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Although progress has been made on the minimum wage, part-time workers, maternity and paternity rights, holiday entitlement, the rights of union representation and the recent agreement on temporary and agency workers, a great deal remains to be done. That was graphically illustrated in the excellent and chilling report, “Hard Work, Hidden Lives”, by the Trades Union Congress commission on vulnerable employment. The report sets a compelling agenda on which the Government must act further to improve workers’ rights and to ensure that they can access the rights that they are already supposed to have. We must have more debates and campaigns on the wider issues to keep these vital matters at the forefront of people’s minds and to secure further progress.

I shall focus on two particular points about minimum wage enforcement that have been brought to my attention by my trade union—the Union of Shop, Distributive and Allied Workers. My hon. Friend the Member for Linlithgow and East Falkirk referred to the important role of trade unions in these matters. We all have a responsibility to act to counter such abuses, but we must respect and recognise the role that trade unions can play.

I want to make the case that third parties should be able to take representative or group cases to employment tribunals to enforce the minimum wage. At the moment, underpaid workers request that they get their due by contacting the minimum wage helpline and taking a case against the employer to an employment tribunal. Every worker who believes they have been underpaid needs to be named on the application, otherwise they will not be affected by the case, even if they are underpaid.

As we know, if an employer is underpaying one member of staff, in most cases, others are also being underpaid. Workers who are being paid less than the minimum wage are some of the most vulnerable people, as we have heard. Most fear losing their jobs if they take action against their employers to demand the higher pay to which they are entitled. The system identifies every such worker and leaves them vulnerable to reprisals from the employer, as we heard in the awful case raised by my hon. Friend the Member for Edinburgh, North and Leith.

There are obvious difficulties related to those circumstances and to persuading workers to put their name on an employment tribunal application—let alone being the first on the list. Although workers are protected from day one against unfair dismissal for enforcing the minimum wage, as we know, there are all sorts of ways that an employer can make it impossible for a vulnerable worker to continue their job—for example, unreasonable shifts, denying holiday requests, changing job content, and so on. Many cases of minimum wage underpayment are therefore never brought and that allows unscrupulous employers to think they can get away with it.

To move forward to a solution, we need to revisit the present restrictions whereby trade unions and other third parties are prevented from any involvement in cases of minimum wage enforcement. If a third party makes a complaint to Her Majesty’s Revenue and Customs, they are not even allowed feedback on the outcome of the case. I should be grateful if my right hon. Friend the Minister addressed that in her reply. As we know,
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representative actions and group litigation orders are allowed in the courts in certain circumstances. Therefore, it seems anomalous that employment tribunals cannot hear representative action and that their powers to manage group litigation in a way that would help to defend low-paid workers from exploitation are less extensive than those of the courts.

I shall try to hurry through my comments, because other hon. Members want to contribute. A further point relates to the wider remuneration package and employment issues. I want to put the case for HMRC minimum wage enforcement officers to be given the powers and training to enforce wage-related employment rights, including rights to paid holidays, statutory sick pay, maternity and paternity pay. Presently, if an employer fails to pay the minimum wage, they often also deny their staff other rights, including holiday leave, sick pay and maternity and paternity pay.

Even if minimum wage enforcement officers find evidence for such underpayments, they do not have enforcement powers. The only option for a worker to enforce their entitlement to those rights is to take an individual case to the employment tribunal. However, there is no protection against unfair dismissal for a worker who has been in employment for less than one year and who is seeking to enforce their legal rights to such payments. As I said, even if an employee has been in the same job for more than 12 months, an employer can find numerous ways to make it difficult for them to stay in their job and complain about their rights. There is little recourse for vulnerable employees who have been denied those payments. That makes the employment rights that we are proud to have carried forward under this Government of limited practical use to the most vulnerable employees, about whom we should be most concerned.

Given that HMRC inspectors have considerable expertise in dealing with wage issues and unscrupulous employers, there is surely a case for extending their role. With additional training, they could seek out and enforce compliance with the other wage-related employment rights issues. They could also ensure that vulnerable workers are protected and that employers have more to lose than they presently do from evading the law.

The introduction of the minimum wage and other employment rights has been a huge step forward. However, if all workers—particularly the most vulnerable—are to enjoy the minimum civilised standards for which we surely all ought to be fighting, enforcement needs to be strengthened, including in the ways that I have suggested.

3.8 pm

Mr. Ian McCartney (Makerfield) (Lab): It is not often that former Ministers are present in debates such as this, not to defend themselves, but to think aloud about where we should take things.

My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) said that he would give the minimum wage two out of three; I would give it three out of three. That is not because I was the Minister responsible for it or because I am totally loyal to the Government, which I am on two counts—one historical and one factual—but because, 10 years ago, a debate such as this would have been about the principle of the minimum wage and whether it is a viable option in a
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modern labour market. That argument has been won. Conservative Members sit over there, but there is absolute, or almost absolute, silence from them. Yet, the Conservative party tries to convince us that it is an anti-poverty party.

We started a campaign to establish the Low Pay Commission, and the national minimum wage is now a reality. Under their contracts, constituents working in Burger King were earning 10p an hour. When there was no work for them to do in the early evening, they had to sit and wait until their employer told them to get back behind the counter. While they were waiting, they got no pay whatever.

When the national minimum wage started, it was £3.60 an hour, which was not a lot of money, but it was better than 10p an hour. The big thing about the minimum wage, however, is that it is not just a minimum wage; it is about the state taking responsibility for its citizens—for workers who are vulnerable, disorganised or unorganised and who do not have the capacity, individually or even collectively, to negotiate better pay and conditions.

Whatever the rate of the minimum wage in the future, it will always be just that—a minimum wage. For many workers at the edges of the labour market, it will always be vulnerable, and there will always be employers who are prepared to undercut it. If we accept that that is the reality, we have to ask what we, as parliamentarians, can do to improve the system in the light of our experience since the implementation of legislation.

Michael Connarty: Everyone in Parliament who followed the minimum wage process from concept to reality will commend my right hon. Friend’s efforts to promote it and to tackle issues relating to temporary workers and the working time directive. We all owe him a debt of gratitude, and every worker in the country should realise that.

Mr. McCartney: I thank my hon. Friend for that. I was not being defensive. I was one of many people involved in the process, and the truth of the matter is that I was lucky to be the right person at the right time. Although I was certainly enthusiastic about the job, it was a collective agreement.

The consultation on the Employment Bill will take its course, and I hope that the Government will respond positively to the recommendations that USDAW, Unison, the TUC and others have made to improve its workings. I want, however, to concentrate on the current regime.

We asked HMRC’s predecessor to take responsibility for investigation and implementation because it was the one organisation that had the capacity to look at employers who refused to pay the minimum wage on request or as a simple matter of principle. Those were the same employers who refused to introduce minimum health and safety standards and who failed to recognise trade unions, pay appropriate tax and national insurance contributions and do all the other things that a good employer does as a matter of course. HMRC is the one agency that has the capacity, intellectual ability and skills mix to have a relationship with every employer in Britain. It is a powerful tool in implementing a national minimum wage and dealing effectively and quickly with those who refuse to pay it.

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First, it was always the intention that every HMRC inspector would have direct or indirect responsibility for ensuring the implementation of the minimum wage. When inspectors check whether VAT, tax or national insurance contributions have been paid, they also have the capacity to check on wage levels, and vice versa. HMRC does not have just a handful of individuals in a region with a particular skill, but a large number of people in each region of the United Kingdom, including Scotland, Wales and Northern Ireland, who can implement the minimum wage. It uses an army of people, rather than a small number of people within that army, to implement the minimum wage. However, it is worth considering whether it can utilise its resources more effectively.

Secondly, when vulnerable workers think of making a complaint, the first question that they ask themselves is, “What will happen to me?” Nine times out of 10, they are not in a trade union, and nine times out of 10, they are in a part of the economy where the trade unions are disorganised or not organised at all.

Thirdly, regardless of whether workers are married, unmarried or in a relationship of any sort, and regardless of whether they have responsibilities of any sort other than to themselves, we can be sure that their wage will be the only wage that they have.

Mr. David Hamilton: May I make a point about the second issue that my right hon. Friend has raised? In many areas, such as my constituency, the vast majority of employees work in small companies and are often not entitled to join trade unions, because trade unions are not recognised. That is one of the changes that could be made.

Mr. McCartney: I was coming to that—

Mr. Hamilton: Sorry.

Mr. McCartney: No, that is okay. It is more than a fair point. The minimum wage was so important, because it was meant to help workers who could not organise to get a higher rate. We must ensure that we deal effectively with the barriers to making a complaint in the first place. We did that by treating the minimum wage as a day-one right, which could be claimed by the worker themselves or by someone representing them, which is important. In other legislation, we have tried to improve the capacity of unions to get into small and unorganised workplaces, but the unions still have a low base in the low-paid sector, although they are beginning to expand, speak up and speak out.

On a daily basis, the practical truth is that workers will still be on their own. That is why HMRC and the Gangmasters Licensing Authority are important. Now that we have established those bodies, we may have to look at ways to bring them together more effectively—in a single agency or whatever—so that they have the capacity to intervene immediately when an employee or group of employees makes a complaint about their wages.

It is important that those who decide not to pay up immediately in keeping with the regulations face a further penalty. Workers should be entitled not only to back pay, but to compensation. That is vital, given the trouble that people go to simply to claim the minimum
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wage. Few of them are in a trade union, so all communication—whether it is telephone calls or whatever—involves a cost to them. There is the cost to them in terms of worry and concern, and there is also the cost of trying to borrow money from somebody else when their employer does not pay them the wages to which they are entitled and which they need to meet their bills. They can be hard-working, but they can still be unable to meet their bills. So getting back the £300, £400 or even the thousands of pounds that people are owed is not enough; we need to see whether there should be a compensation package. I hope that the Government will consider introducing in the Bill the capacity not only to repay people where they have been underpaid, but to compensate them.

We could debate that issue and related issues for a long time, but I know that other colleagues want to come in. However, the fact that we are having a debate shows that we still have a Labour party in Parliament that remembers where it came from, where it is going and where it needs to get to in a disciplined fashion. The longer we keep the Government where they are, the more vulnerable workers will become less vulnerable and the more workers who are being underpaid will get the minimum wage. It is critical that that happens.

The publication of information on the minimum wage raises several key issues. First, few workers understand their rights. Secondly, few can calculate what their wage should be. Thirdly, in industries where workers are vulnerable, few of those who take up work get a contract of employment that is worth the name or which informs them of their rights. Fourthly, when workers get information, it is often confused or not adequate to help them assess whether they are getting the minimum wage.

The Low Pay Commission should, therefore, have a statutory right to amend the relevant regulations to ensure that we have a different form of payslip. Workers should be entitled to a basic minimum payslip designed by the Low Pay Commission. They should be able to use their first payslip to calculate whether they are receiving the minimum wage. On the back of that payslip, there should be information about the hotline and about where people can go if they believe that their employer has miscalculated their wages.

We should take responsibility away from the unions, the employer and the employee and put an easy reckoner on the payslip to show whether the minimum wage has been paid and, if not, how people can get back the money that has been stolen by their employer. If we were to take that step, we could help hundreds of thousands of workers a year.

It would be a mistake if we went to court in the end. I would rather see the money spent on investigations. I would rather put money back in people’s pockets than spend hundreds of thousands of pounds of scarce resources on taking employers to court, when they might just bunk off in the end—many of them would do that. We have to take measures to deal with this issue as part of a prevention strategy, rather than a strategy to deal with things once the horse has bolted.

We must improve the role of HMRC and its relationship with other agencies, such as the Gangmasters Licensing Authority. We must put resources into ensuring that
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workers understand their entitlements from day one, so that they know when they get their first pay packet whether they are being paid the minimum wage to which they are entitled.

3.19 pm

John McDonnell (Hayes and Harlington) (Lab): It is a tradition to congratulate the hon. Member who secured the debate, and it is usually a formality, but my congratulations and thanks to my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) are genuine, because the debate is very timely. We think that the Second Reading of the Employment Bill will be towards the end of June, when the Government will have the opportunity to deal with the range of issues that we are covering. I associate myself, by the way, with what has been said about my right hon. Friend the Member for Makerfield (Mr. McCartney); we would not even be having this debate if it were not for his work.

The Employment Bill will enable us to consider the issues of tips, group actions and holiday pay. I hope that Mr. Speaker will allow us to address the issue of the exclusion of those under 21 from employment rights legislation. I want to raise something else, too. Several of us have been involved in the National Union of Rail, Maritime and Transport Workers campaign on minimum wages for seafarers. We have led a campaign for a decade now in which we have tried to demonstrate that seafarers working on UK-flagged ships are paid at different wage rates because of their race. The European Union intervened, and the Government introduced legislation so that those workers could not be discriminated against on the grounds of nationality. However, many of us thought, “What’s the difference?”, because employers will still get round the provision and avoid paying people a fair wage.

The concession that the Government made in the Select Committee on Regulatory Reform, which I attended, was that the minimum wage would be paid to all UK seafarers—all workers on UK-flagged ships—when they are in British waters. We thought we had a major victory, and we were about to put out a press release congratulating the Government—a rare thing for me—on their work. Then we got back to the office to discover that the change did not apply to British territorial waters, but to British internal waters, which means it concerns the Norfolk broads. Many routes from this country are not included in the provision, which has enabled shipping companies to avoid paying the minimum wage on a large number of UK-flagged ships, particularly ferries, which is a disgrace in this day and age. We shall table amendments to the Employment Bill.

I hope that we are setting the agenda for the Government, and that in three weeks—I hope it is three weeks—they will table amendments to address the anomalies that we have outlined. Also, I think that hon. Members have today constructively demonstrated how the system can be improved to achieve the original objectives that we all—certainly on the Labour Benches—supported when the minimum wage was proposed. I concur with the criticism about those who are under age, and so on, and we can deal with that in the Bill, if we are creative enough in drafting amendments.

Whatever improvements we get will be irrelevant, however, unless we have the resources to enforce the minimum wage. I chair the Public and Commercial
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Services Union parliamentary group, which is an all-party group. The union has welcomed the minimum wage, and it is PCS members who enforce it. They welcomed the statement in 2006 by the then Chancellor of the Exchequer about increasing resources by 50 per cent. and the statement by the Minister for Employment Relations and Postal Affairs that there had been a £3 million increase in the overall budget. Ministerial statements have been superb, but the delivery at management level has not reflected the political statements and commitments that we have been given. For example, the budget in question was frozen for a period before the additional money was made available—management froze it as part of an overall review of departmental resources. One of the statements made by Government was that there would be 20 additional compliance officers. First, none were in place by April 2007 and only 17 had been recruited by 2007-08.

We have been asking questions about where the £3 million has gone. The figures show that the HMRC budget devoted to national minimum wage enforcement in 2006 was £6.3 million, and that that went up to £6.7 million in 2007-08. Only £6.5 million was spent, which does not reflect a £3 million increase in resources. We have looked at the BERR budget with reference to promotional work, but it only accounts for an increase of £200,000. Again, it seems that because of managerial decisions made within the Department, the money that was awarded at the political level has been swallowed up elsewhere and has certainly not been applied to front-line staff to implement policies. In order to extract information, the unions have submitted freedom of information requests about the budgetary disbursement of resources.

The key issue is to use the opportunity presented by the Employment Bill to bring together the agenda of improvements, to put right the issues that we are concerned about and to continue the pressure to increase the minimum wage, now that, as my right hon. Friend the Member for Makerfield has said, we have established the principle and shot down all the arguments about the cost to jobs. However, we must, when we make policy here, make sure that the resources are available, and that they are well and consistently managed, to enable the policies to be carried out. In that matter, members of the PCS who are working on the front line are not confident that the management of resources will ensure that that policy is implemented, which is something that I am sure all Labour Members want.

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