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11 Feb 2003 : Column 800—continued

Dr. Cable: That is a very good point. I would have made it slightly differently, but I agree that, after long periods of underpayment, the real value of people's payment is lost because of inflation—assuming that inflation is present. In any event, there should be some compensation for such loss, and interest payments seem a sensible and fair way of dealing with the issue.

I want to question why there is a need for a formal limit on the period involved and why enforcement officers cannot come forward in the small number of cases that will arise and support a claimant in exceptional circumstances involving a significant backlog of arrears, perhaps in a decade's time. That is a small technical point that the Minister may not have considered.

In broad terms, I am glad to see that there is support for the Bill in all parts of the House. The fact that we all now support the principle of the minimum wage is remarkable in itself, given the controversy about it five or 10 years ago. Given that we all support the change that the Bill makes, perhaps the House can proceed to other business fairly speedily.

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2.37 pm

Mr. Chris Pond (Gravesham): Only a few hours ago, I received a phone call from the Low Pay Unit—an organisation for which I worked for 18 years—asking whether I would like to collect some of my personal possessions from it, as it is sadly having to wind up its operation this week. It is a sad irony that we are discussing a measure such as the Bill on the very day when the organisation that had kept such issues in the forefront of our attention for so many years is sadly no longer with us.

I also welcome the fact that we are discussing the Bill today. Like the hon. Member for Buckingham (Mr. Bercow), I was privileged to be involved in seeing the original minimum wage legislation through Parliament. We tried to anticipate and close every possible loophole, but we clearly failed to do so in respect of this Bill. I am pleased that Opposition Members are with us on the Bill, because I remember sitting long hours through the night while the minimum wage itself was being opposed.

The particular loophole in question is important because it can render enforcement of the national minimum wage almost completely ineffective. This small Bill will help to bring the minimum wage back to life. It is important because it gives back to enforcement officers the power to enforce payment of arrears of underpaid wages. As the Minister and other hon. Members have pointed out, trade unions may still be able to pursue payment of arrears on behalf of their members, but many of the lowest paid are not members of trade unions. They are often in a vulnerable position and work in small establishments in isolated circumstances.

David Hamilton (Midlothian): One of the loopholes that bad employers—small employers—exploit is that they are not required to recognise trade unions if they have only 12 employees. Does my hon. Friend agree that a change in that legislation could be helpful?

Mr. Pond: That is a major problem. I would not agree with bracketing bad employers and small employers together, however, because many small employers are very good employers. We must encourage as far as possible the employers—the firms—to be fully involved in the negotiation process at a collective level, and ensure that people working in small firms feel that it is worth their while to become members of trade unions. That is why people in those circumstances will rely on enforcement officers to make sure that they get their entitlements under the law. That is not necessarily something that they can pursue through trade unions, although I pay tribute to organisations such as the National Association of Citizens Advice Bureaux for advising people in those circumstances.

The Bill is also important because, as the Minister pointed out, claims for underpayment are often made only after employment has come to an end. Without the Bill, there would be a real incentive for employers to dismiss staff as soon as they became aware of an investigation.

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It has been pleasing to hear Conservative Members supporting the Bill. I detected a certain anxiety on their part to ensure that people understood that they now really are in favour of a national minimum wage. Indeed, the hon. Member for North-West Norfolk (Mr. Bellingham) said that they would campaign for it at the next election. I pay tribute to them for such a dramatic conversion on the Damascene bypass.

Mr. Bercow: I understand the hon. Gentleman's surprise at the change of heart that has taken place among Members on the Conservative Benches. I put it to him that I do not deny that I have changed my mind on the issue, as I have manifestly done so. I would simply argue, however, that there is no shame in having previously made a mistake, only in failing to acknowledge the possibility that one may have done so.

Mr. Pond: I welcome the hon. Gentleman's admission of a previous mistake. He has been very honest in his position—he has not pretended that there was not a period when he completely opposed the national minimum wage, nor that he did not support a previous Government who abolished a minimum wage system that had existed from 1909 until the mid-1990s. In responding to the hon. Member for North-West Norfolk, he referred to the words of Winston Churchill, so perhaps I may remind the House that Winston Churchill said that without the minimum wage

That is why it is important that the Bill is supported not only by Members on both sides of the House, but by the TUC and the CBI. Otherwise, we would have a situation whereby the good employer was also undercut by the Employment Appeal Tribunal. The Bill will ensure that we provide protection not only for the most vulnerable workers, but against undercutting and unfair competition for the great majority of firms, large and small, who pay the minimum wage and recognise that decent conditions of employment make good business sense and improve competitiveness and efficiency. I welcome and applaud this small Bill.

2.43 pm

Annabelle Ewing (Perth): I rise to add the support of the Scottish National party to this important Bill. Hon. Members will be aware of the SNP's long-standing commitment to the principle of a minimum wage as the mark of a civilised society. It is regrettable, however, that the Government have not taken this opportunity to end the age discrimination that is inherent in the minimum wage legislation. We in the SNP believe that there should be a rate for the job, regardless of age. I believe that that view is also expressed forcefully by the TUC and the Scottish Trades Union Congress.

We support the aim of the Bill, which is to deal with an anomaly that has arisen in respect of enforcement notices. That anomaly became clear following last summer's ruling by the Employment Appeal Tribunal, and I understand that the Inland Revenue is appealing the decision. Further to the decision, law enforcement notices may be issued in relation to past periods where the worker is no longer employed. I do not believe that that was the intention of the National Minimum Wage

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Act 1998—indeed, it would have made a mockery of it had that been the case. It would have excluded affected workers from the support system of the enforcement officers, which is an innovative approach that has been much welcomed by many individuals who have found themselves in the invidious position of not having been paid a proper wage for their work.

On retrospection, I have already asked the Minister to clarify the position in Scotland. From my reading this morning, it seems to me that the Limitation Act 1980 does not apply in Scotland. If the retrospective approach, which we support, is based on a six-year period to reflect the position in English law, has account been taken of the position in Scots law whereby the general prescriptive period is five years for civil recovery? We do not want the Bill to create a further loophole by not reflecting the reality of the situation under Scots law.

On the exclusion of the agricultural minimum wage regime from the scope of the Bill, I am aware that the Scottish Executive decided against seeking a Sewel motion, which is unprecedented since the inception of the Scottish Parliament. That is a welcome move, if a bit late in the day. Instead, legislation is to be introduced in parallel in the Scottish Parliament. I welcome that development.

I shall keep my comments brief because hon. Members have said much today that we can all sign up to and support. The Scottish National party and Plaid Cymru support the Bill, which will enhance the protection available to workers and close a loophole that was never intended. We congratulate the Government on quickly introducing a Bill to deal with the matter and to close the loophole, but we regret that they have not taken this opportunity to end the age discrimination that is inherent in the minimum wage legislation.

2.47 pm

Mr. Michael Connarty (Falkirk, East): This amendment to the National Minimum Wage Act 1998 is welcome. It is sad that any company could force the Government to introduce legislation by underpaying 25 workers to the tune of £37,000. That shows how mean people can be. We can talk about big employers as opposed to small employers, but in my view many employers like low-wage employees because they want to cut their wage bill, and if they can cut it below the national minimum wage, they will.

The Bill amends section 19 of the 1998 Act, which empowers the officer to serve a notice on any employer who has not paid a worker at a rate that is at least equal to the national minimum wage. The Bill will allow the officer to serve a notice in retrospect regarding people who have left employment. I have read that £9,412,513 has been gained in actions by persons under the tribunals established by the 1998 Act. Can the Minister tell me how many of them were in the category to which I have been referring for some time in questions and in debates in my parliamentary group? I refer to the 4 million people who work in the service industry and have to prove under the 1998 Act that they receive their tips personally and that those tips are not given to their employer. I conducted research and the Minister said that there were references to the Low Pay Commission.

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However, when people give a tip through a credit card, an enforcement officer would find it difficult to know whether they intended it to go to the individual who had served them or to the employer to distribute among all the employees, and thereby be included as part of the minimum wage.

Even if someone gives a tip in cash in a place that has a kitty—it has a special name in the 1998 Act—the money can be distributed among all the employees and taken into account as part of their minimum wage. If the people who gave the tip wanted it to go to the individual who served them, but it was taken into account as part of the minimum wage, how would the enforcement officer make a judgment? How does he judge, under section 20 onwards in the 1998 Act, whether the employer is compliant?

I believe that the Bill covers those who leave employment because they cannot get their employer to give them a proper wage. Perhaps the employer is giving them less than the cash sum of £4.20. I spoke in the Statutory Instrument Committee that upgraded the sum to £4.20, and I wanted it increased to £5. I have continually raised cases in which a substantial tip by the customer makes up the £4.20. Surely those employees are not being paid the national minimum wage. Tips intended for an individual should be in addition to the £4.20. An opportunity to deal with that vital point has been missed. How can we enforce the rights of the 4 million people in the service industry who get tips from customers?

I welcome the Bill because it can be applied retrospectively to take on bad employers such as Bebb Travel, which did not pay money that was clearly owed and not related to tips. However, I challenge the Minister to justify the fact that enforcement officers will continue to wade through a mire of accusation and counter-accusation if it appears that a large portion of the wages that people in the service industry receive is made up of tips that customers pay them directly.

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