Asked by
To ask His Majesty’s Government what assessment they have made of
the case for increasing the national minimum wage to £15 per hour
for workers across all age groups.
The Parliamentary Under-Secretary of State, Department for
Business and Trade and Scotland Office () (Con)
My Lords, I thank the noble Lord for his Question. The Government
are increasing the national living wage by a record 10% in April
this year to £11.44 per hour. This increase will end low pay for
those aged 21 and over, and meets the target threshold of
two-thirds of median hourly pay. Any further increases in the
national living wage will need to be carefully considered,
regarding the economic impact, balancing the cost to business and
benefit to workers. The Government will continue to base these
decisions on increases on robust evidence and recommendations
from the Low Pay Commission.
(CB)
I thank the Minister for that Answer. I think it is interesting
that none of us knows how you can live on £10 an hour and run a
family and pay your rent. The minimum wage is not very near the
living wage, so we have to find a way of morphing the minimum
wage towards the living wage. I ask this rather strange question:
what happens if you take a third of what is on the books at the
moment and increase by a third the minimum wage? The reason I ask
it is: will the Government change the situation where we keep
producing low-paid jobs and low investment so we have an enormous
number of people who cannot earn a decent wage? That means that
we have to increase the way that we trade. We have to push up
prosperity, and that is the job of the Minister’s department.
(Con)
I thank the noble Lord for that reminder. I think all of us in
this place and the other place can be very proud of what has
happened over the past 25 years on the minimum wage. This wage
increase will benefit 3 million workers. Remember, we have 33
million people working in the UK, out of 66 million, so those in
the bottom 10% are getting a 10% increase. That has a knock-on
effect for further formulae. This is a big impact. If we look at
the past eight years, since it came in in 2015, the national
living wage has gone up by 60% versus inflation at 30%, so there
has been a real increase in wages for those at the lower end of
the wage scale.
(LD)
My Lords, I think the noble Lord, , would agree that there are too
many working people who have to rely on the minimum wage in this
country and that those at the bottom of the wage cycle are the
ones who suffer most when there is low growth. A key statistic,
if the Minister wants to trade statistics, is GDP per capita,
which is falling. Our productivity is falling because there is
insufficient investment in skills and capital machinery. The
reason there is insufficient investment is because businesses do
not have stability or confidence going forward. Does the Minister
agree that this Government do not have a plan and are not
providing the facility that can deliver the growth that will help
the people the noble Lord, , is talking about?
(Con)
I thank the noble Lord for that. We have record levels of
employment in this country, with 33 million out of 66 million
people working. Average public sector pay is £19 an hour and in
the private sector it is £16. We are now taking the minimum wage
up to £11.44. The noble Lord is quite right to indicate that if
we want to ask businesses to invest more money, perhaps we should
be asking them to invest in more productivity per employee rather
than just more wage per employee, and perhaps more inclusion and
diversity, along the lines of John Lewis and Timpson.
(Lab)
My Lords, there is no justification for discriminating against
young people under any circumstances. People can join the Army at
16, they can be on the front line at 18 putting their lives at
risk for King and country, but they cannot receive the full
national minimum wage until they are 21. This cannot possibly be
right. Does the Minister agree?
(Con)
I thank the noble Lord for that. There is a wage scale, as he
will well know. For those aged 18-20, it is £8.60 an hour and for
those under 18 it is £6.40 an hour, an apprentice rate. The point
of this is a scale. We all start work on lower wages and increase
our wages as our skill levels increase. We must not be in a
situation where we, in effect, lock young people out of the
market. We must ensure that young people get into the market
earning wages and then increase their skills and their wages. The
noble Lord will know well that many studies have been done on the
wage scar, which blights young people if they do not get into a
job early and get training. We want young people in a job early,
trained up, so they can increase their wages.
(Con)
My Lords, has my noble friend the Minister’s department made any
assessment of whether these increases in the minimum wage, which
go well above and beyond average wage increases, have impacted
the ability of companies to take on interns, which is normally
the main route into employment; whether they have had an impact
on speeding the adoption of automation and assimilating the
upfront costs; whether employers respond by cutting in-work
benefits, discounted meals and so on, to compensate; and, not
least, what the impact is on the price rise of the finished
product, because often people on minimum wages are also consumers
of minimum wage products? If, for example, fast food becomes much
more expensive, it is not going to be hedge fund managers who
pay.
(Con)
I thank my noble friend for that. The cost to business is a
consideration that we must consider. The cost of this particular
increase will be £3 billion over six years and I emphasise that
it will fall largely on the SME community. Some 99% of our
companies are SMEs, with 2.5 million VAT-registered companies.
Setting aside the 10,000 companies that employ 30% of the
workforce, 60% of the workforce are employed in SMEs and they are
bearing the brunt of exactly these wage increases. We survey
employers and they want to pay higher wages. We want a good,
well-paid workforce but we must do so in a way that balances the
needs of business and workers.
(Lab)
My Lords, I thank the noble Lord, , for his tireless campaigning to
tackle homelessness and poverty. Even at my advanced age, I enjoy
celebrating birthdays, but I have never believed that my hourly
work increases by 50% simply by ageing a year—yet that is implied
by the national minimum wage banding between 17 and 18 year-olds.
These days it is a real struggle to survive on the full national
minimum wage. Does the Minister agree that lower rates represent
unfair age-based discrimination and send the wrong message to
young people at the start of their working life?
(Con)
I thank the noble Lord for that. I think I have already addressed
that question. We have to set the national minimum wage as high
as possible for young people without damaging their prospects. We
have to encourage them into the workplace. We have to avoid the
longer-term scarring effects from long spells of unemployment
that I have talked about. That is what this metric achieves.
(Lab)
My Lords, does the Minister agree that it is shocking that social
care workers—who perform incredibly skilled and precious work for
all of us but the majority of whom are paid less than the real
living wage of £12 an hour outside London—are paid so little, and
that a quarter of them are on zero-hours contracts? How much do
his Government believe a social care worker is worth?
(Con)
I think everyone on all sides of the House agrees with the noble
Baroness that we owe a great deal of gratitude to those who work
in the social care sector. It is a fact that a lot of them are on
lower wages and we would like them to be paid more, but at the
end of the day we now have 10% of the workforce on a national
living wage that underpins their prospects, and it is now the
responsibility of businesses and employers to increase the
training and skills of our workforce so that they can earn more
in the market.
(GP)
My Lords, my question follows on from the Minister’s answer to
the noble Lords, and . The Minister spoke about young
people being scarred by periods of unemployment, but just imagine
trying to live on £6.40 an hour for an under-18, which is what it
is going up to in April, or £8.60 an hour for 16 to 20-year-olds.
Does the Minister not think that young people are being scarred
by the inability to afford healthy food or decent accommodation,
or indeed to live any kind of life, while struggling to survive?
Their costs are no lower than anyone else’s. Surely they should
be paid enough money to live on.
(Con)
I thank the noble Baroness for that. The ambition that we should
all share is for everyone to have rising wages as they improve
their skill levels and for our young people to get meaningful
jobs out of school that allow them to be trained and earn more as
they progress in their career.
