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Baroness Miller of Hendon: In the first place, I did not speak about one amendment setting a rate of £3.60, to which the Minister referred. I spoke to three amendments which suggested different rates. The point I made to the noble and learned Lord was that had we known what might be the recommendation, we could have forestalled the whole of this conversation and discussion at this stage. We should not be probing as to which is the appropriate salary level. It was done in the same way in the other place when my honourable friends and honourable Members were discussing matters in the dark, without any guidelines as to the rate.

We made the point very early on, I believe on the first amendment that we discussed today, that we are finding it extremely difficult to discuss these matters because nobody has any idea of any of the recommendations. The Minister shakes his head, but the fact remains that it happens to be a habit of this Government not to come back to the House and make statements about matters. Instead, we read about those matters in newspapers or hear about them on the radio. These debates could be much shorter if we had more information and the Government gave the courtesy to the House which it deserves by making available that information.

If the Government are not in a position to give more detail, it is extremely unfortunate that we are having leak after leak after leak because some journalists are certainly obtaining that information. This is not the only Bill on which that has happened. I know that my noble friend Lady Blatch had similar experiences when she found it practically impossible to debate matters on an education Bill because certain information which she required was not made available to her, although it was made available widely to other people.

I know that that is nothing to do with the noble and learned Lord. But I say that with regard to the way in which I moved the amendment because that is the difficulty that we are having. I still believe that this is an important matter which we must get to the bottom of. However, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 9 and 10 not moved.]

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Lord Newby moved Amendment No. 11:

Page 1, line 16, at end insert--
("( ) The single hourly rate shall, at the end of one year, be increased by--
(a) the rate of inflation; or
(b) the percentage rise in the median of full-time hourly earnings during the preceding year,
whichever is the greater.").

The noble Lord said: The purpose of this amendment is to take out of the political arena the question of operating the minimum wage. Quite clearly, even if the Government are successful to the most ambitious extent in relation to inflation targets, we shall see wages rising both as a result of the rise in prices and as real incomes grow.

In those circumstances, it would be wholly inappropriate for the level of the minimum wage to be eroded in relation to both the overall level of prices and the earnings of the rest of the population. Our amendment suggests one way in which automatic provision could be made to uprate the minimum wage. We have suggested that it should be an annual uprating and that it should be either by,

    "the rate of inflation; or ... the percentage rise in the median of full-time hourly earnings during the preceding year, whichever is the greater".

It is fair to say that we are not wedded to that precise formula but we believe that by having an automatic uplifting provision it will save a tremendous amount of political debate and argument later which foreign experience suggests has been to the detriment of the low paid because it has tended to delay uprating.

Therefore, in large measure this amendment is a probing amendment to seek the Government's view on how they intend to deal with uprating and whether they accept the principle that taking uprating out of the political arena is an acceptable and sensible way forward, rather than having a dog fight every time the Government are suggesting putting 10p or 20p on the minimum wage.

9.30 p.m.

Lord Clinton-Davis: The noble Lord moved the amendment in a characteristically fair way. The Liberal Democrats have been very consistent in arguing this particular point. The amendment has some superficial attraction but I do not find the noble Lord's reasoned argument very compelling. I shall explain why. We do not believe that an automatic uprating system is the right way to proceed as regards the hourly rate. The amendment would take out of the method of calculation that element of judgment and flexibility which we believe to be important. Indeed, that is linked with the reasons why we asked the Low Pay Commission to recommend a rate in the first instance. We need that flexibility in order to judge what will be a sensible rate in all the circumstances, taking into account the wider factors. That is why we asked the commission to consider the matter initially. I believe that the noble Lord is familiar with those considerations, so I shall not go into them. They are well established.

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After setting the rate for the first time, I do not believe that we can assume confidently that all we have to do is sit back and let the thing run on mechanically over future years. Unquestionably, circumstances change; indeed, they often change in a way that is fairly unpredictable. I believe that it was Mark Twain who said that he was prepared to forecast anything but future events. He put it quite rightly.

In a situation where we have never had a statutory national minimum wage in this country, surely we should wait to see how the situation works out. We need to monitor and evaluate the impact and then we need to come to a considered judgment on the action required. Our position is that automatic uprating is rigid and unnecessarily prescriptive. I do not believe that it would be right to tie the Government to an automatic and fixed annual uprating of the national minimum wage or to a particular percentage increase.

Moreover, it is not necessary because such matters can be dealt with, taking into account intervening events, through the surveillance by this Chamber of the relevant secondary legislation. We could deal with the matter in that way without imposing a straitjacket whereby the Government are required to take such matters into account. I hope that I have given the noble Lord a reasonably compelling argument.

Lord Newby: The Minister advanced a reasonable argument, but I do not find it wholly compelling. I see a danger. There are some marvellous phrases about changing circumstances and the exercise of judgment. But if circumstances changed, I suspect that everyone earning a wage would be affected in the same way. Either there would be a big increase in wages across the economy for some reason, or there would be higher or lower levels of inflation. Therefore, the Minister's argument is not wholly compelling.

However, as I made clear, we are not necessarily wedded to every last word of the amendment. I am not completely persuaded that our arguments are misguided in principle. We shall obviously consider carefully what the Minister said and may return to the matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Miller of Hendon moved Amendment No. 12:

Page 1, line 17, after ("such") insert ("reasonable").

The noble Baroness said: In moving the amendment, I shall speak also to Amendment No. 13. These two amendments were discussed together in Committee in another place in a debate which lasted one hour and a quarter. It was a good humoured debate, described by my honourable friend the Member for Daventry as being of a very high quality. He complimented the Minister on having responded "sensitively" to the debate. The amendments were withdrawn in the other place to give time for reflection on the arguments. That time has now come.

The difficulties caused by Clause 1(4) arise not from the principle of the provision, which we accept, but from the way it is drafted. Amendment No. 12 requires the

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Secretary of State to act reasonably in fixing what is called a "pay reference period". Frankly I cannot understand why there should be any resistance to requiring the Secretary of State to be reasonable in everything that she does. The implication of a refusal of this requirement is that she reserves the right to act unreasonably, capriciously and arbitrarily. I readily acquit her of any such intention. I hope that, having now had time to reflect on the issue, the Government will accept this harmless and--if I may put it this way--reasonable little amendment. After all, it does no more than to state that the Minister will comply with the common law and the Wednesbury Rules.

Amendment No. 13 is much more complex. Part of the problem is that we do not know what pay reference period or periods the Low Pay Commission will recommend or whether the Secretary of State will accept those recommendations. This is the difficulty I raised in the Second Reading debate. I hasten to add that I do not want to rehash old arguments--I know that the Minister will be pleased about that--or to introduce any political arguments into what is essentially an administrative provision. However, the fixing of a pay reference period is a horribly complex matter. Whatever is decided is almost bound to raise as many problems as it solves and could cause injustices to employers as well as protecting employees' rights. This is because the national minimum wage will be based on some arbitrary hourly rate. However, the pay of many employees is not calculated hourly. The selection of a week for weekly paid workers and a month for monthly paid workers is a simplistic solution which is attractive on the face of it but which of itself gives rise to difficulties. That is why we have proposed that the pay reference period should be not less than a week or month, as the case may be.

I give the Committee an example of the kind of difficulty I am talking about. Let us take the case of a highly seasonal occupation, the tourist trade. Employees are required to work extremely long hours at some times in the year but have much less to do at other times. An employer may pay his staff, especially key skilled staff such as chefs, housekeepers and head waiters, an annual salary with pay averaged out over the whole year. The system operates on the basis of swings and roundabouts. Other less skilled staff may receive a bare retainer during the off season. If the pay reference period is in every case and in every occupation fixed by reference to a week or a month, an employer may find himself penalised when the busy season arrives, despite the fact that he has kept the employee on the books during the slack season. The consequence is that there may be a great deal more defensive casualisation of seasonal occupations, with some domestic staff being laid off during the off season. That is something that I believe already happens. That is why, as there has to be some pay reference period, we have suggested that it shall be not less than a week or month, as the case may be, but should be a reasonable period to be fixed by the Secretary of State, taking into account all relevant considerations which may vary from trade to trade.

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The amendments enable the Secretary of State to act in a flexible manner and not cause an injustice to one kind of business by imposing a uniform solution or standard on many different trades where different considerations may apply. Although some minimum pay reference period is required, the Minister must have the power to differentiate between those different trades. At the same time, by not taking the easy route of an arbitrary universal pay reference period, the Secretary of State will need to give consideration to representations made to her about the needs of those different trades.

These two amendments are not intended to derogate in any way from the principles of the Bill, and nor do they. They simply clarify aspects which are far from clear and impose a minimum standard where there is not one, and above all they require the Secretary of State to act reasonably. I feel sure she is only too willing to do that. I hope that the Government have made use of the time to reflect given by my honourable friend in another place and will agree that what is proposed improves the Bill and that they will accept the amendments. I beg to move.

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