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11 Jun 2008 : Column 98WH—continued

Mark Lazarowicz: My hon. Friend raises a good point and the Minister will doubtless answer his question. Certainly, more resources have been put into enforcement of the national minimum wage—I was coming to this
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point—some of which have gone into hiring an extra 20 enforcement officers, which is welcome. Various tougher penalties are being imposed upon employers who break the law, which I also welcome, but more needs to be done on grass-roots enforcement to get the full benefits to those who deserve the Government’s support to get the wages that they are due.

Ann McKechin (Glasgow, North) (Lab): I congratulate my hon. Friend on securing an excellent debate this afternoon. Given the context of his constituent’s case, have any criminal charges been brought in Scotland, where there is a separate jurisdiction for criminal law? Does he believe that the staff in the minimum wage enforcement unit are familiar with the practices under Scots law and is there sufficient co-ordination between them and the Justice Department in Edinburgh?

Mark Lazarowicz: I hazard a guess that my hon. Friend thinks that the answer is no. Nevertheless, she raises an important point. The unit has to take account of the situation in different parts of the United Kingdom, particularly where a Department in another Government has some responsibilities in this area and where there is a separate legal system. My hon. Friend makes a good point to which I hope the Minister will respond today, or at a later stage. I do not know of any prosecutions in Scotland. That is important, because as well as enforcing legislation, prosecutions of this nature are an effective means of giving an exemplary reminder to employers who do not meet their duties of what can happen if they do not fulfil the requirements of the minimum wage.

I recognise that the Government have put in extra staff and resources, which is good news, and hopefully that will lead to results. We must look seriously at providing more staff and resources to enforce the minimum wage on the ground. From what my constituent was told by the officers concerned, her experience was that they felt unable to keep up with all the complaints made to them as quickly as they would like to. More staff resources should bring results in terms of real cash going to people who are not getting the money to which they are entitled. There needs to be an investigation, at least, into providing more staff.

Kelvin Hopkins (Luton, North) (Lab): From the story that my hon. Friend related earlier, it appears that a lot of low-paid workers are too intimidated to apply for an inspection to allow them to be paid the minimum wage. Would it not be better to have a much more rigorous, proactive inspection regime in which employers are checked regularly by inspectors to ensure that they are paying the minimum wage, rather than leaving the onus on employees to make a complaint in the first place, because they might be intimidated into not doing so?

Mark Lazarowicz: My hon. Friend makes a good point, particularly given that in certain sectors, about which all hon. Members know, there is more likelihood of exploitation of the type he mentions and it is more likely that people will be paid below the minimum wage. One statistic suggests that, on average, a business could be expected to be visited once every 330 years by wage inspectors. In some ways that is a meaningless statistic, but it makes the point that there is in respect of certain sectors a strong case for much more proactive enforcement of the minimum wage regulations.


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The role of the employee or other members of the public in reporting non-payment of a minimum wage is crucial. We need to consider making changes to the publicity of the national minimum wage, so that people can understand what it is, what they are entitled to and how to complain about non-enforcement. There are advertising campaigns, which I welcome, including a recent national and regional online advertising campaign, which may still be ongoing. A bus campaign has visited many parts of the UK; however, I understand that there is just one bus, not a fleet of buses. One bus will take quite a while to reach most parts of the UK, even allowing for fast progress between different locations. That suggests that we should pay more attention to publicity.

We need to do more to target ethnic minority workers, who are often underpaid and are often, for all sorts of reasons that hon. Members can appreciate, the most vulnerable in respect of irresponsible and criminal employers. There is material in ethnic minority languages, and other work of that nature is being done. However, from my knowledge of my constituency—I am sure that this is replicated elsewhere—a lot more could be done to make a particular effort to target ethnic minority workers in their workplaces and where they gather, and through their media outlets and in other ways.

Mr. David Hamilton (Midlothian) (Lab): May I apologise for arriving late, Dr. McCrea?

Would it be appropriate to ask local authorities, which are major employers, to make sure that the minimum wage is part of the subcontract detail when they subcontract? They should be ensuring that the minimum wage is paid.

Mark Lazarowicz: Indeed; that is another important method that could be used.

I mentioned targeting publicity on the enforcement of the minimum wage at ethnic minority workers. This is a delicate area at the moment in some political debates, as colleagues will recognise. However, there is an issue—there is no point in hiding it—in many parts of the country where there is a feeling that ethnic minority workers can undercut UK workers. That is actually happening in some cases—there is no point in denying that—and it leads to all sorts of tensions and resentments between ethnic minority workers and the UK citizen work force. Of course, ethnic minority workers are not necessarily UK citizens.

One of the best ways of reducing the possible tensions is to remove as far as possible the opportunity for people to feel threatened by being undercut for their work, and to prevent their being paid less than the national minimum wage. The more that we can do to ensure that ethnic minority workers get at least the national minimum wage and are not exploited, the more we benefit the resident UK work force, be it ethnic minority or not. We can do a lot to benefit ethnic minority workers and the wider work force, and to benefit or improve inter-community relations in a way that leads to a win-win situation.

David Taylor: Having spent time in Crewe toward the end of the recent by-election campaign, I heard a lot of anecdotal evidence on the doorstep—no doubt this is
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so in lots of other towns throughout the country—that eastern European workers were undercutting in ways that breached the national minimum wage legislation. Is it not possible for the Department for Business, Enterprise and Regulatory Reform, the Department for Environment, Food and Rural Affairs or Her Majesty’s Revenue and Customs to establish a roadshow, for example, to promote the minimum wage and act as a point of reference in towns from which complaints are received, in order to put the case in the public spotlight?

Mark Lazarowicz: That is a good point. My hon. Friend mentions anecdotal evidence. It may be anecdotal but it is also true: such anecdotes are soundly based. There are instances of migrant workers, rather than ethnic minority workers, being exploited in this way. The more we direct efforts to ensure that they are not exploited, the more everyone benefits, including both the migrant and the domestic work force.

I have been involved in campaigns in my constituency with trade unions and representative organisations from migrant worker groups. Although some material on these issues in various languages is available from Departments and from the Trades Union Congress and other organisations, not a lot of material is available and there is not a lot of easily accessible information that could allow maximum take-up of these rights by both UK and migrant workers, who might be from ethnic minorities.

Ann McKechin: Is my hon. Friend concerned, as I was, about a recent report in The Guardian, which said that, until there is an increase in expenditure on advertising the minimum wage hotline, the amount spent by the Government is a sixth of that spent on a recent Government campaign urging people to use tissues when they sneeze? Does he not agree that now is the time for us to give this issue much greater priority throughout the UK, particularly, as he has mentioned, for ethnic workers and low-paid women?

Mark Lazarowicz: My hon. Friend makes a powerful point that, unfortunately, has taken away the last, ringing point that I was going to make. That again highlights the fact that, despite the number of workers who are entitled to and receive the national minimum wage, there are still too many who are not getting that to which they are entitled.

I return to where I started. Introducing the national minimum wage is one of the biggest success stories of this Labour Government, and we should do everything that we can to ensure that all those who are entitled to it receive it. That requires spending money to bring about reinforcement. Spending money in that way will benefit not just the workers concerned but the wider community. In some cases, it may also benefit the Exchequer. As people receive more income, they will enter the wage system in a way that they previously did not. For all those reasons, I urge the Minister to consider ways in which her Department, working with other Departments, can increase the uptake of the national minimum wage. I look forward to other hon. Members’ contributions to this debate.


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2.51 pm

Michael Connarty (Linlithgow and East Falkirk) (Lab): I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing this very important debate. Many constituencies face issues that reflect his concerns about non-enforcement.

I do not want to give three cheers for the minimum wage, because it deserves only one cheer—possibly two, at a stretch. We know the stories: £1.50 an hour in the security industry and £1.50 an hour in the forestry industry before the minimum wage. I remember my hon. Friend the Member for Dumfries and Galloway (Mr. Brown) telling us about the wage rates in his local industry. The reality is that the wage rate has become a poverty trap for many workers. People are being paid less than they would if we had proper trade union legislation and if we returned to the system of industry wage councils, which worked well before they were collapsed by the Conservative Government to allow massive exploitation and the driving down of wages to the point at which people were getting £1.50 an hour.

When we introduced the wage in 1999, it was £3.60, which was far too low. We were afraid of the propaganda that was put out by the Conservatives and by many people in British industry who did not want to see any security for workers. They were quite happy to use the exploitative environment in which the Conservatives had left the working people of this country after 18 years of misrule. The rate was too low, and it has not risen quickly enough. The adult rate of £3.60 has risen to £5.52. It will go up again in October. That is a 53 per cent. increase. It has only gone up by half from a very low base since 1999. That is an average of 6 per cent. a year.

People may say that that is great and that 6 per cent. is a lot more than people are receiving on average. However, it is certainly not comparable with the massive rip-off wages of the people who work in the City or the people who have exploited the oil resources of this country. The finance markets and the domestic markets for fuel are in an unacceptable state, yet the wages returned to those people have gone up by hundreds of per cent., rather than by 6 per cent. per annum.

I want to speak about the development rate. What is a development rate? Where did that phrase come from and what does it mean? The former Minister, my right hon. Friend the Member for Makerfield (Mr. McCartney), is here and he put it through, but it is a mystery to me what development is supposed to go on between the ages of 18 and 21 that justified us giving people only £3 an hour instead of £3.60, and at this moment only £4.60.

We made one major improvement in 2004; we recognised that those aged below 18 were being ripped off lock, stock and barrel, because they were not covered by the minimum wage until 2004. Therefore, industries such as burger bars and shops would employ young people aged between 16 to 18, because they were not covered by the minimum wage. At least, we have corrected that. Although we have not given them a great deal, we have at least brought them into the structure.

There is an argument that, at 16 and 17, people should be encouraged to stay in school and not go into employment. Sadly, in my constituency, there are still many people who leave school and end up not in
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employment, education or training. Eventually, they end up in some low-paid, temporary and pointless job, which pays them a small wage.

What is a development wage? At the age of 18, a young person can fight and die for their country. They can go out on the front line of a battle and die. They can legally drink in a public house and legally purchase alcohol, and by the age of 21, they can do anything that any citizen would wish to do. They can vote at 18, but they cannot get a man’s wage. I married when I was 21 and my wife was 19. If we had been that age now, we would be getting paid a development rate if we did not have some other way of finding employment. I used to go out and work on a building site. I did that before I was married; during the holidays I married, and I went back on to that building site. I was paid a man’s rate, because I did a man’s job.

Today, when a youngster goes on to a building site, someone does not say, “You’re getting less of a job and you’ll get development.” No, they are given a pick and shovel, or some other implement, and told to get in there and work with the rest of the squad. So what is the development rate about? It is a sop to the rip-off merchants who run many of our industries today.

In the retail industry, which is prevalent in West Lothian, everyone who works in a shop is paid the minimum wage or below—they are paid the minimum wage, but they are below the age of 21, so they get £4.60. The top rate of pay for the supervisor who runs the shop is £6.40 an hour. That is the environment to which people have been driven, partly because the minimum wage is so low. It is reprehensible, and we should have done what the trade unions suggested at the time and set the wage at half the median income for the country. Until we start thinking about that and about giving every 18 year old and above the same rate of pay as everyone else on the adult minimum wage, we are offending greatly against the principles that I certainly came into the Labour party to pursue.

I now want to turn to my pet subject—the Minister probably anticipates this—of the minimum wage and the treatment of tips. The famous regulation to which I refer is not in the National Minimum Wage Act 1998. It is so well hidden in the National Minimum Wage Regulations 1999 that when I talked to Professor George Bain, who chaired the Low Pay Commission for four years, he said that he did not know that it existed. He did not know that such things went on. Regulation 31(1)(e) says that, if tips are paid through the payroll, it counts towards the minimum wage. For 2 million people working in the hospitality industry, a large number get their wages from their tips. The minimum wage is not a wage with an addition for the tips that we give them; it is made up of those tips.

What is a tip? As defined by Her Majesty’s Revenue and Customs, everything that is a gratuity, tip, service charge or cover charge is a tip. It has defined that quite clearly for the purposes of tax and national insurance. When we enter a restaurant and it says at the bottom of the bill, “A 12.5 per cent. service charge has been added to this bill”—sometimes it says that that is voluntary and sometimes it does not—we are paying a tip. If we pay that on our credit card—this matter has been judged all the way up to the European Court of Justice—we are paying it to the owner of the restaurant or the hotel
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premises that we are in. However, if we pay cash and it is paid through a kitty or tronc, which it mainly is, and it goes through the payroll, it still counts towards the minimum wage. So if we give cash, we might not be giving it to the proprietor, but we are still paying the minimum wage with it.

After I introduced a ten-minute Bill in the House, I discussed the matter with the Minister and officials from the Low Pay Commission. I say pejoratively that I found them to be useless. They said, “If we take that away, and tips are in addition to the minimum wage, we will have to find out how much tips people are getting and enforce the tips.” However, that is not correct. All they have to do is ensure that people get the minimum wage. The law should say that everything that is paid as a tip or gratuity will have to count on top of the minimum wage. That would redress the balance between the customer and the person who is serving them.

The French word for a tip is a “pourboire”, which means “for to drink”. That is what a tip is: an additional sum of money on top of someone’s wages that they can have some leisure or pleasure with, but that is not so in this country. In this country, because of the regulation I have referred to, tips are paying the wages—a minimum wage—of many people in the hospitality industry. It is time we stopped that. It is also time that we paid a decent minimum wage and the same rate to all adults. People who are above the age of 18 are adults—they have adult responsibilities, and they usually work an adult shift.

If we get rid of the tips anomaly, people who work in the hospitality industry, particularly in this city, would find that they are due what they are given by their customers. If people want proprietors to get more money, put up the cost of the facility or the food. Anything on top of that is what the customer chooses to give as an extra to the staff for the quality of service. That would redress some of the imbalance that occurs at the moment. The issue was recently illustrated by the Daily Mirror and Unite launching the fair tips campaign, which called for a fair tips charter to be displayed by good premises that pay the minimum wage, on top of which tips are paid. I hope that the Government will shortly do something to correct the tips anomaly.

3.1 pm

Mr. Andrew Smith (Oxford, East) (Lab): Although it was a huge step forward when Labour brought in the minimum wage, which benefited millions of the lowest paid workers, it is appalling that estimates from the Office for National Statistics show that around 300,000 workers are still in jobs that pay below the minimum wage. As we all know, that is only the tip of the iceberg.

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing this timely debate, and I very much agree with the points that he made about strengthening staffing resources and publicising enforcement. I also agree with the point made by my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) about 18 being recognised as the age at which the adult entitlement for the minimum rate should apply, and I think that we all found his arguments persuasive in relation to his convincing obsession with tips.


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