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Age Discrimination: National Living Wage

Volume 611: debated on Wednesday 8 June 2016

I beg to move,

That this House has considered age discrimination and the national living wage.

May I say how delighted I am that you are chairing this debate, Mr Davies?

One of the biggest challenges facing this Government has been the persistence of low-paid work, and I welcome any and all measures to address that, including the national living wage. However, young workers under the age of 25 rightly feel a sense of injustice at having been left out of the pay rise. As of last month, many workers under 25 will have discovered that their pay package is substantially less than that of their older colleagues. About 6 million young people aged 18 to 24 in the UK could be affected. I sought this debate to provide an opportunity to examine the inequality underpinning that decision and to ask the Government to plan for an extension of the national living wage to under-25s.

As it stands, those between the ages of 21 and 24 are currently paid 50p less than the living wage per hour. That is predicted to rise to a difference of £1.21 per hour by October 2020. The margin is greater again for those between 18 and 21, who are paid £1.90 less an hour. It has been estimated that under-25s on the minimum wage will earn just over £11,000 less than an older colleague over the next five years.

We all welcome the recent rise in youth employment. It is up by 94,000 as stated by a Treasury Minister in the main Chamber yesterday. However, this debate is about the value of work. The Resolution Foundation suggests that wages have fallen significantly for young people in recent years, with incomes for 22 to 29-year-olds falling by 12.5% between 2009 and 2014, so I am asking the Government to use the living wage as a means to put that right.

I am sure that the Minister will accept that comments made by the Minister for the Cabinet Office and Paymaster General have rubbed salt in the wounds of young workers, who were already demoralised at being left behind in relation to the living wage. When he outlined at the Conservative party conference the Government’s rationale for taking the decision, he said:

“It was an active choice not to cover the under 25s.”

He continued:

“Anybody who has employed people knows that younger people, especially in their first jobs, are not as productive, on average.”

What a kick in the teeth for the next generation. We know that young people are often the ones asked to work the longer shifts, lift the heavier packages and work the antisocial hours. I know that from personal experience. When I graduated from university, I started working for a business in my home town dealing with sales both overseas and across the UK. My boss was a good man, but as one of the few employees who at the time was young, unmarried and without children, I was regularly asked to travel at short notice and work out of hours, at evenings and weekends.

Young people are regularly asked to work harder and longer hours because of their youth and are often keen to oblige through a desire to prove themselves and to move up the ladder, but sometimes they feel that they have little choice. Sometimes their circumstances mean that it is easier for their employers to ask them to work the more antisocial shifts rather than older members of staff, who might have commitments at home, so when the Government say that young people are not as productive, how are the Government measuring productivity? What does an underproductive young employee look like? Shockingly, when I asked the Government in a written question for their figures to back up their claims that young workers are unproductive, I was told that they have absolutely no evidence to prove that. In his answer, the Minister told me that

“there are no official statistics estimating the productivity of workers by their age.”

So we know that the Government cannot provide evidence for that claim.

I accept that those embarking on a new role often require training and support from their employers and perhaps represent initially a reduced return on the investment for an employer. However, that could be said of any employee, of any age, taking on a new role or returning to the workplace. I ask the Government to avoid making generalisations that single out the under-25s, and I will give an example of how unjust that could be in practice.

Let us imagine a young person who takes their A-levels at 18 and goes either into training in the workplace or directly into employment. They could potentially be in a job for six years before being entitled to the living wage, but a new employee could start in the same role, sit at the next desk and be paid the living wage, at 50p more an hour, with six years’ less experience, simply because they are over 25.

Alternatively, a young person might study hard at school and decide to pursue an academic route, going to university. Research undertaken by Which? indicates that a typical student on a three-year course outside London might expect to graduate with about £35,000 to £40,000 of student loan debt. Most students on a three-year course graduate at the age of 21. The Office for National Statistics has identified that about 47% of graduates are employed in non-graduate roles, a trend that has steadily increased since the 2009 recession. So a young graduate, who has done all the right things by working hard and getting a degree, is saddled with up to £40,000 of debt as a result, has only a 53% chance of securing a graduate job and is not even entitled to the new living wage. Up and down the country there are countless examples of young people who give it their all and are a huge asset to their firms, yet now face the demoralising prospect of unequal pay.

Having raised this issue in the debate on implementation of the living wage in the main Chamber in April and having asked for a debate on this issue in business questions, I can say that it feels as though the Government have sought hastily to move away from the comments by the Cabinet Office Minister about falling short on productivity and are instead arguing that the ability to pay the under-25s less will incentivise firms to hire young workers. Indeed, when I asked the Leader of the House for a debate on this issue, he replied:

“I…think it is important to do everything that we can to incentivise employers to take on young people.”—[Official Report, 28 April 2016; Vol. 608, c. 1564.]

Tackling youth unemployment is a goal that I am sure hon. Members on both sides of the House support, but organisations including the Federation of Small Businesses have pointed out that the Government’s approach could see employers wandering into legally precarious territory. Any employer that actively seeks to recruit under-25s to cut wage costs will almost certainly fall foul of age discrimination legislation. The Equality Act 2010 prohibits discrimination on a number of grounds, referred to as protected characteristics, with section 5 of the Act recognising that age is one of those characteristics. It is direct discrimination if, because of a protected characteristic, one person is treated less favourably than another. The House of Commons Library has confirmed that to recruit workers on the basis of their age would constitute direct age discrimination.

As someone who is under 25, I can say that everybody who is elected in this room is paid on the same basis. Therefore, I find it completely unjustifiable that the same principle does not apply to the outside world. Does the hon. Lady agree that this is yet another example of the Conservative Government’s attitude that there should be one rule for us and another for people outwith this Parliament?

Hon. Members might remember that in the living wage implementation debates, I highlighted that, at times, William Pitt the Younger makes us all feel like underachievers, as he was Prime Minister at such a young age. There are great examples of young people doing well in this place, as well as out in the real world.

Firms interviewing for a role are legally required to choose the best candidate for a position, regardless of age. The employer is forbidden from acting on the financial incentive to hire the younger applicant so how, exactly, do the Government anticipate the incentive will work in practice? In its evidence to the Low Pay Commission, the Federation of Small Businesses said

“our survey data suggests that some businesses may focus their recruitment on the under 25s. However by doing this they run the risk of potentially breaching age discrimination legislation, which should lead many employers to re-evaluate this stance.”

It can only be described as shambolic when the FSB feels compelled to advise its members to avoid acting on those very incentives.

I would be grateful if the Minister could clarify the Government’s intention around the 25-year-olds threshold as a financial incentive and if he could respond to the advice of the FSB. If, as a result of the Equality Act 2010, the under-25s threshold is not permitted to serve any purpose in boosting youth employment rates, why have a lower rate at all?

Thankfully, many companies recognise the contributions made by under-25s and are opting to pay them more than the minimum wage. Nestlé employs up to 1,000 people in my constituency and was accredited by the Living Wage Foundation in June 2014 as the first mainstream manufacturer in the UK to become a living wage employer, paying at least £8.25 an hour from the age of 18.

Nestlé’s senior public affairs manager told me that, as part of its European youth employment initiative, Nestlé decided to go above and beyond the basic requirements of becoming an accredited employer, extending its living wage commitment to apply to graduates, interns and those on its fast-start school leaver programme. It said:

“As a major employer in Halifax and across the UK, we know this is the right thing to do. Not only does it benefit our people but also the communities they live and work in.”

Nestlé has joined 2,575 living wage employers up and down the country to recognise that, regardless of age, young people are hard workers. The company knows that it is important to maintain morale in the workforce, and that young workers deserve respect. The Living Wage Foundation is explicit in outlining that the living wage should apply to everyone over the age of 18.

I anticipate that the Minister will most likely point out the difference between the Living Wage Foundation’s living wage, adopted by Nestlé, and the Government’s living wage, and he would be absolutely right. However, the Government did not decide to call their increase in the minimum wage a living wage by accident. Therefore, I am asking the Government to consider adopting the Living Wage Foundation’s principle that fair pay for fair work starts at 18, in the same way that it has adopted its name.

Given that there are several examples of best practice, such as Nestlé, which has independently recognised the benefits of an equitable pay scheme, why have the Government taken the decision to set the bar lower than the standard that many of our more responsible employers are already attaining? In his 2015 Budget, the Chancellor announced that, with the living wage, he wanted to move towards a higher wage and lower welfare country. However, although the living wage has delivered a benefit to thousands, under-25s are the exception. With this Government benchmark, we risk undermining the good work of trailblazers who are going above and beyond in the market place, with the potential to suppress wages for the under-25s.

In April, when the living wage was introduced, The Guardian ran a story about Anthony, who is 23 and works in a London warehouse. He was quoted as saying:

“I was already getting £7.20 an hour … I’m now on £6.70. It’s been cut just because I’m 23 and not 25…I’m getting less for doing the same job…I feel so worthless.”

I think we can all agree that that is shocking and I do not believe that the Government intended for wages to be cut in any way, but that is not to deny that that is the very real danger in sending out the message that it is okay to pay young workers less for no reason other than their age.

I am, of course, willing to accept that minimum wage rates must be set at a rate that firms are able to support, but previous rises in minimum wage rates for young people have not had an adverse effect on employment. Indeed, that was the case when 21-year-olds covered by the youth development rate were moved on to the adult minimum wage in 2010. That is the perfect case study for measuring the effects of a large increase in wages of a certain age group; in that case, it was a rise of 22.8%. The Low Pay Commission has reviewed that case, saying:

“Looking specifically at 21 year olds, there was an absence of negative employment effects in 2011; on the contrary their employment rates, which had been falling, stabilised until the end of 2011”.

When giving evidence to the Low Pay Commission earlier this year, the TUC voiced its opposition to a lower rate for under-25s, saying:

“We strongly oppose a separate rate for 21-24 year olds. The key point here is that while it is true they have higher unemployment and lower pay, their rate of improvement in employment is impressive and faster than for 25-29 year olds. Their rate of labour market improvement shows they can bear increases in line with the National Living wage.”

The TUC was keen to point out that, by setting the threshold at 25, the Government had adopted the highest threshold for being paid the standard adult rate in the developed world, matched only by Greece. Hon. Members might be interested to hear that Japan, Canada, Turkey and Spain start the adult rate at 16, while France, Ireland, Germany and New Zealand pay the full adult rate from 18. Even in America, there is no age threshold apart from the option to pay workers under the age of 20 a lower rate for their first few months of employment. Only the UK and Greece have set the threshold at 25. If the policy worked, surely we would see it reflected across the developed world, but that is not the case.

Looking back to the introduction of the national minimum wage, John Major told his party in 1996 that the minimum wage should be opposed as it would

“price job-seekers out of the market”

and was a policy to “destroy jobs”. I urge the Government to avoid making the same arguments in the current debate because, just three years after Major gave that speech, the Conservatives embraced the minimum wage after it had so clearly boosted wages without harming employment.

There is support for extending the living wage. In a recent poll by Survation, 66% of voters stated that they believe the new higher rate should also be given to workers under 25. There was support from across the political spectrum, with 55% of Tories and 74% of Labour supporters in favour. Even 69% of UK Independence party voters supported extending the living wage.

In conclusion, nearly 6 million young people could be affected by the lower wage rates and it is an absolute outrage that they have been told they are not worth £7.20 an hour, with unevidenced claims about poor productivity combined with arguments about low pay incentives that could see employers who act on them being open to legal challenge.

We would all like to see youth unemployment improve, but debt and low wages are not a sustainable solution. The Government’s adoption of a higher minimum wage is welcome but, unless under-25s are included, that flagship policy will have a great unfairness at its heart. Once again, the Government are on the wrong side of the equal pay for equal work debate. That has to change and I will work with young people and colleagues from across the country to ask the Government to rethink their unjust and unworkable decision, and extend the living wage to under-25s.

It is great to see you in the Chair this afternoon, Mr Davies. I congratulate the hon. Member for Halifax (Holly Lynch) on securing this important debate, which is significant to many young people across these islands.

It is my gran’s birthday today. She has seen many forms of discrimination removed during her 96 years on the planet, on race, religion and sexuality. There has been so much progress, particularly for women, but there remains a persistent issue of inequality, endorsed by the state, when it comes to age. The differing rates of the minimum wage reflect a situation whereby young people are actively discriminated against because of their age.

In the Scottish National party, the equalisation of the minimum wage has been our policy for many years. While I was convener of the SNP’s youth wing, Young Scots for Independence, a resolution was moved at the SNP conference in 2006. It stated:

“Conference notes that the minimum wage is pegged at different levels dependent on age. Conference believes the current system to be grossly unfair and discriminatory and resolves, in an independent Scotland, to equalise the minimum wage levels.”

Much to my regret, we have not managed to achieve that independent Scotland yet. Nor have we achieved devolution of employment law so that the Scottish Parliament might make that change for itself. I still believe, though, that there is no justification for this grossly unfair and discriminatory practice. YSI renewed the fight on that issue at conference in 2013, giving the SNP’s backing to the Scottish Youth Parliament’s excellent “One Fair Wage” campaign.

I wish to dispel a few myths on the reasons behind the staggering of the minimum wage rate. The Low Pay Commission said in its 2013 report that

“we do not want the level of the minimum wage to jeopardise their”—

young people’s—

“employment or training opportunities.”

I just do not buy that. Young people have a range of options in front of them: work, study, apprenticeships. All that the staggering of the minimum wage ensures is that, whichever choice young people take up, whether it is employment on its own or in support of their studies, they are not legally entitled to the same wage as an older colleague in the same job. That is patently unfair.

Apprentices are faced with a rate of only £3.30 an hour. In many places that would not even cover their bus fare to get to the job, which is an absolute scandal. Do the Government believe that apprentices do not need to eat and do not have bills to pay? That rate compounds existing disparities. Analysis in the Department for Business, Innovation and Skills research paper on the evaluation of apprenticeships shows that apprentices are far more likely to come from a lower socioeconomic background. If the Government actually believe that work and training are means of getting out of poverty, apprentices should be much better supported than the current national minimum wage rates suggest. Decent employers offer comparable rates to their apprentices, but they are not legally obliged to do so.

Going further, under-25s have no discount on their bills, on their purchases in shops or on their rent. There must be recognition that an equal day’s work deserves an equal day’s pay. Those in the 16 to 17-year-old bracket at £3.87 an hour may well do the same work as someone in the 18 to 20 bracket at £5.30 an hour or someone aged 21 to 24 earning £6.70 an hour. None of them is entitled to the holy grail of the pretend living wage at £7.20 an hour, and of course none of them is a true living wage, as determined by the Living Wage Foundation, of £8.25 an hour. Research by the Scottish Parliament’s information centre shows that workers under the age of 18 will earn roughly £6,500 a year less than someone over 25. It further highlights that 18 to 20-year-olds will find themselves £3,705 worse off and apprentices will be £7,605 worse off than workers aged 25 or over.

The Government hide behind the myth that the staggering of the minimum wage reflects young people’s lack of experience. The Chief Secretary to the Treasury made that assertion again yesterday:

“For younger workers, the priority is to secure work and gain experience.”—[Official Report, 7 June 2016; Vol. 611, c. 1016.]

Again, that does not stack up. How can it possibly be fair that, by the letter of the law, a young person could start a job at 16 and work there for eight full years to gain the entitlement that a 25-year-old would have walking in on their first day? It is not about experience at all; it is about age discrimination sanctioned by the state.

I mentioned in a previous debate on the living wage on 18 April that I have a constituent who feels that she was dismissed due to being an older worker in a bar. She was on a zero-hours contract and was phoned on the day of her shift to be told that her services were no longer required. That coincided with the introduction of the new higher rate of the minimum wage. My constituent cannot prove it, but it smells very fishy. The response I received yesterday from the Minister for Skills was absolutely woeful. There is no action, and no changes are being made.

As the hon. Member for Halifax said, the staggering of the minimum wage rate gives unscrupulous employers perverse incentives to choose to hire younger workers, perhaps in industries such as catering, cleaning and retail that have a relatively high turnover of staff. Those workers are being exploited, too. Employers can dodge their obligations and try to manipulate the system to save cash, as younger, less experienced workers are less likely to bring a case successfully to an employment tribunal, even if they can pay the fees in the first place. Such employers are likely to get away with it.

The SNP is calling on the UK Government to raise the minimum wage for young people and apprentices or, if they will not do so, to give that power to the Scottish Government to do it for themselves. As part of the SNP’s commitment to fair work, we passionately believe that the living wage should be paid as widely as possible, including to apprentices and young workers. The Scottish Government have done a huge amount of work to persuade businesses in Scotland to take it up. We now have a very high success rate of employers paying the living wage to their employees. We fully support the living wage campaign, and we recognise that the living wage can make a real difference to the people of Scotland. Our Government are a fully accredited living wage employer, which sends out a hugely important signal that the UK Government should also take up.

If we had control over employment law in Scotland, I am certain that we would improve the pay of people in our nation, including those who happen to be under 25. My gran waited a long time to see discrimination broken down; I hope my daughter does not have to wait very long.

I have plenty of thoughts, and I am glad to share them. It is a pleasure to be called to speak in this debate. I enjoyed the setting of the scene by the hon. Member for Halifax (Holly Lynch), whom I congratulate on securing the debate. It is also a pleasure to be one of two males who will contribute.

It is hard to argue with the principle, ideal and intent of the national living wage. We want everyone in our country to have a life free from poverty and a job that compensates them properly for their labour, which is the purpose of the national minimum wage. In Northern Ireland we have some of the highest levels of poverty in the whole United Kingdom, so the minimum wage is an important issue for us.

We are a nation of shopkeepers, and I am descended from a family of shopkeepers. Margaret Thatcher said that we were a nation of shopkeepers—I am not sure whether we are as much as we used to be, but we still have a lot of shopkeepers. As the hon. Lady said, we are debating the principle of rewarding those who put in the graft by getting up to go to work and work hard for their family, but we would not be having this debate if there were not outstanding issues with the minimum wage changes.

We have all heard that small businesses across the country are worried that they will have to pick up costs that they cannot afford and, as a result, may have to lay off workers, who are not just employees but friends and family. That is an important issue. While seeking to improve the wages of people in the 18 to 25 bracket, we have to ensure that the businesses that employ them are able to pay those wages—it is important that we achieve that.

My constituency office—other Members will say the same—has been visited by many 18-year-olds who are setting up home together. That is good, and we want to encourage them, so we help them as best we can with housing. We hope that their wages will be enough for rent, food, heat and enjoying some time together as a young couple starting off. The hon. Member for Glasgow Central (Alison Thewliss) said that an 18-year-old could be doing the same job as a 25-year-old to the same level of expertise and ability but receive a lesser wage, which is grossly unfair.

Evidence from the Association of Convenience Stores shows that it is extremely concerned about the prospect of the national living wage reaching 60% of median earnings, which is currently projected to be £9 an hour. Retailers report that that is likely to change their staffing structures and affect store profitability. Some 25% of shop owners work more than 70 hours a week, and 20% do not take any annual leave. The May 2013 “voice of local shops” survey indicated that a majority of independent retailers, some 55%, believe that they earn less than the national minimum wage when taking into account the hours they work. Shop owners might not be earning the wage they need, but they do it because they have done it all their life and they want to create some employment for those around them. There are other reasons for doing it as well.

The Chancellor has taken that into account and has offset various business costs such as corporation tax and national insurance. The Government are cutting the burden of business rates by some £6.7 billion over the next five years. Provided that that does not affect tax receipts, it is a most welcome move that will help business owners across the country by freeing them of some of the shackles and obstacles that ambitious and striving small and medium-sized enterprises face in their quest to succeed and expand. The national living wage will hopefully not have the impact that SMEs once feared, but only time will tell. We will see how that works.

It is easy to jump to the assumption that there may be a form of discrimination, as the hon. Member for Glasgow Central said. Many of us feel that there might be discrimination, and in some cases there may well be blatant discrimination. It is about getting fairness so that people get a wage that reflects their labour and the sweat on their brow. That is what I am keen to see. There are mortgages or rent to pay, as well as childcare costs, family expenses and possibly pension savings, because now when people get a job they are often entered into a pension scheme almost straight away; indeed, people are encouraged to join pension schemes, by the Government among others. It is also important to have a pound or two set back for a rainy day. The hon. Lady referred to her grandmother. My grandmother and my mother are the same in this regard; they always had a pound or two set back for a rainy day, or the “what if?” category. When something goes wrong, it is good to be prepared for it.

Those are just a few of the costs that people have to factor in after being paid as they get older. Before the national living wage, people on the old-style minimum wage also factored those things in. It is true that there are some 21 to 24-year-olds who have all those expenses and more, which why it is important and welcome that the Low Pay Commission will continue to monitor, evaluate and review pay conditions for younger workers when it makes recommendations for future changes to the national living wage. I am keen to hear the Minister’s response to the debate, particularly on how he sees the Government monitoring, evaluating and reviewing those conditions. If those conditions are not right, what will happen?

The fact that changes to the national living wage are possible shows that there is room for movement. I believe that the Government have created some flexibility for the changing, adaptation and correction of the national living wage; the Minister will confirm whether that is the case or not. I hope that what is on the table now will not be, by any means, the end goal. There have to be some possibilities for movement, to secure better conditions for those on the minimum wage.

It is important that we do not disadvantage anyone financially in all of this activity, but at the same time we cannot disadvantage those who need the wage increase the most and those who are trying to get on in their life. Let us encourage our young people. That is why we are here; that is why we are MPs. We want to encourage our constituents, and our young people in particular. There needs to be careful monitoring of how the national living wage plays out in reality for those in the lower pay brackets, to ensure that no one is being disadvantaged by the structures.

I conclude by saying that close monitoring of the situation should allow for appropriate adjustments to be made. It is imperative that it continues in the future and that all essential amendments are made in a timely fashion, to ensure that the national living wage is the success that the Government, the hon. Member for Halifax and the rest of us here today want it to be.

I want to begin calling the Front-Bench spokespersons at 5.20 pm, so I invite Liz McInnes to speak for eight minutes or so.

It is a pleasure, as always, to serve under your chairmanship, Mr Davies. I have only prepared a short speech, so I might give the Front-Bench spokespersons a bit longer to speak. However, I am sure that we are all eager to hear what the Minister has to say.

I thank my hon. Friend the Member for Halifax (Holly Lynch) for securing this important debate. It is about a subject that I know she has done a lot of work on, and I commend her for that. This is a really important issue and I agree with her that fair pay for fair work should start at the age of 18. The arbitrary cut-off point of 25 makes no sense; 25 is not the age of consent. There is no reason why this Government should have picked on people under 25. Not for the first time, I find myself standing up in this place and asking, “What have this Government got against young people?”

This Government seem to be intent on attacking young people across the country by putting barriers in their way. They come in the form of educational barriers—the scrapping of the education maintenance allowance—the depletion of local youth services, the increase in tuition fees, the transformation of maintenance grants for students into maintenance loans, which puts those students into more debt, the refusal to address zero-hours contracts and the failure on housing, with the lowest house building figure since the 1920s. In all these ways, this Government discriminate against younger people and now they seem to be using pay in the workforce as another way of undermining our young people.

We welcome the Government’s national living wage, although I prefer to refer to it as the new national minimum wage. The real national living wage would be considerably higher and set independently by the University of Loughborough, which is something we should all be moving towards—a rate of pay that people can actually afford to live on and that is independently assessed. I welcome the pay rise, but I am profoundly concerned that the Government are undervaluing the skills and talents of people under 25, leaving many young people across the country in a perilous position by excluding them from the full living wage.

The legislation fails to address the finding of the Equalities and Human Rights Commission in 2015 that younger people face the

“worst economic prospects for generations”.

The commission stated:

“Younger people suffered the greatest drop in income and employment compared to older age groups and now face greater barriers to achieving economic independence and success”

than they did five years ago. The same report indicated that there was a decline in both earnings and full-time employment among younger workers, despite their being more likely to be better qualified than previous generations. We must harness and encourage the talent of young people, not discourage it.

One of the Government’s flagship polices to drive young talent was to deliver 200,000 new apprenticeships and to introduce an apprenticeship levy. However, the CBI has questioned the implementation of that policy, asking “for more clarity” and arguing that apprenticeships will only “help a small minority” of businesses. Also, apprenticeships need to be extended from traditional industrial sectors to meet the growing demands in social care, the tourism and leisure industry, and the digital and creative sectors.

Those 16 to 19-year-olds who are not in full-time education are at greater risk of being in poverty than any other category of people who are eligible to work. Even when 16 to 19-year-olds are in full employment, the cuts in benefits and the rise in zero-hours contracts have meant they face a daily struggle, making it increasingly difficult for them to get on and make a start in life by, for example, getting on to the housing ladder.

Home ownership among young people is below 50% and figures from the Office for National Statistics show that more young people aged between 20 and 34 are now living with their parents than was the case 20 years ago. The prevalence of zero-hours contracts is higher among young people than among other age groups, with 37% of those employed on zero-hours contracts aged between 16 and 24.

Austerity is a political choice and people under 25 should not pay such an unfair price—in the form of low wages and poverty—because of the policies of this Conservative Government. It is scandalous that the Government feel that they can discriminate against under-25s. Age discrimination is illegal under the Equality Act 2010 unless “objective justification” can be demonstrated, and saying that lack of experience justifies this age discrimination is not satisfactory.

In 2013, the Prime Minister proclaimed that young people have “low aspirations” and that his Government would

“get them to think that they can get all the way to the top.”

The Chancellor has claimed that the Government put “the next generation first”. The Prime Minister and the Chancellor speak great words, but they are really empty words that ring hollow, to my ears and to those of young people in this country, whose lives we are discussing today.

This Government have put young people last: last in opportunity; last in funding; last in jobs; and last in pay. We must not condemn younger people to become a lost generation and we must bring the national living wage age-exclusion to an end.

As always, Mr Davies, it is a pleasure to serve under your chairmanship.

I thank the hon. Member for Halifax (Holly Lynch), who truly has been a champion on this issue, and there is no doubt that we share the same interest in addressing it.

I have made this point before, but I will make it again to echo the sentiments expressed by the hon. Lady. She said that this is not a national living wage and, in fact, the Government are showing audacity in using the words “living wage”, because it is not. The accredited Living Wage Foundation has already made that clear—it is a national minimum wage. There has been a welcome increase, but it is simply not good enough that there is discrimination against an entire generation of young people.

I will speak from my own experience. I stayed on at school when I was 16, but I had to get a part-time job because I was from a single-parent family and the only way that I could continue my studies was to work part-time. I worked twice as hard, for twice as long, for the same amount of money as some of my colleagues, and that is the exact same position that many young people are faced with 13 years on. That is absolutely ludicrous and I honestly do not know how the Government can defend that policy at all.

I will take this opportunity to highlight some of the comments made by my hon. Friends and by other hon. Members today. The hon. Member for Halifax said that there is absolutely no proof that young people are not as productive as older people and I am pleased to hear that the Government have no statistics to that effect, because I am absolutely certain that it is not the case. I hope that the Minister, when he gets to his feet, will confirm that the idea that young people are not as productive is a complete falsehood.

The Government do not want to be on the wrong side of equal pay for equal work, so it is about time they got on the right side of history. To cover the points made incredibly well by my hon. Friend the Member for Glasgow Central (Alison Thewliss)—I have also held that same convenorship role in the SNP youth wing, for my sins—it is essential that we dispel some of the myths around young people taking more time to train and it being harder to get them up to speed with their colleagues. There are some incredibly hard-working young people across the country, and this Government fail to recognise that through their policies. When will they reconsider this policy? Age discrimination sanctioned by the state should never be legitimised.

I asked some of my constituents how they felt about things. Being under 25, were they excited by the new national minimum wage? Were they excited to be discriminated upon by their own Government? While Hailey is not under 25, she said that they were discussing it in college, and she was shocked to hear that a girl in her class, who was under 18 but over 16, was getting less than £5 an hour for the same job on the same hours. In fact, Hailey said, the girl was working more hours to get the same money. Will the Minister respond to Hailey? Ali said that it is despicable that companies—and, I would add, the Government—would allow people to get away with paying someone less because of their age. She said:

“That’s age discrimination. I thought that was illegal—it’s certainly immoral.”

I hope the Minister will respond to those points, which were made so well by Hailey and Ali.

The figure of £7.20 an hour, which the Government have set as their new minimum wage—if people wish to call it a living wage, carry on, but it is not—does not reflect the fact that the Living Wage Foundation has stated that £8.25 an hour for those living outside London would be more reflective of a real living wage. For those living within London, the real living wage would look more like £9.40, which is a far cry from £7.20. Forgive me if I am being presumptuous, but the Minister has perhaps been away from the labour market for some time, so he has not been subject to a minimum wage. I am not necessarily so far away from the labour market. I do not remember receiving a minimum wage, and £7.20 is a far cry from any sort of living wage. It fails to take account of the fact that many people under 25 have families, children and homes to provide for. All it assumes is that every young person has the luxury of deep-lined pockets and a family on whom they can rely. I do not think that is the case, and I am pretty sure that many young people, who are absolutely crucial and are working every hour God sends to make money, would not be happy to hear that the Government genuinely think their labour is worth less than some of their colleagues. I look forward to the Minister responding to each of those points.

We should consider the further aspects of age discrimination, which could take the shape of younger workers being employed in preference to their older counterparts—I am sure that the Government do not want to encourage that—as a cost migration strategy. I respect the comments made by the hon. Member for Strangford (Jim Shannon). Many employers will have difficulty balancing the books due to the new minimum wage, but the reality is that the pressures on small and medium-sized businesses will continue. I am sure that the Government, because they take business so seriously, will do all they can to support small and medium-sized enterprises to deliver a real living wage, instead of creating a further disparity between young people and their voters, who they perhaps prefer.

The ultimate question is this: when will the Government put young people first, instead of simply prioritising businesses, their own agendas, bankers or whatever else they seem to think is their priority? Young people are our future. They are our labour force and our economy—when will the Government start looking out for them?

As ever, it is a pleasure to serve under your chairship, Mr Davies. I congratulate my hon. Friend the Member for Halifax (Holly Lynch) on securing this important debate. She absolutely hit the nail on the head when she said this policy is a kick in the teeth for young people. That comment was certainly well received by the Chair.

The Government are sending a worrying message about the generations by pitching them against each other. They are leaving an open goal. They are saying to young workers, “You are not as valuable as older workers.” During the debate we have heard some worrying examples of employers trying to circumvent the fundamental purpose of the increase in the minimum wage by deliberately hiring under-25s. What we have not heard, and I hope the Minister will rectify this, is an indication of a clear strategy from his Government as to how they will ensure that the so-called national living wage is not used by a small number of unscrupulous employers to manage out staff aged 25 or over or to change terms and conditions in a way that would fly in the face of provisions enshrined under the Equality Act.

As part of the shadow Equalities team, I must say that it does not come as a huge surprise that the Government have once again failed to consider equality. We have a Prime Minister who has referred to equality impact assessments as “pointless reports” and “bureaucratic nonsense” and who refuses to conduct a cumulative impact assessment of Government policies on women since 2010. In lieu of that, the Labour Equalities team commissioned research from the House of Commons Library that showed that, as of the Chancellor’s last Budget, 86% of the net savings to the Treasury through tax and benefit changes since 2010 have come out of the pockets of women. The Government appear to talk the talk on equality, but they fail to put in place the fundamental work to ensure that, advertently or otherwise, certain groups in our society do not end up the losers as a result of Government policy.

The Government could have worked in collaboration with key partners such as the Living Wage Foundation or the University of Loughborough to help to pilot the higher rate minimum wage before it went live, but instead it was rushed through so that the Chancellor could score a political hit at the Budget with a shiny new policy. The Government have self-appropriated the term “living wage” to mean their age-restricted minimum wage. That is what it really is, as it is based on median earnings, while the Living Wage Foundation rate is calculated according to the cost of living. That cost of living is the same for young workers as it is for older workers. I have never met a landlord who is willing to rent out a property for less money to someone who is under 25, or a baker who is willing to sell a loaf of bread for less because the person wanting to eat it is under 25. It costs us all the same to live.

We have seen the Government pinch and misappropriate a term to describe a policy pushed through without any proper equality safeguards. Some of the key questions posed during the debate must be answered. What safeguards are in place to ensure that employers cannot manipulate the terms and conditions of their staff to make them worse off as a result of the new higher national minimum wage? What strategy is in place to ensure that workers under 25 are not exploited and that the provisions of the Equality Act are not breached? Will companies be named and shamed? Will there be financial penalties? The Government must put their declarations of being a party of equality into action and demonstrate they are serious about that by answering those basic questions and ensuring that safeguards are in place for young people and all employees in the workplace. Of course, all that could have been thought through much earlier, had the policy not been rushed in the first place.

Young people deserve a better deal than the one they are getting from this Government. What message are the Government sending to young people with wages low, maintenance grants for the poorest students cut and voter registration rules cynically changed to lock young people out of democracy? The number of young people owning their own home is at its lowest level since records began. University tuition fees have trebled. It seems very much that the Government are not on the side of young people, and I fear that the consequences will be severe.

Even the former Tory MP David Willetts, who now heads the independent Resolution Foundation, has said that the Government are creating a “country for older generations”, in which pensioners benefit from constantly rising incomes while the young, their families and children—under-25s can have a family and children—are battling constantly rising prices and falling incomes. He said:

“The social contract is a contract between the generations and in Britain it is being broken.”

The Government must not leave the next generation out in the cold and take them for granted. It seems that the policy of a minimum wage only properly kicking in at 25 has been dreamt up with an idea of young people who perhaps go through higher education and do some internships while living at home with their parents. The reality for many young people is that they are an adult at 18, leaving home and standing on their own two feet. I call on the Government to integrate equality into their thinking right across their policy, so that all groups in society are treated equally.

Before I call the Minister, may I make it clear that my somewhat ambiguous utterance in response to one of the comments made by the mover of the motion should not be interpreted as an affirmation? I am completely impartial in my job. Over to the Minister.

Mr Davies, it is a pleasure to serve under your chairmanship. Whatever utterances you choose to make, I will still enjoy serving under your chairmanship.

I congratulate the hon. Member for Halifax (Holly Lynch) on securing the debate and for setting out her argument as clearly as she did. Hers was one of the more reasonable and well-founded arguments made, but listening even to her speech one would have thought it was not the Labour Government who introduced the idea of age-related minimum wages. Because you are, Mr Davies, like me, of a somewhat older generation than some of the contributors to the debate, you will remember that age-related rates were an integral part of the original National Minimum Wage Act 1998—Labour are right to be proud of that achievement. It was integral that the design should allow rates to vary up to the age of 26. That was done by the Labour Government explicitly to protect young workers in the labour market.

In advancing the argument that the national living wage is somehow an egregious act of discrimination, the Labour party and the hon. Member for Halifax have to accept that they are advancing the argument that the last Labour Government to win an election were a discriminatory Government. Although I am sure that the hon. Members from the Scottish National party would be only too happy to endorse that suggestion, I suspect that the hon. Member for Halifax and the shadow Minister, the hon. Member for Lancaster and Fleetwood (Cat Smith), would not want to go quite that far.

Let me turn to the impact on employment opportunities. Hon. Members seem to forget that there is a real reason why raising legal minimum wages for younger workers too quickly is a risk. When the last Labour Government—the same Labour Government who brought in the minimum wage with age-related bands—finally limped out of office in 2010, unemployment was high in general, but it was particularly high for young people. In the first quarter of 2010, more than 930,000 young people throughout the United Kingdom aged between 16 and 24 were unemployed. The unemployment rate was much higher as a percentage than the rate for people over 24.

I am glad to say that under the coalition Government and the current Government, we have managed to bring unemployment down not only for people over 24, but particularly for people under 24. Now, 307,000 fewer people between the ages of 16 and 24 are unemployed than when the last Labour Government completed their term in office. The risk of unemployment for young people is a sensitive issue because we all know that a protracted period of unemployment can have long-term negative effects on people’s chances as they go through life.

No. I heard a lot from the hon. Lady.

It is especially important that young people are given early opportunities, which explains the original construction of the national minimum wage. Opposition Members surely recognise that the Low Pay Commission is an independent body charged with advising the Government on what is a responsible increase for the national minimum wage. The commission is charged with looking in particular at what is called—forgive me for the rather unpleasant jargon—the varying bites of minimum wage rises. That refers to the percentage of the median wage for someone of that age that the national minimum wage would represent at that particular level. I am sure everybody can understand, because it is a matter of common sense, that the closer the national minimum wage rate for somebody of that age gets to the median wage, the greater the risk that raising the national minimum wage rate will reduce employment opportunities.

I am not going to give way. I listened to the hon. Lady intently and I am trying to cover all the points raised in a longish debate.

It is critical to understand that although the national minimum wage bite—the percentage of the median wage—for 25 to 30-year-olds in 2015, before the national living wage came in, was only 59%, the bite for 21 to 24-year-olds was 78.7%. That is nearly 80% of the median wage, and that is before the substantial increase in the national minimum wage that was recently introduced for people under 25. There was a significant risk that, had the Government introduced the national living wage for everyone, including those under 25, that would have had a substantial and negative effect on those under-25s’ employment opportunities.

The hon. Member for Heywood and Middleton (Liz McInnes) referred to the apprentice minimum wage. It is important to note that in 2015 the apprentice minimum wage rose by 21%. We had inherited from the previous Government, which she supported, an extremely low apprentice national minimum wage. Employers make a substantial investment in apprentices, so we understand that it is important not to choke off their willingness to make that investment by setting legal minimum wages that are too high.

Nevertheless, in Government—at the time, the coalition—we felt that the level of the national minimum wage for apprentices was egregiously and unfairly low. On one of the few occasions when any Government of either, or any, stripe have rejected a recommendation of the Low Pay Commission, we rejected its recommendation for a small increase in the apprentice national minimum wage, and we instead increased it in one year by 21%, the equivalent of a £1,185 pay rise for a full-time apprentice working 40 hours a week. So we acted on the apprentice minimum wage.

We have taken the advice of the Low Pay Commission and also acted on the national minimum wage rates that apply to people under the age of 25. This year, we accepted all of the Low Pay Commission’s recommendations for national minimum wage rates to come into force from this October. The main national minimum wage rate for 21 to 24-year-olds will increase by 25p, or 3.7%—substantially more than inflation or, indeed, average wage growth—to £6.95 per hour. That is the largest single increase in the main rate of the national minimum wage since 2008, in cash terms, with the expectation of the highest level ever in real terms.

Finally, hon. Members from the various Opposition parties may debate how discriminatory legislation brought in by the Labour Government was, but this Government will continue to invest in apprenticeships; to create millions of jobs, in particular for young people; and to increase wages of all working people, under and over the age of 25, through the national minimum wage and the new national living wage.

I thank hon. Members for their valued contributions.

The hon. Member for Glasgow Central (Alison Thewliss) talked about how age discrimination not only affects under-25s, but leaves older employees particularly vulnerable in the workplace, which was a good point. The hon. Member for Strangford (Jim Shannon) said that we were a nation of shopkeepers, but also that young people in the workplace sweat just as much as older people. My hon. Friend the Member for Heywood and Middleton (Liz McInnes) identified policies across the board that have been unfriendly to younger people. The hon. Member for Paisley and Renfrewshire South (Mhairi Black) identified the disconnect in how we recognise the contributions of younger MPs in this place, but not the contributions of younger workers out in the real world.

I also thank the hon. Member for Lanark and Hamilton East (Angela Crawley), who talked about her experiences of working at 16. I started my first job at 14 and, by the time I was doing my A-levels at 18, I had three jobs: babysitting for a number of families, and working behind a bar and at weekends in a chemist’s shop. To be told that I was unproductive, holding down three jobs while doing my A-levels, is why the issue is particularly close to my heart.

I thank the official Opposition’s Front-Bench spokesperson—my hon. Friend the Member for Lancaster and Fleetwood (Cat Smith) and I try to avoid being in the same place at the same time, as most Members struggle to tell us apart. Perhaps that says something about the demographics of Westminster, that younger, female politicians all look the same to their older, male colleagues—present company excepted, of course.

I am disappointed with the Minister’s response. I understand that there are other opinions historically, but I make the point that when some of the decisions were being taken, I was holding down three jobs while at school. However, I believe that he has failed to address any of the issues that I raised—the injustice of people being told that they are underproductive, and the reason given by the Minister. Also, clarity is desperately needed in industry, for employers, as highlighted by the Federation of Small Businesses. Do young people have an incentive to get into the workplace? If employers act on that, will they end up in the courts?

I would like to take the issue further. If the Minister can provide any more information in writing, I would be grateful to receive it. I hope that other hon. Members will join me in continuing to keep this campaign going.

Question put and agreed to.


That this House has considered age discrimination and the national living wage.

Sitting adjourned.