Written Ministerial Statements
Wednesday 5 March 2008
Business, Enterprise and Regulatory Reform
National Minimum Wage
The Secretary of State for Business, Enterprise and Regulatory Reform (Mr. John Hutton): In June 2007 the Government asked the Low Pay Commission to produce their next report on the national minimum wage by the end of February 2008. The Government are today publishing the Commission’s 2008 report. I would like to thank all the commissioners for their hard work. I would also like to take this opportunity to publish the terms of reference which Government are setting the Commission for the coming year.
The Low Pay Commission’s 2008 report
The main recommendations put forward by the Commission concern the rates of the minimum wage. The Commission has recommended the adult hourly rate of the minimum wage should be increased from £5.52 to £5.73 in October 2008. The Commission has recommended increasing the development rate, which covers workers aged 18 to 21 years old, from the present £4.60 to £4.77 in October 2008, and the 16 to 17-year-old rate from £3.40 to £3.53, again from October 2008. The Commission has also recommended the accommodation offset should rise from £4.30 per day to £4.46 from October 2008.
In addition, the Government accept the Commission’s recommendation that we should review the existing guidance on sleepovers and update guidance on work experience placements in the detailed guide to the minimum wage; and the Commission’s recommendation that Government evaluate whether the fair piece rates arrangement is meeting its objective.
The Government note the Commission’s recommendation that Government should take steps to reverse the cuts to the sample of the annual survey of hours and earnings and prevent further erosion of the quality of the key data provided by the Office for National Statistics.
The Government reject the recommendation that we should move 21-year-old workers onto the adult rate.
Government’s Response to Individual Recommendations in the Low Pay Commission’s 2008 Report
We recommend that the adult rate of the minimum wage should be increased from £5.52 to £5.73 in October 2008.
We recommend that the youth development rate should increase from £4.45 to £4.77 and the 16 to 17-year-old rate should increase from £3.30 to £3.53 in October 2008.
We recommend again that 21-year-olds should be entitled to the adult rate of the national minimum wage. Should the Government maintain its opposition to this proposal, we would welcome an indication of the exact nature of its
opposition and a specification of what would need to change for the Government to adopt a positive approach to this recommendation.
Reject. The Government believe that the “bite” of the minimum wage—the minimum wage as a per cent. of median wages—is a better guide than the employment level in determining the likelihood of any adverse impact from this policy change. While only around 10 per cent. of 21-year-olds are paid below the adult national minimum wage, the “bite” is very high for 21-year-olds and would increase to almost 89 per cent. if 21-year-olds were moved to the adult rate, compared to 77 per cent. and 79 per cent. for 20 and 22-year-olds respectively. This raises the concerns that the higher bite would increase the risk of:
employers substituting 21-year-olds for more experienced or cheaper younger workers and reducing employment rates;
scarring effects from being out of the labour market when young, given the impact will be greatest on the most vulnerable 21-year-olds—these effects can have life-long consequences in terms of higher probability of worklessness and lower earnings power; and
reducing investment in education and training by making work more attractive to those 20 per cent. of 21-year-olds with level 2 qualifications or below who are currently engaged in some sort of education or training.
We recommend that the Government take steps to reverse the cuts to the sample of the annual survey of hours and earnings and prevent further erosion of the quality of the key data provided by the Office for National Statistics.
Note: We recognise the value of good quality data. The ONS will be replaced by the independent UK Statistics Authority (UKSA) from 1 April 2008. We will meet with UKSA and other interested parties to discuss this matter.
We recommend that the value of the accommodation offset should rise from £4.30 per day to £4.46 per day from October 2008.
We recommend that the Government reviews the existing official guidance on sleepovers as soon as practicable and updates the material concerning work experience placements in the official guide to the minimum wage.
We recommend that the Government takes stock and evaluates whether the fair piece rates arrangement is meeting its objectives.
The Low Pay Commission Terms of Reference for 2008-09
The Low Pay Commission is asked to:
Monitor, evaluate and review the national minimum wage and its impact, with particular reference to the effect on pay, employment and competitiveness in the low paying sectors and small firms; the effect on different groups of workers, including different age groups, ethnic minorities, women, people with disabilities, migrant workers; and the effect on pay structures.
Review the levels of each of the different minimum wage rates and make recommendations for October 2009. The Commission is also asked to make provisional rate recommendations as appropriate for October 2010.
Review the current apprentice exemptions and advise whether they are still appropriate. The Commission is asked to bear in mind the Government’s ambition to increase the number of apprentices to 500,000 and the need to ensure that sufficient employed places are available when the education participation age is raised in 2013.
Report to the Prime Minister and Secretary of State for Business Enterprise and Regulatory Reform by the end of February 2009.
Copies of this statement, the report from the Low Pay Commission and the Government’s individual response to the Commission’s recommendations have been placed in the Libraries of the House.
EU Energy Council (28 February 2008)
The Minister for Energy (Malcolm Wicks): Due to conflicting parliamentary business, my noble Friend the Parliamentary Under-Secretary of State for Business and Competitiveness Baroness Vadera represented the UK at the Energy Council in Brussels on 28 February in place of my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform.
The Council was dominated by discussions of the internal market legislative package, in particular of energy unbundling. The Council also had a policy debate on the 2020 climate and energy legislative package and agreed conclusions on the strategic energy technology (SET) plan.
On the SET plan, Ministers agreed conclusions on the Commission communication on the long-term perspective for the development of low carbon energy technologies.
Following a Commission presentation on the climate change and energy 2020 package, Ministers’ responses highlighted the following concerns:
All member states supported these targets, although I and others noted their ambition. Several member states noted the need for flexibility to enable cost-effective delivery of the overall GHG target. Many emphasised energy efficiency. Detailed points were made by individual member states against rounding the targets; in favour of a 1990 base year, taking better account of efforts already made; and the need for a better balance between energy and environmental interests in large (hydro) projects.
Guarantee of Origin (GO) certificates
Most countries endorsed the need to allow cross-border trading of renewables in the EU, noting that considerable work would be needed to refine the practical arrangements. Smaller member states commented that GOs would be essential to meet their targets. I encouraged wider application of trading to cover non-EU countries. A number of member states expressed concern about the impact on their national renewables support schemes. The Commission said that they had tried to provide flexibility for those member states that wanted it, while allowing national schemes to continue.
Carbon leakage/energy intensive industries
Many member states referred to the letter signed by some member states advocating ED action to address the prospect of carbon leakage. They emphasised the
global nature of the issue—including the risks of industry relocating outside the EU, EU competitiveness and price inflation. Some argued for a phased approach to tackling the problem.
Commissioner Piebalgs referred to the significance of CCS and mentioned the UK as a front-runner. He noted the Commission’s openness to considering the possibility of member states providing finance under the revised environmental state aid guidelines.
The presidency concluded that most delegations welcomed the 2020 package and its ambitious nature and that political agreement of the package was possible by the end of the year. The presidency would take account of member states’ comments in the next draft of the spring Council conclusions.
On the internal market legislative package, substantive discussion of unbundling was taken over lunch in closed session after introductions by the presidency and the Commission, during which the Commission noted the five principles that any alternative option would have to meet. The Commission emphasised that ownership unbundling was the most efficient option: any alternative would have to achieve equivalent effect.
In the formal session, the presidency proposed a simple procedural conclusion stating that the Commission’s proposal, supplemented by all other contributions, would be the basis for continued discussion, with the aim of agreement in June. All member states accepted this. This was a positive outcome for the UK.
Under Any Other Business, the Commission reported on developments related to security of supply. A report on the energy security correspondents’ network would be submitted to the June Council and energy security would feature heavily in the next strategic energy review, to be debated at the December Council. Ways to enhance solidarity, promote market access and infrastructure projects, and improve resilience against energy shocks would be addressed. One member state intervened to stress the importance of this issue in view of its specific circumstances: they would make proposals for the conclusions of the spring European Council.
Communities and Local Government
Unlocking the Talent of our Communities
The Secretary of State for Communities and Local Government (Hazel Blears): I am publishing a document entitled “Unlocking the Talent of our Communities” which includes our proposal to publish a White Paper. A copy of this document is available in the Library of the House. We will be developing a range of proposals over the coming months, and plan to publish a White Paper on putting communities in control of their local services and environment in England in summer 2008.
This White Paper will follow on from the achievements resulting from the 2006 local government White Paper “Strong and Prosperous Communities”, copies of which are available in the Library of the House. It is anchored in the Government’s conviction that our success as a
nation in the twenty-first century is contingent on our capacity to unlock the talents of every citizen, community and region, so that the success of each of us contributes to the prosperity of all of us.
The White Paper will develop practical ways for local people to exercise power, influence and control over the services and agencies which have the most impact on their lives and neighbourhoods. People demand a greater say on the decisions which affect their lives, and an ever greater number are willing to serve their communities, given the right structures, support and encouragement. Our White Paper will unlock the talents, energy and innovation latent in local communities by creating new platforms, systems of redress and accountability, and mechanisms for making local change.
encouraging more citizens to become active, renewing civil society, and building stronger local democracy
using the power of citizens and consumers to improve local public services
strengthening local accountability of local services and agencies
sustainable regeneration of deprived neighbourhoods by engaging local people, supporting people into work, encouraging more enterprises and boosting the social enterprise and mutual sector.
We will want a wide range of people to contribute to the thinking that goes into the White Paper, including practitioners and community activists, local government, trade unions, and people in the public services.
Culture, Media and Sport
Sale of the Tote
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): The Government took powers in the Horserace Betting and Olympic Lottery Act 2004 to enable them to sell the Horserace Totalisator Board (“The Tote”) as part of their wider policy aim of removing themselves from detailed involvement in the affairs of the racing industry. Since then they have been in exclusive negotiation to sell the Tote to racing, in line with their manifesto commitments of 2001 and 2005. The Government’s initial intention was to sell the Tote to a racing trust in 2005 at a fair price until it became clear that a sale on that basis risked being denied approval under European state aid and competition rules, because it would have been below open market value.
The Government subsequently appointed independent advisers to assess market value and sought unsuccessfully to achieve a sale on that basis to racing in 2006. Finally the Government, responding to representations from racing and the Tote itself, sought during the course of 2007 to achieve a sale to racing interests and the staff and management of the Tote. The Government received an offer for the Tote in January 2007 but the final offer subsequently received in September 2007 did not meet the independent assessment of the Tote’s market value undertaken for the Government and which was necessary for a sale to proceed lawfully under EU state aid rules. The Government have therefore today, with great regret, declined the offer and, having exhausted all the practicable
sale options, have decided to draw to a close the period of exclusive negotiation with racing.
The Government now intend to prepare for an open market sale, and will appoint advisers shortly to advise them on strategic options. The overriding criterion for the Tote’s privatisation will be to maximise value for the taxpayer. Advisers will work closely with the board of the Tote. Meanwhile the Government stand fully behind their commitment during the passage of the Horserace Betting and Olympic Lottery Act 2004 to make available to racing half the net proceeds of any open market sale in the event that a sale to racing itself did not prove possible. We will now be considering urgently how best to give effect to that undertaking in ways which meet the needs of racing, do not add unnecessary bureaucracy and are consistent with European state aid and competition regulations.
The Government are also taking steps to appoint a chairman to oversee the process of preparing the Tote for sale, to work closely with the Government and their appointed advisers in assessing strategic options and in executing the sale process, and to manage the implications of the sale particularly as they affect the Tote’s staff. The Government would like to place on record their gratitude to Ian Good, as the senior non-executive on the Tote’s board, for agreeing to act as interim chairman of the Tote until that appointment is made.
Pending the appointment of sale advisers the Government are happy to receive any initial expressions of interest to acquire the Tote’s businesses. Any such expressions of interest will then he evaluated by the Government’s advisers as part of their wider strategic view of sale options.
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