March 5, 2009

Support for Women (Economic Downturn) debate: MP calls for 10% increase in minimum wage

John Bercow praises the success of the introduction of the national minimum wage and makes the case for an extraordinary increase of 10% at the annual uprating in October.

John Bercow (Buckingham) (Con): It is a pleasure to follow the hon. Member for Keighley (Mrs. Cryer), with whom I have made common cause on a number of issues in recent years, and to whose courageous contribution I listened with immense respect.

I would like narrowly to focus my remarks on the national minimum wage, to the compelling case for the introduction of which I long ago publicly converted. Before its introduction, too many people suffered too much for too long with too little done to help them. Since its inception, it is estimated that approximately 1 million people a year benefit from the annual uprating, of whom no less than two thirds are women. It is worth emphasising to boot that for those beneficiaries of the national minimum wage who are sole earners, it has been especially significant. Indeed, I would go so far as to say that its introduction has been an economic kiss of life to significant numbers of women who were struggling at the margins, and of whom it cannot reasonably be said that they lived their lives; they rather fought daily to continue to exist. That is a dramatic achievement.

It is instructive to look at the reports of the Low Pay Commission. Its sixth report, published in 2005, observed—probably en passant, while raising all sorts of other points—that although it was not the prime rationale for the introduction of the national minimum wage that it should reduce the gender pay gap, in practice it had had a major impact on that gap. That is especially true at the lower end of the income scale.

My hon. Friend the Member for Bromsgrove (Miss Kirkbride) referred to the sharp disparities in income in the financial services sector, and I think she would almost certainly be right in surmising that the sharp disparities are especially sharp at the upper end of the scale. It is to the credit of the Government that for people at the bottom of the pile, the introduction of the national minimum wage and the constant increase in its rate has had the effect of narrowing that gap.

The ninth report of the Low Pay Commission in 2008 significantly observed that the evidence demonstrated that there was no adverse impact upon employment as a result of the introduction of the wage or from its annual uprating, in contrast to the predictions of the doom-mongers, among whom I readily number myself. It is easy to be convinced by one’ own rhetoric, or drenched in one’ own propaganda, and for an indefinite period of time to be convinced of one’ own preconception. I admit that I thought the introduction of the minimum wage would be hazardous, that it would lead to terrible consequences, that there would be a huge increase in unemployment and so on, and that has not proved to be the case, principally because the Government were politically and economically savvy enough to introduce it at a relatively low rate and then to look gradually and affordably to increase it.

The point that I want to make today in relation to the level of the wage, in the context of economic downturn and the particular problems that beset women, is this: I recognise that every year the Low Pay Commission looks at the wage, the state of the economy and what scope there might be for an affordable increase. It normally makes its recommendation to Government in February, with a view to the uprating taking effect in October.

As the Solicitor-General knows, this year the Low Pay Commission has sought permission from the Government, which was sensibly granted, to take a little longer in its consideration of the economic numbers before making a recommendation as to what, if any, increase there should be. My understanding is that the Low Pay Commission intends to furnish its advice to Government by May this year, though importantly and justifiably there is to be no delay in the annual uprating taking effect. That should take effect, if there is to be such, in October.

Over the past 10 years there has been a compound increase in the national minimum wage of roughly 59 per cent., if my arithmetic serves me correctly. Several years have witnessed increases of 4 per cent. or thereabouts, although I think I am right in saying that in 2001‚ÄîI pluck that arbitrarily from the annals of election history; I am sure it was purely a matter of serendipity that there was an election in 2001‚Äîthe Government chose to increase the national minimum wage by about 10 per cent. There are people who will say to Government, “It is very difficult. Times are tough. We can’t afford very much. Let’ have a stay on the increase of the wage or increase it only very modestly.”

I want to lob into the debate the radical but alternative suggestion that the Government should consider a sharp increase in the national minimum wage this year. That would conduce to the economic good, it would greatly increase the spending power of people who are languishing at the bottom of the economic pile, and there is every chance that it would be capable of being afforded by the public purse. I observe in passing that the public will be both bewildered and horrified by the massive public largesse that is shelled out in the direction of failed, incompetent and greedy bankers who have to be paid huge fortunes to go off, and are apparently not remotely embarrassed about taking such great departure payments.

It surely should not be beyond our economic competence or our moral sense to say of those who receive the national minimum wage, “These are people who are really struggling. Let’ give them a sharp increase.” From ¬£5.73, we could increase the minimum wage by 10 per cent.‚Äî57p or thereabouts‚Äîto ¬£6.28 or thereabouts. I hope that the Government will seriously consider that, and I challenge all the political parties to accept that there would be a powerful ethical case for behaving in that way.

That deals with the subject of the national minimum wage and its prospective increase, but there is another related issue concerning the large numbers of people, among whom women are disproportionately represented, who are currently paid below the national minimum wage. That has been referred to once or twice‚Äîand only once or twice‚Äîin the course of this afternoon’ debate. It is important to put it on the record that when that happens it is not merely undesirable, unethical or unreasonable, but palpably illegal. There ought to be some sense of moral outrage in the House if employers are paying people below the minimum wage. My understanding is that the annual survey of hours and earnings undertaken under the auspices of the Office for National Statistics showed that in 2008 no fewer than 185,000 women‚Äî1.4 per cent. of the female work force‚Äîwere being paid below the national minimum wage. That is, frankly, an unconscionable state of affairs.

I recognise that, not least through the device of the Employment Act 2008, the Government have committed a considerable resource for the purposes of publicising people’ entitlements and facilitating an effective enforcement regime for the national minimum wage. If memory serves me correctly, the Government are currently spending about ¬£850,000 a year on publicity and something in the region of ¬£7 million a year on enforcement. It is absolutely right that that should happen. My anxiety is that when times are tough, there can be an inadvertent green light for the skinflint, the rogue, the cowboy to behave even worse than he would otherwise be inclined or feel able to. If this House exists for no other purpose, it must surely exist, convene and debate with a view to extending the greatest possible protection to the disadvantaged people in our community. We should always strive to help most those who have least.

I hope that the Solicitor-General will say to her right hon. and hon. Friends in the Department for Business, Enterprise and Regulatory Reform that they should keep a close watch on this budget and see whether, from time to time, it might be necessary even to increase it. I recollect that the Government established the vulnerable worker enforcement forum, which was a useful opportunity to exchange views about what needed to be done. I suspect that a greater resource will be required, and there will be people who will try to renege on their responsibilities. This is a big problem, particularly for women and not least for home workers, who are notoriously difficult to track and whose ill treatment is especially difficult to identify and expose. That problem must be addressed.

I know that the hon. and learned Lady will understand when I say that among home workers there is another factor‚Äîthat of ethnicity. Significant numbers of people from the ethnic minority communities work as home workers. Let us be clear: there is a difference between people in this House, in the political class, whose familiarity with the regulatory regime, with entitlements, with what is due, with the legal position, is quite strong, and people out there, especially those for whom English is an additional language, who are more often than not, I would go so far as to say, unaware of their rights or, because of the economic circumstances in which they find themselves, frankly too frightened to claim and insist upon them. It is not good enough simply to respond in a legalistic sense. One very senior colleague in my own party once said to me, “Well, this is a matter to be pursued in a legal manner, John‚Äîit is not something about which we need to make speeches or anything of that kind. If people are dissatisfied with the way in which they are being treated, of course they have legal recourse.” I am afraid that that sort of reactive approach simply will not do.

I want to finish by saying that I applaud the national minimum wage and its continued uprating. It seems to me that it is economically justified, it is morally right, and for whichever party wins the next election it has to be an integral part of a counter-poverty strategy. In saying that, I emphasise that it is critical to the fight against poverty both of women and of children as well. There is a long way to go and I hope that we will see real and meaningful progress in the years ahead.

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John’s other interventions in the same debate

John Bercow (Buckingham) (Con): I do not know whether my right hon. Friend heard that my hon. Friend the Member for Shipley (Philip Davies) also muttered sotto voce from a sedentary position that the delay in the publication of the equality Bill was to be welcomed. Although none of us could deny my hon. Friend the right to his view, does she agree that our hon. Friend suffers from the notable disadvantage of being wrong, and that the sooner the Bill is introduced, the better?

Mrs. May: I hope my hon. Friend will have noted, as I said, that we look forward to the equality Bill when it is published, and we have been chastising the Government for their failure to bring it forward earlier. I am concerned that it may not be on the statute book by the time of the next election. There are some measures that I hope we will see in that Bill—

John Bercow: It is, of course, a very sad state of affairs that we have reached a position in which we have to contemplate and, indeed, give the go-ahead to quantitative easing, but does my hon. Friend accept that it might now be the least worst option? Is it not significant that no lesser a monetarist economist than the distinguished Patrick Minford, from the university of Liverpool, has said that it is the right thing to do in the circumstances?

Miss Kirkbride: With a hugely heavy heart, I agree with both of the contributions that my hon. Friends just made. We have reached the point where we have no choice. The point that I was going to make was that, in all likelihood, this measure will, over time, lead to inflation—the thing that we used to dread. At the moment, a bit of inflation in the UK economy would be very welcome, because we face the diametric opposite. But over time, unless it is dealt with very skilfully, we will have inflation, which hits the people on a fixed income in retirement, whose savings are decimated. We remember the 1970s only too well, when exactly that scenario was played out, and people will worry that that will happen again as a result of this announcement.

John Bercow: I am sorry to press the rewind button, but my hon. Friend made an extremely interesting point about the older generation’ expertise in managing effectively but frugally on tight budgets. Is she suggesting that some sort of informal‚Äîor even formal‚Äîgrouping could be put together from extended families of aunts, uncles and grandparents? They have a lot to offer, but they might not share their expertise as widely as they could if they merely exist independently.

Angela Watkinson: I thank my hon. Friend for that intervention. While he was speaking, I started to think of those organisations, such as Age Concern, that concentrate on older people. We should tap into their experience and knowledge, as I am sure that they could be enormously helpful to the younger generation.