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Lord Falconer of Thoroton: The main effect of the amendment is that it would require the Secretary of

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State to refer any proposal which would result in a higher national minimum wage to the Low Pay Commission. In other words, it would remove the ability of the Government to change the rate without first referring the matter to the Low Pay Commission; and that is, at first sight, particularly in the hands of the noble Baroness, an entirely reasonable proposition. The Government have already made clear in another place that they do not believe that the minimum wage should be varied by some kind of automatic formula. They have also made it clear that the Low Pay Commission is the right model to ensure ownership of the policy by the social partners--a vital ingredient if the minimum wage is to be introduced effectively.

Perhaps I may remind the Committee of what the Bill says at present. It is deliberately flexible regarding future changes to the national minimum wage. It says in Clause 6:

    "The Secretary of State may at any time refer to the Low Pay Commission such matters ... as [she] thinks fit".

We have been asked both by the noble Baroness and in another place why that wording, with its discretion, has been chosen. The reason is this: to cater for the possibility that the regulations setting the minimum wage and establishing its operation may require amendment at some future time because they do not cover particular detailed circumstances that have been overlooked or missed for some reason.

A component of pay, for example, may not have been considered fully. Problems of a technical nature to do with the pay reference period may be discovered. Obviously, we will do our best to avoid this situation but such problems can and do arise, under any administration, especially in a new area of legislation. Ministers have in any event made a commitment to consult on these and other issues in the form of draft regulations, before implementing the rate. There will plainly be cases where it will be unnecessarily cumbersome, bureaucratic and time-wasting to refer the whole matter to the Low Pay Commission. That is why the Bill is drafted as it is. It is right that there is no requirement on the Secretary of State to refer every last detail of such matters to the Low Pay Commission before making changes.

At the same time it remains perfectly open to the Government to refer matters of a more substantial nature, including any review of the need to vary or increase the level of the minimum wage. I am not convinced by the arguments that the Secretary of State should be required to consult the commission on the face of the Bill. At the same time, as was made clear in another place, I would not wish to rule out any such future consultation. It is plain that in many cases it would be appropriate. The whole arrangement needs to be bedded down, monitored and analysed before we can begin to think about how to make changes to the rate.

The noble Baroness referred to the members of the Low Pay Commission having sinecures and to the commission lying fallow, doing nothing and not even producing annual reports, while revving up expenses. That is a slight misunderstanding of the way in which the Low Pay Commission would work. From time to time, the Secretary of State, as she thinks appropriate,

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will refer matters relating to the Bill to the commission. When it does not have matters to consider, it will not be doing anything. It will not be sitting around incurring expenditure, as it were. The picture that the noble Baroness created of the Low Pay Commission may not be the model that the Bill envisages.

Finally, if there is a reference to the Low Pay Commission on any matter and if the Secretary of State determines that he or she will not accept any particular suggestion of the Low Pay Commission, under the existing provisions of the Bill the Secretary of State is required to lay a report before Parliament, giving her reasons. I think that deals with the point made by the noble Baroness about the need to explain why advice is not being accepted.

I very much hope that in the light of the explanations that I have given--I fully understand the reasons behind the amendment--the noble Baroness will feel able to withdraw her amendment.

Baroness Miller of Hendon: I was interested and pleased to hear from the Minister that the Low Pay Commission will, from time to time, do something and that sometimes it will be busy while it may not be so busy at other times. Given the amount of money that it will cost, it would be hateful to think that it had nothing at all to do! This reminds me of an earlier amendment when I said that sometimes people are very busy and sometimes they are not; it is then difficult to work out a pay reference period.

Having listened carefully to what the Minister has said, at this stage, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 [Referrals to, and reports of, the Low Pay Commission: supplementary]:

[Amendment No. 62 not moved.]

Clause 7 agreed to.

Clause 8 [The Low Pay Commission]:

11.15 p.m.

Lord Razzall moved Amendment No. 63:

Page 7, line 3, leave out ("may at any time appoint a") and insert ("shall, not more than 12 months after this Act comes into force, appoint a permanent,").

The noble Lord said: In moving Amendment No. 63 I should like to speak also to Amendment No. 64. In our view the two amendments are linked. Reverting to the discussion that the Committee has just witnessed between the Minister and the noble Baroness, Lady Miller, we take the opposite position as to the status of the Low Pay Commission. As an aside, far from worrying about the members of the Low Pay Commission obtaining a sinecure of some kind and the annual cost of £1 million, we believe, as fervent supporters of the national minimum wage, that in the next few years it is important that proper resources are devoted to enforcing this measure and providing the necessary mechanisms to ensure that it is a success. Therefore, we fundamentally disagree with the Conservative Opposition. We should like to press the

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Government for confirmation, as happened in another place, without tying the hands of the Chancellor of the Exchequer, that adequate resources will be provided to ensure that that happens.

The fundamental point on which we wish to push the Government is that the national minimum wage will be a success only if permanent status is given to the Low Pay Commission. The Committee will be aware that as it stands Clause 8 gives the Government the right within a period to give the commission permanent status. That is a mistake. We believe that the Government should now be in position to appoint a permanent commission to provide a framework for the ongoing administration of the Bill. In moving Amendment No. 63, we hope that the Government are prepared to go the last mile and confirm that they will give permanent status to the Low Pay Commission.

Turning to Amendment No. 64, this is the crux of our belief that the commission requires permanent status. We were disappointed that the Government were not prepared earlier in the debate to accept the need for a mechanism for the annual uprating of the minimum wage. We are nervous that, as has happened in the United States and other countries with a minimum wage, there will be an annual row--which we believe is now going on in the Cabinet--about the level of the minimum wage. Obviously, Ministers will not comment on that. Those who wish the minimum wage to be a success do not want this to be a political football every year. We believe that, particularly in years when the economy is not as strong as it is currently, this will be a political football. We want to enshrine in the Bill as many powers as possible for the Low Pay Commission to be divorced from that and to have an objective structure in which it can make recommendations in the public arena on which the Government will act. One knows that in fixing the initial rate the Government have set their face against the particular point that we make; namely, that regional variation is important.

If the Government are going to fix the rate at a low figure, the regional variation may not be as important as it would be if the rate were fixed at a higher figure, as the trade union movement has been advocating. We shall wait to see what the rate is and whether the Low Pay Commission has commented upon a regional variation for the fixed rate. We shall return to that point.

It is paramount that there should be an annual review by the Low Pay Commission of that and other issues. If it agrees that there is no case at the moment for a regional variation, so be it. Clearly the Government will act on that, and we will accept that. However, one, two, three, four or five years down the track, rates of unemployment in Cornwall may be significantly different from those in London, and average wage rates in the north-west may be significantly different from those in London and the south-east. Without committing themselves in any way to accepting the principle of regional variation, perhaps the Government can move towards agreeing that the Low Pay Commission will have an obligation to look every year at that and other issues and to make a report. We shall then see whether we or the Government are correct. We should like the

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Government to commit themselves to setting up the Low Pay Commission as a permanent body. It is not in the Bill, but we should like an assurance that the Low Pay Commission will be given adequate resources to enable it to perform its work correctly.

Amendment No. 64 reflects the type of report that we should like to see the Low Pay Commission produce. I beg to move.

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