National Minimum Wage

Part of Opposition Day — [6th Allotted Day] – in the House of Commons at 12:41 pm on 15th October 2014.

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Photo of Chuka Umunna Chuka Umunna Shadow Secretary of State for Business, Innovation and Skills 12:41 pm, 15th October 2014

I beg to move,

That this House
notes that the value of the National Minimum Wage has been eroded since 2010 as working people have been hit by the cost-of-living crisis and are on average £1,600 a year worse off;
recognises that the fall in the real value of the minimum wage since 2010 is now costing the public purse £270 million a year in additional benefit and tax credit payments;
further notes that the Chancellor of the Exchequer cruelly misled working people by saying he wanted to see a minimum wage of £7 while the Government has no plans to reach this goal;
calls on the Government to set an ambitious target for the National Minimum Wage to significantly increase to 58 per cent of median average earnings, putting it on course to reach £8 before the end of the next Parliament;
supports action to help and encourage more firms to pay a living wage through “make work pay”
contracts to boost living standards and restore the link between hard work and fair pay so that everyone shares in the UK’s wealth, not just a few at the top;
and further calls on the Government to set a national goal of halving the number of people on low pay by 2025.

We are a great country with some of the most hard-working and creative people in the world, but there are challenges and problems that must be addressed. We are the sixth largest economy in the world, yet too many people do not have secure, fulfilling jobs that provide dignity, respect and a wage that they can live on. Most people who are living in poverty in this country have a job. If people do the right thing, play by the rules and work hard, day in, day out, they should not have to live in poverty in this country; but the reality in 2014 is that they do. More than 5 million people do not earn a decent wage.

We can see the economic data and, yes, on paper, GDP growth is better than it was two years ago, but the reality of people’s lived experience suggests otherwise. Just in the past fortnight, the much respected Resolution Foundation has produced research that paints a different picture. Tens of thousands of people are trapped in low-paid jobs with little hope of a pay rise. Among those minimum wage employees who have been employed for at least five years, a record one in four has failed to progress off the minimum wage for the entirety of that period. That compares with just one in 10 minimum wage workers a decade ago.

That is the background to our motion. What each party says it will do to address that situation and to make work pay will provide the context in which the next general election is fought. Before I set out what the Labour party would do if elected next year, I will remind people what we have already done. I have said it before and I will say it again: in 2010, this party left the country in an immeasurably better state than we found it in 1997. [Interruption.] If the Minister waits, he will get his time in a moment. One of the many reasons for that was our utter determination to end the outrage of people being exploited at work, which led to our establishment of the national minimum wage in the face of opposition from Conservative Members.

In 1997, the current Secretary of State for Work and Pensions—I note that he is not here—told the House that if we introduced the national minimum wage, it would

“negatively affect, not hundreds of thousands but millions of people.”—[Hansard, 4 July 1997; Vol. 315, c. 526.]

In the same year, the current Defence Secretary told the House that the Conservative party had “always resisted” the minimum wage and that he thought there were “other better solutions” to extreme low pay. Then, of course, there was the Conservative party leader—now the Leader of the House—who said that a minimum wage would be

“either so low as to be utterly irrelevant or so high that it would price people out of work.”—[Hansard, 17 March 1997; Vol. 308, c. 618.]

They and their Conservative colleagues made those claims and arguments to justify inaction at a time when some people in this country were earning as little as £1 an hour.

We had the good sense to ignore the Conservatives, and in my view establishing a national minimum wage was one of our greatest ever achievements. As a consequence, between 1997 and 2001 extreme low pay fell from 6.9% to 1.5% of the work force, and we are proud of that. All the evidence shows that the minimum wage boosted earnings considerably, without causing the unemployment that we were told would follow. So when people say that we are all the same, I point to the establishment of the minimum wage to illustrate our very different instincts as parties, our different approaches and the kind of difference that a Labour Government make when in office.