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Mr. Byers: My right hon. Friend makes an important point. His illustration of the way in which his genuine question was dealt with by the Minister responsible at the time demonstrates a typical Tory reaction to a pressing issue. He is correct in outlining the benefits that his constituents and many millions of other hard-working people up and down the country have received. We were elected to govern for all our people, and that is exactly what we are doing, whether by introducing the national minimum wage, providing working-time paid holidays or ensuring that people can balance work and family life. Those important measures are also sympathetic to the needs of business. The increase in the national minimum wage reflects that approach.
Angela Smith (Basildon): Many of us are overjoyed by my right hon. Friend's statement because we have campaigned for the minimum wage to be uprated. Does he share my disappointment to hear the whingeing of Conservative Members? Given that Members of Parliament are on a salary of almost £50,000 a year, is it not miserly to begrudge an increase to those people whose salary will, even after today's announcement, be only about £8,500 a year? Although his statement is good news, will he also consider, before the rate is introduced in October, the youth rate of the national minimum wage so that there is not a greater discrepancy between them?
Mr. Byers: I share my hon. Friend's disappointment, but I am not surprised by the reaction of Conservative Members because we know their view about the national minimum wage. On the youth rate, I assure her that we
have asked the Low Pay Commission to consider that in volume two of the report, which will be produced a little later this year.
Sir Teddy Taylor (Rochford and Southend, East): Will the Secretary of State assure us that there will be appropriate changes to the level of tax credits to ensure that the increases in October will lead to a real increase in living standards, rather than simply being an accountancy exercise? Does he agree that in some seaside towns there is an anomaly because employees in cafes and restaurants receive substantial tips from the customer on top of the minimum wage, while employees in the shops next door simply receive the minimum wage? Can that be resolved? Although I appreciate that it will be difficult to do so, I hope that the Secretary of State accepts that it is a problem.
Mr. Byers: Tips do not count against the national minimum wage, and there may be a particular problem to which the hon. Gentleman is referring. I understand his concern about the possible impact of the minimum wage on seaside towns. The Low Pay Commission considered the hospitality, catering and hotel industries because, as we are all aware, they are traditionally low-paid sectors. We wanted to ensure that an increase to £4.10 an hour would not have an adverse effect on them, and the commission's analysis shows that it will not.
On the interface between the tax and benefits system, I repeat that it is worth waiting for the Chancellor's statement on Wednesday.
Mr. Jon Trickett (Hemsworth): The national minimum wage will be one of the greatest monuments to this Government. I welcome the speed and boldness with which my right hon. Friend reported to the House this afternoon. He said that the impact of the minimum wage on inflation is less than 0.05 per cent. Families in the pit villages that I represent and in the coalfields of Yorkshire more generally will feel that £16 is a massive increase in their weekly household income and will greatly welcome it.
The right hon. Member for Wells (Mr. Heathcoat- Amory) said that he would not oppose the measure. That form of words is more than a verbal circumlocution; it indicates a fundamental dividing line in the House. Does my right hon. Friend agree that the Tories have always resisted the national minimum wage and other measures to improve the living standards of working people?
Mr. Byers: It is a traditional role of the Conservative party to do precisely that, and my hon. Friend is absolutely right. Those who work 40 hours a week will see their earnings rise by £16 pounds a week and those who work 25 hours will receive an increase of £10. That will make a real difference to hard-working people and their families. It is interesting that the right hon. Member for Wells (Mr. Heathcoat-Amory) did not say that the Conservatives' policy of exempting employers of up to 100 people from basic employment legislation, except for health and safety provisions, would not apply in this case. A raft of employees would therefore be exempt from the national minimum wage. We shall certainly make sure that people throughout the country are acutely aware of that.
Mr. Nick St. Aubyn (Guildford): I thought that we were here to discuss the Government's policy. Will the
Secretary of State therefore answer the question asked by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) about whether those who run care homes will feel a particular impact following his announcement? Given that the number of care homes that are closing is causing alarming problems, especially for the health service and related areas, what will the Government do to help care homes?
Mr. Byers: The hon. Gentleman raises an important point. We must ensure that every sector involved is able to manage the increase, and the Low Pay Commission is confident that that is the case. The private care sector plays an important role in our society and it is valued. We would not introduce any measures that would threaten its future, and we are confident that the measures that I have announced today will not do so. The implication of what the hon. Gentleman said is that people working in the private care sector should not be paid the national minimum wage, and we disagree.
Mr. David Winnick (Walsall, North): Is my right hon. Friend aware that one of the main reasons that the Government have remained popular is that Ministers are concerned about ordinary people, not least those who desperately require Parliament's protection--namely, low-paid workers? Is he surprised to learn that far from wanting an election, the Tories are absolutely terrified of having one?
Mr. Byers: My hon. Friend is absolutely right. We have taken people out of poverty pay through the national minimum wage, which was introduced in the face of total opposition from the Conservatives. Their words might have changed, but we know that their beliefs remain the same: they do not accept even the concept of a national minimum wage.
Mr. Simon Thomas (Ceredigion): May I welcome today's announcement and congratulate the Government on sticking to their principles in this respect? I have a couple of questions, the first of which relates to the long-term future of the national minimum wage. Does the Secretary of State accept that subsidies to the low-paid will continue, for example, in the form of the working families tax credit, which can be seen in that light? In the long term, will he consider raising the national minimum wage to a level at which those subsidies do not kick in, and recycling the Treasury money, perhaps in the form of support for small businesses?
Secondly, will the right hon. Gentleman examine where real poverty in the workplace now occurs? Increasingly, it is the small self-employed tradesperson--the farmer, or the person who runs a small rural post office--who is affected. Such people cannot avail themselves of the national minimum wage but increasingly receive less than the national minimum wage. Will the Government consider whether that problem can be addressed through the tax system, so that poverty does not increase in one part of the economy while it is decreasing in another?
Mr. Byers: We must ensure that we have measures in place to make work pay, whether for the self-employed, farmers or workplace employees. The issue can be addressed in a variety of ways: one is through the tax regime; another is through the introduction of the national
minimum wage. As for the working families tax credit, it is important that we have in place measures that complement the safety net of the national minimum wage; the working families tax credit achieves precisely that. We have to achieve a balance and set the national minimum wage at a level that takes people out of poverty pay but does not affect employment opportunities. Getting that balance right is the crucial test.I hope that the hon. Gentleman will reflect on the fact that Wales is a part of the United Kingdom that has benefited most from the introduction of the national minimum wage in terms of both the number of people it covers and the increase in average earnings it produces. That increase in average earnings has been of real benefit to the country of Wales and, under the Labour Government, it is secure for the future.
Mr. Barry Jones (Alyn and Deeside): Does my right hon. Friend know how many people in Wales will benefit from this excellent measure and what will be the full-time annual wage of someone receiving the national minimum wage in Wales? Today's announcement heralds an important social and economic advance, which Wales will be pleased to receive from the Government. Why are the Conservatives looking so miserable, sad and out of place? Will my right hon. Friend send for the House of Commons nurse to aid them?
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