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House of Commons

Thursday 23 October 2008

The House met at half-past Ten o’clock


[Mr. Speaker in the Chair]

Private Business

London Local Authorities (Shopping Bags) Bill ( By Order)

Order for Second Reading read.

To be read a Second time on Thursday 30 October.

Oral Answers to Questions

Business, Enterprise and Regulatory Reform

The Minister of State was asked—

National Minimum Wage

1. Mr. Elliot Morley (Scunthorpe) (Lab): What representations he has received on the effects on the observance of the national minimum wage of employers who overcharge migrant workers for accommodation. [229212]

The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Pat McFadden): Within the minimum wage there is an allowable accommodation offset, currently set at £4.46 a day. It is considered every year by the Low Pay Commission, and representations on its level are normally directed at the commission.

Mr. Morley: I thank my hon. Friend for that answer. Does he agree that although foreign workers, particularly from the EU countries, are an essential part of our economy, it is not acceptable for employers to undercut local employment by abusing the minimum wage, accommodation charges and charges to transport workers to and from their place of work? That has been a problem in Lincolnshire in relation to rogue gangmasters, but it is not confined to them. Can he assure me that such issues will be cracked down on, and that the people responsible will be punished?

Mr. McFadden: My right hon. Friend makes a very good point. The minimum wage has been in place for a decade now, and there is no excuse for the practices that he sets out. With that in mind, the Government have allocated extra support to enforcement of the minimum wage—some £3 million more a year—but we are also changing the law through the Employment Bill, which is currently before the House. It will increase the arrears for any employee who is not paid the minimum wage
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and stiffen the penalty regime against the employer who does not pay it. Those measures are absolutely right and in the interests of both low-paid workers and the vast majority of good businesses that obey the law and treat their workers decently.

Tony Baldry (Banbury) (Con): How many prosecutions have there been of employers who have abused the minimum wage and exploited workers in this way?

Mr. McFadden: Her Majesty’s Revenue and Customs, which recovers arrears on the minimum wage, has up to now placed its emphasis on that and recovers several million pounds a year, so there have been relatively few prosecutions. One change that we are making in the Employment Bill is to give the enforcement officers extra powers. The Opposition did table some amendments on the matter, but I am glad that they did not press them to the vote.

Andrew Miller (Ellesmere Port and Neston) (Lab): When I was undertaking research for my private Member’s Bill on temporary and agency workers I came across such scams day in, day out. Some of them are covered by current legislation and some will need fresh regulation. Can my hon. Friend assure me that now that the agency workers directive is in force—it came into force this week—the Government will implement the necessary changes to enforce it?

Mr. McFadden: The agency workers directive is not yet in force, but it has been agreed. Of course, that agreement was made possible in part by an agreement reached in this country between business and employee representatives on how to take it forward. That has been reflected in the directive, which represents a much better deal for the United Kingdom than previous drafts of the directive that have been discussed in recent years.

Richard Ottaway (Croydon, South) (Con): But does the Minister agree that the biggest influence on wage levels is the supply of labour? Under the circumstances, does he agree with the immigration Minister that immigrant labour should not replace indigenous labour?

Mr. McFadden: I think that migrant workers from other countries have made a very significant contribution to economic growth in this country in recent years. When it comes to the future, we have the new points-based system. The idea behind that is precisely to match the demands of the labour market with migrants coming from other countries.

Phil Wilson (Sedgefield) (Lab): What steps is my hon. Friend’s Department taking to promote employment rights to the low-paid and increase their awareness of the minimum wage?

Mr. McFadden: My hon. Friend makes a very good point. We will spend some £850,000 on minimum wage awareness over the next year, which will include advertising on radio and efforts to communicate with migrant workers who, as my right hon. Friend the Member for Scunthorpe (Mr. Morley) said, can sometimes be subject to exploitation in this area. It will also include direct mail to employers to ensure that they are aware of the rates, which were increased on 1 October.

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Post Office Network

Mr. Henry Bellingham (North-West Norfolk) (Con): When he next expects to meet the National Federation of SubPostmasters to discuss the future of the post office network. [229215]

The Minister of State, Department for Business, Enterprise and Regulatory Reform (Mr. Pat McFadden): The Secretary of State met the general secretary of the National Federation of SubPostmasters on 15 October to discuss a range of matters relating to the future of the post office network. I have had regular contact with the federation since I came into the job 16 months or so ago, and I will continue to do so.

Mr. Bellingham: The Minister will be aware that the branch network in East Anglia, and west Norfolk in particular, has been devastated. The one crystal clear message we hear from the remaining sub-post offices is that they are determined to keep the Post Office card account. I asked the Under-Secretary of State for Business, Enterprise and Regulatory Reform, the hon. Member for Dudley, South (Ian Pearson), about that yesterday. Although he was sympathetic, he basically said, “Not me, guv. It is down to Ministers at the Department for Work and Pensions.” Will the Minister of State and the newly ennobled Business Secretary get a grip of this matter, and give a clear guarantee that the Post Office card account will be kept?

Mr. McFadden: I understand the value of the Post Office card account to the post office network; the general secretary of the National Federation of SubPostmasters has made his views on that clear. I stress what my right hon. Friend the Secretary of State for Work and Pensions said to the House on Monday—this decision is subject to competitive tendering, no decision has yet been made and it will be made in the proper way.

Albert Owen (Ynys Môn) (Lab): My hon. Friend will be aware that many MPs in Wales have been trying to work with the federation and local government to sign an accord providing for more council services to go through the post office network. Can he tell the House what progress has been made on that, given that he hosted the first meeting? Does he agree that if we are to have a sustainable network, we need local authorities to invest in local communities through the post office network?

Mr. McFadden: Local authorities will always want to consider the outlets for their services, and that will include post offices. For example, most local authorities offer people a range of ways in which to pay bills and the option of paying council tax online. That reflects the changes that people are making in their lives and the decline of business in the post offices in recent years. Of course, even after the current closure process is completed, the Post Office will still have an unmatchable reach in urban and rural communities, involving many more than 11,000 branches. That is a valuable asset to anyone interested in delivering services and reaching local communities.

Peter Luff (Mid-Worcestershire) (Con): If, in the next few days, Post Office Ltd confirms its initial proposal to close Bengeworth post office in my constituency, it will
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entirely forfeit my confidence in its common sense and commercial judgment. However, if the Post Office card account is not awarded to Post Office Ltd, many more post offices in my constituency and around the country will face closure. In the context of the Government’s understandable concern about small businesses, may I remind the Minister of the crucial role that rural sub-post offices play for many struggling small businesses?

Mr. McFadden: The Chairman of the Select Committee on Business and Enterprise makes a good point about the value of post offices to small businesses. He again mentioned the Post Office card account, but I cannot go any further than my right hon. Friend the Secretary of State for Work and Pensions, who told the House on Monday that this decision would be taken in a proper way, and that when there is an announcement to be made, we will make it.

Mr. Mark Todd (South Derbyshire) (Lab): I return to the impact of the possible loss of the Post Office card account. The Post Office has a poor record of tendering competitively for these sorts of services. I hope that the Minister has ensured that those in the Post Office who are preparing its tender have emphasised the network’s strength, not in terms of its numbers, because PayPoint outnumbers it now, but in terms of its proximity to the communities that it seeks to serve with the benefits that would be distributed through the card account.

Mr. McFadden: I am sure that all the bidders for this work, including the Post Office, will have tried to maximise the strengths of their bid by pointing out the strengths of their network. As I say, I appreciate the value of the card account to the post office network. When we have an announcement to make on this matter, it will be made.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The Minister has recognised that the Post Office has an unmatchable reach. If that is the case and if the card account contract is not given to the Post Office, our constituents will get a poorer service from whatever the replacement is. His Department has said that it wants to make life easier for small business and that it wants to speed up payments and everything else. Surely it needs to speed up decision making, because small businesses need to make investment decisions. If people do not know whether they are going to get the card account contract, how can they plan for the future of their local sub-post office?

Mr. McFadden: I appreciate the hon. Gentleman’s impatience and I know that the House is keen to hear the results of the tendering process. When we have made a decision on this, I can assure the hon. Gentleman that it will be announced in the normal and proper way.

Mr. David Drew (Stroud) (Lab/Co-op): I hear what my hon. Friend says and it was interesting to hear what his colleagues at the DWP have said. Does he realise that the Post Office has wonderful opportunities in these times of financial crisis? In particular, an opportunity is presented by the credit union movement. Will he go back to the federation and to the Post Office to see what opportunities there are for launching the credit union movement nationally by using post offices so that our constituents have safe ways to save and borrow?

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Mr. McFadden: My hon. Friend makes a good point. The Post Office has seen increasing success in offering financial services over the past couple of years, and not only in the area he mentions: the Post Office is now the leading retailer of foreign currency in the country, is expanding in insurance and offers deposit savings that I understand have been quite popular in recent months.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): I hope that we can all agree on the importance of the Post Office network to all communities, particularly rural communities. As has been mentioned, the renewal of the Post Office card account will be vital to maintaining footfall. In that regard, is the Minister aware of the recent press speculation that the contract is to be split between Post Office Ltd and a number of other suppliers? Is he also aware that most sub-postmasters would regard that as the final nail in their coffin? Will he take the opportunity to reassure them?

Mr. McFadden: I am aware of all sorts of speculation; whether it is wise to comment on it is another matter. I am certainly aware of the value of the card account to the post office network, but as I have said, the decision will be taken in the proper way by the Department for Work and Pensions. When a decision is reached, it will be announced in the normal way.

Mr. Andy Reed (Loughborough) (Lab/Co-op): In Loughborough, we have already gone through the closure programme, having lost four post offices. I would like to press the Minister on the level of compensation that is paid and whether there is any flexibility. A constituent of mine who had a post office and a Chinese food business that served the Chinese community at Loughborough university in particular feels that the amount of compensation in relation to the length of his lease is not adequate. Is there any flexibility in the scheme? Is there any hope that my hon. Friend can give to me as I go back to that constituent next week to try to sort the matter out?

Mr. McFadden: The compensation for sub-postmasters leaving the network as a result of the closures over the past year was negotiated with the National Federation of SubPostmasters. On the whole, the system of compensation is generous, which is quite right; it is paid in recognition of the very valuable contribution that those sub-postmasters have made to local communities over the years.

Mr. Jonathan Djanogly (Huntingdon) (Con): Given that there are some 4 million users of the Post Office card account, equating to some 10 per cent. of sub-postmasters’ net income, are not the Government slightly ashamed that they continue to delay the tender process for POCA’s replacement? Will the Minister explain why the delays continue, and tell us when the announcement will be made and certainty given to customers and staff of the Post Office?

Mr. McFadden: We are certainly not ashamed. We have put large financial sums into supporting the Post Office network: some £150 million a year. Without that level of subsidy, thousands more branches would be under threat because the Post Office is losing £500,000 a
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day and has lost 4 million customers a week in recent years. The decision on the card account will be taken in the proper way by colleagues at the DWP and, when we are ready, it will be announced in the normal and proper way.

David Taylor (North-West Leicestershire) (Lab/Co-op): In terms of his admiration for the private sector, the last Secretary of State for Business, Enterprise and Regulatory Reform was known to be on our party’s right wing, but the present one seems to be off the pitch and somewhere in the directors’ box. Can my hon. Friend tell me whether he thinks that Lord Mandelson’s inclination towards part-privatisation will go down well with the National Federation of SubPostmasters when next he meets it?

Mr. McFadden: I think that the Secretary of State will do a great job on the pitch. It is always good for a team to have its best players on the pitch. He has been on loan to another team, but I am glad that he is back playing a proper role. My hon. Friend’s question refers more to the Hooper review, which will report shortly.

Construction Industry

3. Mr. Robert Goodwill (Scarborough and Whitby) (Con): What assessment he has made of the economic condition of the building and construction industry. [229216]

The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Ian Pearson): The global credit crunch is affecting all economies, including the UK. Overall, the construction industry is experiencing a significant downturn in activity, but some sectors are faring better than others. The housing and commercial sectors are being hit hardest. However, the outlook for other parts of the industry is more positive due to major programmes of work such as Crossrail, the Olympics and the Building Schools for the Future programme.

Mr. Goodwill: The Minister mentions the Chancellor’s solution to the problem, which is to bring forward major infrastructure and construction projects—a massive spending splurge paid for by a borrowing splurge. But does he really think that that will address the problems facing small construction companies, especially in the housing sector, that are facing problems this week and this month?

Ian Pearson: As I said, the housing and commercial sectors are among the hardest hit at the moment. We announced a package of measures on 2 September, some of which will help the housing sector. I would have thought that the Opposition would want to welcome the bringing forward of infrastructure investment, because such investment is important for the UK’s long-term future and, if we can speed up the investment process, it will create new jobs for prime contractors and down through the construction supply chain. That will be valuable at this difficult economic time and will be welcomed by those who work in the construction industry.

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