The legislation on wages councils is of some maturity. It dates back to 1909, which shows a level of endurance, and, I believe, a civilisation by Parliament. We believe that the legislation enshrined in the law the concept that within our capitalist, entrepreneurial society there will be a level beyond which people will not be exploited. That was fundamental to the argument in 1909, and it is fundamental to the argument that I wish to present today. That argument was good enough for the House in the 1920s, 1930s, 1940s, 1950s, 1960s, and 1970s, but today we live in a different era. Even such basic concepts as that have to be argued and fought for.
In principle, the wages councils set for several categories of employees minimum rates of pay and minimum employment conditions that should be obeyed. Most of the regulations insist upon adult pay rates of about £65 to £72 a week. A single person receiving that would have a take-home pay of £61 a week and a married man £65 a week. The average for the whole lot is just short of £70 a week.
The issue whether we should abolish or reform has, in one form or another, been the subject of political debate and argument for a least two or three years. The Government played with it under pressure from their own Back Benches, and eventually produced a consultative document, which comes up with the alternatives of abolish or reform. Everyone in the House knows what abolition means; that is a simple state to deal with. However, reform can mean anything. It can mean virtual abolition. At the same time, it can mean a great extension and strengthening, so I suppose that the optimist in me must say that there is at least some hope for a civilisation on this issue.
Several arguments are paraded in favour of abolition. The favourite one, in the era in which we live, is not surprising—it is jobs. Various documents and economic theories suggest that if there were a 1 per cent. reduction in average pay that would create up to about 150,000 jobs. Therefore, one does not lightly dismiss arguments in this area. It is worth remembering relative to the figures of £65 to £72 a week that average pay is currently £178 a week. My hon. Friends and I believe that some wage settlements currently being made mitigate against the national recovery, and certainly against a reduction in unemployment. That is my honest, candid view. However, those pay increases are in the higher categories. They are not for the people earning the income that I have mentioned. We believe that if one extrapolates that basic argument, in which there is some truth, to this category, it is standing all logic on its head, and possibly putting several people in a position that we find unacceptable.
As I have said, we do not dismiss the possibility that there is some substance in the argument to which I have just referred. However, we find little evidence that reducing wage rates from between £65 and £72 a week to between £55 and £62 a week would create a significant number of extra new jobs. The best estimate that I can find is that if the wages councils were abolished 8,000 jobs would be produced. To put it in perspective, that is fewer than 16 jobs per constituency. Average unemployment is now over 5,000 per constituency. Even if that figure underestimated reality by a factor of two, 32 jobs relative to 5,000 is of very little significance.
Is the hon. Gentleman aware that the Department of Employment has given me the following figures in relation to the average wages of young people, at whom is often aimed the assertion that if their wages were reduced more jobs could be created? The average wage for school leavers relative to adult rates has fallen by 8 per cent. for boys and 12 per cent. for girls during the lifetime of this Government, yet youth unemployment has trebled. In other words, the evidence from the Department showing falling wage rates has shown no increase in employment but a trebling of unemployment.
I have seen those figures before somewhere. It might be because the hon. Gentleman produced them. I shall refer to youth pay. I do not totally dismiss what the hon. Gentleman says.
A few people believe that the abolition of wages councils would allow pay to increase. I have heard few hon. Members argue that in the House. I do not know whether that is the view of the Minister or his Department. I regard it as fantasy of the first order.
Let us ask ourselves what would happen if wages councils were abolished. What evidence can one produce? The truth is that little can be produced. I believe that their abolition would reduce pay. Many low-paid jobs are already not covered by wages councils. One can examine the pay structure in that area and judge what might happen in similar jobs that happen to be inside wages councils. Let me give the Minister an example. In my constituency, a young woman who is a qualified florist came to see me. She had been through the course to become a florist, and was highly regarded in that skill. Her employment boiled down to preparing wreaths and sprays and making the flowers that are grown in my part of the country, among others, into a more attractive item to persuade people to part with their money. In another part of the same enterprise. a young woman of similar age works behind the counter of the shop.
Reason suggests that the person behind the scenes doing the skilled work should be paid more than the person behind the counter taking the orders, but that is not so because the young woman on the counter is defended by the wages council to the tune of £67 to £72 per week whereas the other is not. I believe that if wages councils were abolished many more people would be in the position of the qualified florist who is paid less than her colleague at the counter.
One of the wages councils that were abolished protected the minimum pay of whalebone corset manufacturers. From observation in my constituency and in the House, I suspect that the outlet for those products is somewhat limited nowadays, so the three people still making them may well be paid less than in the past.
It was abolished because it was thought that under the legislation collective bargaining was adequate to protect the employees in that industry, but research by the Department of Employment into the impact of abolition concluded that there had been no significant improvement in wage determination, no catching up with the rates achieved by voluntary collective bargaining in similar industries and, indeed, sufficient evidence of underpayment of female workers to suggest that protection had deterioriated since abolition.
One likes to encourage maximum participation on these occasions, but I think that there have been five speeches so far, and I note your comment, Mr. Deputy Speaker. Another example of which I have experience is the village sub-post office with a retailing business attached. If an employee's duties include the selling of Mars bars and the like, that person is defended by a wages council to the tune of £67 to £72 per week; but the person employed only behind the post office counter dealing with large amounts of state money in pensions and benefits is not protected and in many cases the wages are lower. There are many other examples. I know of tyre fitters being paid between £45 and £50 per week.
It may be argued that these are fringe examples and that hard cases make bad law, but I argue that they are not fringe cases. The Minister's own document states that of the 2·7 million people covered by wages councils about 1 million earn the wages council minimum or just a pittance more, so all those people are influenced by wages council settlements. With regard to the impact on employment, subparagraph 8 of the Government document states that
those figures suggest that the wages council rates are now higher than would be necessary to recruit and retain workers.
That is the Government's own view, and I agree with it entirely. There is thus no argument between us and the Minister — there may be some argument from Conservative Back Benchers, although not from the hon. Member for Banbury (Mr. Baldry)—that the abolition of wages councils will do anything other than reduce wages. In this context, I remind the House that we are talking about minimum wages of £67 to £72 per week.
There are a couple of documents supporting abolition. The document submitted by the Institute of Directors advocates outright abolition. I put some energy into trying to discover any categorisation of directors' pay in the new earnings survey but was unable to do so. I suspect, however, that their earnings are nearer £70 per day than £70 per week. The institute baldly states that 54 per cent. of its members believe that they would employ more people if wages councils were abolished.
One does not simply dismiss evidence of that calibre, so let us consider the way in which that magnificent figure was produced. Of the 2,000 members of the institute consulted about the Government's document relating to abolition, only 130 responded, 30 per cent, of whom said they had no experience and therefore no knowledge of this area and thus had no strong view one way or the other. The great Institute of Directors survey thus comes down to just 91 people's responses, 70 of whom said that they might take on more staff. That is 3½£ per cent. of the institute's membership, not the 54 per cent. suggested on the front page of the submission.
That is a disgracefully shoddy piece of work by a body which, on the whole, one respects and it shows no interest in or understanding of the circumstances that we are discussing. If the business decisions of members of the Institute of Directors are based on such flimsy evidence, it is no wonder that Britain is in trouble. Some of them should try living on £70 per week rather than £70 per day.
The other substantial body in favour of abolition is the National Federation of Self-Employed and Small Businesses, which tends to major on the complexity of some wages council regulations. Paragraph 12 of the Government document refers to a set of wages council regulations comprising 30 pages of closely typed instructions, and the wages inspectorate concluded that half the underpayments discovered in its random survey —not its detailed survey—were due more to ignorance than to malice, and that is the wages councils' own view. That suggests that there is room for simplification, so I do not defend every detail of the present situation.
The wages councils' own evidence states that 35 per cent. of visits found evidence of underpayment That figure contrasts with the 6 per cent. found in the random survey, but visits occur largely when problems have been brought to the attention of a wages council by employees, other employers or, no doubt, Members of Parliameni. I make no complaint about that. One recognises that the sample for visits is skewed and I do not know whether the figures are exactly 35 per cent. or 6 per cent., but let us take the 6 per cent. It shows beyond question that the current regulations are more complicated than they need be. Therefore, some simplification may be suitable.
Some of the members of the National Federation of Self-Employed and Small Businesses to whom I talk are aware that, in many cases, the wages councils protect them. If, for example, business A is offering the community a service and paying its employees £70 a week, and business B comes along to compete and pays its employees £50 a week, I have news for the owner of business A: he is likely to be in some difficulty fairly soon. Many people recognise that, at the end of the economy, wages councils operate to their advantage.
Some of those who claim that they could produce extra jobs if wages councils were abolished seem to base that suggestion on their ability to undercut their compelitors. They say, "If I pay my employees £60 a week, I can employ more, because I will undercut the man up the road and grab some of his business." The employer up the road is likely to hit back in the obvious way. Therefore, I believe that few jobs will be created by the abolition of the wages councils. The major complaint is about wages for the young. I note that all the categories of business pay what is called in the document the adult rate at the age of 18, excent for the boot and shoe repair industry, which pays it at 20; the hairdressing industry, which pays it at 20; the retail food trade, which pays it at 19; and the sack and bag industry, which also pays it at 19. Logic suggests that if an employer is given a choice between employing a 28-year-old with eight or 10 years' experience, and an 18-year-old with only one or two years' experience, at the same rate of pay, regardless of all the surveys and the comments of the philosophers who analyse such matters, the 28-year-old stands a better chance of getting a job.
Part of the problem is that we define adulthood legally as the age of 18, but an 18-year-old is not always trained and experienced. In other European countries, the main rate recommended by minimum wage legislation — Britain is by no means unique in having such legislation is paid only to older people. For example, in Denmark, the consolidated rate is paid at the age of 23. I believe that that is too old, and would suggest 21 as the most suitable age. However, I warn the House that changes in this area will not create more jobs. All that will happen is the substitution of mature workers by younger workers, but there is some justification for arguing that the system should be changed. In some areas, the consolidated →or experienced—rate should apply to 21-year-olds, not to 18 or 19-year-olds.
Some believe that the Government will abolish all protection for those aged under 21. That would go tragically too far. The justification for this legislation is that it protects the vulnerable in society, and we all know that probably the most vulnerable section of society is the under-21s. It stands logic on its head to abolish protection for them. Furthermore, if protection is removed completely, when many people reach the age of 21 they will be sacked. Hon. Members should realise that some people suddenly lose their jobs simply because they have moved up a bracket in the pay range. I beg the Secretary of State not to introduce as a compromise the scrapping of regulations governing employees aged under 21.
What proportion of the adult rate would the hon. Gentleman suggest those aged between 16 and 21 should get? At present, 22 of the 26 wages councils pay a disproportionately higher rate to young people than 16-year-olds receive elsewhere in the economy.
I have made it clear that there is some necessity for movement in that area. I do not dodge the hon. Gentleman's question. However, he cannot expect me to come up with a figure for wages should the basic regulations be changed. That is a matter for negotiation by the wages councils within their spheres of influence. But if the House says that it wishes the consolidated rate to operate from the age of 21, I believe that action would be taken to implement it.
The Secretary of State produced a consultative document mainly to try to quell the hard core on the Conservative Back Benches. He knows already that the Select Committee on Employment is against total abolition. The Auld report, at page 66, came out firmly against abolition of the wages councils. The CBI is against it. One is not surprised, but one does not dismiss it for that, that the Low Pay Unit and the Child Poverty Action Group are against it. The Labour party, the Liberal party, the Social Democratic party and the nationalist parties are all against total abolition. The citizens' advice bureaux are certainly against abolition, and they have day-to-day
experience of dealing with the problems that arise in this area. The British Institute of Management is against abolition.
There could be a much more intelligent debate on the subject if the Government accepted the Liberal motion, which is simplicity itself. Let us make it clear that total abolition is not an option, and that doing nothing is not an option. Between those two extremes, we could have a much more sane, sensible and civilised debate. We believe that there is a case for simplification, and that not all workers are experienced and mature at the age of 19, but that there is no case for abolition. Indeed, it may be worth considering an improvement in the endorsement procedure in some areas.
The Liberal party has used one of its rare Supply days to raise this subject because it believes that the Parliament of our capitalist, competititive society should send out the clear message that there is a point beyond which people shall not be exploited. The miserable wages that we are defending range between £65 and £72 a week. The alliance is defending that, but the Government, by issuing their consultation paper, are attacking it, or at least putting it under scrutiny. The Secretary of State probably agrees with much of what I said, but some of the hard men on the Conservative Back Benches will have different views.
This legislation was good from the 1920s to the 1970s. It is a reflection on our Government, on the era in which we live and on the ideas that are foisted upon the British people that we must spend parliamentary time defending such miserable wages. I invite the House to vote for our motion and to clear up this matter once and for all.
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
'notes that the period for consultation on the consultative document on wages councils is only just ending and representations are still being received; and asks the Government to take into account the views of the Employment Committee, together w ith the very many other responses from interested organisations and individuals.'.
The Government's amendment makes it clear why we cannot accept the motion introduced by the hon. Member for Truro (Mr. Penhaligon). We do not intend to set aside, at the moment of their reception, the many representations and comments that have been made in response to our consultative document. Despite the hyperbole of his peroration, the hon. Gentleman must realise that it would be a disgrace for the House—I hope that the Liberal party would have nothing to do with it—to treat with contempt the representations of people who are informed and involved. They will certainly be considered by the Government, although the hon. Gentleman seems to be prepared to ignore them.
The hon. Gentleman knows that 31 May was the date set for the end of the consultation period. We are just ending that consultation period, and six further serious representations were made today. They are still coming in, and I am sure that the House would wish us to continue to consider all the representations that can be taken into account, even if, technically, they fall just outside the deadline. I hope that all those who believe in a serious consultation of this nature will support our amendment and realise that that must be the right way to proceed.
As I have said, we are still receiving a massive number of representations. The lunch-time score today was 667.
I therefore welcome the opportunity provided by this debate for the House to make its comments, and I shall certainly take note of them.
I apologise for the fact that there has been a discontinuity of Ministers. There was a debate in the early hours of the morning during the proceedings on the Consolidated Fund, but at present my hon. Friend the Parliamentary Under-Secretary is attending a meeting of the ILO in Geneva. I hope, therefore, that the House will accept me as an inadequate substitute for him on this occasion.
The House will recall the background to the consultative document. It was originally announced in the Budget speech as part of a range of measures specifically targeted towards the issue of unemployment. It will also be recalled that in the Budget debate the Chancellor and I announced a series of measures, including the development of the two-year youth training scheme, the expansion of a further 100,000 places in the community programme to help the long-term unemployed and new pilot projects as a means of providing further valuable work for the long-term unemployed. They include schemes managed by the private sector and those that involve work in charities.
We also looked at ways in which we could remove any obstacles to the creation of the maximum number of jobs. In that connection, there was a general welcome in the House for the proposals to reduce the starting rate for national insurance contributions at the lower level as a means of reducing the cost of taking on new employees. In addition, we have tried to ease the burden or remove any obstacle which might exist in relation to employment protection. That has already been carried through. We also identified the problem of the wages councils. As a result, I announced our proposals and published a consultative paper.
In the Budget debate I set out the reasons why the Government believed that the changes were needed. As we know, wages councils specify rates of pay and detailed conditions for 2·75 million workers in 26 industries. The hon. Member for Truro said that the system was first introduced in 1909, against a background of much public concern about "sweating", the three components of which were inadequate wage rates, excessive hours of labour and the insanitary state of the houses in which the work was carried out. That was the background against which the original trade boards were established.
However, economic conditions have changed sig-nificantly since that time. The welfare state has been established, real average pay is much higher and average hours of work are much lower. There is now an extensive range of legislation aimed at protecting the welfare and health and safety of employees. The development of systems for family support—and the further developments announced by my right hon. Friend the Secretary of State for Social Services are relevant in that regard— has made a significant new impact on the situation.
I have said that one of the original concerns was the extremely long hours of work, but it is worth remembering that two thirds of the employees covered by wages councils are part-time workers. A significant number produce a second family income, paniclarly women who work part-time and represent a significant number of those covered by wages councils.
The system has developed piecemeal and is extremely uneven in its application. I read with interest the article in The Guardian by the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), and it is without offence that I say that the speech of the hon. Member for Truro covered many of the points made in that article. However, I challenge hon. Members to walk down any high street in the country and to identify which shops are covered by wages councils and which are not. The application of wages councils is piecemeal, and it is extremely difficult to identify any great distinction between those for whom the wages councils are supposed to provide protection and those for whom they do not operate.
I am, of course, aware of that relationship, and my right hon. and learned Friend the Home Secretary has already made our position clear. In advance of legislation on the Auld report, the Government recognise the need to make clear their position on wages councils As the hon. Gentleman rightly said, that was raised in the Auld report.
Against that background, a range of complaints is widely recognised. One concern often expressed is the problem of the levels of pay of young people, and there is evidence that they are above the going rate that may exist in other industries. The mistake that was made by the hon. Member for Truro—it was a point in his right hon. Friend's article with which I disagreed—was to suggest that somehow there would be competition for a job between a 28-year-old at a fixed rate of pay and a 17-year-old at the same rate of pay. Instead, we should consider whether there is an alternative job at a lower rate of pay. I make no apology for saying that, because in Germany and other countries rates of between 30 and 40 per cent. of adult pay are considered reasonable as the starting rate. That gets more young people into jobs. However, so long as the adult rate is satisfactory, the problem of the starting rate for young people must be looked at very seriously. It should not just be considered in the context of substitution between the older and the younger person.
Does my right hon. Friend also agree that people at that age and with such a short amount of experience cannot possibly be worth the amount which employers are asked to pay at that stage in their working lives? Is it not totally unrealistic to force an employer to pay more money than an employee is actually worth?
I am appalled by the reception giver to my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight). It is obvious that Opposition Members do not understand that in certain cases what she said is undoubtedly true. In certain cases, a 16-year-old is not worth £55 a week when starting out. I am anxious that youngsters should get training and jobs. It is acceptable to trade unions and all political parties in, for example, West Germany that youngsters should start on about £27 a week. Why is there much lower youth unemployment there?
Why do some people here, who are living in the past, insist on negotiating wages of £50 or £60 a week? By doing that, they are condemning a lot of young people to unemployment. I care about that and about a blinkered attitude which just shouts down a perfectly constructive comment.
There are anxieties about the wages councils and about the complexity and length of the reports. The wages inspectors bear out the fact that many offences arise out of misunderstandings because of the length of the reports. Considerable difficulties have been caused by the practice of some wages councils of making retrospective awards. Employers suddenly discover that they have a bill for which they have not budgeted.
As the hon. Member for Truro said, employment is at the heart of this debate. We put employment at the top of our list of priorities. Every responsible right hon. and hon. Member must take that view. We have decided that there is an urgent need to tackle the problem of unemployment by abolition or reform of wages councils. We have had a staggering response to our consultation document. I do not wish to anticipate what conclusions we should draw, but I should like to give a summary of the responses. I acknowledge the response of the Select Committee on Employment and the minority report of my hon. Friend the Member for Bolton, North-East (Mr. Thurnham). We had 667 responses by lunch-time today, and they are still coming in.
The Trades Union Congress and the unions have made clear their opposition to abolition, although some unions have joined the reform lobby because they think that simplification is important for more effective enforcement. Employers, the Institute of Directors and the National Federation of Self-Employed and Small Businesses obviously favour abolition. The Confederation of British Industry has suggested abolition, unless there is a request from both sides to retain wages councils, but maintains that there should nevertheless be radical simplification. The Association of British Chambers of Commerce wants radical reform. There is significant pressure in the hotel and catering industry for abolition. Organisations which advocate reform but not abolition have concentrated on issues mentioned in the consultation paper, such as the exclusion of young people, the setting of a percentage of the adult rate as a maximum, simplification involving a single rate for adults, amalgamations or reductions in the numbers of wages councils, and the elimination of retrospection and of independent members as a means of simplifying the operations of wages councils.
It is precisely because of the potential for extra jobs that we are considering the matter. The consultation period is ending. We have received many representations and we are reviewing them, so the debate comes at an opportune moment.
I have only the figure of representations received—667 I have picked out a few views which are already public [HON MEMBERS "Ah1"] There IS no secret about this I shall be anxious to disclose the results of the consultation Representations are still coming in We have received six more today I do not have a breakdown, but the right hon Gentleman knows that the total includes representations from major institutions such as the CBI and the TUC We have had one representation from the alliance A Liberal councillor has written to us That is the only representation that we have had from the alliance so far, and I welcome it That is why the debate has been so valuable It is important to measure the merits or quality as well as the numbers of representations.
I am sure that the House agrees that it is important to reach an early decision With the leave of the House, I shall respond to the debate In the meantime, I shall listen with interest.
rejects the Government's claim that reducing the pay and conditions of low-paid workers will create more jobs, condemns the Government's deliberate weakening of the Wages Inspectorate by cutting their numbers by one-third — the Government are already undermining the system and now we are discussing whether it should be undermined further—
thus encouraging bad employers to break the law
We hear much from the Government about law and order and respect for the law, but there are some laws such as those which are supposed to protect the wages of the lowest paid for which they have no respect As the motion continues, the Labour party
calls for the strengthening of wages councils to improve the protection of these workers, most of whom are women, young people and ethnic minorities
It was not clear whether the hon Member for Truro (Mr Penhaligon) spoke for the Liberal party or for the alliance, but the motion is enormously weak The Government have manipulated the press and public opinion time and again—then- method seems to work, although it is crude They always threaten more than they intend to do, and do less I do not believe that they intend to abolish all wages councils That would be too unpopular and they would pay too high a political price They intend to exempt major groups from their protection—young people and perhaps part-time women workers—and to undermine further the system which they have already weakened by cuts in the inspectorate It is clear from the consultative document that this is one possibility that the Government are considering The Liberal motion says-nothing about that, perhaps because of the difference on this question between the Liberal party and the Social Democratic party As usual, there seem to be grave differences between the two parties
On 23 May 1985, writing in The Times, the leader of the Social Democratic party told us how new technology could lead to full employment and jobs for everyone—a thesis with which I agree He said that there is one grave threat to the possibility of the restoration of full employment, and that is that some of the new jobs will be low-paid jobs in the services sector He said:
not all new jobs in the service sector will be high-skilled, high value-added, high-wage jobs. Along with the professional jobs and the jobs in IT will also be a lot of traditionally lower wage jobs in areas such as fast foods, retailing and health care.
This has two critical policy implications. It is imperative not to prevent these jobs emerging by minimum wage legislation".
There is minimum wage legislation in the wages council system. On 23 February, the leader of the Social Democratic party was not in favour of minimum wage legislation. I have always suspected that he makes up his party's policies in the bath and announces different policies depending upon how he feels.
The National Union of Tailors and Garment Workers is deeply worried about the prospect of the abolition of wages councils. It represents workers in the textile industry who work in sweatshops— some of which are in my constituency—which are increasing in number. The union has sent us a letter that the leader of the Social Democratic party sent to one union member. On 22 May, the day before the article in The Times, the right hon. Gentleman seemed to be in favour of retaining wages councils but thought there might be scope for reform. He thought there should be less protection for school leavers and people with a second income. We know that he meant women but, just to show that the Social Democratic party favours sexual equality, the right hon. Gentleman referred to
perhaps the second wage earners in the family household— male or female—if wages were more flexible.
May I help the hon. Lady with some comments on the Liberal party's views? She mentioned the garment industry. I think that she would accept that the wages of garment workers are determined by the world prices of their goods. The Liberal party has differing views on world prices — the hon. Member for Yeovil (Mr. Ashdown) says one thing about the multi-fibre agreement and the hon. Member for Rochdale (Mr. Smith) says the opposite.
I understand that the hon. Gentleman wants all controls to be abolished. I suppose that he wants Britain's textile workers to compete for wages with workers in Bangladesh.
The leader of the Social Democratic party seems unable to make up his mind between one day and another whether he favours any minimum wage legislation. On Monday 3 June, in an article on the agenda page in The Guardian,as a trailer for this debate, the leader of the Liberal party tells us that we must retain and expand wages councils. A major difference between the views of the two parties is found in that statement. He stated:
"there is definitely a case for saying that wages councils may
"may" is an interesting word—
"deter some firms from taking on young people by insisting that they are paid the same £63–£72 per week as older employees." The right hon. Gentleman is mistaken in thinking that young people must be paid the adult rate. It seems that young people should be exempted from the protection offered by wages councils.
The Government assert that the evidence suggests that abolition or major reform is needed. When the Government discuss reform in the consultative document, they mean further weakening of the wages council system. Let us be in no doubt about that. The Government assert that weakening the system or abolition will produce jobs. Despite enormous efforts by the Government to produce evidence to support this prejudiced and dogmatic view, as Centre Forward calls it, the Government have failed to produce convincing evidence of this case The Select Committee's report shows that clearly, stating in paragraph 17:
Thus the empirical evidence submitted to the Select Committee does not provide unambiguous support for the notion that the elimination of Wages Councils would have the sort of employment effect which would provide an overwhelming case for abolition.
In paragraph 19, the Select Committee states:
Ministers did not give an estimate of the increase in the number of jobs which might be expected to result from abol ition, when pressed to do so in respect of young people, they were unable to the message was try it and see'.
Why do we not try it? Why do we not cut the wages le vels of people on £60 a week, just in case it will provide a few jobs? That is the proposition that is put before us.
It is incredible how the Government have managed to make the senior Civil Service — an old part of the British establishment—so deviant that it constantly leaks documents One leaked document tells us something very interesting The Government have been trying to move in this direction since taking office in 1979 The Government keep commissioning research that does not prove their case If Ministers will not act as desired, it is a case of chuck them out, get new academics and Ministers and try again Here we are, the third time round In a minute dated 12 February 1981, Mr M Wake says that, in November 1980 — the Government got on to this matter quite quickly after 1979:
The mter-Departmental report by officials which was considered by Ministers at E(EA)"—
that is a Cabinet employment sub-committee—
found no evidence of any significant loss of employment directly attributable to the setting up of minimum rates by wages councils.
It seems that the Cabinet was persuaded Following that decision, the Secretary of State was asked to "examine whether it might be possible to remove young people and part-time workers from the scope of Wages Council awards The draft paper prepared for submission to that Cabinet sub-committee shows the conclusions of the review by the Secretary of State It states
The case for exclusion is based on the suggestion that job opportunities for young persons and part time workers would be increased if employers were free to take them on at less than the statutory minimum rates set by the wages councils When made, the suggestion usually comes from small shopkeepers.
There are more and more of them in the House.
Exclusion of these groups has not been advocated by the employers' associations represented on the Councils (including those predominantly representing small businesses) although the National Federation of Self Employed and Small Businesses Ltd has recently urged the total abolition of the wages council system
The facts are that statutory minimum rates for young pe sons and part timers are lower than comparable collectively barg lined rates, and rates actually paid frequently exceed the statutory minima In practice, therefore, there is unlikely to be any very significant scope generally for increasing job opportunities thereby To whatever extent this did happen, it would be largely at the expense of the jobs of full-time adult bread-winners'—
that means throwing the parents out of work and giving the low paid work to their kids, this is the way in which we are going forward to Britain in the 1990s—
since there is no plausible evidence that it would significantly increase job opportunities overall in the wages council sectors
That Secretary of State — no longer a member of the Government—was asked to review the question whether
wage councils should be abolished. He reviewed an interdepartmental report and found that there was no case for abolition. The Cabinet committee accepted that. He was asked to look at the possibility of excluding young workers and part-time workers and found that there was absolutely no case for it. But he was thrown out, so here we are looking at it the second or third time round. The Government were determined. If the facts did not fit their prejudices, never mind, kick out the Minister and try again, commission more research and find some academics who will say the right thing.
Yesterday the Low Pay Unit issued a briefing which makes very serious allegations about the way that the Department of Employment has been conducting its academic research. The briefing was prepared by Mr. Frank Wilkinson, a research economist at Cambridge university, who has carried out a number of research studies for the Department of Employment over the years. We understand what it means to that man. He will not carry out any more research studies while this Government are in power, so obviously he really means what he says in his report.
I am sorry; I am very short of time.
Mr. Wilkinson makes the serious charge that the Government are fabricating and distorting the evidence that comes from the research that they commission. I will briefly summarise the case that he made.
The Department of Employment commissioned a study of the effects of the retailing wages council from independent academics, but when the results became available last year they were embarrassing. Contrary to ministerial researches, the research found that minimum wages had had no effect on employment.
The Department of Employment did not publish the report until this May, and in the meantime hurriedly assembled its own report on the effect of wages councils in the clothing industry, which it then published on the same day. The clothing report came to remarkable conclusions for an industry in which relative wages had fallen since the 1950s by 20 per cent. for men and 13 per cent. for women. The Department of Employment concluded that wages were to blame for unemployment. Mr. Wilkinson points out that that conclusion could have been reached only by the improper use of data and a muddled methodology. Certainly the report bears all the signs of being put together very quickly and with a decided lack of competence.
The Department of Employment report ignored completely the effect of falling demand and imports in looking for an explanation of the decline of the clothing industry, preferring instead to place the blame on the industry's wages councils, but its conclusion is at odds with the perception of firms within the industry, 86 per cent. of which attributed the fall in employment to lack of demand and import penetration. So much for the research that we now get from the Department of Employment.
The final point from Mr. Wilkinson is that, using methodology and data considerably more reliable than that used in the Department of Employment study of clothing, the Ministry of Agriculture, Fisheries and Food analysed the impact of the minimum wage for farm workers. The report concluded that an increase in the value of the minimum wage increased both the demand for and the supply of labour, and hence employment Again, the findings were in complete contradiction of the views of Ministers on the effect of minimum wages The Department of Employment is quite unjustified in suggesting that the research findings demonstrate convincingly the potential for minimum wage increases to affect employment adversely The Department is saying exactly the opposite of what it found in its research
No, I am so short of time [Interruption ] I am not scared of Conservative Members I may give way later if I find that I can get through my speech in time [Interruption ] I have more to say than the Secretary of State On the Labour Benches we care about the wage levels of low-paid people Conservative Members can sit there smugly and richly while wanting to cut the wages of people who work 40 hours a week for £67.
The consultative document produced by the Government is enormously biased It does not ask openly for a discussion of the effect of wages councils, whether they destroy jobs or not, or whether people want them to be strengthened, weakened or modified In the light of the research evidence, what the consultative document says is disgraceful Paragraph 7 says that
Wages councils interfere with the freedom of employers to offer, and jobs-seekers to accept, jobs at wages that would otherwise be acceptable This restricts job opportunities, particularly for young people".
Paragraph 8 says that
A number of studies support the view that statutory minimum rates jeopardise employment.
I have just dealt with the studies that prove that statement to be wrong.
Tory Back Benchers pretend that they care about the low paid, but they are quite prepared to sacrifice young people on the altar They are going for the young people The consultative documents suggest that they should be removed from protection, even if the wages councils stay That means that, even if we retain wages councils, we must denounce the International Labour Organisation convention But what does the ILO tell us about the position in the rest of the world? It says that
Almost all countries in the world now operate minimum wage systems, and none to our knowledge excludes young workers The latter are entitled to such protection as any workers, and even more so because they are more vulnerable to possible exploitation due to their inexperience and perhaps because of their very desire to earn a living by finding a first job
Since 1979 — [Interruption] Conservative Members should look at the evidence instead of showing their prejudices Since 1979 youth unemployment has doubled but the relative pay of young people has fallen sharply over the same period Young males have received pay rises 23 per cent lower than the average increase for adult males Young women's pay has fallen 20 per cent behind the equivalent increase for adults.
A Department of Employment research — [Interruption ] I have only 15 minutes and Conservative Members will have their opportunity later A Department of Employment research paper, published in 1980, concluded that
variations in youth unemployment do not appear to have any systematic relationship with changes in the relative earnings of young people".
That is a fine piece of research by a man called Makeham It shows that youth unemployment grows faster than
general unemployment and that it falls faster when unemployment is falling. It has nothing to do with wage levels, and there is no evidence for that.
A more recent paper, published by the Department of Employment in 1983, contradicts the earlier finding. This is one of those pieces of academic research that the Department of Employment hunted for in trying to find some academic who would provide a case in support of its prejudices. The paper tentatively suggests that the employment of young people under 18 years of age appears to have been reduced by increases in their average earnings. The author warns, however, that the analysis relies on data which are already fraught with problems and that therefore the results are extremely tenuous. His warning that the results should be viewed with caution appears to have been wholly ignored by Ministers, and it has been quoted in this House repeatedly. The final point in that piece of research is that, to the extent that cuts in youth wages did result in new jobs, that would be largely at the expense of adult workers. What is the point of that?
The Department of Employment study that I have just quoted estimates that eight out of 10 new jobs created for young people, if their wages were cut, would be jobs lost by adults. It costs more to keep an adult on the dole, so it does not even make economic sense from the Government's point of view.
The Public Accounts Committee found that 77 per cent. of the jobs subsidised under the young workers' scheme that the Government are now getting rid of, but which was deliberately used to try to cut youth wages, would have existed anyway, even without the subsidy. The vast bulk of the additional jobs that were created were taken away from adults.
It is not just that there is no case for abolition of wages councils, or weakening the position of young people or excluding them. There is a strong case against doing so, not just on the basis of social justice—to which I shall refer in a moment — but on the ground of the inefficiency that is encouraged. In the words of Mr. Frank Wilkinson,
Employers' attempts to escape from competitive pressure by attempting to reduce their wage costs can only be temporary and in the long run are counter-productive. The ability to protect profits by reducing wages allows producers to avoid any long-term solution of their lack of competitiveness by reinvesting in improved efficiency or developing new products. Moreover, the availability of lower wages as a strategy creates a particularly destructive form of competition which undermines product market stability, upon which favourable expectations depend. The consequent uncertainty militates against long term solutions.
We get the bad employer paying rotten wages, not investing, and not training his staff. They undermine each other, lower the conditions of employment, and increase Britain's chronic unemployment problem and the problem of very low investment. The road that we are going on is to cut wages to such a degree that we shall be competing with Third world countries for jobs.
I come now to social security. Two days ago, the Secretary of State for Social Services told us—and the Prime Minister repeated it—that in the review of the social security system they were deeply concerned about the needs of the working poor. Yet the Government are suggesting that it would be a really good idea to cut the wages of the working poor.
The proposal to abolish wages councils is a proposal to cut the wages of some of the poorest workers, otherwise there would be no point in the Government making the proposal.
The new family credit scheme, which is to replace the family income supplement, is a subsidy to bad employers paying low wages and lacking investment and training. If the Government want to subsidise British business, they should put money into firms which invest in training, higher technology and so on. Instead, they propose to spend more of the taxpayers' money on subsidising the worst employers in the land.
Who are the people protected by wages councils whose conditions the Government are anxious to undermine? We are speaking of 2·75 million people, 11 per cent. of the work force. About two thirds of them work part time. Any threat to remove protection from part-time workers is a threat to the majority of those people. Four out of five of them are women and half of all women workers are protected by wages councils. This, therefore, represents an enormous threat to women.
About 5 per cent. of people protected by wages councils are young. That may be a small percentage of the total, but it represents 20 per cent. of all young workers, and 90 per cent. of them work in retailing, catering and clothing. Large numbers of them are black workers — [Interruption.]Conservative Members may smirk and grin at the evidence, but prejudice is all that they are interested in.
We are told by the Select Committee that 25 per cent. of families classified as poor have a low earner at their head, and that proportion rises to 40 per cent. when pensioner families are excluded. In other words, although 40 per cent. of poor families in Britain have a low paid worker at their head, the Government want to cut their wages.
Would anyone dare argue that, because most women work, they really work only for pin money? I am sure that many Conservative Members think that. Would they dare say it openly? In one in four households the main breadwinner is a woman. These are households in which there are single women, sometimes with dependent relatives, and one in eight women look after an elderly dependant. Alternatively, a single parent is bringing up children on her own. One in 10 households is headed! by a single-parent mother. Women are the sole earners, because of the unemployment of their partners, in 400,000 families.
In addition, women's earnings equal or exceed those of their male partners in one in seven of all married couples. If it were not for the earnings of married women, four times as many families would be living in poverty. The low wages that those women earn are absolutely crucial to enable them to look after their dependants and families.
What, then, are the princely wages that the Government want to cut? We are told in the consultative document:
Most minimum full-time rates at March 1985 for adults ranged from £63 to £72.
For young people we are told that 16-year-olds
get roughly 65 per cent. of the adult maximum
and that 17-year-olds
get 75 per cent. of the adult maximum.
That represents £40 to £50 a week, yet Conservative
Members have the cheek to suggest that that is too much
for young people to earn. Among those who claim that is
the hon. Member for Birmingham, Edgbaston (Mrs. Knight), who represents a neighbouring constituency but who, unfortunately, is not in her place.
Since 1979, the lowest paid have taken major pay cuts. According to recently published Treasury figures, the highest paid men have enjoyed increases in real net pay 10 times as large as the wages enjoyed by the poorest, and the Government want to increase still further the wages of the better paid and, at the same time, to reduce the wages of the poorest.
The Government have no case for suggesting that the abolition or weakening of wages councils will create jobs. The claim is false and there is no evidence for it. [Interruption.] Conservative Members may laugh, but they cannot laugh away the evidence. What the Government propose will simply encourage bad employers and bad employment practices, low investment and a lack of training. This move is opposed by the public.
I have taken too long already. [HON. MEMBERS: "Hear, hear." Tory Members may not care about the low paid or try to laugh off the evidence that my hon. Friends and I have been adducing, but I wonder whether they care about public opinion. A survey carried out by Mori in 1983 found that 66 per cent. of adults, including 62 per cent. of Conservative supporters, favoured a minimum wage for all workers. A recent opinion survey in the north-west conducted by Granada TV showed that 89 per cent. were in favour of retaining wages council protection.
The Labour party will fight the Conservative party every inch of the way on this issue. We shall fight to retain the protection that low-paid workers have through wages councils and, when we take power, we shall ensure that they have improved protection.
I am grateful for this opportunity to speak, having found myself in a minority of one in dissenting from the Select Committee's report. I am disappointed that the Chairman of the Committee, the hon. Member for Newham, North-East (Mr. Leighton), is not in his place. Indeed, it is extraordinary that the Chairman is not present, especially as I am bound to comment on the way in which the report was put together.
It was surprising that we had a report at all because at one stage it was thought that there would not be one. It was produced at remarkable speed, and that was probably why there were no amendments. At one stage I began to think that I was at a SOGAT meeting, considering the way in which the matter was progressing. I had had a difference of opinion with the Chairman on a previous occasion about GCHQ, and I found that I was getting the same sort of treatment this time. However, I managed to register my dissent before the report went to press.
It was a pity that matters proceeded so quickly because three important items were missed. I am not sure whether I am a believer in the conspiracy theory or the cock-up theory of history, but an important report from the Department of Employment arrived just hours after the Select Committee had had its last meeting. That report was on the clothing industry, and it showed, from an examination by me of the figures, 50,000 job losses. That is significant because the report itemised the big rundown in employment in that industry in the last 30 years. Jobs dropped from over 500,000 to about 250,000, and 50,000 of those were lost because of minimum wage legislation.
The principal point was that the wages of people starting in the industry, including youngsters, had been pitched at such a level that the industry could not train people to take the places of those who were leaving. In my constituency there is a shortage of skilled machinists because there is no incentive for employers to train people in such skills.
The Select Committee missed another important document. That was a report by Dr. Stanley Seibert of Birmingham university which showed that as many as 230,000 job losses could be attributed to minimum wages legislation for youths.
The Select Committee's report is disdainful about the figures for job losses and speaks at one point of "only 25,000 jobs" having been lost. Even 25,000 must be worth concern. After all, who would like to choose the 25,000 people involved? Even the Labour party's economist, Neuburger, referred to "only 8,000 job losses." Who on the Opposition Benches would care to name those 8,000 people?
Is the hon. Gentleman aware that unemployment in Britain has increased by 4,000 a week and that he has regularly voted for the policies that have brought that about?
Unemployment in Britain has resulted from mistaken policies over many years — [Interruption.]—policies which have been followed by the Labour party and which are still advocated by Labour Members.
The third item which, unfortunately, the Select Committee did not examine was the report by the Minister for Health and Social Security this week in which he makes interesting proposals for the reform of the welfare state, including the new family credit scheme. That scheme finally makes wages councils totally obsolete.
Wages councils were introduced for three reasons— wages, hours, and unsanitary conditions. Unsanitary conditions have been dealt with by health and safety legislation; hours are no longer a problem because most of the people are part-time workers; and wages will now be taken care of by the family credit scheme proposals, which are excellent and which will cover what people want. People want a good take-home pay. They do not want legislation for a wage that employers cannot afford to pay from which massive deductions are made to cover the cost of payments to the unemployed which are caused by a ridiculous policy.
What is the problem? We want to see the unemployed back at work. If 200,000 extra jobs are possible, what is holding them up? I think that there is a conspiracy between the employed and the unemployed fed by fears fostered by the Opposition that there will be wage cuts. The hon. Member for Birmingham, Ladywood (Ms. Short) said that there would be wage cuts. That demonstrates her misunderstanding, because there will be no proposed wage cuts.
It is cosy to be able to get together with other employers and keep the current wages and to say that it does not matter about the unemployed because they do not come into the argument. That is a nice little restrictive practice.
It seems unfair that in every sector any employer can pay what he will and the family's wages are made up by the taxpayer. It is a question of employers who seek to pay as little as possible knowing that the wages of family workers will be made up. That does not apply to women workers or young workers. That is an unfair way of treating the taxpayer.
If my hon. Friend looks at the booklets produced this week, he will see that what will happen is that take-home pay will increase with gross pay. If someone is paid more by his employer, he will have more to take home and he will not be interested in employers paying less. That should not apply in any case.
The fear has existed since the measure was introduced in 1909 when the welfare state did not offer protection. The Under-Secretary of State is not here tonight because he is in Geneva — I hope doing a good job. In the middle of the night in our previous debate he said that if the wages councils were to be totally abolished
I have no doubt that some people would find themselves, at least temporarily, in circumstances which would be difficult to defend."—[Official Report, 26 March 1985; Vol. 76, c. 416.] I have asked myself what he meant by that, and it crossed my mind that he might have been thinking of the wages councils' inspectors themselves. I accept that other employment would have to be found for them. However, perhaps my hon. Friend was thinking of people who might have their wages cut, but I do not understand that. In manufacturing industries wages are determined by the prices of the goods produced based upon world markets, and employers will compete among themselves to set the wages of people who can work profitably. There will not be any wage cuts for people who are occupied in profitable manufacturing industries.
The service industries are not the same, because world prices do not apply, but employees still have the protection of their employment contract. After two years their wages cannot be cut. That would mean constructive dismissal, so I do not see how people's wages will suddenly be cut. We are talking not about cutting wages but about bringing in people lower down the ladder of earnings opportunities. I do not see why we should take away the bottom rungs. People on the bottom rungs will not affect the wages of those on the higher rungs who have the skills to command higher wages. Average wages might come down but there is no reason to believe that people working in the service industries should suddenly have their wages reduced. Obviously, by mutual agreement their wages could be reduced.
I find it most difficult to defend the circumstances of workers who have no mutual agreement and who lose their jobs through redundancies About 250,000 jobs in the clothing industries have been lost I find that difficult to defend.
Hon Members talk about reform and say that youngsters set their own wages to keep a semblance of the wages councils What happens when someone is 21 years of age9 The hon Member for Truro (Mr Penhaligon) talked about redundancy at 21 That is ridiculous He suggests that the person of 21 should be told that Parliament has legislated that he must now have protection and that that means that he must be made redundant We talk about protection of wage levels, but not about the protection of the job itself.
I am in favour of the protection of the unemployed against obsolete laws which can stop people starting work on the bottom rung of the ladder What is the point of being on the dole and without a job? Everybody should be able to start a job at whatever wages they can command I believe that the unskilled should be protected so that they can gain skills If someone is taken on at too high a wage, what incentive has he to gain extra skills? They must be given the incentive to improve their skills and the employer must find the means to train people.
My hon Friend has been generous in giving way, unlike the hon Member for Birmingham, Ladywood (Ms Short) In the course of his deliberations in the Select Committee, did he come across the document produced by the TUC which states:
There must obviously be some truth in the proposition that all other things being equal, an individual employer will tend to employ more people if wages are lower and fewer people if wages are higher"?
If my hon Friend has a copy of that document, perhaps he will give it to the hon Member for Ladywood.
I am grateful to my hon Friend— that is exactly it When talking about the national minimum wage, the Opposition do not seem to be able to make up their mind whether they want a national minimum wage The document "In Place of Strife' was put down by people who thought that they knew better That is probably the main reason for today's unemployment The Department of Employment was commissioned in 1969 to produce a document on a national minimum wage Paragraph 186 of that document states the effect on employment It states that the national minimum wage would increase the level of unemployment, and that the worst impact would fall on the less prosperous areas, including the development areas, Northern Ireland could be particularly affected That is why there was no minimum wage legislation in 1969 That is why the Opposition play around with the words and go no further.
I am grateful for the opportunity to make points which were not included in the Select Committee report I am learning at every stage In future when I have differences with a Chairman I shall be able to include my points in the report I am all in favour of proposals which ensure that people have a proper take-home pay, but I am totally opposed to legislation which tells the employer what he should pay at such a level that the employer cannot pay it, and therefore cannot provide the job.
Wages councils exist to protect those who cannot protect themselves because they are not unionised to give them real strength. Because they are not strongly organised in their appropriate trades unions, they rely on the law and the inspectorate to enforce their wages. That is always a dicey business under capitalism. It is clear that a Tory Government can always pull away the prop, which is what this Tory Government propose to do in pursuit of their policy of driving down wages. They have created mass unemployment as a strong stick with which to beat the workers. They brought in the youth training scheme with low remuneration, and now propose to extend it.
The introduction of Sunday trading is part of the strategy of driving down wages. It will mean more part-timers on lower rates, although God knows that part-time working on lower rates has already vastly increased. There is nothing wrong with part-time work, provided that the hourly rates and conditions are the same as those for full-time work. Indeed, there are many arguments in favour of part-time work. However, the truth is that part-timers are paid lower hourly rates and usually have worse conditions than full-time workers.
Doing away with wages councils — which the Opposition will certainly resist — will not only drive wage rates which are already too low even lower, but will bring back sweated labour. Talk about Victorian values —they will be with us with a vengeance.
The consultative document claims that wages councils' orders are difficult to understand. Of course, there are none so dense as those who do not want to understand. It is alleged that the difficulty in understanding the orders is one reason for underpayment. If people believe that, they will believe anything. There must be few employers who fail to obtain the grants to which they are entitled because they do not understand the regulations. The wages inspectorate continually report flagrant violations of wages board orders. Therefore, there is a case for more enforcement, not less. Few union members and no officials have difficulty in interpreting the orders.
It is argued that more jobs would be created if wages were lower. I want to re-emphasise the point made by my hon. Friend the Member for Birmingham, Lady wood (Ms. Short). The Minister of Agriculture, Fisheries and Food analysed the impact of the minimum wage for farm workers, and the report concluded that increases in the value of the minimum wage
increased both the demand for, and the supply of, labour and hence employment.
Ministers have found themselves arguing the case for abolition of wages councils against mounting opposition from public opinion, employers and some of their own Back Benchers as well as trade unions and the poverty lobby. The weight of evidence is that abolishing the councils or rendering them ineffective would have little or no effect on unemployment.
In the absence of credible evidence beyond unsubstantiated anecdotes, the Department of Employment appears to have tried to cover Ministers' embarrassment with spurious and misleading claims for the likely effects of abolition. It is now time for the Government to admit that the king really has no clothes.
Ministers have given no estimate of the increase in jobs likely to flow from the abolition of wages councils. When pressed to do so in relation to young people, they were unable to produce any figures or evidence. Paragraph 11 of the consultative paper claims that the wages set by the councils make it more difficult for those who wish to take up employment to do so. That is absurd because paragraph 7 notes that the minimum rates range from £63 to £72 a week, which respectively are 41 per cent. and 46 per cent. of national average earnings.
The majority of employees covered by wages councils are women, and their average earnings hover around 53 per cent. of national average earnings. Therefore, women will suffer from any abolition of wages councils. The fact that 37 per cent. of workers covered by wages councils are paid the minimum only does not support the argument that rates are too high. Indeed, as has been made clear in many inspectorate reports, it suggests that underpayment is rife.
My union, the Transport and General Workers Union, will continue to fight for low-paid workers, including farm workers, regardless of the fate of wages councils. Our principal interest is in the agricultural wages board. We are especially concerned about the consultative paper's attack on younger workers aged 18 or under. We appreciate that that could so easily be read into the agricultural wages board provisions.
We see the attack on wages councils as a veiled attack on the wages board, and we shall certainly resist any such attack, as we resist the attack on wages councils. I make it clear that we shall also resist the so-called reforms, because I believe that they will be almost as bad as abolition.
All that we have heard from Opposition Members so far has had an element of unreality. No one has yet used the words "employer" and "customer". They ignore the fact that it is the employer who pays the wages. If wages councils regularly award unrealistic rates, employers will not be able to pay them and firms will go out of business. The employer will become unemployed, as will the employee. I should have thought that Opposition Members would have been only too anxious to direct their minds to that.
Everyone in this House is greatly concerned about unemployment. None profess to be more concerned than Opposition Members. It is therefore surprising that they do not understand that wages councils are a straitjacket on employer and employee alike.
Reference has been made to youth unemployment. The effects of wages councils' demands in that area are so obvious that I am surprised that anyone feels able to stand up and justify them.
I want to concentrate my few remarks on wages councils generally. The rigidity of some of their awards prevents the development of sensible wage structures and systems of remuneration tailored to the needs of industry and business. Wages councils concern themselves not only with pay—if they did, perhaps there might be a little more justification for them—but with hours of work, holidays, part-time working, overtime wage rates and a host of things that sensible employers and employees in other businesses and industries not covered by wages councils manage to settle by themselves.
In today's highly competitive world, businesses will fail unless they can make sensible and realistic forward planning forecasts. Few businesses can organise themselves and settle the difference between a profit and a loss without knowing precisely what their overheads will be during the next 12 months.
The biggest question mark against any employer's forecast is labour costs. It is a crucial factor. The fact that that should be decided by other people, many of whom have no direct business experience whatever, and without regard to whether that business will continue profitably, is tying the business man's hands behind his back. Nor is it any more satisfactory for the person who is employed. An able worker with years of seniority and experience finds his wage differentials annually eroded as a result of these awards, particularly to young workers, to the point where seniority and responsibility are counted as of little worth and there is no incentive left to achieve either.
It is essential that there should be economic recovery. That could be achieved by more flexible hours and by encouraging efficient, low cost businesses which can compete with foreign competition. It is a truism that the new small businesses of today will be the big businesses of tomorrow. If their growth is stunted at this stage, we shall do no service to employment prospects.
Since the recession, more and more small business employers have had to pay themselves less and less in order to satisfy the ever increasing and ever more unrealistic requirements of the wages councils. The uncertainty of those awards—the fact that they can be backdated — is a terrifying prospect for the small employer who has limited capital. These requirements are a very large factor for an employer in deciding whether he can afford to take on extra staff. In practice, each new wages council award has meant a cut in the hours that an employee may work. The corollary is an increase in the hours that the employer has to work if he wishes to stay in business. When the Opposition hear of businesses failing, they are the first to say that it is the Prime Minister's policies that are creating unemployment. They never consider that it might be the result of the unfeeling, appalling bureaucracy which is interfering with the day-to-day operations of businesses which are trying to do their best.
We are still one of the least efficient industrial nations. We still pay more but produce less than most of our competitors. The essential problem of keeping costs down in order to remain in business does not concern the wages councils and the academics who serve on them. The fringe benefits that they award become more and more unreasonable every year — for example, increased holiday allowances for workers who may work for only two days a week or who may even work from home.
The contact with reality of many who serve on wages councils is tenuous. Wages councils were formed to protect those who work in small enterprises where at one time union organisation was impracticable. In industries where there are unions a settlement is reached between management and union, but that does not happen in industries which are covered by wages councils.
Wages councils are answerable to nobody — not to employers, to employees, or to this House. Working in their ivory towers, the only jobs that they protect are their own. If they succeed in raising wage levels beyond what the market will bear, employers will be unable to continue profitably in business. Wages councils will harm the ability of employers to provide better working conditions and fringe benefits. They are costly and expensive items in the day-to-day business of any employer.
In any group of people there are variations in ability, self-confidence, application and usefulness to the employer. If the cost of offering work constantly goes up, the less able and useful will suffer. Those who are highly skilled will get the jobs. If wages councils continue in existence, the less able will be permanently barred from having the chance of a job. The abolition of wages councils would not entirely solve our unemployment problem, but would help to solve it. It would bring greater flexibility to the labour market. The wages councils would cease to do a job which ought to be done by the social services.
The abolition of the wages councils would discriminate against women, because a high proportion of women are covered by them. Their abolition would also increase the amount of racial discrimination against the black community. There is also a regional dimension to this problem. The economies of Northern England, Wales and Scotland are already low-wage economies. If it were true that low wages created jobs, the boom areas would be the low-wage economy areas, but that is not the case. The low-wage economy areas are also the high unemployment black spots. Far from employment being created by low wages, unemployment is to be found alongside stagnant wages levels and low productivity.
The Government have not produced figures that show the number of workers who are covered by wages councils in Wales. When I asked the Secretary of State about the number of jobs that would be created by the abolition of the wages councils, he was unable to produce any figures. Eight thousand jobs in Wales could be created over five years. This would be one twelfth of the jobs lost in Wales since 1979. As a proportion, this would produce perhaps 500 jobs in Wales.
The Government's monetarist policies are creating unemployment. The decision to abolish the wages councils is a product of supply side fanaticism, but it is the fall in the aggregate demand in the economy caused by monetarism which is the cause of unemployment. The supply siders believe that the poor and the unemployed cause unemployment by pricing themselves out of jobs and that if the wages councils are abolished wages will be cut and more jobs created. This fantasy is deliberately nurtured by the Government to obscure their intentions.
When we debate the substantive legislation, I hope that this debate will herald a major campaign throughout Britain, particularly in the industrial sectors which already suffer from depressed wage levels and in the regions where for years there have been low-wage, depressed economies. We must mount an effective campaign against these sexist, racist, anti-working class proposals.
I rise to speak in support of wages councils, but perhaps in company that I did not anticipate. I shall still speak in favour of them, but not with the same fervour or with the same views as Opposition Members. The case that could be made in support of them has been overshadowed by strong political rhetoric and by claims that cannot be justified.
At present there are 26 wages councils, which represent about 2·75 million people. However, seven of them represent as many as 2,600,000 people. Thus there are two different types of wages council. A small group of them represent the majority, and many smaller wages councils represent a wide range of other employees. That is why there is a need for reform. Hon. Members should bear in mind that two thirds of the units involved employ fewer than 10 people. Consequently, wages councils, which are very rigid and have many rules, do not give many of the small employers any opportunity to understand their real purpose. I believe that wages councils should be restricted to looking at the basic wages of adult employees and some of their basic conditions.
However, it is too easy to say that all young people have priced themselves out of work. In general, they have not done so. At present, wages councils set the adult rate. Many of the industries that are covered employ people who need comparatively little training before they can achieve a reasonable rate of work. That level is rightly, in some cases, set at 18 or 19 years of age, and that is only sensible.
However, industries gradually change. Demand changes, and consequently there are manufacturing and technological changes which may mean that wages councils have to be more flexible in their approach. However, the argument that young people price themselves out of jobs is no more true than the argument that low wages automatically lead to greater benefits, more jobs. It is true that higher wage rates can price people out of work, but the converse is not automatically true. In some areas, exploitation already exists. Inspectors have already reported on cases of people being underpaid. Sometimes that is accidental, but sometimes it is not. If we remove all regulation, that exploitation will increase —perhaps not greatly but sufficiently.
Many of the 2·75 million people covered by wages councils are already subject to various collective bargaining arrangements within their industries. Thus, fewer than 2·75 million people are genuinely dependent on the results achieved by wages councils. I do not think we can risk removing all such regulation in anticipation of the fact that more competition at the bottom will lead to genuine benefits. When young people have achieved a certain level, they should be paid the rate for the job, but until then they cannot expect anywhere near the full rate. It is productivity that matters. The employer must see a return, because otherwise he will ask himself whether it is worth employing a person at a certain rate. If an employer is not obtaining £62 worth of work, it is not economical for him to pay that rate.
The hon. Gentleman has made several valuable points, but is there not a danger in trying to explain all pay levels by productivity levels? Agriculture is a high productivity industry, but the wage rates are low.
I accept that one cannot pursue that argument to its end. However, the difference between employing and not employing people must depend to some extent on how much work is done. For example, in the case of certain shop jobs, there must be a time when people are not fully employed as otherwise they could not be brought in to deal with big queues.
I support wages councils. I hope that they will not be abolished and that we shall continue to give them a valuable role to play. However, there is a tremendous need for them to be reformed. Much of the bureaucracy that goes with them is not acceptable to many small businesses. The value of wages councils is not recognised, so they are not used and therefore they cannot help the people whom they are there to protect. The most worthwile thing that we do is reform the councils, streamline them, make them more efficient and reduce the bureaucracy while keeping the basic regulations of protection for the ordinary working people.
This debate arises out of what was described by the Chancellor of the Exchequer as a Budget for jobs. In reality, the purpose of the measure, announced in that Budget, of which the abolition, or changing the structure, of wages councils is but one, was to provide a sweatshop Budget, designed to produce low wages. That is in line with the Tory Government's philosophy. Over the past six years, they have used mass unemployment in an attempt to cower the trade union movement, to limit wage rises and to reduce the direct and indirect wages paid to working people.
The employers and the industrialists whom the Tory Government represent, having failed to invest in new machinery in the past 30 years, and having realised that they have lost world markets and are now losing their share of the domestic markets whether in fridges, vehicles, televisions, radios or textiles, are cutting the share of wealth that goes to working people to restore or enhance their profit levels. They are cutting direct wages or, through the Government, cutting the social wages of education, housing and other social services. The threat is now extended to the wages councils.
The wages councils cover almost 3 million workers in shops, hairdressing, clothing, catering and hotels. Significantly, despite what Tory Members have said, the wages councils do not cover manufacturing or the export industry. Therefore, the Tory Government's logic—that cutting wages for those covered by wages councils will help the British capitalist economy—is spurious. It will only increase the number of workers who have to survive on poverty wages.
That 3 million is part of an army of 8·5 million workers living on or below the poverty line. One third of the workforce is living on a financial tightrope and the abolition of the wage councils would shred it. We are talking about wages of £60 or £70 a week. How can Tory Members understand what it is like to live on such a wage when for many of them it is the price of a week's gin and tonics in the Bar or Banqueting Rooms?
The Tories have argued in this debate and elsewhere that the wages councils price workers out of jobs. We have had that tonight from a Member of Parliament who has seven jobs. Where is his evidence? In the past 10 years, wages council rates as a percentage of average wages have fallen from 73 per cent. to 65 per cent., but unemployment has rocketed. Tory Ministers and the Secretary of State have argued that YTS youngsters on £26 a week, hairdressers on £45 a week, check-out lasses and lads on £69 a week are getting too much.
If high wage increases automatically lead to a destruction of jobs, why is there no condemnation from the Tory party of the chairman of ICI, who took a 63 per cent. increase in his wages last year? The Financial Times commented that, compared with some company chairmen, he is a pauper. He is on only £171,000 a year—£3,300 a week. Why is there no condemnation for the chairman of the British Oxygen Company, on £13,000 a week for selling fresh air? Why is there no condemnation of Cabinet Ministers, who gave themselves a 9.4 per cent. increase last year or of company directors with an 11 per cent. increase?
Under the Tory Government, the number of millionaires has doubled to over 8,000. Over 1 million people now earn over £20,000 a year. How many jobs of ordinary working people have been destroyed by those high salaries? According to the register of Members' interests, many Tory Members cannot survive on the salary for an MP. They have to have five, 10 or 15 jobs. The argument that wages of £60 or £70 per week authorised by wages councils destroy jobs is obviously rubbish in the light of what some Tory Members are getting. The argument of the Tories could be summed up by saying that the poor are not yet poor enough for unemployment to fall and the rich are not yet rich enough for investment in industry to take place.
Because of the time, I am not giving way.
We on these Benches oppose the abolition of wages councils because the Labour party is against low pay. I have a private Member's Bill before the House which expresses TUC and Labour party policy. I hope that it will be implemented speedily by the next Labour Government to provide a national minimum wage for £ 115 per week for all workers for a maximum 35 hour week; that wage would start at the age of 18. There should be a pro rata wage for part-timers and increases should be linked to inflation. For 16-year-olds the rate should be 75 per cent. of the adult rate and for 17-year-olds it should be 85 per cent. For those in Government training schemes, no one should receive less than the £55 per week that a trade union member would get.
We are arguing not just against the abolition of wages councils but in favour of a campaign by the trade union movement to get the 3 million workers covered by wages councils into trade union membership so that we may fight for the enhancement of their conditions.
Wages councils are by no means perfect. In 1983 the wages council inspectors visited 23,000 work places. In 9,000 cases employees were being illegally underpaid, but there were only seven prosecutions. In 1984 there were two prosecutions. We have in government the so-called party of law and order, the Tory party. When the Tory Government see evidence of massive avoidance of the law in regard to the payment of wages, do they strengthen the wages inspectorate? No; they cut its number by one third. Do they give the inspectors more tools to do their job? No; they restrict their activities by reducing the miles they are allowed to travel. They change the law to allow their friends off the hook.
If wages councils were to be abolished, it would be a direct attack on women and young workers. Four fifths of all workers covered by wages councils are women, and one in five of all young workers are covered. The Secretary of State said that wages councils price young people out of jobs. Even the consultative document on which the debate arises says:
there is a growing body of evidence that the employment prospects of young people are adversely affected by the level of their pay relative to adults.
What evidence exists for that? Youth wages have fallen sharply over the last six years. Relative to adult rates,
wages for boys are 8 per cent. lower and for girls 12 per cent. lower than they were five years ago. Yet youth unemployment has trebled.
What sort of conditions are the young people working in? Just under two weeks ago I had an article in a magazine called "Just 17". As a result of that article over 80 girls aged 16 to 20 have written to tell me about their employers.[Interruption.]That seems to provoke laughter on the Tory Benches. I heard about a 19-year-old in the Black Country who is working for a stockbroker who no doubt has many friends on the Tory Benches. She is working from 9 am to 5·15 pm. During the three months she was training she received £30 per week. Now she has been taken on permanently at £32·50 per week.
I heard from another young girl who was lured to Devon to work in a shop by a bloke who promised her a flat and wages of £50 per week plus commission. Now she finds that she is working seven days a week from 10 in the morning until 9 at night. For all those hours she gets. £10 per week plus her board. She is to get commission only if the shop takes over £400 per week, but while she has been there the takings have never been more than £200 per week. I heard from another young girl in Rhyl in Clwyd who is working alongside someone who receives £78·50 per week as a typist; she is on YTS and is getting £26·50 for doing the same job.
Have those wage rates created massive increases in new jobs for young people, as the Tories have said tonight and in previous arguments? Earlier today in business questions, I gave some figures showing the true picture of youth unemployment now. Fourty-six per cent. of all England's careers offices have 10 or fewer vacancies for this year's school leavers. Ninety-four per cent. of Scottish careers offices and 95 per cent. of Welsh careers offices have 10 or fewer vacancies. Five hundred and seventeen thousand people will leave school this summer. Fifty-one careers offices do not have a single job available. Another 36 have only one job. Those 517,000 school leavers are chasing 12,355 vacancies—42 kids to every vacancy. In England the figure is 37 to one, in Wales it is 129 to one and in Scotland it is 144 to one.
In only two places in Wales, Cardiff and Shotton, are there more than 10 jobs for the school leavers. Some 40 offices in Wales have fewer than 10 vacancies. In only five places in Scotland are there more than 10 jobs for school leavers. The statistics go on and on.
My hon. Friend is absolutely correct. In Wales, Brecon is one of the four offices with 10 or more vacancies. It just gets itself into double figures for the hundreds, if not thousands, of school leavers chasing those vacancies.
The British capitalist economy under this Tory Government is in tatters. Some 5 million people are denied the right to a job. Some 6 million live in damp houses and 8.5 million live on poverty wages. The Government come forward with the idea of reducing the wages of people on £60 or £70 a week, claiming that there is not enough money in the economy to pay decent wage rates. Under this Government, over £50,000 million has left this country in the past four or five years and gone to the real low-wage economies of South Africa, Korea, Brazil and Argentina, where the wage rates are kept low at the barrel of a gun often of a military police dictatorship. That is what is at the back of the minds of some Tory Members. They want to emulate the wage rates and conditions in Singapore, Bangkok or Bangladesh to compete with the textile manufacturers of those far eastern countries, affecting the young workers and women in those industries in this country.
We are against the abolition of wages councils. We are even more interested in getting rid of this Tory Government and giving every worker a more decent week's wage for his job than he receives now.
Few hon. Members can have a constituency with more workers who are under the auspices of wages councils than mine. In Bournemouth, many workers are in the leisure, hotel, catering and retail industries. In fact, they are the backbone of employment in that town. Since I was elected I have been inundated with complaints about wages councils, and nearly all the employers in my constituency would like to see them abolished.
It was not unnatural that I approached the matter with that view. There is no doubt that if we were to abolish wages councils there would be a considerable improvement in employment. Indeed, all the academic studies that I have seen show that to be the case.
I shall tell the hon. Gentleman which ones. The study giving the lowest figure comes from Henry Neuburger, who I believe is employed by the Labour party. In the Low Pay Unit report of 1984 he suggested that here would be 8,000 new jobs if the wages councils were abolished. The highest figure that I have seen is in the study by Dr. Stanley Siebert who suggested in 1985 that there would be 230,000 more jobs. A study by the Department of Employment last month suggested that there would be 50,000 more jobs. I do not know which of those figures is right.
No, I do not have time to give way. Whichever figure is correct, surely those jobs are worth having. There has been an enormous volume of representation to the Government and also to me because I have taken a particular interest in this as secretary of my party's sub-committee on tourism. Many employers, the Institute of Directors, the National Federation of Self-Employed and Small Businesses and the CBI have all made representations urging us to proceed with abolition. The hon. Member for Truro (Mr. Penhaligon) said that the CBI did not favour abolition, but its parliamentary brief for this debate states in capital letters:
Each wages council should be abolished unless employers make a substantial case for its continuation.
Many other employers have suggested reform rather than abolition, including the Institute of Personnel Management, ACAS and the National Chamber of Trade. The Auld committee, too, recommended reform rather than abolition. Given the differing views, the Government are right to say that there should be a considerable period of consultation before any decision is made.
If wages councils are retained, there must be substantial reforms.
The hon. Member for Truro referred to the ridiculous position of young workers. Young and inexperienced people are automatically paid the same as more experienced workers. That is not the situation in Holland, Denmark or Germany. Protection for young workers should be either abolished or subject to graduated stages up to the age of, say, 23 as in Holland.
I am also concerned about the rules for Sunday working. If, as it seems, we are to proceed with Sunday trading there will be considerable problems, as there are already in Scotland. It is ludicrous to insist on payment at double time for Sunday working. If there is any differential at all, it should not be more than time and a half for Sunday working.
There is also considerable concern about the independent members of the councils. That, too, must be urgently considered if reform is to take place.
The scope of the wages councils should be strictly limited to minimum wage levels. Very small firms with, say, fewer than five members should be excluded. Larger firms with existing trade union agreements or satisfactory collective bargaining agreements of other kinds should be allowed to come out of wages councils because they are adequately protected already.
To do all that, it may be necessary to repudiate ILO convention No. 26. If that is necessary, the Government should do so.
As my hon. Friend the Member for Truro (Mr. Penhaligon) and others have said, two options were placed before us in the Government's consultative document. They are that we should abolish the wages councils, as stated in the Chancellor of the Exchequer's Budget speech, or that we should reform them. No hon. Member who believes that wages councils have an important part to play, as I and my right hon. and hon. Friends do, would deny that progressive action for reform would be welcome. The right hon. and learned Member for Monklands, East (Mr. Smith), in a debate on 15 February 1984, said, on behalf of the Labour party, that wages councils should be changed in some respects.
There are many ways in which the effect of the wages councils could be strengthened, and perhaps some of the worst aspects of what they do to small businesses could be limited. Assistance could be channelled more effectively towards the most vulnerable. The observance of statutory minimum rates could be better policed. We could encourage more dialogue between both sides who sit on the councils, and it may be essential to lessen the burdens placed on small firms by the wages councils. For instance, the time lag between giving decisions and their being implemented could be shortened.
If the Government produced a genuine package of reforms aimed at some or all of those objectives, we would have to consider them constructively. But the central issue is either abolition or emasculation in the guise of reform. Wages councils are not necessarily the best way to protect the low-paid, but there is no doubt about the need for some mechanism for such protection. At present, the wages councils are all that we have.
The abolition of wages councils would be an act of pure ideology unsupported by the facts now available to us. We have heard arguments from the Secretary of State and from Conservative Members that their abolition or emasculation would increase employment. But where is the evidence for that? The largest industry covered by a wages council— the clothing industry — together with the retailing and catering industries, represent 90·3 per cent. of all employees who are protected by wages councils. Between 1950 and the late 1970s, wages in the clothing industry decreased by 20 per cent. compared with average wages, and at the same time employment was halved. There is no evidence that a reduction in wages causes increased employment. In the other direction, I note that a 1982 report from the Ministry of Agriculture, Fisheries and Food stated that increases in average earnings appeared in that industry
to have increased both demand for and supply of labour, hence employment.
The Department of Employment's in-house employment market research unit has produced evidence that points in the other direction, but, as the hon. Member for Birmingham, Ladywood (Ms. Short) said, the Low Pay Unit has completely discredited that research. It employed many unscientific statistics for its conclusions, and even included the footwear industry, which is not covered by a wages council. Many believe that that research was slanted to support some previously chosen prejudices.
The matter is brought into clear relief by the Government, whose senior members seem completely unconvinced of the fact that the abolition of the wages councils will have no effect on employment. One need look no further than the speech made in April 1984 by the chairman of the Conservative party. He said:
It is not possible to estimate in any precise way how employment might be affected if wages councils were abolished. — [Official Report, 11 April 1984; Vol. 58, c. 255.]
There we have it. There is the admission that the Government at the most senior level are not convinced that the abolition of the wages councils would have any effect on employment. Clearly revealed in that statement is the idea that this has been done for ideological purposes.
If the wages councils go, we shall see the end of organisations which provide safeguards for 2·7 million people. In no sense can it be said that they provide high wages. In some areas—for example, hairdressing—the rates are as low as £1·18 per hour. Such wages are set at 25 per cent. of average earnings. Can it really be countenanced that those wages should be allowed to fall even lower? Is it really proposed that, with benefit to the economy and without exploitation of the people concerned, such wages should fall lower than that level?
If one extrapolates the 1983 checking figures, it can be seen that there may be as many as 170,000 people who are underpaid. It will also be discovered from the 1983 survey that the amounts of underpayment are not insignificant. Indeed, it appears that on average each employee was underpaid by about £118.
We would lose a structure which all too inadequately limits exploitation. Do the Government say that there is no wage exploitation? Surely they cannot be so blind. If wages councils are abolished, how will they safeguard those who are vulnerable to low wage exploitation, or do they intend that there should be no such safeguards— that they do not intend to safeguard the wages of those earning as little as £1·18 an hour? As my hon. Friend the Member for Truro said, do they intend to abandon a safeguard which as a civilised society we have accepted for nigh on 80 years? Is that what they mean by returning to Victorian values and Victorian practices?
There is no doubt that wages councils perform an important function. They are part of a civilised society. They safeguard the wages of those who are vulnerable to wage exploitation. They provide a mechanism which protects employers as well as employees from unfair competition based on wage undercutting. That is undoubtedly one of the reasons why many employers welcome their existence. They provide a framework within which orderly industrial relations and a voluntary collective bargaining system can operate.
There is no evidence that the abolition or the emasculation of wages councils would produce anything but the most insignificant increase in employment. Is the questionable gaining of that worth so much sacrifice? The answer must be, "No". If the Government go for such substantial reform as will further weaken the powers and effectiveness of the wages councils, we shall see the triumph of prejudice over the facts, the triumph of dogma over compassion and the triumph of ideology over common sense and common humanity. Let the Government now announce that they do not intend either the abolition or the emasculation of the wages councils. If they fail to do so, let those Conservative Members who believe that wages councils have a part to play—I know that there are some—vote for our motion tonight.
We have had a debate in which the arguments for and against wages councils have been wide ranging, and the strong feelings on both sides of the House about this issue have been put on the record. However, one voice has been notable by its absence. When I picked up the Daily Telegraph this morning—which I do not normally do with any great enthusiasm—I was pleased to find that the Conservative Centre Forward group had chosen its four priority issues which it intends to press in the House over the coming months. They are unemployment, the reform of the welfare state, the financing and organisation of local government, and the future of wages councils. The House will confirm that, despite that announcement, not one voice from that group has defended wages councils today.
Another group, which might have been associated with the Centre Forward group, has also been missing today —the majority of those who supported the Employment Select Committee's report which recommended that wages councils should be supported. Three of the four members of that Committee who voted for the report are Conservatives. Unfortunately, we have had no speech supporting the Committee's report from the hon. Member for Banbury (Mr. Baldry), the hon. Member for Cornwall, North (Mr. Neale) or the hon. Member for Bat)ey and Spen (Mrs. Peacock). We shall be interested to see whether they support their views later today.
It is most regrettable that those voices have been absent from the debate.
The Government have brought wages councils into the firing line because of their desire to divert attention away from the failure of their other policies on unemployment. They have tried to give the impression that abolition of wages councils will in some way which has not been proved today or elsewhere overcome unemployment. Indeed, they have tried to give the impression that the very existence of wages councils is a major reason for high unemployment. One need only consider the activities covered by wages councils to see what palpable nonsense that is.
Two thirds of employees covered by wages councils work part-time and four fifths of them are female. The majority are covered by just six wages councils concerned with hairdressing, hotels, restaurants and the retail trades. The Secretary of State and his colleagues constantly tell us they are areas of expanding employment and, in many cases, increased efficiency and considerable success. Indeed, all the forecasts suggest that they will continue to prosper. One can hardly suggest that restaurants and retail trades are not expanding or that they are being restrained by wages councils. We have only to consider the extension of chains such as McDonalds, ASDA and Sainsburys to see that activity is not restrained by wages councils.
It is unfortunate that, in the Budget, the Government tried to parade wages councils as one of the causes of high unemployment and suggested that their abolition would reduce unemployment. We have had a useful discussion about the reform of wages councils. Some useful reforms on simplification and on the pay structure laid down by the wages councils could be introduced. We accept that, but unfortunately the debate has not predominantly been about that. The Select Committee members examined this aspect as dispassionately as we would expect. There is no clear evidence to support the employment claims put forward by those who advocate abolition.
Various pieces of evidence have been bandied about. For every piece of evidence that demonstrates that employment increases if wages councils are abolished, there is another to show the opposite.
Much of that evidence is anecdotal. The report on clothing also dealt with the footwear industry, which is not covered by a wages council. Conservative Members should refer to the hon. Member for Macclesfield (Mr. Winterton) who, for many years, has argued for the textile industry as vociferously as anyone. The wages councils have not been the cause of the problems in the clothing industry. Management, lack of investment, poor marketing, design and product development and international trade have affected the industry. The Labour Government and the present Government have been criticised by hon. Members on both sides of the House for not acting more stringently to protect our home industry from unfair imports. Those factors have given rise to the loss of employment in the clothing industry much more than the marginal effect of wages councils.
Hon. Members cannot rest upon that case to claim that wages councils should be abolished. No case has been proved during this debate or in evidence to the Select Committee showing that there is an employment case for abolishing the wages councils. The overwhelming case for the retention of the wages councils is based on the argument for equity and for protecting the most vulnerable people within our society.
What do the Government seek to do in relation to pay? In recent years, one of the divides between the two sides of the House — all Opposition parties and the Government — has concerned pay and productivity. Members on the Government Benches seem hell-bent on bringing about a low-pay, low-productivity economy, whereas Members on the Labour and alliance Benches want a high-pay, high-productivity economy, which they know is the only solution to our long-term problems and the only hope of beating overseas competition and having low unemployment in the future. The two major industrial countries that have succeeded so much where we have failed are Germany and Japan. In Japan especially pay and productivity have been rapidly increasing. The Japanese have succeeded in beating the competition and, therefore, in keeping unemployment low.
I cannot give way, because my time is limited. Instead of aiming for the type of economy that exists in Germany and Japan, the Government seem hell-bent on going for a low-pay economy and competing with economies that have low technology, low skill and low education bases. I am sure that the Opposition agree that that is not the direction in which we should move.
The Government are at their weakest in their response to the case for protecting the most vulnerable people— workers who are earning very low rates of pay, between £65 and £72 a week. In some trades such as hairdressing, wages are even lower than that. Those are not the sort of people who are causing problems to the British economy. They are the sort of people who need the protection of this House to ensure that their standards of living are not curtailed even further.
As hon. Members on both sides have said, it is interesting that the wages councils make a contribution to industrial relations. If there is not a collective bargaining system in an industry, the wages councils system provides a framework for an orderly determination of wages and conditions that would otherwise not exist. As the Select Committee pointed out, if the wages councils were abolished, that orderliness would go, and the consequent competition, wage cutting, and worsening in the conditions of workers would be very damaging to industry as a whole and not only to the workers.
Therefore, there is an overwhelming case for retaining the wages councils, albeit with some of the reforms to which my right hon. Friend the Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel) referred when he opened the debate. I hope that, despite the lack of speeches from those Conservative Members who believe that the wages councils should be retained, the Secretary of State will be able to tell the House that, in taking note of the weight of arguments in the debate, he is prepared to give us an early decision that the wages councils will be maintained.
I believe that the Government's policy towards the wages councils is a pathetic and dishonest attempt to divert attention from the failure of their other policies. Today's high unemployment is caused not by the levels of wages but by the lack of demand within the economy. We made that quite clear to the Government in the Budget debates and in other economic debates in this House.
More and more people are coming to realise that the only way in which we shall be able to cut unemployment is not by tinkering around with bodies such as the wages councils, or with the rates of pay of the lowest paid members of our community, but by changing the Government's economic strategy.
Ministers must not suggest that by dealing with the so-called problem of wages councils they will be able significantly to reduce unemployment from 3¼ million. It has been suggested that the maximum number of people who could be employed as a result of the abolition of the wages councils would be 25,000. That would hardly make any impact on the problem of unemployment, even if that figure could be attained. There is conflicting evidence on that figure in the Select Committee report, and 25,000 is the highest figure that I have seen. It is much more realistic to suggest that, if all the wages councils were abolished, it might result in creating about 8,000 jobs. That has been the number of jobs lost month by month as a result of the Government's economic policies. Why are we wasting all this time, effort and money in investigating the future of the wages councils when the number of jobs that might be created, if the councils were abolished, is so small and puny and would make so little impact on unemployment?
What we are witnessing is a charade in an attempt to divert attention from the high level of unemployment and its true cause—the Government's economic policies. If the Secretary of State were to announce tonight a change in the Government's policy towards the wages councils, he would get much more support than he is likely to get in the Lobbies.
With the leave of the House, I will respond to the points that have been made in this short debate.
I said in my opening remarks that I appreciated the House having an opportunity to discuss this subject because the consultation period had just ended in terms of the formal public consultation. I said that we had received 667 responses from a range of organisations and individuals. I am, therefore, grateful for the opportunity that has been afforded for hon. Members to make their contributions as well.
Will the right hon. Gentleman now answer the question that I asked earlier? Are there any objections or support for his view in the representations that he has received?
The consultation paper suggested two alternatives, abolition or reform, and I assure the right hon. Gentleman, as I said in my opening remarks, that there was support for both possibilities.
It would be wrong of me not to say that I have received from some employers' bodies strong arguments for the retention of wages councils. Those bodies have included the Federation of Merchant Tailors, and I feel that I should put that on the record early in my contribution.
The House will have noticed the vigour with which the debate has been conducted and I am under no illusions about the strength of feeling that exists in quarters of the House on this matter. There is a real difference of view. There are those who hold strong views about the present pattern of wages councils, covering an erratic series of shops in the high street. Earlier, I challenged any hon. Member to walk with me down a high street and be able to speak with certainty about which shops were and were not covered by the existing wages councils provisions. That point was clearly recognised by the hon. Member for Truro (Mr. Penhaligon).
If I were to take a theme that has carried certain common ground across the Chamber, it would be that there is, without doubt, room for action. The hon. Member for Yeovil (Mr. Ashdown), part of whose speech I missed, referred to the case for sensible reform. The case for reform undoubtedly exists, and we start from that common ground.
I cannot say that I am absolutely sure about the position of certain Labour Members, least of all those on the Labour Front Bench, who would oppose almost any change in any situation, no matter how obvious the case for it. In this situation, however, we have established a case at least for reform, and the argument that we now face is whether it should be reform or abolition.
I am sorry that the hon. Member for Birmingham, Ladywood (Ms. Short) is not at present in her place. She referred to a leaked document and she seemed to chase every story on the subject. She referred to the obvious fact that there had been a leaked document on the pressures from senior civil servants unhappy with the policy. That was an unfortunate phrase for her to use. She is in a▪ position to know—because the person concerned is with an organisation with which she is connected—that a document has been removed from my Department.
Sadly, it meant the end of the career of a young junior civil servant because he leaked the document of a senior civil servant, in this case the permanent secretary. I say that only in sorrow, and Opposition Members who gloat with great delight about leaked documents must have regard—[Interruption.] This applies particularly to the Labour Member who has aspirations to be in government. He should not gloat too much about the readiness of civil servants to hand out Government documents. If that hon. Member were in a different situation he might not think that to be in the best interests of Government organisation.
My hon. Friend the Member for Bolton, North-East (Mr. Thurnham) was a member of the Select Committee and issued a minority report. He made his arguments clear to the House. The hon. Member for Ladywood promised that her party would fight the proposal all the way. but she cannot bear to be here for the closing speeches. I am sure that there is a reasonable explanation for her absence. I see that she has returned. She makes a late return to the battlefield and we are delighted to welcome her back. Not a single Labour Member of the Select Committee took part in the debate tonight.
My hon. Friend the Member for Bolton, North␣East emphasised the heart of the issue — employment and jobs. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) made it clear that even the Leader of the Opposition's advisers accepted that extra jobs will result. One can argue about how many extra jobs. That is important, but the key question is about the level of protection—if that protection is necessary for those in work—and about what impact it will have on preventing those out of work from having the chance of a job. Those issues are at the heart of the matter.
My hon. Friend the Member for Bolton, North-East also raised another matter which I am sure that the House will consider further. He asked what was the relevance of such a form of wage protection in a society in which there might be family credit or some other form of family income support.
I sought earlier to explain the different criteria against which the original trade boards were established and the different categories involved — the long hours and the insanitary nature of the working conditions. They are two of the three criteria on which the trade boards and the wages councils were established. The criteria are dealt with in different legislation and protected in different ways.
I have listened to most of the debate. I shall study all the contributions. After the extensive consultation we shall reach decisions, not because of the vote tonight, but by giving serious consideration to representations. I do not intend to dismiss with contempt, as the motion invites, the 667 responses. They deserve serious consideration.
The Government's amendment makes clear that those representations, with those from hon. Members, from the Select Committee and from the minority report by my hon. Friend the Member for Bolton, North-East, will be seriously considered. I commend the amendment to the House.
|Division No. 231]||[10 pm|
|Abse, Leo||Clark, Dr David (S Shields)|
|Alton, David||Clarke, Thomas|
|Anderson, Donald||Clay, Robert|
|Archer, Rt Hon Peter||Clwyd, Mrs Ann|
|Ashdown, Paddy||Cocks, Rt Hon M. (Bristol S.)|
|Ashley, Rt Hon Jack||Cohen, Harry|
|Atkinson, N. (Tottenham)||Coleman, Donald|
|Banks, Tony (Newham NW)||Concannon, Rt Hon J. D.|
|Barnett, Guy||Conlan, Bernard|
|Barron, Kevin||Cook, Frank (Stockton North)|
|Beckett, Mrs Margaret||Cook, Robin F. (Livingston)|
|Beith, A. J.||Corbett, Robin|
|Bell, Stuart||Cowans, Harry|
|Benn, Tony||Cox, Thomas (Tooting)|
|Bennett, A. (Dent'n & Red'sh)||Craigen, J. M.|
|Bermingham, Gerald||Cunliffe, Lawrence|
|Blair, Anthony||Cunningham, Dr John|
|Boyes, Roland||Dalyell, Tam|
|Bray, Dr Jeremy||Davis, Terry (B'ham, H'ge H'l)|
|Brown, Gordon (D'f'mline E)||Dewar, Donald|
|Brown, Hugh D. (Provan)||Dobson, Frank|
|Brown, N. (N'c'tle—u—Tyne E)||Dormand, Jack|
|Bruce, Malcolm||Dubs, Alfred|
|Buchan, Norman||Dunwoody, Hon Mrs G.|
|Callaghan, Rt Hon J.||Eadie, Alex|
|Callaghan, Jim (Heyw'd & M)||Edwards, Bob (W'h'mpt'n SE)|
|Campbell—Savours, Dale||Evans, John (St. Helens N)|
|Canavan, Dennis||Fatchett, Derek|
|Carlile, Alexander (Montg'y)||Faulds, Andrew|
|Field, Frank (Birkenhead)||Mikardo, Ian|
|Fields, T. (L'pool Broad Gn)||Millan, Rt Hon Bruce|
|Foot, Rt Hon Michael||Morris, Rt Hon J. (Aberavon)|
|Forrester, John||Nellist, David|
|Foster, Derek||Oakes, Rt Hon Gordon|
|Foulkes, George||O'Brien, William|
|Fraser, J. (Norwood)||O'Neill, Martin|
|Freeson, Rt Hon Reginald||Paisley, Rev Ian|
|Freud, Clement||Patchett, Terry|
|Hamilton, James (M'well N)||Pavitt, Laurie|
|Hamilton, W. W. (Central Fife)||Penhaligon, David|
|Hancock, Mr. Michael||Pike, Peter|
|Hardy, Peter||Powell, Raymond (Ogmore)|
|Harman, Ms Harriet||Prescott, John|
|Harrison, Rt Hon Walter||Randall, Stuart|
|Hart, Rt Hon Dame Judith||Rees, Rt Hon M. (Leeds S)|
|Haynes, Frank||Richardson, Ms Jo|
|Heffer, Eric S.||Roberts, Ernest (Hackney N)|
|Hogg, N. (C'nauld & Kilsyth)||Robertson, George|
|Holland, Stuart (Vauxhall)||Robinson, G. (Coventry NW)|
|Home Robertson, John||Rowlands, Ted|
|Howells, Geraint||Sheerman, Barry|
|Hoyle, Douglas||Shore, Rt Hon Peter|
|Hughes, Roy (Newport East)||Short, Ms Clare (Ladywood)|
|Hughes, Sean (Knowsley S)||Silkin, Rt Hon J.|
|Hughes, Simon (Southwark)||Skinner, Dennis|
|Hume, John||Smith, Cyril (Rochdale)|
|Janner, Hon Greville||Snape, Peter|
|Jenkins, Rt Hon Roy (Hillh'd)||Soley, Clive|
|John, Brynmor||Spearing, Nigel|
|Kaufman, Rt Hon Gerald||Stewart, Rt Hon D. (W Isles)|
|Kennedy, Charles||Strang, Gavin|
|Kilroy—Silk, Robert||Straw, Jack|
|Lamond, James||Thomas, Dafydd (Merioneth)|
|Leadbitter, Ted||Thompson, J. (Wansbeck)|
|Lewis, Terence (Worsley)||Tinn, James|
|Lloyd, Tony (Stretford)||Torney, Tom|
|Lofthouse, Geoffrey||Wardell, Gareth (Gower)|
|McCrea, Rev William||Wareing, Robert|
|McDonald, Dr Oonagh||Weetch, Ken|
|McKay, Allen (Penistone)||Welsh, Michael|
|McKelvey, William||Wigley, Dafydd|
|MacKenzie, Rt Hon Gregor||Williams, Rt Hon A.|
|McTaggart, Robert||Wilson, Gordon|
|Madden, Max||Woodall, Alec|
|Marek, Dr John||Wrigglesworth, Ian|
|Marshall, David (Shettleston)|
|Martin, Michael||Tellers for the Ayes:|
|Maxton, John||Mr. John Cartwright and|
|Maynard, Miss Joan||Mr. Michael Meadowcroft.|
|Aitken, Jonathan||Butcher, John|
|Alexander, Richard||Butler, Hon Adam|
|Alison, Rt Hon Michael||Butterfill, John|
|Amess, David||Carlisle, John (N Luton)|
|Ancram, Michael||Carlisle, Kenneth (Lincoln)|
|Arnold, Tom||Cash, William|
|Ashby, David||Chalker, Mrs Lynda|
|Baker, Nicholas (N Dorset)||Channon, Rt Hon Paul|
|Batiste, Spencer||Chope, Christopher|
|Bellingham, Henry||Clark, Hon A. (Plym'th S'n)|
|Bendall, Vivian||Clark, Dr Michael (Rochford)|
|Benyon, William||Colvin, Michael|
|Biffen, Rt Hon John||Conway, Derek|
|Biggs—Davison, Sir John||Coombs, Simon|
|Blackburn, John||Cranborne, Viscount|
|Blaker, Rt Hon Sir Peter||Crouch, David|
|Boscawen, Hon Robert||Currie, Mrs Edwina|
|Bottomley, Mrs Virginia||Dickens, Geoffrey|
|Bowden, A. (Brighton K'to'n)||Dorrell, Stephen|
|Bowden, Gerald (Dulwich)||Douglas—Hamilton, Lord J.|
|Bright, Graham||Dunn, Robert|
|Brinton, Tim||Durant, Tony|
|Brittan, Rt Hon Leon||Edwards, Rt Hon N. (P'broke)|
|Brown, M. (Brigg & Cl'thpes)||Eggar, Tim|
|Bruinvels, Peter||Evennett, David|
|Buck, Sir Antony||Fairbairn, Nicholas|
|Burt, Alistair||Fallon, Michael|
|Fletcher, Alexander||Hunt, David (Wirral)|
|Fookes, Miss Janet||Hunt, John (Ravensbourne)|
|Forsyth, Michael (Stir/ing)||Hunter, Andrew|
|Forth, Eric||Jackson, Robert|
|Fox, Marcus||Jessel, Toby|
|Franks, Cecil||Johnson Smith, Sir Geoffrey|
|Fraser, Peter (Angus East)||Jones, Gwilym (Cardiff N)|
|Freeman, Roger||Kellett—Bowman, Mrs Elaine|
|Gale, Roger||King, Rt Hon Tom|
|Galley, Roy||Knight, Gregory (Derby N)|
|Gardiner, George (Reigate)||Knight, Mrs Jill (Edgbaston)|
|Garel—Jones, Tristan||Lamont, Norman|
|Glyn, DrAlan||Latham, Michael|
|Goodhart, Sir Philip||Lawler, Geoffrey|
|Gorst, John||Lawrence, Ivan|
|Gow, Ian||Lawson, Rt Hon Nigel|
|Greenway, Harry||Lee, John (Pendle)|
|Gregory, Conal||Lennox—Boyd, Hon Mark|
|Griffiths, Peter (Portsm'th N)||Lester, Jim|
|Ground, Patrick||Lilley, Peter|
|Hamilton, Hon A. (Epsom)||Lloyd, Ian (Havant)|
|Hamilton, Neil (Tatton)||Lloyd, Peter, (Fareham)|
|Hampson, Dr Keith||Luce, Richard|
|Hanley, Jeremy||Lyell, Nicholas|
|Hannam, John||McCrindle, Robert|
|Hargreaves, Kenneth||MacKay, Andrew (Berkshire)|
|Harris, David||MacKay, John (Argyll & Bute)|
|Harvey, Robert||Major, John|
|Haselhurst, Alan||Maples, John|
|Hawkins, Sir Paul (SW N'folk)||Marlow, Antony|
|Hawksley, Warren||Mather, Carol|
|Hayes, J.||Mawhinney, Dr Brian|
|Hayward, Robert||Maxwell—Hyslop, Robin|
|Heddle, John||Moate, Roger|
|Henderson, Barry||Moore, John|
|Heseltine, Rt Hon Michael||Morrison, Hon P. (Chester)|
|Hind, Kenneth||Murphy, Christopher|
|Hirst, Michael||Newton, Tony|
|Hogg, Hon Douglas (Gr'th'm)||Page, Richard (Herts SW)|
|Holland, Sir Philip (Gedling)||Percival, Rt Hon Sir Ian|
|Holt, Richard||Pollock, Alexander|
|Howarth, Alan (Stratf'd—on—A)||Powell, William (Corby)|
|Howarth, Gerald (Cannock)||Powley, John|
|Hubbard—Miles, Peter||Roe, Mrs Marion|
|Ross, Wm. (Londonderry)||Thompson, Patrick (N'ich N)|
|Rumbold, Mrs Angela||Thornton, Malcolm|
|Ryder, Richard||Thurnham, Peter|
|Sackville, Hon Thomas||Townsend, Cyril D. (B heath)|
|Sainsbury, Hon Timothy||Tracey, Richard|
|Sayeed, Jonathan||Twinn, Dr Ian|
|Shaw, Sir Michael (Scarb')||Vaughan, Sir Gerard|
|Shelton, William (Streatham)||Viggers, Peter|
|Shepherd, Colin (Hereford)||Waddington, David|
|Shepherd, Richard (Aldridge)||Walden, George|
|Sims, Roger||Walker, Bill (T'side N)|
|Skeet, T. H. H.||Waller, Gary|
|Spencer, Derek||Ward, John|
|Spicer, Jim (W Dorset)||Wardle, C. (Bexhill)|
|StanbroOk, Ivor||Warren, Kenneth|
|Steen, Anthony||Watson, John|
|Stern, Michael||Watts, John|
|Stevens, Lewis (Nuneaton)||Wells, Bowen (Hertford)|
|Stevens, Martin (Fulham)||Wheeler, John|
|Stewart, Andrew (Sherwood)||Wiggin, Jerry|
|Stewart, Ian (N Hertf'dshire)||Wolfson, Mark|
|Stradling Thomas, J.||Wood, Timothy|
|Sumberg, David||Yeo, Tim|
|Taylor, John (Solihull)||Young, Sir George (Acton)|
|Taylor, Teddy (S'end E)|
|Terlezki, Stefan||Tellers for the Noes:|
|Thomas, Rt Hon Peter||Mr. Ian Lang and|
That this House notes that the period for consultation on the consultative document on wages councils is only just ending and representations are still being received; and asks the Government to take into account the views of the Employment Committee, together with the very many other responses from interested organisations and individuals. '.