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Baroness Turner of Camden: My Lords, the noble Baroness referred to "flexibility". Is she seeking flexibility for employers simply to employ vulnerable people as sweated labour? Is that what the noble Baroness is seeking? This is a human rights issue.

Baroness Miller of Hendon: My Lords, the noble Baroness should know me better than that and should know that I am seeking flexibility--

Baroness Turner of Camden: I hope so!

Baroness Miller of Hendon: My Lords, the noble Baroness says that she hopes so. We are seeking some flexibility for certain circumstances that may arise in the future. At the moment, for example, it seems that the manufacturing sector of the economy is suffering badly as a result of the high value of the pound. I am not saying that that in any way relates specifically to what we are considering now, but it could be that within two or three years the small business sector is suffering equally badly although perhaps in a different way.

The Secretary of State--the President of the Board of Trade--does not have to exercise the discretion. It is up to her. It is not up to the employers. Indeed, that is exactly what we are seeking. We are seeking to give the Secretary of State the power and the discretion, if she thinks it fit--not if the employers think it fit. The noble Baroness, Lady Turner, shakes her head, but we are seeking to give the Secretary of State a discretionary power which the Secretary of State may exercise, should she decide that she needs it. Nobody else could apply to use the discretion because nobody else has the power.

Lord Razzall: My Lords, as the Minister is well aware, the Liberal Democrat Benches have taken a fundamentally different approach to this Bill from the Opposition. We believe, in common with the Government, that it is time for the cowboy practices of many employers to be put to an end by the operation and implementation of minimum wage legislation. We have disagreed with the Government on one or two areas. We have consistently disagreed with the

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Government about the possibility of allowing regional variations to the national minimum wage, as happens in a number of other countries. I accept that as to the first stage of the minimum wage the fox has been shot. The Government were elected on a manifesto which committed them to a national minimum wage. Regional variation has been examined to some extent by the Low Pay Commission. The report of the Low Pay Commission--I commend it to noble Lords, if they have not already read it--deals in considerable detail with the arguments for and against regional variation. I accept that the case for regional variation has not been made out. However, I support the noble Baroness, Lady Miller of Hendon, in that I am not entirely certain why the Government wish to restrict themselves in future.

We part company with the Government on the question of what happens if, for example, in the year 2000, 2004 or 2008 the economic circumstances of this country change, bearing in mind the significant alteration in the economic structure of this country that may result from our entry into European Monetary Union. Is it to be said that if the Low Pay Commission in future recommends a regional or sector variation the Government must promote primary legislation to achieve that? Do the Government have to have a new Bill to obtain a minimum wage with the variations that are contemplated? I do not believe that it is in the interests of any party in government in favour of the concept of a minimum wage to constrict themselves to such an extent that they are forced to seek primary legislation to introduce what at that stage will be regarded as a detail. For the reason that we do not want the Bill to be prescriptive but want to give it the widest possible powers in future. Although not for the arguments advanced by the noble Baroness, we support this amendment.

Lord Davies of Coity: My Lords, I believe that in tabling this amendment which effectively introduces an exemption, the noble Baroness poses the wrong question. Only a minority of workers in this country suffer low pay to the extent that they require a national minimum wage. The Low Pay Commission has examined all the circumstances and made recommendations.

It is not a question of ensuring that small businesses are propped up by low wages. The exercise is to ensure that those in employment who are the most vulnerable are protected. To a very great extent, though not invariably, those workers are already subsidised by state benefits because of their low wages. We should not continue to tolerate that. Firms, whether they be small, medium or large, are in business to make profits, which is perfectly sound. Those profits can be made in a number of different ways: increasing productivity or re-arranging business operations. Perhaps they can sell more goods or charge higher prices for them, but profits should not be as a result of paying sweated labour rates which subsequently become subsidised.

If it is said that by this amendment we give the Secretary of State power to make exemptions it sends out the wrong message. We have been arguing about

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this matter since the abolition of the wages councils. Not only would the amendment send out the wrong message but it would mean that Parliament did not determine the terms on which the national minimum wage should be paid. There is no need to provide the Secretary of State with an opportunity to change it. The national minimum wage has not been set so high that it will damage jobs. The unanimous recommendation of the Low Pay Commission composed of representatives of small businesses and workers has reached a conclusion and by and large, the Government have accepted it. To accept this amendment would send out the wrong message.

3.45 p.m.

The Minister of State, Department of Trade and Industry (Lord Clinton-Davis): My Lords, before I turn to the new clause and the other amendments to which the noble Baroness has referred, perhaps I may comment briefly on the remarks just made by my noble friend Lord Davies of Coity and the noble Lord, Lord Razzall. The noble Lord has tabled his own amendment with which I shall deal in more detail later. I believe that my noble friend has put his finger on it. This is not a tremendously revolutionary Bill, or it should not be. It is a radical Bill which represents an important change.

The Bill is all about ensuring that those who are in employment and are most vulnerable are protected, and that is absolutely right. It is also about improving morale in the workplace and ensuring that people feel that they are not being exploited but have a role to play in an enterprise.

The noble Baroness, Lady Miller, in her Second Reading speech this afternoon reiterated her root and branch opposition to the concept of a national minimum wage, and she has not been chary of saying so. Her comments about election commitments were a little wide of the mark. When she referred to political dogmatism, perhaps she was referring to the dark days of the poll tax. The fact is that this was a very clear manifesto commitment on which we were elected. It does not mean that we have got everything right as a consequence. But this is such a fundamental part of our election platform that we are entitled to say that this is something that the electorate accepted. I understand perfectly well that the Opposition are unlikely ever to accept it. Despite that we are proceeding with the fundamentals of this Bill.

I remind the noble Baroness that the Labour Party has not resided at Transport House for many years. I recommend that she looks in the telephone directory to see where we are. Maybe the noble Baroness will come over to us. Lots of people are joining. She puts forward a rather ramshackle case. Our approach is diametrically opposed to the direction that she takes. We want an inclusive policy whereas she wants exception after exception to the point of neutering the Bill altogether. Therefore, we have here a whole series of wrecking amendments, which is essentially what Amendment No. 1 is all about. This amendment is not concerned with providing a limited range of exemptions or modifications. We want a single

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national minimum wage which is universal in its application. There have been some minor exceptions to it, but the fact is that we are not in the business of excluding whole swathes of people which is what the noble Baroness seeks to do.

We want to get rid of poverty pay and have a level playing field so that companies can compete fairly on the basis of quality, not excessively low wages. I have made that position clear over and over again in the course of these debates and in the responses to the Statement that I made in this House not very long ago about the report of the Low Pay Commission.

The Bill has been designed in such a way that the possibility of exemptions according to sector, region, size of firm or occupation is excluded. It permits in specific circumstances exemptions or modifications according to age. The limitations we placed in Clauses 3 and 4, which this new clause would effectively remove, are in our judgment necessary limitations. What they do is to defend the integrity of the national minimum wage. That is something which the noble Baroness rejects entirely. We made clear in previous debates, when the noble Baroness moved somewhat similar clauses, that those amendments or new clauses fail, not only on conceptual grounds but on the grounds that they are wholly impractical.

I shall give an example of the exemptions that the noble Baroness has in mind. Why should it be possible to exempt a firm in Surrey rather than a firm in Cheshire? Why should a hairdresser at one end of the street be exempt rather than its competitor at the other end of the street, perhaps in a different county? Why should these low paid workers, likely to benefit from a minimum wage, be exempt? The noble Baroness has not come within a mile of answering those points which have been raised on previous occasions.

I move to Amendment No. 6, to which the noble Baroness also spoke. The amendment would remove all the limitations, which we have deliberately provided, on the powers of the Secretary of State to make key regulations on the way in which a worker's hourly rate of pay is to be calculated for minimum wage purposes. These amendments would not allow the Secretary of State to set more than one rate. Clause 1, rather than Clause 2, prescribes that the national minimum wage shall be a single hourly rate and thus establishes this fundamental principle. Clause 2 is concerned with how an hourly rate of pay is to be calculated; what will count towards the worker's pay for minimum wage purposes; what will be excluded; and how benefits in kind and one-off bonuses will be treated. Clause 2 gives the Secretary of State the power to determine matters within that category.

This is a complex matter. That is why we asked the Low Pay Commission to make recommendations on it. We have indicated that we are accepting those recommendations subject to consultation on the detail.

Subsection (7) of Clause 2 prevents the minimum wage calculation being applied differently in certain circumstances. That is what the noble Baroness

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seeks to amend, as attempted previously on several occasions in this place and elsewhere. The amendment proposes to do away with all the limitations in Clause 2 in one fell swoop so that we could have variations by region, sector, size of firm, age or occupation. It seeks to remove all such restrictions for the purpose of calculating if the rate has been paid. I think on further reflection that the noble Baroness might agree that we would end up with an absurd position, completely negating the purpose of the Bill, unless, as I indicated, that is the purpose of the actions being taken by the noble Baroness and her colleagues. I shall not go into the detail of the point made by the noble Lord, Lord Razzall, until later unless he wishes me to deal with it at this stage. He indicates to the negative.

I believe that what is proposed is not the right way to proceed. What is more, if we were to go down this route it would be a heavy vote of no confidence in our belief in the way in which the Bill will work out when enacted. I do not think that that is right. We have confidence in the Bill. We thought a lot about it before the election and since the election. We have had the help of the Low Pay Commission. It turned down the idea of regional variation. That was a sound conclusion.

I turn to Amendment No. 8, also touched on by the noble Baroness. Although we have not discussed the amendment previously, we have gone over similar ground at great length. This is an important area. I listened carefully, as I have done on previous occasions, to the noble Baroness. Clause 3 is drafted to permit us to take account, within certain limitations, of whatever the report from the Low Pay Commission recommended. I made clear when I repeated the statement in this House on publication of the report that we propose to use the Clause 3 power in a limited way by setting a modified rate for those aged from 18 to 21 and also to provide a modified rate for workers starting a new job with a new employer and where there is an accredited training scheme in operation and being applied.

Each of these outcomes reflects the importance that we attach to young people and trainees. The amendment seeks to alter the way in which the whole clause operates. It would provide the Secretary of State with a wide-ranging power to make exemptions whenever he or she felt it expedient so to do. It would remove all the limitations which currently prevent differentiation by region, sector, size of firm or occupation for persons below 26 provided for under Clause 3. It would undermine, in my submission, the whole purpose of the Bill as it relates to the category of workers below 26. I know that the noble Baroness is extremely persistent. I admire her for that, but I think she is wrong.

I turn to Amendment No. 10. The effect of this amendment is to remove all the limitations currently preventing differentiation by region, sector, size of firm or occupation for persons aged 26 and over who might potentially be added by regulations under Clause 4 to the candidates for exemption under Clause 3. The amendment constitutes, once again, a

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direct attack on the principles of the Bill. We have all along made clear our commitment to the principles which I have adumbrated today. While I understand that it is difficult for the noble Baroness and her colleagues to accept those principles, they are essential as far as this Bill is concerned. For those reasons I would ask the noble Baroness to withdraw the amendment.

There is one other matter to which I should refer. It concerns small firms. I shall quote, for the benefit of the noble Baroness, two passages from the report of the Low Pay Commission. The noble Baroness expressed the view that small businesses were opposed to the national minimum wage. I refer to the comment at page 106, paragraph 6.41:

    "We made great efforts to canvass their [the small firms] opinion and held many meetings with employers in small firms and their representatives. There were differences between such firms, but we recognise that many do not have the same margins or management resources as larger competitors. We were sensitive to this in making our recommendations".

The report continues at page 135, paragraph 7.11:

    "Written evidence from trade associations representing small stores indicates that although there will be some substantial increases in wage bills for some companies, the majority of stores will be able to cope with our recommendations".

The issues were firmly and comprehensively dealt with by the Low Pay Commission. I think that those are relevant quotations.

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