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Earl Russell: My Lords, is the noble Lord aware that the remark of Lord Birkenhead was identical to one that was made on the Union of the Crowns in 1603, which was wrong?

Lord Kingsland: My Lords, I was not aware of that, but I could not have been corrected by a more noble Lord. Sadly, Mr. F.E. Smith was right in relation to Ireland. In the 1990s and in the millennium to come, it is our task to prove wrong the sentiment which he expressed then, and which reflected a previous observation made so many centuries ago. But we will do so only if we take these issues and others that your Lordships have raised with the utmost seriousness.

The National Minimum Wage

3.57 p.m.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the President of the Board of Trade on the national minimum wage. The Statement is as follows:

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    "Today the Government publish the report of the Low Pay Commission and spell out how, in our response to that report, we will begin to end the scandal of poverty pay.

    "In the labour market we inherited just over a year ago, many workers received such excessively low rates of pay that they were driven to work long hours simply to make ends meet. We all know the examples: a homeworker paid as little as 35 pence an hour; a cleaner £1.30 an hour; or a security guard £2.35 an hour--and bring your own dog!

    "In addition, such low levels of pay mean that taxpayers provide massive sums of income subsidy and businesses, large and small, striving to compete, as Britain must, on quality and value for money, see their position undermined not by fair competition, but by cutthroat cowboys. And with the lack of any fair and basic minimum standards at work, the gap between real hourly earnings of the lowest and highest paid almost doubled in the past 20 years.

    "This was the outcome of the strategy of the previous Government; that Britain aimed to be merely the cheapest rather than the best, no longer the workshop of the world, but the sweatshop of western Europe.

    "This Government believe in decent standards as a spur to competing sustainably on quality, to tackle social exclusion and to make work pay.

    "We have already made substantial progress. The working families tax credit will guarantee an income of at least £180 per week for families working full-time. No family with weekly earnings of less than £220 will pay tax. The reform of national insurance contributions will reduce barriers to work. The New Deal will help the young and the long-term unemployed to move from welfare to work; and the Fairness at Work White Paper and the work of the Social Exclusion Unit are all part of the wider strategy to reshape Britain.

    "The national minimum wage is a key element in this range of policies. It will help create a better rewarded and more committed workforce, itself a force for driving up standards and helping competitiveness. Experience elsewhere shows too the likelihood that staff turnover will be reduced and investment in training encouraged, which itself improves productivity.

    "We were determined from the outset that the national minimum wage must be introduced sensibly and in accordance with prevailing economic conditions. That is why we set up the Low Pay Commission, with George Bain in the chair, after only 90 days.

    "The commissioners were publicly recruited following Nolan principles, and drawn from among employers, employees and independents, each serving in an individual capacity. Their work is impressive. I would like to pay tribute to George Bain and the other commissioners who have done a quite remarkable job.

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    "As well as studying 500 written submissions, they took oral evidence from a wide range of organisations, and held over 200 meetings throughout the United Kingdom. They heard from large and small employers, trade unions, individual employees including homeworkers, and a range of other interested organisations.

    "I wholeheartedly commend their immense hard work, energy and willingness to give so freely of their time for this important task. As we made clear in our evidence to the Low Pay Commission, the government are particularly concerned to ensure that our national minimum wage should be set at a level which avoided the risk of adverse effects on employment, inflation and the PSBR.

    "We have been particularly mindful of the need to protect the position of young people. It is in our view essential that we avoid reducing the relative attractiveness to young people of staying on in education and training, and to avoid discouraging employers from providing training for those in work. These concerns have guided our judgment on the decisions in response to the commission's recommendations.

    "The Government welcome the report and support all of the commission's key recommendations, subject to consultation on some of the practical details. In particular we accept a main rate of £3.60 per hour before deductions with effect from April 1999. When combined with the working families tax credit and other benefits, for a one-earner couple with two children, this means an effective wage of more than £7 per hour. We accept that all those aged 16 to 17 or on formal apprenticeships should be exempt, and we also accept the proposal to institute a development rate. The commission proposes that that minimum rate should apply at £3.20 to all 18 to 20 year-olds, and to all workers starting a new job with a new employer and receiving accredited training.

    "We are however at a critical point in the economic cycle. The Government are determined to proceed with all due caution with the introduction of that rate, especially for the crucial group of those aged 18 to 21.

    "We have therefore decided, for this group, to phase it in two stages, with an initial transitional rate of £3.00 from April 1999, which will increase to £3.20 in June 2000. However, we are asking the commission to review the position of 21 year-olds again in 1999, following the implementation of the £3.00 transitional rate, and then to provide a further report on whether, in the light of experience to that date, they reconfirm their advice that 21 year-olds could safely be covered by the main adult rate. I am pleased also to announce that we shall also be asking the commission to continue its work monitoring and evaluating the introduction and impact of the minimum wage.

    "Introducing the minimum wage at the levels I have announced today will help some 2 million workers escape from poverty pay without adverse

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    effects on jobs or inflation. These will include: 1.4 million women, over 1.3 million part-time workers, some 200,000 young people, around 110,000 homeworkers, approximately 175,000 lone parents who work, and some 130,000 ethnic minority workers.

    "The remaining Low Pay Commission recommendations deal with such technical matters as the composition and reference period for calculating the minimum wage, the handling of benefits in kind and its application to homeworkers and pieceworkers.

    "We have fully and carefully considered these recommendations and accept them in principle, subject to consultation on the practicalities and detail of their implementation when formulating the regulations implementing the national minimum wage.

    "Both Houses will have an opportunity to discuss all the matters on which the commission have made recommendations when we lay draft regulations in Parliament following that consultation.

    "In order to assist right honourable and honourable Members I shall place in the Vote Office a paper setting out the Low Pay Commission's recommendations as well as details of where further consultation is required.

    "Today marks a further milestone in implementing this Government's manifesto commitments. The introduction of the national minimum wage would never have taken place under a Conservative administration. From the outset the Government's approach to the minimum wage has been that it must be approached in an atmosphere and a framework of partnership. The Low Pay Commission has shown that that approach was the right one. It is clear from its work that there is now an overwhelming welcome for the principle of the minimum wage. Among the few people out of step appear to be the party opposite. I challenge it today on behalf of the 2 million people benefiting from these proposals, to say whether it will, if returned to office, seek to reverse the steps we take today.

    "The minimum wage, along with our other policies, such as the working families tax credit, will help remove the worst cases of exploitation in the workplace, cases which have no place in a modern Britain.

    "I commend the report to the House."

My Lords, that concludes the Statement.

4.6 p.m.

Baroness Miller of Hendon: My Lords, I thank the Minister for repeating this very important Statement. Is he aware that, although at long last we welcome the official Statement from the Government, it has been massively leaked for weeks, apart from copies apparently being privately available to the trade unions ahead of Parliament? Unlike others, I have not had the chance to read this 285-page report in the half hour that was available before entering the Chamber.

Is the Minister aware that we welcome the fact that the Government have agreed a lower sum for the young, one of the vulnerable groups that will suffer most from

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this ill-conceived doctrinaire concept? The Minister claims that the New Deal will help the young move from welfare to work. Can the Minister say how that will happen? He is absolutely right; we would not have introduced the Bill, although we most certainly agree with the minimum income.

Up to this very minute Parliament has been legislating about a pig in a poke. The National Minimum Wage Bill has passed all of its stages in the other place without honourable Members knowing for certain what the national minimum wage will be. Here we have gone two-thirds through the Committee stage, which is a very abbreviated stage considering the number of unknowns and the number of blank cheques that the Government are asking us to sign, but only now are we being told some of the details. We did have a leaked figure, with counter leaks from within an apparently divided Cabinet that a sort of Dutch auction is going on, with the Chancellor of the Exchequer trying to bid the figure down as if he were in some kind of oriental bazaar. There is more that we need to know.

Mr. Rodney Bickerstaffe, the Secretary General of UNISON, said in a television interview last Sunday that there was a lot of pressure by the Treasury on the Low Pay Commission to keep the national minimum wage down. Can the Minister say what pressure was brought to bear by the DTI on the Low Pay Commission with regard to other aspects of its deliberations? To what extent did the different Government departments interfere with the supposedly independent and impartial inquiry? Why were the terms of reference of the Low Pay Commission circumscribed by the Secretary of State and Clause 5 of the Bill, which has not yet become an Act, to produce a pre-determined result? If, as the Minister stated, the commissioners were widely recruited, why was there no representative of genuine small businesses?

Why, if the commission had been so minded, was it not able to recommend different figures for different areas, sectors of employment, different size undertakings, different ages over 26--for example, senior citizens--or different trades or occupations?

On Second Reading, I asked why the President of the Board of Trade had expressly forbidden the Low Pay Commission to take regionality into account. May we please have an answer now? Despite using the American minimum wage as their model, which provides many exemptions for small businesses, why will the Government not give the same exemption to our own small businesses?

The Minister has said that this measure will help about 1.4 million women. If the American experience is anything to go by, why would the American equal pay Act 1963 have given exemptions to business with an annual turnover of less than 500,000 dollars? Is he aware that tables on page 104 of that report show that a national minimum wage of the order proposed by the Government would add almost 2 per cent. to the wage bill of Britain's agriculture and up to 5 per cent. in the cleaning industry? Do the Government agree that it is

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small businesses which are currently providing the greater number of new jobs, while big businesses are still shedding them?

Although the Government must be tired of being reminded of the Deputy Prime Minister's frank admission that,

    "any silly fool knows that the national minimum wage would result in job losses",

perhaps they will tell us whether they agree with the noble Lord, Lord Haskell, who as recently as 18th May at col. 1277 agreed that if an employer had to pay more in wages he would shed labour.

Do the Government agree with Professor Bain, the Chairman of the Low Pay Commission, who told The Times on 3rd June 1997 that he would be,

    "surprised if there were not some job losses, but the question is whether those jobs would be better lost anyway"?

Do the Government agree with what he appears to have been saying: that job losses would be a price well worth paying? Can the Minister say whether there is any truth in the report in the Mail on Sunday last Sunday that Professor Bain has warned that he might resign if the recommendations of the Low Pay Commission are not accepted?

Do the Government agree with the analysis which appeared in The Times on 17th June by Christine Buckley who also repeated the adverse effects on employment of the national minimum wage, especially on young employees? Do they agree with that same analysis which repeated my warning on Second Reading; namely, that it would have an adverse effect on the Government's Welfare to Work programme? Will the Minister say whether that is the advice that the Treasury has given to the Chancellor?

Do the Government agree with the CBI, which forecast that the national minimum wage,

    "could result in rising prices, business closures and unemployment"?

That is despite the fact that the CBI is now reported as saying that it could live with the figure of £3.60.

Do the Government agree that the CBI does not speak for my village store or everybody's local newsagent which are the sort of business that will be hit hardest by a national minimum wage of £3.60? Will the Government be publishing the minutes and rationale of the deliberations of the Low Pay Commission in fixing the figure? We are very curious to know how it could arrive at a figure of £3.60 when in the USA, where the average wage is far higher than in the UK, it is five dollars 15 cents which is merely about £3.15.

What is the Government's attitude to the threat by Mr. Monks that the unions will jump free (whatever that means) from the so-called partnership with the employers and government if the LPC's recommendations are watered down? Is the Chancellor not worried about that? Will the Government introduce fresh legislation to deal with any political strikes threatened by UNISON at its current conference if its demands for different levels of the national minimum wage are not met?

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Do the Government agree that this latest interest rate increase, the sixth in 13 months, was due to the fears of the Bank of England's Monetary Policy Committee about the increasing size of wage settlements? What assessment does the Minister have of the impact on wage inflation of the introduction of the national minimum wage?

Do the Government agree with the widely held view, as reported in The Times that:

    "A 5.25% pay award by Marks and Spencer was an important factor in the decision"?

Marks & Spencer is generally regarded as a model employer. Does the Minister agree that it was bound to have taken the forthcoming national minimum wage into account and would have ensured that it maintained its pay differentials with other employers?

Do the Government agree with the noble Lord, Lord Healey, who once said in the other place that the minimum wage was something on which the unions will build differentials? How will that help the Chancellor to secure the wage restraint he is calling for? How will the national minimum wage increase productivity and employment, and help to bring down interest rates which are at a damagingly high level?

The Minister said that when we were in government, we aimed to be the cheapest rather than the best. I utterly reject that. I am proud to have been part of a government who made sure that we secured one of the lowest unemployment rates in the world. We were very keen to try to maintain that.

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