not young women doing hairdressing who were selling the pound short last September or who are selling it short this week. They are the victims of Tory policies and they are being made to suffer.
It is worth pointing out that the highest wages council hourly rate is the somewhat unprincely sum of £3.10. It is our view that the abolition of wages councils will reduce wages. The wages councils set minimum pay, and if that
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minimum pay floor is taken away people will fall through. The people employed in the industries involved fear that, the Government advocate it, the supporters of the abolition of wages councils say that that is why they want it, and there is no reason to believe that anything else will happen but that people's minimum wages will fall. It will not be just minimum wages that fall either, because the big hotel groups have said that they do not mind paying people £2.98 an hour-- which is very generous of them--but the problem is that they have to pay their supervisors so much more. So we can bet that supervisors' pay will go down when the minimum wage goes down for other people.As was shown by the Greater Manchester Low Pay Unit's study of what happened to pay for young people in Greater Manchester, when wages council coverage of under-21s was withdrawn their relative pay went down.
In London now, for reasons that I do not understand, chemist shops are not covered as other shops are by the retailing minimum wage set by the wages councils. That wage is about £3, but jobs for chemist shop assistants are being advertised in London at £2.50. So we can see where retailing pay is going in London.
Mr. Dennis Turner (Wolverhampton, South-East) : On the question of retail pay in London, would my hon. Friend care to reflect on the hypocrisy of top directors working in the retail industries? At Allied-Lyons, for instance, the top director's salary is £369,000 ; at Forte it is £249,000. That is the sort of sums these people are taking out of the retail industry. Will my hon. Friend reflect on those figures when he is talking about minimum wages, and would he like to comment on the morality and fairness of talking to the Government about introducing a maximum wage to take some of this money from those people who are taking too much out of society?
Mr. Dobson : The rules of order which limit what we are allowed to say rather curtail the expression of my real views concerning some of the people who line their pockets by paying themselves half a million pounds a year and then write letters to the Secretary of State for Employment saying that it caused difficulties for their companies' hotels when wages went up by 4 per cent. to less than £3 an hour. Cant and hypocrisy go nowhere near describing them.
The other problem with the abolition of wages councils is that it will be particularly damaging to women's pay. The great advantage of the wages councils from their inception was that they were unisex and awarded the same hourly rate to people working full time and people working part time. As a consequence, the gap between the average pay of men and the average pay of women is much lower in wages councils trades than it is in other trades.
It is shocking to me that the Secretary of State for Employment, who has been given the task, so we are told, of trying to promote equal opportunities in this country, is not concerned by the likelihood of what will happen to wages in wages councils industries and the way that women are likely to suffer. This is what the Equal Opportunities Commission has to say :
"If wages councils are abolished without alternative measures such as strengthening the Equal Pay Act, the pay gap, already wider than in most other EC countries, will increase, making it even more difficult for women to achieve economic independence and to provide for their future in old age."
That is the Equal Opportunities Commission's view, and I am sure that it is right. I believe that the Secretary of
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State, who is responsible for the Equal Opportunities Commission, should have taken a bit more notice of that and a bit less notice of the ideologues in the Tory party who have been driving this through. Then there are wages which prevail in other industries not covered by wages councils but which are notorious low payers. There is the well-known security industry, as my hon. Friend the Member for Coventry, North-East (Mr. Ainsworth) pointed out in Committee. He cited an advertisement in Coventry for somebody to work as a security guard at £1.80 an hour and to "provide your own dog". That is the sort of wage that these people are talking of providing.There are also private residential homes where a lot of very vulnerable people are supposed to be properly looked after. Following the excellent "Cutting Edge" programme on TV last night, which exposed the situation in north Lancashire with regard to underpayment, the Low Pay Unit has received approaches from many people throughout the country. It received a telephone call today from a nursing home care assistant who is being paid £1.25 an hour. That is a disgrace. It is a disgrace that employment Ministers are prepared to countenance such things, that social security Ministers are willing to provide finance to such places and that health Ministers are prepared to countenance people being paid such rates for providing vital care for old and vulnerable people. I do not believe that proper standards of care are likely to be provided by people who are so desperate that they have to accept a rate of £1.25 an hour. 6.30 pm
Mr. Michael Forsyth : I saw the programme and I have asked the wages inspectorate to look into the two cases which were identified. Does not the hon. Gentleman think it odd that in three months the journalist, the researcher and the production team managed to find only three cases of underpayment, one of which was resolved immediately? Does he not also think it odd that the programme makers did not ask the wages inspectorate to examine the two unresolved cases of underpayment shown in the programme?
Mr. Dobson : I find that extraordinary. Whether or not I disagree with the Minister, I usually have some time for his intelligence, but that is one of the daftest interventions he must have made in his life. How could the young women have fitted in more underpayments except by working and discovering that the jobs were underpaid or, in one case, that she did not get paid at all unless she went loping along to the owner of the cleaning company at his grand residence in Liverpool? The Minister may recall that she had to spend quite some time going to the nursing home owner's vast ranch next to the golf course in Blackburn. When she tried to get the money that he owed her, she was told that she could not see him because he was on holiday in the Caribbean and she could see him when he got back three weeks later. So it took three weeks.
Is the Minister suggesting that anyone should depend on the wages inspectorate to do anything to help people in those industries? Will the Minister guarantee that the employers who are underpaying will be prosecuted?
Mr. Forsyth : The hon. Gentleman has to address the point I was making. If the programme makers were concerned about low-paid people, and if their argument
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was that the existing system with the wages inspectorate should be retained in order to provide protection, does he not find it odd that none of the cases identified by the programme makers was reported to the wages inspectorate so that they could be investigated? As to the hon. Gentleman's specific point, I will happily say that the matter will be properly investigated, and if the wages inspectorate finds that there has been a breach of the law it will make the appropriate recommendations. However, the wages inspectorate informs me that the vast majority of employers meet their obligations and, of course, the vast majority of people are paid well above the minimum level.The hon. Gentleman must address my point, which he has sidelined. Why does he think that programme makers who are supposedly committed to the cause of maintaining the wages inspectorate and wages councils did not even bother to report the cases for proper investigation by the system that they are arguing to retain?
Mr. Dobson : The programme makers were making a programme ; they were not running an operation to suit the Minister and did not want to be diverted by going along to the wages inspectorate. They made an effective programme which had a great impact, and I am glad that it had.
The Minister makes it sound as if the wages inspectorate goes around vigorously looking into things and prosecuting all the cases of wrongdoing that it finds. However, only one in 1,000 cases gets to court. Is that not the figure?
Mr. Forsyth : Last year, a record number of cases were brought to court, far more than were ever brought under the last Labour Government. Employers are often unaware of their obligations and, as the hon. Gentleman knows, the wages inspectorate operates by means of persuasion and without redress to legal measures, and when it finds clear examples of abuse it prosecutes. If the hon. Gentleman is criticising the level of prosecutions, in 1991 we had a record level, considerably higher than anything under the last Labour Government. The Labour Government's record of prosecutions was considerably less than the current level, and it also abolished wages councils, so the hon. Gentleman is trying to make bricks without straw.
Mr. Dobson : I return to the point that the wages council system is not working as well as it should. I am not its greatest supporter. I believe that the system needs to be strengthened and extended. We made that point in Committee.
Ms. Eagle : Will my hon. Friend comment on the fact that the wages council inspectorate's decisions for the north-west in 1991 revealed that 1,083 establishments were underpaying and that there was only one prosecution that year? Will he also comment on the fact that our legislation providing protection against unfair dismissal is now so weak and inadequate, thanks to the Government's dismantling of that protection, that many people currently in low-paid jobs are simply too frightened to report underpayment?
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Mr. Dobson : I agree with my hon. Friend. I was quoting the figures for the north-west when I said that there was one prosecution in 1, 000 cases.
The Minister said that the employers apparently did not know what their legal obligations were ; but employers should know their legal obligations. The Minister is always ranting on about trade unions knowing their legal obligations, so if paid officials of unions are supposed to know, why not people running companies? If they do not, whose fault is it? It is the fault either of the employers or of the Department of Employment and the wages inspectorate for not getting the information through to them. They must take the blame and it is no good the Minister trying to slough it off on other people. Ignorance is no defence. That is a basic principle in English law, and I think in Scottish law as well.
No one can live on the appalling wages that are being paid. I shall quote a very limited number of examples of low pay that the Low Pay Unit has received by telephone today as the result of last night's excellent programme. They include a hairdresser getting £2.39 an hour and being underpaid by £30 a week ; a shop worker being paid £2.32 an hour and being underpaid by £31 a week ; a 17-year-old working in a butcher's shop for £1.37p an hour and a 19-year-old hairdresser getting £1.50 an hour. That is the demi-paradise in which the Tories have got Britain at the moment. That is their beau ideal. That is how we will compete with the world--by paying people pathetic poverty wages which are demeaning to them and should be demeaning to any Minister of the Crown with any responsibility for it. If the Minister was not ashamed when he watched the film last night, he has lost all sense of shame.
Most of the people who work for those wages are extremely poor and have to fall back on the taxpayer as people on low pay are sometimes entitled to benefit. If their wages are cut, they will be entitled to more benefit, so two groups of people are picking up the price of lining the pockets of Tory supporters who want the abolition of wages councils--the people who will be impoverished by low wages, and the taxpayer who will have to dip into his pocket or her handbag to make up for some of the money that has been taken away.
Who favours abolition? Certainly some free-market freaks, some friends of the Tory party and some people who fall into both categories. There are some notorious contributors to Tory party funds who are strong supporters of the abolition of wages councils. It is a kick-back for putting money into the Tory election fund. It is at the expense of the badly off and the taxpayer.
My hon. Friend referred to the examples of Forte, Allied-Lyons, Whitbread and Scottish and Newcastle Breweries. They paid more than £250,000 to Tory party funds in the most recent year for which the information is available. The lowest paid of the top directors in those companies took home £271,000 in a year, and they all think that £3.10 an hour threatens the future of their companies. They need some attention from some people. They have a lot of explaining to do, especially those in the hotel chains. I ask the directors in the hotel chains or the Minister to give me an explanation.
Why are British hotels more expensive than French hotels, although the wages for French hotel workers are higher than those for British hotel workers? What is wrong? Why are we not competing with the French in hotel prices? If there is any logic in the Minister's case, we
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should be providing hotel spaces at cheaper prices than the French do, but we do not. We end up charging people more because the bosses pay themselves much more and property speculators still make enormous profits out of most hotel developments. That is where much of the money is going.Apparently, the Tories believe that there should be no such thing as a minimum wage. They want to leave it to a bargain between the employer and the employee. When wages councils were introduced, Winston Churchill--then a Liberal but with the support of the Conservatives because there was not a vote against the introduction of wages councils--said :
"Where you have a powerful organisation on both sides you have a healthy bargaining which increases the competitive power of industry and then forces a progressive standard of life. But where you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad employer is undercut by the worst."
That was true then and it is true today.
In Standing Committee, what did we get from the Minister when he was provoked by my hon. Friend the Member for Wallasey (Ms. Eagle)? My hon. Friend said :
"I still await an answer to my question about how low the Conservative party thinks it is reasonable for wages to fall." The response from the Minister ended with the magic words : "The hon. Lady cannot stand the idea that people should be free to choose for themselves their terms and conditions."--[ Official Report, Standing Committee F, 28 January 1993 ; c. 605.]
Winston Churchill talked about
"a powerful organisation on both sides"
and "parity of bargaining". Let the Minister consider what parity of bargaining there is in my constituency when somebody who has slept in a cardboard box all night, because the Government's policies have not found him or her anywhere to live, goes to one of the hotels owned by Grand Metropolitan or Forte--multi-million pound organisations with multi-million pound profits every year--and bargains for a job in the kitchen in London where 60 people chase every job. Is that
"a powerful organisation on both sides"?
Are those people who scrape out of their cardboard boxes and look for work powerful? I suggest that they are not ; but the people whom they are trying to get jobs from are powerful.
The "Cutting Edge" programme last night revealed that this does not apply simply in London. That young woman, admittedly working for a television programme, was basically forced to beg, bow and scrape to get any job at all and scarcely got enough money to pay the rent even when she did secure one. What a collection of lawbreakers we had on that programme last night.
The Tories say that wages councils lose jobs. There is no possible justification for that statement. If the minimum rates of wages councils lead to the loss of jobs, why has the number of people working in wages council industries in the past three years increased by 90,000 while at the same time the total number of people employed in other industries has decreased by no fewer than 1,364,000? If there is any logic, sense or merit in the Minister's argument, the fall in the number of people employed in wages council industries would have been greater than the fall in other industries. But it has increased in wages council industries while it has fallen in all those industries in which there is no minimum wage.
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The other argument of the Tories is that one needs to pay low pay to secure prosperity. That is typical Tory gibberish. If one looks around the world, two things go in parallel : high pay goes with prosperity and low pay goes with poverty. That has always been the case and it always will be the case. Paying poverty-level wages is no way out of Britain's problems.Apparently, that is the new Tory approach. The Tories have decided that we must compete with the third world and that the way to do that is to have a sort of DIY third world. We are introducing third world pay, work practices, hours and working conditions in Britain. That is shameful.
6.45 pm
The Labour party believes that everyone who wants a job should have one, and that when they have that job they should be able to earn their keep. They should not have to struggle in poverty or depend on benefits when they have been to work. If people have worked a full-time working week, they should be able to maintain themselves and bring up themselves and their family without being dependent on benefits or anything else from anyone. That is what all of us have wanted to do, and most of us have managed to achieve it. We are glad to do it, and we believe that it should apply to everybody else. Everyone should be able to pay his way and look after himself. I am not the only one who says that. This is a quotation from someone who is well favoured amongst some Conservative Members. In "The Wealth of Nations" in 1776, Adam Smith said :
"It is but equity that they who feed, clothe and lodge the whole body of the people should have such a share of the produce of their own labour as to be themselves tolerably well-fed, clothed and lodged."
He was the great revolutionary thinker who has been sort of colonised by the right wing of the Tory party who do not read much of what he said. What he said at that time was true and it remains true today.
We do not believe that wages councils should be abolished. If they are abolished, the Government should be required to carry out the proposals in our new clauses. It would provide some element of protection for those whom we believe will be exposed to the harshest economic and social winds unless we do something to offer them some protection.
It boils down to this. On one side of the argument we have a few free- market freaks and Tory vested interests getting their pay-off for putting money into the Tory party. On the other side, we have Adam Smith, Winston Churchill, the Equal Opportunities Commission, the Fawcett Society, the citizens advice bureaux and a legion of other people who have demonstrated over decades that they are interested in the welfare of ordinary people and in promoting equal opportunities for women. I know where we stand tonight. I think that the Minister stands in a shameful position.
Mr. Peter Bottomley : I think that the hon. Gentleman was proposing that the Government should be required to bring in a report on what will happen as a consequence of the abolition of the wages council system.
I oppose the abolition of the wages council system. Occasionally, the Minister has asked me whether I appreciate, and did I not say in 1985, that the abolition of the wages council system would cost jobs. In 1985, I was willing to accept that the abolition would cost some jobs.
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So does health and safety at work and the sort of formal and informal cartels which help lawyers to be paid a certain amount of money. So, for that matter, does the level of pay of Members of Parliament. If we were paid half as much, we could have twice as many Members of Parliament for the same wage bill. All those things are self- evident. The question is at what level is it worth taking away protection from the vulnerable where it is not possible for them to have any equality in negotiating their pay.I do not wish to exaggerate the effect of wages councils or the effect of abolishing them. However, if the wage levels set by wages council orders were wrong, it was open to the Government to propose, either in the Conservative election manifesto or subsequently, that they should have the power to reduce wages council orders by, say, 10 per cent., 15 per cent., or even 25 per cent.
The House is justified in being suspicious about a proposal to abolish wages councils based on consultation in 1988 when we had a general election in 1992 at which the issue could have been included in the manifesto and debated between the parties. It could have been a determinant in how people decided to vote. I do not believe that it would have affected many votes because the issue is more a private one. Given the number of people who move in and out of wages council sectors and sectors equivalent to wages council sectors, the issue would not necessarily have been the most important one.
However, the issue is important to more than 2 million people and to people in industries akin to wages council industries. We may hear from my hon. Friend the Minister about anomalies between raw meat and cooked meat shops. But in the high street most shops that are not covered directly by the retail orders pay wages equivalent to shops that are covered. We should ask whether abolition of the wages councils should have been declared policy at the last election. My recollection of the consultation in 1988 is that there was not a strong view that wages councils should be abolished. Employers did not make strong representations that wages councils had a significant effect on employment or profits. My hon. Friend the Minister has been known to say--I do not want to traduce him completely, although I do not mind in part--that it does not matter very much if wages fall because jobs covered by wages councils are mainly part time and done by women and, in any case, 80 per cent. are paid more than the basic minimum rate.
Mr. Michael Forsyth : I have said no such thing. I have pointed out that most people who are covered by wages councils live in households in which there is a second source of income. Therefore, the emotive arguments made by Opposition Members do not apply.
Mr. Bottomley : As someone who is paid way above wages council rates but who produces a subsidiary income in a household, I take that as a friendly remark.
If wages councils orders have a highly inhibiting effect on employment, one would expect to find that most people covered by them were on the minimum rate. But most people are not. I could go through the economics if my hon. Friend the Minister was interested, but I might bore
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the House. That fact that most people are not on the minimum rate suggests that wages councils do not have a great employment effect. I have tabled various parliamentary questions asking the Government to estimate the employment effect of abolishing the wages councils. They have ducked those questions because the research reports do not indicate strongly one way or the other that there will be a significant employment effect. But we can guarantee that abolition of wages councils will have a significant effect on the pay of some individuals.I asked the Department of Employment to analyse the levels of underpayment. The Department has consistently answered that it would cost too much to obtain that information. I would have been entertained, if this was not such a serious issue, by the exchanges between my hon. Friend the Minister and the shadow spokeman on employment. Perhaps a television programme could find only one or two people who were significantly underpaid, but the Department's wage inspectors find so many cases that it is not possible to give a full and useful answer to a Member of Parliament who asks how many cases of underpayment occur.
My hon. Friend the Minister talked about the significant increase in the number of employers who are prosecuted. I suspect that, even at the current high level, one would not get through one's fingers and toes in arriving at the annual total. If I am wrong and there have been more than 20 cases in the past year, perhaps my hon. Friend will interrupt my speech and tell me. There may have been a significant increase from seven to 15 prosecutions-- more than double the number--but that is insignificant in relation to the amount of deliberate, let alone inadvertent, underpayment which inspectors find.
Mr. Michael Forsyth : I am surprised that my hon. Friend of all people should share the views of Opposition Members. In cases where people are paid wages below the legal level, does he want the matter to be put right, people to be paid according to the rate set down and any back- payment to be made, or does he want an increase in the number of prosecutions? If my hon. Friend is worried about low pay, surely the way in which the inspectorate chooses to carry out its task in the interests of those who are paid below the legal rate is a matter for it.
Mr. Bottomley : It would be inelegant for someone who previously held the post of my hon. Friend the Minister, but at a lower ministerial rank, to provide a running commentary. When my hon. Friend the Minister spoke about the increase in the number of prosecutions, I observed that he did not give the number. When I suggested that the increased number was below 20, he did not confirm it directly, but one can presume from his intervention that the figure is below 20. If my hon. Friend wants me to do so, I will say openly and aloud that I approve of the way in which wages inspectors have pay put right and required back-payment. Employers have been required to pay back-pay amounting to hundreds of thousands of pounds. I approve of that. However, I emphasise that the Department is fully aware of the level of underpayment, some of which is deliberate.
I should like my hon. Friend the Minister to give some estimate--I support the idea of a report--of what has happened in the sectors for which wages councils were abolished. He helpfully reminded the House that various
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