National Minimum Wage

– in the House of Commons at 3:30 pm on 5 March 2001.

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Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry 3:30, 5 March 2001

With permission, Mr. Speaker, I would like to make a statement on the national minimum wage.

As the House will know, in June last year I asked the independent Low Pay Commission to produce a further report on the national minimum wage by July of this year. In particular, the commission was asked to consider whether there was a case for increasing the rate of the minimum wage. In considering any increase, it was required to take into account movements in earnings, the effect on employment, the impact on individual sectors, including small business, and the likely and future impact on the economy.

The commission announced at the end of January that this year it would produce its report in two parts. It had a clear message from employers that the length of notice given of any changes would be critical.

Today we are publishing volume one of the commission's third report. It looks solely at the main rate, and makes recommendations to have effect on 1 October this year and next. Copies will be placed in the Library of the House.

I thank the commission chairman, Professor George Bain, and its other members for the time, commitment and detailed consideration that they have given in preparing today's report. The strength of its recommendations comes from the detailed analysis, and also from the fact that it is a unanimous report, agreed by, for example, the deputy general secretary of the Transport and General Workers Union as well as the deputy director general of the Confederation of British Industry

The report concludes that the minimum wage has been a success, with nearly 1.5 million benefiting without any adverse impact on employment or the competitive position of British business. More than 70 per cent. of those benefiting are women. The commission concludes that, in narrowing the gender pay gap the minimum wage has had the most beneficial effect on women's pay since the introduction of the Equal Pay Act 1970 more than 30 years ago. It has also helped close the gap in regional pay differences. Since its introduction, the largest increases in average earnings have been in traditionally low-paying parts of the United Kingdom. While the national average increase in earnings for the first year of the minimum wage was 3 per cent., average earnings in the north-east rose by 5 per cent. In Wales, the average increase in earnings was over 4 per cent., and in Yorkshire and the Humber it was 3.5 per cent.

The minimum wage is about ensuring that people throughout the United Kingdom share in the country's economic prosperity. Twenty years ago, pensioners made up the largest section of those in poverty. Today it is those living in workless working-age households who are in poverty. Simply compensating people for their poverty through benefits is not good enough; the task must be to deal with the causes of poverty. The best form of welfare is work, and having a job. That is why it is crucial to make work pay, and the national minimum wage makes a vital contribution to the achievement of that objective.

Of course, there are those who opposed the very concept of a national minimum wage. They said that its introduction was the height of irresponsibility. Some said that it was a cretinous idea. Others said that it would deal a blow to low earners and would cost more than 1 million jobs.

The critics have been proved wrong, wrong and wrong. Employment has increased by nearly 450,000 since the introduction of the national minimum wage in April 1999 and by more than 1 million since we were elected with a clear pledge to introduce it. The number of jobs in the hotel and catering sector, which includes a high proportion of low-paid jobs, increased by 14,000 between March 1999 and September 2000.

In recommending a new rate, the commission had to satisfy itself about the likely impact of any increase. A rate that was not manageable would hurt the prospects of the very people whom it was meant to benefit. The commission is confident that there is scope for a significant increase in the rate of the minimum wage. The aim has been to make recommendations that are bold enough to make a real difference, but prudent enough not to have an adverse impact on employment or the economy. The commission's report is unanimous. It recommends that the adult rate, currently £3.70 an hour, should increase to £4.10 an hour on 1 October this year.

The Government accept that recommendation. It will mean that someone on the minimum wage and working a 40-hour week will see their earnings increase by £16 a week. It will mean a £10 a week increase for someone working 25 hours a week. Coupled with the working families tax credit, the Government are ensuring that work pays. The commission also recommends that the adult rate should increase in October next year to £4.20 an hour. In principle, the Government also accept that recommendation, subject to the economic conditions prevailing at the time.

The commission's report looks in detail at the impact of an increase to £4.10. It finds that the estimated wage bill impact will be modest—lower than the wage bill increase that resulted from the introduction of the minimum wage—and that the minimum wage had no discernible impact on the main measures of inflation. Analysis shows that the rise in the wage bill that would follow from the proposed increase to £4.10 adds 0.07 per cent. to inflation in the first year and 0.05 per cent. in the second.

The new rate for the minimum wage will apply across the board: to part-time and full-time workers, to agency staff and to those who work from home. I understand that there are some who would exclude businesses that employ fewer than 100 people from all legal requirements, apart from health and safety. That would mean nearly 8 million people being denied decent rights in the workplace. We reject such an approach. That is why the minimum wage will apply to all those in work, whatever the size of organisation that employs them.

The introduction of the national minimum wage has been one of the Government's great achievements. It has already had a real and much-needed impact on the lives of many hard-working people and their families, helping to raise the pay and standard of living of almost 1.5 million people.

The minimum wage combines economic efficiency and social justice. Increasing it to £4.10 an hour will take people further out of poverty pay. It is a significant increase that is affordable and will make a real difference to those who receive it. It brings reality to the phrase "dignity of work." I commend the increase to the House.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am grateful to the Secretary of State for giving me some notice of his statement today.

Last October, the national minimum wage was uprated by 10p an hour. Before that, the Secretary of State made no oral statement to the House. Today, however, he has announced in the House that there will be a 40p uprating in the minimum wage. Is the difference in the announcement and the way in which it was made anything whatever to do with the fact that there will shortly be a general election?

When we take office after that general election, businesses will be planning that uprating and adjusting their payrolls accordingly. We shall therefore not oppose this uprating—[Interruption.] I want to make that clear at the outset. However, I do have various conditions and questions for the Secretary of State—[Interruption.]

Photo of Michael Martin Michael Martin Speaker of the House of Commons

Order. The right hon. Gentleman is entitled to a hearing. The Minister received a hearing; the right hon. Gentleman is entitled to one.

Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

I am most grateful, Mr. Speaker.

Why has the Secretary of State been so anxious to make this announcement on the minimum wage while at the same time adding to the regulatory burdens on the very businesses that will be delivering the jobs in future? I remind him that, according to the British Chambers of Commerce, over the lifetime of this Parliament, that regulatory burden amounts to an extra £10 billion on British business. Would he like to confirm that, contrary to his earlier claims, that £10 billion figure does not include the financial costs of the minimum wage?

Is the Secretary of State aware that small business organisations are extremely alarmed at the damage caused by those regulations—which are added now to a substantial uprating later this year—particularly in vulnerable sectors such as village shops, sub-post offices and care homes?

I should like the Secretary of State to deal specifically with the point about the costs on private care homes. Is he aware that, this year, most care homes are receiving a funding increase from the Department of Social Security and from local authorities of between 1 and 2 per cent., whereas those same homes will now have an increase in their total costs of more than 7 per cent? For an average 20-bed care home, that will increase those costs by £2,600 annually. That is a Government responsibility. This is a Government problem that is being made worse by the Secretary of State's announcement. What offsetting arrangements is he making to get over and solve that crisis in care?

Will the Secretary of State also confirm that it is not within the Low Pay Commission's remit, but up to the Government, to assess the economic effects of increasing the national minimum wage in that manner? What could the damage be if this turns out to be at the top of the economic cycle? Will he confirm that unemployment decreased more slowly in the first three years of this Government than in the last three years of the previous Government? Will he therefore give his own assessment of the effect that the uprating will have on future employment growth, on which national prosperity and the prosperity of the low paid depend?

Will the Secretary of State comment on the report today by the organisation Incomes Data Services—which is authoritative in this sphere—which shows that pay settlements are running substantially ahead not only of inflation, but of last year's equivalent wage settlements? Those data were not available to the Low Pay Commission when it drew up its recommendation.

The Secretary of State gave a very low figure for the inflationary consequences of his announced uprating. Will he tell us whether that takes account of the preservation of differentials when the national minimum wage is increased by 11 per cent. and also of the earnings figure that has now been disclosed by IDS?

Finally, will the Secretary of State confirm that, in "Economic Trends", the Office for National Statistics records that under this Government, the tax burden on the poorest 20 per cent. of households has increased from 37 per cent. of gross income to 40 per cent.? So the sharpest rise in taxation under this Labour Government has been imposed on the poorest fifth of households. Will he confirm those Government figures? If the House takes seriously its duty to help the lowest paid, as it should, it will pay at least as much attention to that problem, and to the problem of future employment growth, as it does to this uprating of the national minimum wage.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

Well, there we have it. I admit that I had some sympathy for the right hon. Member for Wells (Mr. Heathcoat—Amory) at the beginning of his response, because he had to accept that the Conservative party agree with the decision that the Government took, having opposed, day in and day out, the introduction of a national minimum wage.

The people of this country know the Conservative party's approach to the national minimum wage—it disagrees with it in principle, and it would allow it to wither on the vine. That is why the right hon. Gentleman said that the minimum wage would deal a body blow to low earners. That is his view of the national minimum wage, and he knows that it has not changed. The hon. Member for Rutland and Melton (Mr. Duncan) called it a "cretinous" policy. Well, he should know—but the reality is that 1.5 million people have benefited from its introduction. The right hon. Gentleman said little on the details of the proposals that we have announced this afternoon.

On the impact on small businesses and, in particular, on the private care sector, the Low Pay Commission has considered in detail the impact of the increase, sector by sector, and has decided that it would be prudent to adopt a significant increase to £4.10. That increase will make a real difference to those who receive it, but it will not have an adverse impact on either the economy or employment levels. That is the position. If the right hon. Gentleman looks at the areas where we have had the biggest increase in employment growth, he will see that they happen to be those that have traditionally been in the low-paid sector. That is the reality, as he will know.

Yet again, we have heard the cry about burdens on business. It is about time that the right hon. Gentleman made a distinction between red tape and bureaucratic burdens and decent, minimum standards. Today's announcement is about decent, minimum standards. The right hon. Gentleman will not challenge directly the basic standards that the Government are providing because he knows that they have broad and popular support. Instead, a code is used—the right to time off in emergencies involving children, the right to four weeks' paid holiday and the right to a national minimum wage is all red tape and bureaucracy. Well, it is not; it is what people should expect at the beginning of the 21st century. Under this Government, they will get those decent minimum standards; under the right hon. Gentleman, they would be taken away.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

It is like having two Budgets in a week.

Is my right hon. Friend aware that no Labour Government with a majority in Parliament have ever introduced a minimum wage? The Attlee Government did not achieve it; neither did the Wilson nor the Callaghan Governments. That is why it is important that my right hon. Friend has made a statement today, even though the Tories do not want to hear the truth. Is he aware that this minimum wage is vital to people in areas where the bosses have got the whip hand and where the pits were shut and people were paint spraying at £2.10 an hour? I went through those Lobbies glad to vote for the minimum wage, muttering "£5" as I went through, and I look forward to the day when, in the next Government, my right hon. Friend will take the figure up to £5 an hour. Then he will get another plaudit from me.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

We shall probably have to wait for the Low Pay Commission to report. However, I can tell my hon. Friend that we have decided to make the commission permanent—it had been reappointed on an annual basis. However, under this Government, the minimum wage is here to stay, which is why the Low Pay Commission is to be made a permanent body.

My hon. Friend is right to point out that the minimum wage is significant for individuals. I know from my own constituency of many hundreds of people who have benefited from the minimum wage. I remember vividly a security guard coming to my advice surgery. He pulled out his wage slips and he showed me that he was paid £1.80 an hour for working evenings and weekends. He said, "Now, because of what you have done, I am being paid £3.60 and hour", which was the rate at the time. He added, "This has simply made a difference to my life that I could not have believed before you introduced it." That is why the Labour party and this Government are committed to retaining the minimum wage and ensuring that it will not wither away.

Photo of Vincent Cable Vincent Cable Shadow Spokesperson (Trade and Industry), Liberal Democrat Spokesperson (Trade and Industry)

May I welcome the announcement, particularly on behalf of my colleagues who represent constituencies in the south-west, the north-east and Wales, where wages are below the national average?

Although I was given 20 minutes to read the Government's 170-page report, I have several questions for the Secretary of State about it. First, table 4.2 suggests that one of the main beneficiaries of today's announcement will be the Chancellor of the Exchequer because there will be a substantial saving in benefit payments amounting to about £100 in million plus increased tax and national insurance contributions. As the reduced working families tax credit payment amounts, in effect, to a tax on business, what plans does the Chancellor have to feed back the money from the Treasury to business?

Secondly, what analysis has the Secretary of State conducted of the impact of the changes specifically on the competitiveness of manufacturing industry? Table A.3.1 in appendix 3 suggests that, at the present level of exchange rates, we now have the highest minimum wage of any country in Europe apart from Luxembourg. What assessment has he made of the impact of that on the unit costs of manufacturing and what proposals has he to enable British manufacturers, who have to compete for trade, to sustain the increase in costs?

Finally, although most groups in society will benefit from and appreciate the increase, some specialist groups have concerns. I am sure that the Secretary of State has read the Mencap report on people with learning difficulties. What thought has been given to the impact of the minimum wage on Mencap and associated groups and how does he propose to deal with their particular problems?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The Low Pay Commission is considering the hon. Gentleman's final point about therapeutic workers and that will form part of its recommendations in volume two of the report, which we expect to receive in a few months.

On the hon. Gentleman's question about the tax and benefits position, we should probably all wait until my right hon. Friend the Chancellor of the Exchequer makes his Budget statement on Wednesday. That may have an impact on these matters.

The hon. Gentleman also asked about the competitive position. The Low Pay Commission was particularly tasked with the responsibility of ensuring that any increase would be significant to individuals, but would not effect the competitive position of British business. That balanced approach is important, and I am confident, from the Government's analysis, that the commission's recommendation of an increase to £4.10 will not affect the competitive position of British manufacturing.

Photo of Tony Baldry Tony Baldry Conservative, Banbury

Does the Secretary of State agree that it is axiomatic in his statement that, if the Low Pay Commission gets it wrong, that could have an adverse effect on employment and the economy? Is not the simple fact that, if the minimum wage is set below market levels, it is otiose and, if it is set above market levels, it will simply result in job losses in the economy? Does the Secretary of State agree that either the minimum is not needed at all or that, if it is applied in this way, it will result in job losses?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The hon. Gentleman is repeating what he said in the House on 4 May 1997.

Photo of John Bercow John Bercow Shadow Spokesperson (Home Affairs)

It was not on 4 May—that was a Sunday.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

It was 14 May—the hon. Gentleman is right. We all remember that weekend very well.

When the Labour party took office, we announced the introduction of the national minimum wage in the Queen's Speech. The hon. Member for Banbury (Mr. Baldry) shows that Conservative party policy has not changed; the Conservatives still fundamentally disagree with a national minimum wage.

It is important to have a significant increase that helps individuals without producing the adverse consequences that the hon. Gentleman mentions. A minimum wage of £3.70 has made a difference to people who receive it, and an increase to £4.10 in October will be significant. That bold move can be afforded. It is manageable because of the economy and its strengths. I think that we have achieved the correct balance. We are not threatening the economy or jobs; rather, we are increasing the national minimum wage to a decent level.

Photo of Gerald Kaufman Gerald Kaufman Chair, Culture, Media and Sport Committee

Is my right hon. Friend aware that when I asked his counterpart in the previous Government what a constituent of mine was to do because his hourly pay as a security guard had been reduced to £2-plus and his average working week had been increased to 70 hours, he said that my constituent had the choice of resigning, even though the constituency had some of the worst unemployment in the country and the worst youth unemployment in England? Is my right hon. Friend also aware that, by capping the working week, providing minimum pay and cutting unemployment vastly—youth unemployment has fallen by two thirds in my constituency—the Government have transformed many of my constituents from virtual menial slaves to respected working people who contribute to society?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My right hon. Friend makes an important point. His illustration of the way in which his genuine question was dealt with by the Minister responsible at the time demonstrates a typical Tory reaction to a pressing issue. He is correct in outlining the benefits that his constituents and many millions of other hard-working people up and down the country have received. We were elected to govern for all our people, and that is exactly what we are doing, whether by introducing the national minimum wage, providing working-time paid holidays or ensuring that people can balance work and family life. Those important measures are also sympathetic to the needs of business. The increase in the national minimum wage reflects that approach.

Photo of Angela Smith Angela Smith Labour/Co-operative, Basildon

Many of us are overjoyed by my right hon. Friend's statement because we have campaigned for the minimum wage to be uprated. Does he share my disappointment to hear the whingeing of Conservative Members? Given that Members of Parliament are on a salary of almost £50,000 a year, is it not miserly to begrudge an increase to those people whose salary will, even after today's announcement, be only about £8,500 a year? Although his statement is good news, will he also consider, before the rate is introduced in October, the youth rate of the national minimum wage so that there is not a greater discrepancy between them?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I share my hon. Friend's disappointment, but I am not surprised by the reaction of Conservative Members because we know their view about the national minimum wage. On the youth rate, I assure her that we have asked the Low Pay Commission to consider that in volume two of the report, which will be produced a little later this year.

Photo of Mr Teddy Taylor Mr Teddy Taylor Conservative, Rochford and Southend East

Will the Secretary of State assure us that there will be appropriate changes to the level of tax credits to ensure that the increases in October will lead to a real increase in living standards, rather than simply being an accountancy exercise? Does he agree that in some seaside towns there is an anomaly because employees in cafes and restaurants receive substantial tips from the customer on top of the minimum wage, while employees in the shops next door simply receive the minimum wage? Can that be resolved? Although I appreciate that it will be difficult to do so, I hope that the Secretary of State accepts that it is a problem.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

Tips do not count against the national minimum wage, and there may be a particular problem to which the hon. Gentleman is referring. I understand his concern about the possible impact of the minimum wage on seaside towns. The Low Pay Commission considered the hospitality, catering and hotel industries because, as we are all aware, they are traditionally low-paid sectors. We wanted to ensure that an increase to £4.10 an hour would not have an adverse effect on them, and the commission's analysis shows that it will not.

On the interface between the tax and benefits system, I repeat that it is worth waiting for the Chancellor's statement on Wednesday.

Photo of Jon Trickett Jon Trickett Labour, Hemsworth

The national minimum wage will be one of the greatest monuments to this Government. I welcome the speed and boldness with which my right hon. Friend reported to the House this afternoon. He said that the impact of the minimum wage on inflation is less than 0.05 percent. Families in the pit villages that I represent and in the coalfields of Yorkshire more generally will feel that £16 is a massive increase in their weekly household income and will greatly welcome it.

The right hon. Member for Wells (Mr. Heathcoat-Amory) said that he would not oppose the measure. That form of words is more than a verbal circumlocution; it indicates a fundamental dividing line in the House. Does my right hon. Friend agree that the Tories have always resisted the national minimum wage and other measures to improve the living standards of working people?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

It is a traditional role of the Conservative party to do precisely that, and my hon. Friend is absolutely right. Those who work 40 hours a week will see their earnings rise by £16 pounds a week and those who work 25 hours will receive an increase of £10. That will make a real difference to hard-working people and their families. It is interesting that the right hon. Member for Wells (Mr. Heathcoat-Amory) did not say that the Conservatives' policy of exempting employers of up to 100 people from bask employment legislation, except for health and safety provisions, would not apply in this case. A raft of employees would therefore be exempt from the national minimum wage. We shall certainly make sure that people throughout the country are acutely aware of that.

Photo of Mr Nick St Aubyn Mr Nick St Aubyn Conservative, Guildford

I thought that we were here to discuss the Government's policy. Will the Secretary of State therefore answer the question asked by my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory) about whether those who run care homes will feel a particular impact following his announcement? Given that the number of care homes that are closing is causing alarming problems, especially for the health service and related areas, what will the Government do to help care homes?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The hon. Gentleman raises an important point. We must ensure that every sector involved is able to manage the increase, and the Low Pay Commission is confident that that is the case. The private care sector plays an important role in our society and it is valued. We would not introduce any measures that would threaten its future, and we are confident that the measures that I have announced today will not do so. The implication of what the hon. Gentleman said is that people working in the private care sector should not be paid the national minimum wage, and we disagree.

Photo of David Winnick David Winnick Labour, Walsall North

Is my right hon. Friend aware that one of the main reasons that the Government have remained popular is that Ministers are concerned about ordinary people, not least those who desperately require Parliament's protection—namely, low-paid workers? Is he surprised to learn that far from wanting an election, the Tories are absolutely terrified of having one?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My hon. Friend is absolutely right. We have taken people out of poverty pay through the national minimum wage, which was introduced in the face of total opposition from the Conservatives. Their words might have changed, but we know that their beliefs remain the same: they do not accept even the concept of a national minimum wage.

Photo of Mr Simon Thomas Mr Simon Thomas Plaid Cymru, Ceredigion

May I welcome today's announcement and congratulate the Government on sticking to their principles in this respect? I have a couple of questions, the first of which relates to the long-term future of the national minimum wage. Does the Secretary of State accept that subsidies to the low-paid will continue, for example, in the form of the working families tax credit, which can be seen in that light? In the long term, will he consider raising the national minimum wage to a level at which those subsidies do not kick in, and recycling the Treasury money, perhaps in the form of support for small businesses?

Secondly, will the right hon. Gentleman examine where real poverty in the workplace now occurs? Increasingly, it is the small self-employed tradesperson—the farmer, or the person who runs a small rural post office—who is affected. Such people cannot avail themselves of the national minimum wage but increasingly receive less than the national minimum wage. Will the Government consider whether that problem can be addressed through the tax system, so that poverty does not increase in one part of the economy while it is decreasing in another?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

We must ensure that we have measures in place to make work pay, whether for the self-employed, farmers or workplace employees. The issue can be addressed in a variety of ways: one is through the tax regime; another is through the introduction of the national minimum wage. As for the working families tax credit, it is important that we have in place measures that complement the safety net of the national minimum wage; the working families tax credit achieves precisely that. We have to achieve a balance and set the national minimum wage at a level that takes people out of poverty pay but does not affect employment opportunities. Getting that balance right is the crucial test.

I hope that the hon. Gentleman will reflect on the fact that Wales is a part of the United Kingdom that has benefited most from the introduction of the national minimum wage in terms of both the number of people it covers and the increase in average earnings it produces. That increase in average earnings has been of real benefit to the country of Wales and, under the Labour Government, it is secure for the future.

Photo of Mr Barry Jones Mr Barry Jones Labour, Alyn and Deeside

Does my right hon. Friend know how many people in Wales will benefit from this excellent measure and what will be the full-time annual wage of someone receiving the national minimum wage in Wales? Today's announcement heralds an important social and economic advance, which Wales will be pleased to receive from the Government. Why are the Conservatives looking so miserable, sad and out of place? Will my right hon. Friend send for the House of Commons nurse to aid them?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

One reason might be that there are no Conservative Members of Parliament to represent the 80,000 people in Wales who benefit from the national minimum wage and will benefit from the increase announced today.

Photo of Michael Fabricant Michael Fabricant Conservative, Lichfield

The Secretary of State will know that I am never miserable and that I have always supported the principle of a national minimum wage—indeed, I operated a company in the United States that was subject to the national minimum wage. However, he will recall that in 1997 his own party predicted a national minimum wage of between £5 and £5.50 an hour, which is why the Conservative party said that the result would be high unemployment. Far from the Conservatives being "wrong, wrong, wrong", as he put it, the national minimum wage is just another Labour promise made in 1997 that was broken, broken, broken.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I think that the hon. Gentleman opposed the introduction of the national minimum wage. He will be aware that when we appointed the Low Pay Commission, we said that it was for it to decide the level at which the minimum wage should be introduced. The hon. Gentleman said that the minimum wage and other Bills going through Parliament will harm rather than enhance women's employment prospects."—[Official Report, 8 March 1999; Vol. 327, c. 67] He has forgotten that there are more than 600,000 more women in work now than there were under the Conservative Government. There are more women in work, and they are better paid because 70 per cent. of them benefit from the national minimum wage.

Photo of Andrew Miller Andrew Miller Labour, Ellesmere Port and Neston

My right hon. Friend rightly received wide-scale plaudits last Friday when he visited the north-west, announcing improvements in the science base. Today, he will receive more plaudits from other parts of the community.

When he next visits the north-west, may I invite him to see lone parents in my constituency who have benefited in their attempts to get into work and obtain real paid work that takes them off benefit as a result of the minimum wage policy? The policy has made a fundamental difference to those people and others. Will my right hon. Friend ensure that that message goes back to the Low Pay Commission? Will he tell it to keep up the good work, and will the Government continue to support the commission?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

One reason that the Low Pay Commission is such a strong body is that it visits regions and talks to those who have benefited from the national minimum wage, as well as employers who are responsible for paying that wage. The members of the commission have a balanced and rounded approach to the recommendations that they make.

I have no doubt that my announcement will be good news for the tens of thousands in the north-west who will benefit from it. It is about ensuring that work pays and that there is real dignity for those in the workplace. The national minimum wage is an important element in securing those objectives.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Environment, Food and Rural Affairs)

What advice would the Secretary of State give to small business men and women who perhaps employ only one or two people and work many more hours than their employees? Given the right hon. Gentleman's announcement, their net take-home pay will be considerably less than that of the employee in receipt of the minimum wage. Will the Government make up their wages through the social security system? That cannot be done now because they are self-employed. If someone cannot see any light at the end of the tunnel in terms of his business—he may be a farmer, for example—should he sell up before the increase in the minimum wage comes into effect in October?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

When the Low Pay Commission considered its recommendation, it looked at the impact that it would have on all sectors of the economy. I am confident that the recommendation that we have been prepared to agree will escape the difficulties to which the hon. Gentleman has referred. It is a balanced approach. It is prudent and bold in that there is a significant increase, but it is being introduced in a way that will not adversely affect the economy or employment generally.

Photo of Rosie Winterton Rosie Winterton Labour, Doncaster Central

My right hon. Friend's announcement will be extremely welcome in my constituency, where more than 2,000 people—most of them women—have already benefited from the national minimum wage.

There are always Scrooge employers who try to use every dodgy practice going to avoid paying a penny. Will my right hon. Friend assure me that his Department will mount an effective publicity campaign so that people know what they are entitled to? A clear message must be sent to miserly bosses that they need to pay what is due to people.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

We need to ensure that there is effective enforcement, and we have committed a good deal of time and resources to that end. Enforcement will be one of the issues covered by the Low Pay Commission in the second volume of its report, which will be available in a few months' time. We lave put measures in place to ensure that people are aware of their entitlement. We have already run an advertising campaign; no doubt we will want to do so again, to publicise the fact that there is to be an increase to £4.10 in October. In the interim, individuals or employers who need guidance or have questions should contact our helpline number, which is 0845 6000 678.

Photo of Anne McIntosh Anne McIntosh Conservative, Vale of York

The Secretary of State referred to benefits for women, especially in respect of the hotel and catering industry. Has he had time to read the latest Bank of England quarterly report, which indicates that the trend in the increase in employment is less towards full-time jobs and much more biased towards part-time jobs? Does he recognise that the increase in the national minimum wage will therefore involve less full-time employment and an increase in part-time employment? That is fine if that is what women want when their children are at school, but not if the women are the main breadwinners and bringing up young children.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

As I said, the rates will be the same, whether employees are full-time or part-time. As a result of today's announcement, the national minimum wage will go up to £4.10 an hour from this October. It is important that people have a genuine choice; many of them choose to work part-time. I welcome the fact that, as a result of employment growth under this Government, people now have that option and can decide how to balance their lives. If people want to work reduced hours or go part-time, it is important that they should be entitled to do that, particularly if they have responsibilities for child care or looking after an ageing parent. In a genuinely flexible work force, employees can choose to work fewer hours, if that is what they want.

Photo of Terry Rooney Terry Rooney Labour, Bradford North

I thank my right hon. Friend for his statement. Will he confirm that there are no grounds at all for differential rates, whether by sector or geographic region? In particular, will he resist calls from Liberal Democrat Members for a lower rate in the south-west and Yorkshire and Humberside?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My hon. Friend is right to point out what the Liberal Democrats' policy was; I am not sure what it is nowadays. [HON. MEMBERS: "Neither are they."] That is probably right. When the national minimum wage was introduced, the Liberal Democrats wanted regional differences in the application of the rate, which would obviously have an adverse impact not just on Yorkshire and Humberside, but on the north-east, the north-west and Wales in particular Under this Government, the national minimum wage is exactly that: it is a national minimum, which does not vary according to sector or geographical location. Wherever someone works in the United Kingdom, in whatever sector, in whatever size of organisation, he or she will be able to get the benefit of the increase that we have announced today.

Photo of John Bercow John Bercow Shadow Spokesperson (Home Affairs)

I accept that a powerful case has been made for the national minimum wage and that my fears about it have not been realised— [Interruption.] I do not find that embarrassing; my mother always said that it was quite a good idea, and I probably should have listened to her earlier.

Will the right hon. Gentleman assure the House that farmers who earn substantially less than the national minimum wage will shortly be on the receiving end of Government largesse? Further to the pertinent inquiry of my hon. Friend the Member for Cotswold (Mr. Clifton-Brown), will the right hon. Gentleman tell the House what specific discussions he is having, or intends to have, with the Federation of Small Businesses and the Forum of Private Business about the impact of the uprating on micro businesses?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The important point is that the Low Pay Commission has consulted and engaged with all organisations and has considered the impact of the national minimum wage. We, too, have looked at its impact, and are confident that some difficulties about which the hon. Gentleman is concerned will not arise. The report was published early in the cycle to ensure that small businesses have plenty of notice of the intention to introduce an increase in October this year. We are now giving them that notice. I have no doubt—and this point was reflected in the report—that, with that period of notice, the change will be manageable for micro businesses and other small businesses.

Photo of Mrs Helen Jackson Mrs Helen Jackson Labour, Sheffield, Hillsborough

May I congratulate my right hon. Friend on his statement, particularly as it comes at the beginning of international women's week? Is he aware that, before the statutory minimum wage, countless women went out to work, often part-time, for what was derogatively called "pin money"? One effect of the statutory minimum wage has been to raise the status of part-time work—for example, in cleaning and private care homes, where formerly work was nothing more than exploitation.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My hon. Friend is right. Before we introduced the national minimum wage, there is no doubt that there was exploitation of workers, especially of women in the workplace. Through the introduction of the national minimum wage, we have made sure that work pays for those women, and that part-time workers have the same rights as full-time workers. They are no longer treated legally as second-class citizens. We will ensure that part-time work has status and dignity. Of course, the majority of people working part-time are women, so I am pleased that, as my hon. Friend pointed out, we made the announcement at the beginning of international women's week.

Photo of Mr Chris Pond Mr Chris Pond Labour, Gravesham

I know that the whole House will want to congratulate the mother of the hon. Member for Buckingham (Mr. Bercow) on her good sense. It is sad that she did not have more influence on him, so that we could have avoided a single sitting of 23 and a half hours in Standing Committee while he and his colleagues tried to talk down the national minimum wage.

I welcome my right hon. Friends confirmation, in answer to my hon. Friend the Member for Basildon (Angela Smith), that the youth rate will be considered before October. Did my right hon. Friend hear Mr. Chris Humphries of the British Chambers of Commerce this morning, when he said that his members, mostly small and medium-sized firms, did not oppose the national minimum wage? Does my right hon. Friend agree that if the membership of that organisation—firms with fewer than 100 employees—were exempted, that would mean the abolition of the minimum wage for a large number of vulnerable employees?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

My hon. Friend is right to point out that if employers with fewer than 100 employees were granted an exemption from the national minimum wage, hundreds of thousands of people would lose the benefits of it. That is why we stated clearly that it should apply to all employers. I did listen to Chris Humphries this morning. I know that the British Chambers of Commerce endorses the principle of a national minimum wage, and I hope that now that he has had an opportunity to see the details of our proposals, he will welcome our approach to the matter.

On the specifics of the youth rate, my hon. Friend can be assured that the second volume of the Low Pay Commission report for this year will address it within the next two or three months. When the hon. Member for Rutland and Melton (Mr. Duncan) has read the Low Pay Commission report, he will see that it considered in detail the impact of differentials in relation to the recommendations that it made. In the light of that, the Low Pay Commission recommended a significant increase, which the Government have endorsed.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

May I take the Secretary of State back to the issue of the youth rate? When he considers the next report, which will deal with the youth rate, will he also consider extending the national minimum wage to young people aged 16 to 18? As I am sure he is aware, there is a great deal of evidence to suggest that many 16-year-olds are grossly exploited because they are not covered by the national minimum wage, and some employers take great advantage of that. Will he consider, too, the problem of the increasing benefit trap in areas of high housing costs? When people get a job, the loss of benefit combined with very high rent costs unfortunately means that they are worse off. Finally, will he put another 90p on the national minimum wage?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The Low Pay Commission has been charged with the responsibility of examining the youth rate, but we have not restricted that to the existing youth rate; we have specifically asked the commission to examine the position of 16 and 17-year-olds, so they will be covered by the second volume of the report, which is due in a couple of months.

As for the impact of the national minimum wage on the benefits system, the Government keep it under review generally, because it is important that the existing barriers to work—my hon. Friend identified one of them—are removed, so that people are rewarded when they go out to work and recognise that there is a better future for them in work than on benefit. It is important that the barriers are removed wherever possible.

Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

My right hon. Friend's announcement will be warmly welcomed by the people of Devon and Cornwall, where pay is traditionally very low. Thousands of families in the region have benefited from the national minimum wage, so is it not telling that not a single Conservative or Liberal Member from those counties is present to welcome the announcement? Furthermore, is it not time that we were given a fulsome apology by those who opposed the minimum wage? They claimed that it would boost unemployment, but there is record employment in Devon and Cornwall and throughout the country, and it is still rising.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I welcome the fact that we have been proved right on the introduction of the national minimum wage. As my hon. Friend said, it benefits the tens of thousands of people in Devon and Cornwall who have been taken out of poverty pay because of its introduction. Those people will benefit also from the significant increase that will be made in October, as I have announced. I share his disappointment that no Conservative or Liberal Democrat Members who represent constituencies in the south-west were present to hear the announcement.

Photo of Mr Peter Pike Mr Peter Pike Labour, Burnley

In low-paid constituencies such as mine, the announcement of the £4.10 figure will be much welcomed, as will the assurance that the Low Pay Commission will continue its work, which demonstrates the Government's commitment to continuing the national minimum wage at the right level and to ensuring that it will be relevant in future years.

There is one further thing that we should do in relation to the minimum wage: we should recognise that many employees are worth a lot more than the minimum. We must urge employers who can afford to pay more not to rest on the floor of the minimum wage. When they can pay more and their workers deserve more, we should ensure that a fair wage is paid.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

The minimum wage is a safety net below which no employer can legally go. Obviously, it is to be hoped that individuals who merit a higher wage will receive proper rewards, but I am pleased that thousands of hard-working people in Burnley will benefit from today's announcement. The minimum wage is about rewarding communities and individuals, and that is exactly what it does. As a result of the increase, 1.5 million people will be better off in October than they would otherwise have been.

Photo of Bill Rammell Bill Rammell Labour, Harlow

Does my right hon. Friend agree that, despite the Opposition's forced weasel words of support, there can be no doubt that if a Conservative Government were elected, the national minimum wage would be allowed to wither on the vine? Does he also agree that the success with which the measure has been introduced and extended should give us greater confidence to proceed with further family friendly employment policies?

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

I agree with that final point. We must ensure a balance so that work and family life can be lived to the full. My hon. Friend was also right to point out the Opposition's view. It was the shadow Chancellor who announced what appeared to be a policy U-turn by saying that the Opposition would support the national minimum wage. He did so having had very little consultation with his Front-Bench colleagues.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

Because they have told me. Later, on the "Today" programme, the right hon. Member for Kensington and Chelsea (Mr. Portillo) said: "You know, we're not great enthusiasts about the minimum wage." That is absolutely right.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

At least the right hon. Member for Bromley and Chislehurst (Mr. Forth) agrees with that. He is among the foremost of those who do not believe in the national minimum wage, bur the reality is that most Conservative Front-Bench Members who speak on trade and industry matters do not believe in it either.

Photo of Ronnie Campbell Ronnie Campbell Labour, Blyth Valley

Can my right hon. Friend confirm that north-east England will benefit most from the minimum wage? It is another great achievement for the Government, but, above all, it is a socialist achievement.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

It is an achievement that manages to combine economic efficiency and social justice. I know that my hon. Friend will be pleased for the thousands of people in Blyth Valley who will benefit from the increase announced today. Indeed, hon. Members who represent constituencies in the north-east will take particular pleasure in the announcement. We know that for far too long, good, hard-working people in the region that we represent have simply not been rewarded for their endeavours. As a result of the national minimum wage, that is now happening, and they will benefit from the significant increase that is to be made in October of this year.

Photo of Paul Flynn Paul Flynn Labour, Newport West

Does my right hon. Friend realise that fewer than a dozen Conservative Back Benchers are present to hear his statement? They have escaped an afternoon of humiliation here by going to their constituents to apologise for being wrong for the past 22 years. Members of the shadow Cabinet are reversing all the policies that do not match the Government's, while others, such as the right hon. Member for Henley (Mr. Heseltine), are busy working out which party to support in the general election.

Does my right hon. Friend agree—I am sure that he will—that the announcement is a great triumph for the Labour Government? It means that 3,000 of my constituents, who faced the daily insult of dirt pay for many years, will earn wages that will lift them out of the dependency culture and give them a reasonable reward for their labours.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

There is no doubt that the national minimum wage has taken people out of poverty pay and that it rewards them for their endeavours. The significant increase that we have been able to announce today will make a real difference, not only to my hon. Friend's constituency but to the 1.5 million people and their families who rely on the national minimum wage. Today's announcement constitutes a genuine benefit for them; they know that it was introduced by a Labour Government and that it is safe under this Government. They also know that the Conservatives do not believe in a and would take it away at the first opportunity.

Photo of Dave Watts Dave Watts Labour, St Helens North

Many small employers in my constituency will welcome today's announcement because, for many years, they were seriously undercut by employers who offered £1 and £2 an hour.

Now that we have acted on pay, will my right hon. Friend consider the many people who are on temporary employment contracts? They continue to suffer because they have no security of tenure.

Photo of Stephen Byers Stephen Byers Secretary of State, Department of Trade and Industry

On my hon. Friend's final point, we are considering the fixed term directive and the steps that we need to take on that.

My hon. Friend made the important point that many small businesses encouraged the Government to introduce the national minimum wage because they were worried about the way in which other small businesses exploited their position and paid very low wages.

The Government have set up an enforcement line and many calls have come from employers, not employees, who have told the Inland Revenue and my Department about other employers who pay wages that are below the national minimum level. That demonstrates that business accepts the national minimum wale as an important provision. Indeed, it is widely accepted and welcomed, not only by those who receive the benefit of it but by decent, fair-minded people who know that a national minimum wage is about decency. At the beginning of the 21st century, the least that we can expect of a Government is the introduction of such a provision, We have done that, and we are proud of it.