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National Minimum Wage

Volume 281: debated on Wednesday 17 July 1996

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To ask the President of the Board of Trade what representations he has received on the impact of a national minimum wage of £4 on employment in small businesses. [36082]

I have received representations from numerous organisations, including the Institute of Directors, the Confederation of British Industry, the British Clothing Industry Association, the Engineering Employers Federation and the British Chambers of Commerce, all of which have said that companies, including many small firms, would be severely hit by a minimum wage.

A recent report said that small firms would
"come under pressure to survive".

Does my right hon. Friend accept that, in the constituency of Hastings and Rye, the tourism and rest home sectors are two of the principal industries? Does he agree that, if a national minimum wage were introduced into those two sectors, British holiday makers would go abroad rather than spend money in the United Kingdom, because tourism would be uncompetitive, and rest homes would have to put up prices, which would go straight on to public spending and hence to higher taxation? Is not that another example of new Labour being new danger?

My hon. Friend is right. In an answer to an earlier question, I mentioned the estimate that 1 million jobs would be lost with a national minimum wage of £4 an hour. A recent survey estimated that about 128,000 of those jobs would be lost in the south-east of England.

Is the President of the Board of Trade aware that it is not the minimum wage that is affecting business and small business today? He must know that half the competitive advantage that we got by a massive devaluation of our currency has already been frittered away and that our productivity is slipping away as well. What is he doing about that? That is what matters to the British economy, not the red herring of the national minimum wage.

The hon. Gentleman may call it a red herring, but perhaps he would like to tell his right hon. and hon. Friends on the Labour Front Bench that it is. They are planning to introduce a national minimum wage that would destroy jobs and competitiveness. The Confederation of British Industry has estimated that the cost to industry of a minimum wage of £4.25 an hour would be £5.7 billion. That would destroy jobs and profitability and undermine the record export and good manufacturing figures that we have achieved without a minimum wage.

Does my right hon. Friend agree that, if the European experience is anything to go by, young people are one of the groups who would suffer most from the introduction of a national minimum wage? Is not the reality that a national minimum wage would simply price young people out of a job? Is not that why it should be strongly resisted by the Government?

My hon. Friend is right. That is one reason why countries on the continent of Europe that have a national minimum wage also have almost twice the level of youth unemployment that we have.