Mr.
Binley: There is a concern, particularly from small
businesses, about—I was about to say policing by consent, but
perhaps inspecting by consent is a better phrase. First, it takes a lot
more time proportionally for a small business to deal with these
matters than it takes in a larger business. Secondly, if there is a
fear that inspection by one authority might lead to lots of other
inspections, there is a tendency to become defensive. That defensive
mechanism is not helpful to any of
us. I
understand the need to ensure that those who are wilfully trying to get
round provisions such as the minimum wage should be treated in the way
that we would all wish to see. They should be paying the minimum wage;
there is no doubt about that, but I want the Minister to assure me that
it will be applied sensitively. I can see that, particularly over the
next two or three years, if we made a purge—I know that that is
not in the Minister’s mind—or if any officers made a
purge, it could be disruptive and make it more difficult for small
businesses to operate in the way that we all want them
to.
Mr.
McFadden: I agree with most of what the hon. Gentleman has
said, but there is another side that we have to consider. He referred
to some of the earlier
deliberations on the Bill and to what happens when “the inspector
calls”—I think that that was the phrase he used. The
amendment would mean that rather than having a series of inspectors
calling about different legislation, they would be able to talk to one
another in a way that they are legally prohibited from doing at the
moment. I accept what the hon. Gentleman says about small businesses
not wanting repeat visits, but I think that the provision could result
in fewer repeat visits rather than more. I appreciate the difficulties
of the small business—I represent the Department of business
and, of course, we want small businesses to prosper. We fully
appreciate their
value. However,
we must also place ourselves in the shoes of the vulnerable worker, who
does not know, and legitimately cannot be expected to know, what to do
if they face problems at work—for example, if an agency supplied
them to an employer and charged them illegally for finding them work,
and they were possibly not paid the minimum wage or the holiday and
other pay to which they were entitled. Surely we should try to improve
the current situation, in which a person can find themselves having to
phone different Government helplines to try to report the problems. As
far as they are concerned, they just want to report their problem to
the Government. They do not know that the agency standards inspectorate
is part of BERR and that HMRC is part of the Treasury, or about
friendly and proper agreement about the enforcement of the minimum
wage.
Through a lot
of the work on vulnerable workers, we are trying to transfer more of
the burden of navigating the system from the vulnerable worker to the
Government. That is certainly in the interests of the vulnerable
worker, but I stress that it is also in the interests of good and
legitimate business. The hon. Gentleman asked us to work with
sensitivity. I absolutely believe in working with sensitivity, but
there must be a tough edge to law enforcement on these areas, because
we are dealing with vulnerable workers and an overall theme of the Bill
is that enforcement has to get
tougher. I
took issue with the hon. Member for Solihull, who is not with us today,
when she raised the idea that, with the resources of the minimum wage
inspectorate, the chances of inspection were once every 300 years. We
do not want an inspection regime that simply sends people round the
country for no reason into legitimate businesses that are obeying the
law, paying and treating their workers properly and so on. We want it
to be risk-based and targeted, in the interests of business and of the
taxpayer. We will operate with sensitivity, but we are also determined
to enforce the law. The new clause will help us to do that more
effectively.
Amendment
agreed to.
2.30
pm
Amendment
made: No. 21, in
clause 21, page 18, line 19, leave
out ‘section 18 comes’ and insert
‘sections
(Employment agencies and national minimum wage legislation:
information-sharing) and 18
come’—[Mr.
McFadden] Clause
21, as amended, ordered to stand part of the
Bill.
Clause
22Short
title
Mr.
McFadden: I beg to move amendment No. 2, in
clause 22, page 18, line 29, leave
out subsection (2).
I do not need
to detain the Committee with this amendment, which is a technical
change to remove the privilege amendment made in the other place. Hon.
Members will be aware that the financial powers of the other place are
restricted by the rights and privileges of the House. The text in
subsection (2) is inserted in all Bills with financial implications
that begin their life in the other place, and it is standard procedure
to remove that privilege amendment after Second Reading in this
House. Amendment
agreed
to. Clause
22, as amended, ordered to stand part of the
Bill. Schedule
agreed
to.
New
Clause
8Employment
agencies and national minimum wage legislation:
information-sharing ‘(1) In
the National Minimum Wage Act 1998 (c. 39), in section 15 (information
obtained by officers), after subsection (5) there is
inserted— “(5A)
Information to which this section
applies— (a) may be
supplied by, or with the authorisation of, the Secretary of State to an
officer acting for the purposes of the Employment Agencies Act 1973 for
any purpose relating to that Act;
and (b) may be used by an
officer acting for the purposes of that Act for any purpose relating to
that Act.” (2) In the
Employment Agencies Act 1973 (c. 35), in section 9 (inspection),
subsection (4) is amended as
follows— (a) after
“this section” there is inserted “(or pursuant to
section 15(5A) of the National Minimum Wage Act
1998)”; (b) after
paragraph (iv) there is inserted
“or (v) to an officer
acting for the purposes of the National Minimum Wage Act 1998 for any
purpose relating to that
Act;”.’—[Mr.
McFadden.] Brought
up, read the First and Second time, and added to the
Bill.
New
Clause
1Amendment
of the National Minimum Wage Regulations
1999 ‘(1) The National
Minimum Wage Regulations 1999 are amended as
follows. (2) In Regulation 31,
sub-paragraph (1)(e) leave out “that is not paid through the
payroll” and insert “whether paid through the payroll or
by any other method”.’.—[John
Hemming.] Brought
up, and read the First
time.
John
Hemming: I beg to move, That the clause be read a Second
time.
The
Chairman: With this it will be convenient to discuss New
clause 7— National minimum wage:
gratuities— ‘In the
National Minimum Wage Act 1998 (c. 39), in section (2) (determination
of hourly rate of remuneration), after subsection (5) there is
inserted— “(5A)
The regulations shall make provisions with respect to employees in
service industries, to provide that gratuities paid to them in the
course of their employment shall not be included in the calculation of
the national minimum wage to be paid to
them.”.’.
John
Hemming: There has been some concern about this issue. New
clause 7 would have similar effect to new clause 1, which is meant to
probe the issue. Depending on the Government’s response,
however, we might be inclined to divide on new clause 7, if the hon.
Member for Huntingdon wants to do
so. This
issue is important because it is complicated to have a mix of service
charges and extra bits on credit cards with some things being paid
through the payroll and others not. Some subtlety is required to handle
the matter. Perhaps there should be a standard service charge rather
than it simply being put in the price, so that there is clarity. I am
interested to hear what the Government have to say on
that.
Mr.
Crabb: It is a pleasure to serve under your chairmanship,
Mr. Caton. Obviously, I rise to speak to the new clause
tabled by my hon. Friend the Member for Huntingdon, but I support the
sentiment in the new clause tabled by the Liberal Democrats.
At the start
of the Committee’s proceedings on Tuesday, the Minister referred
to an article that he had read in the Sunday Mirror purporting
to convey some foresight into what might be a future Conservative
Government’s approach to the minimum wage. On behalf of the
Conservatives, I should say that we are positive about the minimum
wage. When discussing an amendment earlier this afternoon, my hon.
Friend said that changes can occur in political parties. One change in
our party is that we recognise that the minimum wage has been a good
thing, and we want it to be properly enforced and to be
effective. We
are also positive about the service industry. We recognise that we have
a vibrant, successful service sector that is an increasingly important
component of the economy, and we want that success to continue. Our new
clause would support a successful and vibrant service-based economy,
from the perspective of both employees and employers. From an
employer’s perspective, our new clause would make a significant
difference to many people working in cafĂ(c)s, restaurants or
hairdressers. Let us take, for example, the case of a student working
in a city centre restaurant, doing three shifts a week, six hours each
shift, totalling 18 hours a week. That person might be paid the minimum
wage rate of £5.73 an hour and can expect to take home
£103.14. If they anticipate that they will receive £20 in
tips per night, which is not unusual in a city centre restaurant, an
extra £60 will bring their wage up to £163.14. By having
a properly enforced minimum wage, £163 is far better than if
they were receiving a wage below that
level. Let
us compare that scenario to the one uncovered by The Independent on
Sunday and reported on in May this year. It was about a leading
Italian restaurant chain that employed its 300 members of staff at
£3.75 an hour. There was a substantial difference in what those
employees were taking home. The company said in its defence that it
took care to maintain that the money that its employees received at the
end of each week or month was equivalent to the minimum wage level, and
that it bumped it up to ensure that its staff received at least the
minimum wage. That defence was weak.
Many
restaurant owners argue that that it creates an incentive for good
performance on the part of their staff if they know that they need to
work hard and put
in a good performance just to bring their wage up to the minimum wage
level. I do not buy that. A far more powerful incentive for employees
in cafĂ(c)s, restaurants, hairdressers—or whatever the
service-based scenario—is to be guaranteed a decent legal
minimum wage at the end of each week, knowing that whatever tips,
bonuses or gratuities they receive are in recognition of extra-good
performance. I
am sure that I am not the only hon. Member who has experienced
particularly bad service or an unhelpful, stroppy waiter or waitress,
nor would I be the first to observe that we have a problem of patchy
quality in our service sector. Guaranteeing a decent minimum wage for
people in the service sector will help to raise their esteem and lead
to overall gain for the industry and the British
economy.
Mr.
Swire: I support new clause 7, and I largely support what
my hon. Friend the Member for Preseli Pembrokeshire has said, but I
want it to go a lot further. It hinges on the word
“gratuity”—a tip. A gratuity is given to someone
who has done something above what we would normally expect them to do
for us. The whole issue of tipping is completely out of control in this
country. I have never understood why a taxi driver who is rendering us
a service when we contract him to take us from A to B expects a 10, 11
or 12 per cent. tip on top. Even when I was a little younger than I am
now, taxi drivers used to emerge from the comfort and warmth of their
front seats to open the door and help elderly people with suitcases.
Alas, that is no longer the case, yet they still expect a tip on top of
what we pay them. That is completely
unacceptable. I
represent a constituency that has many people working in the service
industry. The industry is casual and seasonable, and it pays a low
wage. To them, the minimum wage is important. I would come down harder
than my hon. Friend the Member for Preseli Pembrokeshire on the Italian
restaurateur, or on any other restaurateur who acted in that way. There
is evidence throughout the country of people regarding gratuities or
tipping as a supplement with which to bring poor wages up to the
minimum wage. Such a practice should be illegal, and it should be
enshrined in law that it can never happen.
Mr.
Crabb: For the sake of clarity, I too regard it as
absolutely unacceptable for a chain of restaurants to use arguments
about incentives as a smokescreen for paying an illegal wage to its
workers.
Mr.
Swire: Indeed. If I suggested that my hon. Friend did not
feel as strongly about the matter as I do, I completely withdraw that
remark.
Mary
Creagh: I am sure that all members of the Committee feel
strongly about it. Does the hon. Gentleman agree that we need to put an
end to the practice whereby restaurants automatically add the service
charge to a bill but leave the total blank so that people unwittingly
add an extra amount? That is bad for consumers as well as for
staff.
Mr.
Swire: The hon. Lady is stealing my script. I completely
agree with her. An hon. Member—I cannot remember who—was
going to introduce a private Member’s
Bill on the whole question of tipping, but alas he lost his seat or is
otherwise no longer with us. I am quite tempted to do the same,
although I do not want to lose my own seat. Nor do I wish to irritate
the entire taxi-driving community of London, although I fear that I
have already done so. I shall have to resort to my Vespa motorcycle,
which I ride most days anyway like a good green
Conservative. The
hon. Lady rightly raised another issue about gratuities and tipping in
general. As well as the appalling practice whereby service is added on
and then the bill is left open, when one asks whether service is
included it can seem almost like a threat to be told, “Yes, 12.5
per cent.” or whatever, as if that is not enough. Where does
that money go? Increasingly often, I ask waitresses and waiters, many
of whom come from eastern Europe and many of whom are struggling
students, what happens to their tips. When I hear that they are all
pooled and handed out at the end of the week, I do not much like the
sound of that
either.
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