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Baroness Miller of Hendon: My Lords, I know the Minister will not be surprised when I say that the Opposition did not welcome this Act and did not believe it to be a good one. However, we believe that any proposal that ameliorates the problems that might arise with the National Minimum Wage Act is to be welcomed.

During the passage of the Bill through both Houses we warned the Government that it would have adverse effects on employment prospects of some vulnerable categories of employees. Though the noble Lord spoke to both orders together--I will continue to deal with them together--my comments now refer specifically to the amendment regulations.

To adapt an aphorism of the late Harold Wilson as he then was, one person's minimum wage is another person's job seeker's allowance. This is not the first U-turn that the Government have had to make over the operation of an Act which has not yet even come into

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force. On 8th February, in response to a Question from me, the noble Lord, Lord Williams of Mostyn, defended the application of the national minimum wage to au pairs only to find himself later cut off at the knees by the Secretary of State of the DTI who announced that it did not apply to them, which is what I had argued.

I mentioned this matter to the Minister outside. This morning two pieces of paper were faxed to me. One was an extract from Stephen Byers' report on regulations supplementary to the national minimum wage dated 16th February. It contained a paragraph which said that au pairs are excluded from the national minimum wage regulations. At the same time, or shortly afterwards, I was faxed something from one of the activity centres (to which I shall turn later) which appears to be preliminary guidance on the national minimum wage from the Department of Trade and Industry. The activity centre is not sure whether it received it on 23rd or 24th February, but it was certainly either last Tuesday or Wednesday. It stated that all workers, including part-time workers, pieceworkers, home workers, agency workers, domestic workers including au pairs must receive at least the national minimum wage.

I understand that a problem arose in that the Home Office did not anticipate what the DTI would announce a week later. Those things happen. But it is extraordinary that, once the Secretary of State at the DTI had made a statement on it, a leaflet on guidance was dispatched by officials of the DTI more than a week later saying that au pairs are included in the national minimum wage.

I am particularly glad to see that the Government are going to take powers to exempt those over the age of 26 in the categories (b) and (c) referred to in the regulations. Those are persons who participate in a scheme under which shelter is given in return for work and those participating in a scheme designed to provide training and work experience.

In the debate on one of my amendments I drew attention to the problem of those working at holiday summer schools, what are usually called "activity centres". I warned that the application of a national minimum wage to their staff, who were actually engaged in gaining work experience towards national vocational qualifications, would not only put the activity centres out of business but would also have a devastating effect on local communities who depended upon them, as well as depriving up to 200,000 children every year from a much-needed facility provided by these charities.

Unfortunately the noble Lord, Lord Haskel, who dealt with the amendment at that time, was unable to offer me any comfort except to refer to Section 44 of the Act, which I do not believe to be applicable. However the provisions go some way towards meeting the needs of the activity centres. I hope that the Secretary of State will exercise the powers he had taken in that regulation in their favour as soon as possible. I say, "go some way" because it would only be applicable if they were over 26; not in the gap between 18 and 26 when people might be working in those centres or studying there.

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It is also a matter of some considerable disappointment, especially to those in the engineering industry, that the Government, when taking these second thoughts, have still not exempted apprentices. That was a recommendation of the Low Pay Commission and I hope that even at this stage the Secretary of State will consider that.

There is also a change in the proposed record-keeping requirements, which I will mention later and which the Minister has just discussed. I am not against politicians of whatever party making U-turns whenever they realise that they have got something wrong or have discovered that the electors who sent them to the other place do not agree with them. I am certainly not criticising the Government for their change of mind in respect of people over 26. On the contrary, I congratulate the Government and welcome their decision.

The main regulations, which we awaited with bated breath, define the value of the elements that make up the national minimum wage--cash payments, residential accommodation, food and other benefits in kind. In Committee, I introduced an amendment that defined in the simplest possible terms wages, benefits and anything so defined by the Inland Revenue for the purpose of income tax. I hope that your Lordships will excuse me for quoting myself. I said:

"The plain and simple effect of the main amendment ... is to define 'remuneration'. It is defined as being anything which the Inland Revenue would treat as taxable. In other words, if it is subject to income tax then it is income. It is as simple as that".

It still is. I argued that the Inland Revenue, with its long experience of defining wages and dealing with attempts at evasion was the best possible interpreter--especially with the impending amalgamation of the Benefits Agency. I asked--with some prescience, if I may say so--whether the regulations would be drafted by the Inland Revenue or by

"dedicated amateurs on the subject in the DTI".--[Official Report, 11/6/98; col. 1255.]

In a few moments, your Lordships will be able to form your own opinions. In replying to that helpful and constructive amendment the noble Lord, Lord Clinton-Davis, said--and mark this closely:

"Employers and employees will want to know precisely what does and does not count as payments for determining compliance with the minimum wage".--[Official Report, 11/6/98; col. 1257.]

In debates on other topics, the Minister and the noble and learned Lord, Lord Falconer of Thoroton, stressed the importance of employers and employees alike knowing exactly what was payable.

Paragraph 36(1)(a) on page 33 defines the amount to be taken into account where living accommodation is provided. The length of the regulations speak for themselves when compared with my nine-word definition:

"whichever is the lesser of the following--

"(a) the amount resulting from multiplying the hours of work done in the pay reference period (determined in accordance with Regulations 20 to 29) by 50p, and reducing that product by the proportion which the number of days (if any) in the pay reference period for which living accommodation was not provided bears to the total number of days in the pay reference period; or"--

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I shall not continue. When the Minister was discussing that regulation, it sounded simple but not when an employer or an employee has to examine it. If the object of the regulations is to enable employees and employers alike to understand what their respective rights and obligations are, perhaps the Minister will tell us how the owner of a late-night chippy who allows staff who have missed the last bus home to sleep on a camp bed in the stock room can work out the value of the accommodation.

I do not want to rub salt into the wounds, but what about Regulation 37(2)? It states that:

"For the purposes of Regulation 31(1)(i), the amount of the deduction the employer is entitled to make or payment he is entitled to receive in respect of the provision of living accommodation shall be adjusted by multiplying that amount by the number of hours of time work actually worked by the worker in the pay reference period (as determined in accordance with Regulation 20) and dividing the figure so obtained by the total number of hours of time work the worker would have worked in the pay reference period (including the hours of time work actually worked) but for his absence."

The words "work worked" and "worker" appear eight times in one gigantic sentence of 101 words, including a reference to theoretical hours that a worker would have worked but for his absence from work.

To describe those regulations as a dog's breakfast is to risk running foul of the RSPCA. The Minister said that guides are being produced. I ask that those produced by the DTI are written in simple language capable of being understood by unsophisticated employers and employees, and that they will be published as soon as possible.

Part V of the regulations refers to the records that the employer is required to keep. Regulation 38(2) says that the records that an employer shall be required to keep shall be in the form a single document. Let me applaud that uncharacteristic brevity and simplicity.

I remind your Lordships that in Committee, I argued for an amendment requiring the records to be kept in a quote "reasonable" form and that PAYE records should be regarded as adequate records, to avoid duplication.

The noble and learned Lord, Lord Falconer, rejected my amendments as being unduly prescriptive, but offered to consider closely and sympathetically the relationship between the PAYE and national insurance records and those required for the purposes of the 1998 Act. I am glad that after the consultation process, the Government conceded that I was correct and that two sets of records on two separate bits of paper are not required. I am also delighted that the Government have abandoned the idea of the massive written statement that in their original consultation document an employer would have had to prepare weekly.

The Government professed the desire that employees would be able easily to see that they were getting their entitlement to the national minimum wage. I doubt that they will be able to do so simply by reading the regulations. The main beneficiaries from the regulations are likely to be the lawyers, but then they work for much more than £3.60 per hour. This is the Government's Bill.

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The Government are responsible for the regulations that are supposed to make it work. We shall not oppose them.

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