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Division No. 2


Addington, L.
Archer of Sandwell, L.
Ashley of Stoke, L.
Avebury, L.
Barnett, L.
Beaumont of Whitley, L.
Birk, B.
Blackstone, B.
Bridges, L.
Brookes, L.
Bruce of Donington, L.
Callaghan of Cardiff, L.
Carmichael of Kelvingrove, L.
Carter, L.
Castle of Blackburn, B.
Chapple, L.
Chorley, L.
Cledwyn of Penrhos, L.
Clinton-Davis, L.
Cocks of Hartcliffe, L.
Crook, L.
Darcy (de Knayth), B.
David, B.
Dean of Beswick, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Donaldson of Kingsbridge, L.
Donoughue, L.
Dormand of Easington, L.
Dubs, L.
Eatwell, L.
Ewing of Kirkford, L.
Ezra, L.
Falkender, B.
Fitt, L.
Foot, L.
Gallacher, L.
Geraint, L.
Gladwin of Clee, L.
Gould of Potternewton, B.
Graham of Edmonton, L.
Grey, E.
Halsbury, E.
Hamwee, B.
Harris of Greenwich, L.
Haskel, L. [Teller.]
Healey, L.
Henderson of Brompton, L.
Hollis of Heigham, B.
Holme of Cheltenham, L.
Hooson, L.
Howell, L.
Howie of Troon, L.
Hughes, L.
Hylton, L.
Hylton-Foster, B.
Irvine of Lairg, L.
Jay, L.
Jay of Paddington, B.
Jeger, B.
Jenkins of Hillhead, L.
Jenkins of Putney, L.
Judd, L.
Kennet, L.
Kilbracken, L.
Kinloss, Ly.
Kirkhill, L.
Lawrence, L.
Lester of Herne Hill, L.
Listowel, E.
Lockwood, B.
Longford, E.
Lovell-Davis, L.
McCarthy, L.
McGregor of Durris, L.
McIntosh of Haringey, L.
Mackie of Benshie, L.
McNair, L.
Mallalieu, B.
Mar and Kellie, E.
Mason of Barnsley, L.
Mayhew, L.
Merlyn-Rees, L.
Milner of Leeds, L.
Monkswell, L.
Morris of Castle Morris, L.
Moyne, L.
Nelson, E.
Nicol, B.
Northbourne, L.
Ogmore, L.
Palmer, L.
Parry, L.
Perry of Walton, L.
Peston, L.
Rea, L.
Redesdale, L.
Richard, L.
Robson of Kiddington, B.
Rochester, L.
Rodgers of Quarry Bank, L.
Russell, E.
Sainsbury, L.
Scanlon, L.
Seear, B.
Sefton of Garston, L.
Serota, B.
Shepherd, L.
Simon, V.
Stallard, L.
Stoddart of Swindon, L.
Strabolgi, L.
Tope, L.
Tordoff, L.
Turner of Camden, B.
Varley, L.
Wallace of Coslany, L.
Wedderburn of Charlton, L.
Whaddon, L.
White, B.
Wigoder, L.
Williams of Crosby, B. [Teller.]
Williams of Elvel, L.
Williams of Mostyn, L.


Aberdare, L.
Addison, V.
Ailsa, M.
Aldington, L.
Alexander of Tunis, E.
Ashbourne, L.
Astor, V.
Balfour, E.
Banbury of Southam, L.
Belhaven and Stenton, L.
Blake, L.
Blatch, B.
Boardman, L.
Borthwick, L.
Boyd-Carpenter, L.
Bruntisfield, L.
Burnham, L.
Butterworth, L.
Cadman, L.
Carnock, L.
Chalker of Wallasey, B.
Charteris of Amisfield, L.
Chelmer, L.
Chelmsford, V.
Chesham, L.
Clanwilliam, E.
Clark of Kempston, L.
Cockfield, L.
Coleraine, L.
Coleridge, L.
Cornwallis, L.
Courtown, E.
Cranborne, V. [Lord Privy Seal.]
Cranworth, L.
Crathorne, L.
Cullen of Ashbourne, L.
Cumberlege, B.
Davidson, V.
Dean of Harptree, L.
Denton of Wakefield, B.
Dilhorne, V.
Dixon-Smith, L.
Dormer, L.
Dudley, E.
Dundonald, E.
Ellenborough, L.
Elles, B.
Elliott of Morpeth, L.
Ferrers, E.
Flather, B.
Foley, L.
Fraser of Carmyllie, L.
Gage, V.
Gainford, L.
Gardner of Parkes, B.
Geddes, L.
Gisborough, L.
Goschen, V.
Gray, L.
Gray of Contin, L.
Gridley, L.
Haig, E.
Hailsham of Saint Marylebone, L.
Harding of Petherton, L.
Hardinge of Penshurst, L.
Harmsworth, L.
Hives, L.
Hogg, B.
Hood, V.
Howe, E.
Inglewood, L.
Jenkin of Roding, L.
Johnston of Rockport, L.
Kingsland, L.
Kinnoull, E.
Knollys, V.
Lane of Horsell, L.
Lauderdale, E.
Lindsay, E. [Teller.]
Liverpool, E.
Long, V.
Lucas, L.
Lucas of Chilworth, L.
McColl of Dulwich, L.
McConnell, L.
Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. [Lord Chancellor.]
Macleod of Borve, B.
Marlesford, L.
Merrivale, L.
Mersey, V.
Middleton, L.
Miller of Hendon, B.
Milverton, L.
Monckton of Brenchley, V.
Monk Bretton, L.
Morris, L.
Mountevans, L.
Mowbray and Stourton, L.
Munster, E.
Noel-Buxton, L.
Northbrook, L.
Northesk, E.
O'Cathain, B.
Onslow, E.
Oppenheim-Barnes, B.
Orkney, E.
Orr-Ewing, L.
Oxfuird, V.
Pender, L.
Perry of Southwark, B.
Peyton of Yeovil, L.
Pym, L.
Quinton, L.
Radnor, E.
Rankeillour, L.
Rawlings, B.
Rawlinson of Ewell, L.
Renfrew of Kaimsthorn, L.
Renwick, L.
Rodger of Earlsferry, L.
St. Davids, V.
Salisbury, M.
Saltoun of Abernethy, Ly.
Sandford, L.
Seccombe, B.
Sharples, B.
Shaw of Northstead, L.
Simon of Glaisdale, L.
Skelmersdale, L.
Skidelsky, L.
Slim, V.
Stewartby, L.
Stodart of Leaston, L.
Strange, B.
Strathcarron, L.
Strathclyde, L. [Teller.]
Terrington, L.
Thomas of Gwydir, L.
Torphichen, L.
Trefgarne, L.
Trumpington, B.
Ullswater, V.
Vaux of Harrowden, L.
Vivian, L.
Westbury, L.
Wolfson, L.
Wynford, L.
Young, B.
Zouche of Haryngworth, L.

Resolved in the negative, and amendment disagreed to accordingly.

16 May 1995 : Column 434

4.20 p.m.

Baroness Hollis of Heigham moved Amendment No. 25:

Page 5, line 30, at end insert ("and in particular, a person shall be entitled to refuse to make himself available for employment where the average weekly remuneration would produce an income less than the amount of means-tested benefits to which he is entitled.").

The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 31. This amendment would protect the jobseeker from being required to accept a job that pays below JSA or the old income support rates. Why is that? It is because that rate is a poverty rate and we do not believe that people should be required to make themselves poorer in consequence.

What is the old income support/JSA figure? It is less than £37 a week for someone under 25; it is £46.50 for a single person over 25; and £73 for an unemployed couple without children—in other words, £5 a day for each of them. Most of us cannot survive even on that sum—the existing jobseeker's allowance—without getting into debt, scrounging from friends and family who themselves may be unemployed or needing Social Fund loans. That is a poverty line. It is basic. One cannot live below it. Yet, with the abolition of the wages councils and with compulsory competitive tendering in public services, wages for the low paid are falling. There are now nearly 1.25 million people earning less than £2.50 an hour and a third of a million people earning less than £1.50 an hour, which is well below income support/JSA levels.

Also, more and more jobs are temporary and not, as we would understand it, full-time jobs. They comprise 25 hours, 28 hours or 30 hours. That is too many hours to combine with another job but not enough hours to float that person above income support level and off the poverty line. In consequence, 3 million people at the moment earn less than £57 a week and too little to pay national insurance contributions. About whom are we talking? We are talking about people who work in hairdressing, catering, shops, cleaning and retailing and those who are care assistants and work in old people's homes. Those low-paid people are weak, scattered, not organised in trades unions and are not any more protected by wages councils. They are in no position to defend themselves as wages are pressed down and down.

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But, the Minister may argue, are not they at least pricing themselves into work by accepting such low rates of pay? On the contrary, since the abolition of the wages councils, over 18,000 jobs have been lost in the industries that the wages councils protected, while at the same time the pay for those jobs has fallen. Cutting wages does not create more jobs; it merely pays less for the same job.

Who are willing or able to afford to accept such jobs which now pay below income support levels? They are mostly women whose partners are in work and who are therefore above the poverty line. Because her partner is in full-time work, she can afford to take a low-paid job. As a household they are above the poverty line even though her pay as an individual may be below it. So this amendment does not affect them.

But it is a very different situation for someone who is currently on jobseeker's allowance, either as a single person or as one of an unemployed couple, who is required by an employment officer to take a job which brings his or her income down below that poverty line, below income support and below jobseeker's allowance. For an unemployed couple that figure would be £73 a week. Let us suppose that the man in that partnership is offered a job stacking shelves at £2.20 an hour—now a perfectly standard wage for stacking shelves—for 30 hours a week. It is not a part-time job but a semi-full-time job. How much would 30 hours a week at £2.20 an hour bring in? It is £66 a week, which is some £7 a week less than the poverty line JSA figure of £73 a week that the couple needs to live on. That is before he pays national insurance and before any travel to work costs are taken into account. If that person is required to take that job at £66 a week, which pays less than JSA, then JSA or income support is no longer, as the noble Earl, Lord Russell, said, a safety net below which no one needs fall. Instead, it has become a trapdoor through which the lowest paid fall.

Employers will be able to fix wages at whatever level they will. Why stop at £2.20? Why not pay £1.75, £1.50 or £1.25 an hour? They know as employers that they will have the support of the employment officer acting, if one likes, as a sergeant-major, requiring people to take jobs which make them poorer than if they were to remain on benefit. How will they do that? The employment officer will say, "Take this job which pays less than JSA or you will lose JSA altogether." That is not a labour market. That is forced labour, at exploitative pay. What will be the consequence? If the couple have no children and one is required to take that 30-hour £66 a week job, they will be forced to live below the poverty line. They will get into debt, scrounge or go into fraudulent work—the black market or black economy work.

However, if they have children they will receive family credit, which is a top-up in-work benefit for those with children. The result is that over the past four years the cost of the family credit benefit has soared. It has more than doubled. That is not because people have had more children but because employers have cut wages, knowing that the state will take the strain and top them up again. The employer has exported his wage bill to

16 May 1995 : Column 436

the rest of us as taxpayers. Why should we permit that? He has not done it more widely simply because people without children have been able to refuse jobs that pay less than income support. As a result, income support has effectively operated as a minimum wage below which wages may not fall.

Unless we accept the amendment, income support will not act as a minimum wage in the future. If, in the future, anyone on JSA can be required to take any job, irrespective of whether it pays above or below income support levels, then that floor of decency, that safety net for us as citizens and taxpayers, has gone. Employers can pay what they want and either "you" as a jobseeker or "we" as taxpayers, will subsidise and subscribe to an unlimited wage subsidy for employers.

The result is again a "Morton's fork". If a couple have no children, they are required to live below the poverty line; if they have children, we as taxpayers will subsidise the employer's wage bill to take them above the poverty line. Below the poverty line they are in destitution; above the poverty line, with children, we subsidise the employer. Neither of those alternatives is fair or acceptable. How do we stop it? By saying that no one should be required to take a job that pays below income support levels; that no one should be made poorer in work than on benefit—the level of benefit itself being our poverty line. I beg to move.

4.30 p.m.

Earl Russell: My Lords, I offer my support to both the amendments, which are important. They would put a floor underneath the wage at which people may be required to work, and would put it at the level of income support. Putting people below that level causes considerable hardship. While I appreciate that that is not necessarily regarded in all quarters as conclusive, nevertheless it is not negligible.

For example, I am aware of a case of somebody discussing his job plans with his employment officer, who worked out a budget which covered his actual outgoings—council tax, mortgage and so forth. Repossessions are not cheap, either for the country or for those who suffer them. The claimant then sent in that calculation, with his employment officer's approval, and was deprived of benefit on the ground that he had placed unreasonable restrictions on his availability. That does not seem to me to be a practical way of going on. There must be a floor underneath the wages at which people can be required to work, especially where we do not really have a free market; where the labourer cannot bargain because he is not given the freedom to do so. In particular, people should not be compelled to take jobs which pay commission only. I have known people quite well who are involved in looking for jobs in the part-time, deregulated labour market and they have come across jobs which no one in any civilised country should ever be compelled to take. There are limits.

I understand that that is not recognised as conclusive by all concerned, and we must therefore consider costs. I stress that I am always prepared to consider costs, but we must get them right. We have already heard reference today to the new book by Mr. Frank Field

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reported in the papers last Saturday which estimated that 50 per cent. of our population were on means-tested benefit. I have had no time since Saturday to check that figure. What Mr. Field says must always be taken seriously and I regret to say that that figure is by no means self-evidently absurd. As far as I can check, about half of Mr. Field's figure results from people on means-tested, in-work benefits who are being subsidised by the state because the wages paid by the employer are too low. I am sure we all agree that there are circumstances in which that can properly be done, but there must be a check on it, otherwise the temptation on the employer to free-load on the state is irresistible.

If 25 per cent. of our population are being paid wages so low that the state has to subsidise them, then the state is taking on a financial burden in the face of which it ought to hesitate. For example, we know that the cost of housing benefit is causing considerable concern to the Chief Secretary, as well it might. He has not recognised the problems, although when he says that there is a problem, he is unquestionably right. Again, the cost of housing benefit is largely the result of wages which are too low to sustain people in the housing market in which they have to be if they are to be able to work at all. To a lesser extent one can say the same of council tax benefit and family credit. But the three of them together give rise to a burden which the state should not multiply unnecessarily. I entirely agree with the Minister that the interests of the taxpayer need considering. I do not think in this regard that they are being considered in a sensible way.

When we were in Committee I drew the Minister's attention to a Written Answer I was expecting about the fall in public revenues during the past financial year. It so happened last week that the Minister signed the Answer himself, so it will already have come to his attention and I thank him for it. He may have noticed that the biggest drop in revenues was in income tax. If I remember rightly, although I do not have the figure by me, it was a drop of 1.2 per cent.

The Minister has reminded us many times in the course of the passage of the Bill that we have more people in employment than we had a year ago. He conceded that we welcome that, as he does. But when we have more people in employment and less revenue in the form of income tax, we need an explanation. The most likely explanation—I should like to know what information there is to sustain or oppose this conjecture—is that it is the result of falling wages. If we pay people less wages, we pay less tax; we damage the state's tax base and put an increasing burden on the diminishing number of people who are still receiving a big enough income to pay large sums of tax.

The state therefore is shooting itself not only in the foot, but in both feet. It may claim that it is creating more jobs. Supposing it is; I am in favour of public spending to create more jobs, but we must be careful how we do it. For some projects of job creation the price can be too high. This is very likely one of them. If the state wants to create jobs, it could find cheaper ways of doing so.

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Finally, when we discussed the hypothesis of creating jobs, I should like to recall the Minister's attention to the incident of Bottomley's list. This occurred during the debates on wages councils in 1990. Mr. Peter Bottomley asked the Government what the studies were that supported the contention that a floor under wages destroyed jobs. They gave him a Written Answer listing 26 studies. None of them proved the point and four argued directly for the opposite. The Government's case therefore rests on a shaky evidential foundation. To shoot oneself in both feet as a result of bad evidence is not clever.

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