Ian McCartney MP

Mr Ian McCartney:

It is not often that former Ministers are present in debates such as this, not to defend themselves, but to think aloud about where we should take things.

My hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) said that he would give the minimum wage two out of three; I would give it three out of three. That is not because I was the Minister responsible for it or because I am totally loyal to the Government, which I am on two counts—one historical and one factual—but because, 10 years ago, a debate such as this would have been about the principle of the minimum wage and whether it is a viable option in a modern labour market. That argument has been won. Conservative Members sit over there, but there is absolute, or almost absolute, silence from them. Yet, the Conservative party tries to convince us that it is an anti-poverty party.

We started a campaign to establish the Low Pay Commission, and the national minimum wage is now a reality. Under their contracts, constituents working in Burger King were earning 10p an hour. When there was no work for them to do in the early evening, they had to sit and wait until their employer told them to get back behind the counter. While they were waiting, they got no pay whatever.

When the national minimum wage started, it was £3.60 an hour, which was not a lot of money, but it was better than 10p an hour. The big thing about the minimum wage, however, is that it is not just a minimum wage; it is about the state taking responsibility for its citizens—for workers who are vulnerable, disorganised or unorganised and who do not have the capacity, individually or even collectively, to negotiate better pay and conditions.

Whatever the rate of the minimum wage in the future, it will always be just that—a minimum wage. For many workers at the edges of the labour market, it will always be vulnerable, and there will always be employers who are prepared to undercut it. If we accept that that is the reality, we have to ask what we, as parliamentarians, can do to improve the system in the light of our experience since the implementation of legislation.

Michael Connarty MP:

Everyone in Parliament who followed the minimum wage process from concept to reality will commend my right hon. Friend’s efforts to promote it and to tackle issues relating to temporary workers and the working time directive. We all owe him a debt of gratitude, and every worker in the country should realise that.

Mr McCartney MP:

I thank my hon. Friend for that. I was not being defensive. I was one of many people involved in the process, and the truth of the matter is that I was lucky to be the right person at the right time. Although I was certainly enthusiastic about the job, it was a collective agreement.

The consultation on the Employment Bill will take its course, and I hope that the Government will respond positively to the recommendations that USDAW, Unison, the TUC and others have made to improve its workings. I want, however, to concentrate on the current regime.

We asked HMRC’s predecessor to take responsibility for investigation and implementation because it was the one organisation that had the capacity to look at employers who refused to pay the minimum wage on request or as a simple matter of principle. Those were the same employers who refused to introduce minimum health and safety standards and who failed to recognise trade unions, pay appropriate tax and national insurance contributions and do all the other things that a good employer does as a matter of course. HMRC is the one agency that has the capacity, intellectual ability and skills mix to have a relationship with every employer in Britain. It is a powerful tool in implementing a national minimum wage and dealing effectively and quickly with those who refuse to pay it.

First, it was always the intention that every HMRC inspector would have direct or indirect responsibility for ensuring the implementation of the minimum wage. When inspectors check whether VAT, tax or national insurance contributions have been paid, they also have the capacity to check on wage levels, and vice versa. HMRC does not have just a handful of individuals in a region with a particular skill, but a large number of people in each region of the United Kingdom, including Scotland, Wales and Northern Ireland, who can implement the minimum wage. It uses an army of people, rather than a small number of people within that army, to implement the minimum wage. However, it is worth considering whether it can utilise its resources more effectively.

Secondly, when vulnerable workers think of making a complaint, the first question that they ask themselves is, “What will happen to me?” Nine times out of 10, they are not in a trade union, and nine times out of 10, they are in a part of the economy where the trade unions are disorganised or not organised at all.

Thirdly, regardless of whether workers are married, unmarried or in a relationship of any sort, and regardless of whether they have responsibilities of any sort other than to themselves, we can be sure that their wage will be the only wage that they have.

The minimum wage was so important, because it was meant to help workers who could not organise to get a higher rate. We must ensure that we deal effectively with the barriers to making a complaint in the first place. We did that by treating the minimum wage as a day-one right, which could be claimed by the worker themselves or by someone representing them, which is important. In other legislation, we have tried to improve the capacity of unions to get into small and unorganised workplaces, but the unions still have a low base in the low-paid sector, although they are beginning to expand, speak up and speak out.

On a daily basis, the practical truth is that workers will still be on their own. That is why HMRC and the Gangmasters Licensing Authority are important. Now that we have established those bodies, we may have to look at ways to bring them together more effectively—in a single agency or whatever—so that they have the capacity to intervene immediately when an employee or group of employees makes a complaint about their wages.

It is important that those who decide not to pay up immediately in keeping with the regulations face a further penalty. Workers should be entitled not only to back pay, but to compensation. That is vital, given the trouble that people go to simply to claim the minimum wage. Few of them are in a trade union, so all communication—whether it is telephone calls or whatever—involves a cost to them. There is the cost to them in terms of worry and concern, and there is also the cost of trying to borrow money from somebody else when their employer does not pay them the wages to which they are entitled and which they need to meet their bills. They can be hard-working, but they can still be unable to meet their bills. So getting back the £300, £400 or even the thousands of pounds that people are owed is not enough; we need to see whether there should be a compensation package. I hope that the Government will consider introducing in the Bill the capacity not only to repay people where they have been underpaid, but to compensate them.
We could debate that issue and related issues for a long time, but I know that other colleagues want to come in. However, the fact that we are having a debate shows that we still have a Labour party in Parliament that remembers where it came from, where it is going and where it needs to get to in a disciplined fashion. The longer we keep the Government where they are, the more vulnerable workers will become less vulnerable and the more workers who are being underpaid will get the minimum wage. It is critical that that happens.

The publication of information on the minimum wage raises several key issues. First, few workers understand their rights. Secondly, few can calculate what their wage should be. Thirdly, in industries where workers are vulnerable, few of those who take up work get a contract of employment that is worth the name or which informs them of their rights. Fourthly, when workers get information, it is often confused or not adequate to help them assess whether they are getting the minimum wage.

The Low Pay Commission should, therefore, have a statutory right to amend the relevant regulations to ensure that we have a different form of payslip. Workers should be entitled to a basic minimum payslip designed by the Low Pay Commission. They should be able to use their first payslip to calculate whether they are receiving the minimum wage. On the back of that payslip, there should be information about the hotline and about where people can go if they believe that their employer has miscalculated their wages.
We should take responsibility away from the unions, the employer and the employee and put an easy reckoner on the payslip to show whether the minimum wage has been paid and, if not, how people can get back the money that has been stolen by their employer. If we were to take that step, we could help hundreds of thousands of workers a year.

It would be a mistake if we went to court in the end. I would rather see the money spent on investigations. I would rather put money back in people’s pockets than spend hundreds of thousands of pounds of scarce resources on taking employers to court, when they might just bunk off in the end—many of them would do that. We have to take measures to deal with this issue as part of a prevention strategy, rather than a strategy to deal with things once the horse has bolted.

We must improve the role of HMRC and its relationship with other agencies, such as the Gangmasters Licensing Authority. We must put resources into ensuring that workers understand their entitlements from day one, so that they know when they get their first pay packet whether they are being paid the minimum wage to which they are entitled.