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Mr. John Bercow (Buckingham): Given that the logic of the existence of the minimum wage is that it will be periodically and affordably increased, and that the effect of the increase that the Government recently announced to take effect in October should be to help some of the most vulnerable people in our society, how does the Minister intend to ensure maximum dissemination of information about the increase to businesses? That would ensure that the maximum number of businesses complied with the law and did not render themselves liable to an enforcement notice under the Bill.
Mr. Timms: The hon. Gentleman makes an important point. I agree with him about the desirable impact of the increase in the minimum wage, which has been announced, and I am grateful for the terms in which he expressed that. Experience shows that the mechanisms that we have used to disseminate changes in the rate proved effective. The Inland Revenue's enforcement role, apart from in the circumstance that the Bill covers, has proved effective. If the hon. Gentleman believes that there are gaps or weaknesses in the arrangements that he
wants to draw to my attention, I shall ensure that officials consider them. It is vital that the information be widely known by employers and employees, to achieve the maximum benefit from the change.The hon. Gentleman's point gives me the opportunity to celebrate the way in which the minimum wage is a firmly established feature of the UK labour market. Its benefits are widely recognised and it has been successful.
The Bill fits the Government's framework and sends an important signal. It is the first time we have had to amend the National Minimum Wage Act 1998 because of a court case. We will do that again if the need arises in order to protect the interests of low-paid and often vulnerable groups of workers. Any minimum wage system has to have effective enforcement provisions. The powers in the Bill will be critical in helping the most vulnerable to secure their rights. They will also indirectly assist responsible employers—the vast majority—who must be free from the fear that a competitor will undercut them.
Again, I welcome the wide support for the Bill, and I commend it to the House.
9.4 pm
Mr. Henry Bellingham (North-West Norfolk): First, I declare my interests, which are in the Register of Members' Interests. I thank the Minister for warning me that the Minister for Employment Relations, Industry and the Regions could not be here tonight. I understand that he has had to fly to Taiwan via Bangkok, where he will be batting for Rolls-Royce in an important bid for engine replacements. We wish him well in that task and fully understand and accept why he is not here this evening. I understand that he would have been able to fly direct to Taiwan had it not been for the severe acute respiratory syndrome crisis.
I am impressed that the Minister has been able to read himself into the Bill so quickly. As he pointed out, the Opposition have supported this small but important Bill. He referred to the decision in the case of Inland Revenue v. Bebb Travel plc in which Judge J.R. Reid QC—I do not know whether he is any relation to the Leader of the House; perhaps he is the Leader of the House—came up with a bizarre ruling. He held that enforcement officers can issue enforcement notices requiring the employer to pay the minimum wage only in respect of current and future pay periods or in respect of current, future and past pay periods. Enforcement officers cannot issue notices for past periods alone, therefore. As the Minister pointed out, that ruling was upheld on appeal two weeks ago.
Bebb Travel had 25 employees who were receiving less than the minimum wage and there were pay arrears of £37,649. The enforcement notice was dated October 2000, but the 25 were dismissed in May 2000, and so were past employees.
Obviously, it was the intention of the House that the legislation should address the interests of such employees. Therefore this evening we are restoring the position to what everyone believed it was before the Bebb Travel case. As the Minister pointed out, the Bill has widespread support. It is supported by the CBI and the TUC.
The Government are appealing against the decision by Judge J.R. Reid QC. In Committee, the Minister said that he would continue with the appeal, if necessary to
the House of Lords, because he felt that it was wrong to prejudge Parliament. We all respect the Government's sensitivity in this. It would be an arrogant Government who said that they would drop the appeal because they knew that the Bill would go through. They have adopted a sensitive position towards Parliament and they are not making any assumptions. However, with the Opposition's support, there is no reason why the Bill cannot go through quickly.The argument put on Second Reading and in Committee was that the Government would go ahead with the full appeal process because to withdraw at this stage would mean the Government paying the costs of Bebb Travel. Here we have a rogue employer and it would be wrong if the taxpayer had to pick up its costs.
What is the Government's position at the moment? If the Court of Appeal gives them leave, will they go to the House of Lords, or will they withdraw the appeal? If they do withdraw the appeal, will they have to pay the costs of Bebb Travel? I assume that they will have to. How much has the case cost the Government, and was it, with hindsight, the right decision to launch the appeal against the Employment Appeal Tribunal in the first case? I appreciate that the Minister is not fully up to speed on the Bill, and I sympathise, but if he does not have the answers tonight perhaps he could drop me a note on this.
We are dealing here with a serious drafting error. One could have concluded that the Employment Appeal Tribunal judge was over-zealous and would be easily overturned in the Court of Appeal, but the Minister kindly let me have the Court of Appeal's judgment before tonight's debate, and it is obvious from that that the judges took the view that there was a serious drafting error.
Is this perhaps a consequence of the growing problem of the lack of scrutiny in this place? More and more Bills are going on to another place without proper scrutiny, and intolerable pressure is being put on another place for that reason.
We must learn the lessons of this débâcle, because the Bill is going to cost the taxpayer a substantial amount of money. I do not know what it costs to take a mini-Bill through Parliament, but it must cost a substantial number of thousands of pounds. I would be grateful if we could be told how much this has cost. We must learn from this, because a mistake has been made. It has been corrected, and we are all happy to correct it, but why was it made in the first place? We do not want the Bill to become an Act and then to pass away without this lesson being learned. Another cost arises in the form of the cost to the employees who are affected by this issue. The Inland Revenue told us back in February that 250 former employees had had their cases put on hold because of the Bebb Travel case. Will the Minister tell us how many more have been added to that figure since then?
Most Bills come into effect two months after receiving Royal Assent. For that reason, the 250-plus former employees whom I have just mentioned are going to have to wait another two months anyway. There might then be further delays in the court system, as this could
run on into the summer vacation. It is therefore possible that quite a few of those former employees will not get their cases on until well into the autumn.
Mr. Mark Hoban (Fareham): Is my hon. Friend aware that some of the outstanding enforcement notices relate to pieceworkers and outworkers whose liability is difficult to calculate? One estimate that I have heard is that it will take five man-years for the Inland Revenue to calculate the amount that might be due to the employees of a firm in my constituency.
Mr. Bellingham: That is extremely interesting. My hon. Friend makes the point that this is a complicated matter, and enforcement officers from the Inland Revenue and from the Department for Environment, Food and Rural Affairs are working extremely hard on preparing these cases. The cases have been put on hold, however, and the employees in question might not get their cases on until well into the autumn. There could also be deferred judgments. We therefore need to look carefully at the two-month rule.
The two-month rule delays the implementation of a Bill by two months after it has received Royal Assent to enable all the interested parties to make the necessary arrangements and adjustments. We are, however, talking here about an Act—the original Act—with which every interested party is already completely up to speed. This small Bill is going to become an Act, but everyone knows where they stand. I therefore suggest to the Minister that there can be no pressing reasons for the Bill not to be brought in immediately. It is unique, and there is every argument for it to be implemented at once.
The Opposition have had a look at a number of Bills that have been enforced immediately in recent years. The Northern Ireland (Elections) Act 1998 was enforced immediately, as was the Education Act 2002, the Anti-terrorism, Crime and Security Act 2001, the Armed Forces Act 2000 and the Freedom of Information Act 2000. I understand that an investigation was carried out in 1979—I realise that that was some time ago and that Governments of all hues have changed their practices since then—when a working party from the Statute Law Society looked at 105 Acts passed in the 14 months between 1 January 1978 and April 1979 to ascertain when they had come into force. It was found that 41 Acts came into effect on the exact date on which they were passed, that only 12 came into force on a date specified in the Act, and that 14 came into force after the expiry of the two-month period.
We are talking about a very vulnerable group of employees, and it is in everyone's interest that they should get their cases on as soon as possible.
Is there any reason why the Bill cannot be implemented as soon as possible once it has received Royal Assent, preferably in a matter of days? I am sure that is supported by Labour Back Benchers. Everyone knows where they stand. We have discussed this matter with various employer organisations, and they are in full agreement that there are no complications.
My hon. Friend the Member for Buckingham (Mr. Bercow), who is not in his seat at the moment, raised a point about interest on outstanding amounts of wage that are due. These vulnerable employees have been waiting a long time. Through no fault of their own, their
cases could not be dealt with because of the Bebb Travel case. In these exceptional circumstances, is there an argument that interest should be paid? After all, the Bebb Travel case involved a total sum of £37,000, and I imagine that quite a lot of interest would have accrued on that amount. Those employees were dismissed by Bebb Travel in May 2000, and they deserve to receive interest on that money. Perhaps the Minister will consider that.On Second Reading and in Committee we referred to the debate in the other place about how many years one should be able to go back to take a claim through the county court. The statute of limitations applies to the county court, so there is a six-year limit. However, although most cases go through the county court, some go through the employment tribunal system, including that of Bebb Travel. Unless one brings a case to an employment tribunal within three months of the discovery of the underpayment, the case cannot be brought. That is why most cases are brought in the county court.
Until an amendment was made in the other place, there was no limitation on how far back one could go in a case before the employment tribunal. In theory, one could go back eight, nine, 10 or 12 years. In the other place, the Government graciously accepted an amendment whereby if a case is brought to the employment tribunal by enforcement officers, the six-year limit applies as in the county court. However, if an individual employee brings a case to the employment tribunal, he can go back as far as he wants. That is academic, because the original Act came in only a few years ago, so the statute of limitations is not relevant. If we fast forward 10 years or so, individual employees who bring cases in the county court and in the employment tribunal will be able to go back more than six years.
Companies are obliged by company law to keep records going back only three years, however. There is nothing in this legislation to ensure that companies keep wage records for more than three years. That counts as a normal company record. The Minister's Department could send out guidance to companies. After all, it is always bombarding them with useless information. It would be helpful if a guidance note went out to employers, perhaps from the Inland Revenue, advising them that, given the six-year limit in the county court and the current legislation that applies the six-year limit to employment tribunals, they should keep wage records going back at least six years.
I do not know whether the Minister can comment on that. Conservative Members are keen to reduce the burdens on business. If companies were guided in the right direction, it could save an awful lot of extra management time later on.
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