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National Living Wage (Extension to Young People) Bill

Volume 644: debated on Friday 6 July 2018

Second Reading

I beg to move, That the Bill be now read a Second time.

It is a pleasure to have the chance to present my Bill calling on the Government to extend the national living wage to workers between the ages of 18 and 25. It is also a pleasure to follow the Bills of my hon. Friend the Member for Croydon North (Mr Reed), and the hon. Members for Lewes (Maria Caulfield) and for Wellingborough (Mr Bone) on what has been a productive sitting Friday. I wish those Members all the best as their Bills progress to the next stages.

My Bill seeks to address the policy introduced in 2016 whereby under-25s in minimum wage jobs can be paid less per hour than their older colleagues—even those performing the same tasks. My Bill would ensure that the Government’s national living wage, currently £7.83 per hour for those over 25, would apply to all workers over the age of 18—the group I am targeting currently receive a reduced minimum of £5.90 per hour. This simple change would have a big impact on many young people’s lives, helping to tackle the generational divide opening up in our country.

The impact of the current policy is keenly felt by young people in my constituency, many of whom have written to me in support of the Bill. Katie, for example, was paid just £5.25 per hour when she started working at a major high street retailer at 18. She told me that young people in her workplace were often expected to do the most difficult tasks and in some cases look after entire departments, yet they still received a lower wage than their older colleagues. She is now 22, with five years’ retail experience, but is still paid less than others. She says she feels unappreciated and has put off the possibility of buying a house, and she is frustrated that she cannot provide financial support to her parents.

Another Halifax resident, Imran, started working at 16, but because he was paid less than older colleagues he found it difficult to be able to afford his work-related expenses. He was disappointed that, even though he did the same—or often more—work than people who were older than him, he got paid a lot less.

Research by the House of Commons Library shows that Katie and Imran’s experiences are shared by thousands across the country. It has calculated that an 18-year-old working full-time on the minimum wage will earn £3,774 a year less than an equivalent colleague aged 25 or over. That gap is expected to widen as the rate for over-25s rises towards £9 an hour in 2022. Of course I welcome that rise, but I am very uncomfortable with the disparity.

Having probed the Government on a number of occasions for the rationale for such a high age threshold, I have been given a number of justifications, varying in both intention and credibility. Comments by the then Minister for the Cabinet Office and Paymaster General, the right hon. Member for West Suffolk (Matt Hancock), shortly after the policy was introduced inevitably rubbed salt in the wounds of young workers. He said it was “an active policy choice” not to cover the under-25s. He went on to say:

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

That prompted understandable frustration from young people and embarrassment for the Government when a Minister later conceded in written parliamentary questions that

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

I congratulate my hon. Friend on securing a slot in which to debate this Bill. When she has been probing the Government on their decision on the national living wage for the under-25s, did they ever give any indication that it was their intent to give a housing reduction or a utility bill reduction for those under 25, to reflect the fact that they want to pay them less?

I am grateful to my hon. Friend for that intervention. He is right—that has never been forthcoming in the Government’s justification. However, it is a point that is made to me by young people time and again. They do not get a reduction in any of their outgoing costs because of their age, so why should they see a reduction in their pay packets?

When I asked the right hon. Member for Epsom and Ewell (Chris Grayling) for a debate on this issue when he was the Leader of the House, 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.]

Although we all want to see lower youth unemployment, the Federation of Small Businesses has pointed out that the Government’s approach could see employers wandering into legally precarious territory. In evidence to the Low Pay Commission, the FSB 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.”

An 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, and section 5 recognises age as 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.

Ministers often claim that other countries also discriminate by age yet, in the entire developed world, only Greece has taken a similar approach and set the age threshold as high as 25. France pays the full rate from 18 onwards, as does Germany, and even in the significantly more deregulated US there is no difference in wages based on age, apart from the option to pay workers under 20 a lower rate for their first few months of employment.

The Government continue to insist that any rise in the wages of young people risks

“pricing them out of employment”

yet there are serious flaws with keeping wages low to supposedly help the young, not least that employers that actively seek to recruit under-25s to cut wage costs risk falling foul of age discrimination legislation. Any employer interviewing for a role is legally required to choose the best candidate for the position, regardless of age. Any monetary incentive can only be acted on if the employer discriminates against older applicants. It is simply not going to work.

The point made to me by young people time and again, and which my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) just outlined, is that under-25s get no discounts on utility bills or rent, food is not cheaper for them, and there is no discount on the transport that they use to get to work. Why should their younger age be reflected in a smaller pay packet when it is not reflected in their outgoing costs? A recent survey by the Young Women’s Trust found that a quarter of young people in England and Wales have to borrow to make ends meet. For those people, a decent wage is desperately needed.

Thankfully, many companies recognise the contributions made by under-25s and are opting to pay them more than the minimum wage. Nestlé in my constituency employs up to 1,000 people 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 all its workers the Living Wage Foundation’s living wage from the age of 18. Nestlé 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.”

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. The Government did not decide to rename the national minimum wage the national living wage by accident, so I ask them to consider adopting the Living Wage Foundation’s principle that fair pay for fair work starts at 18, in the same way that they have adopted its name.

My private Member’s Bill will help to restore the dignity of young workers and assist people such as Katie and Imran to get a much deserved pay rise. I thank the trade unions Unison and Unite, my trade union the GMB, and the Union of Shop, Distributive and Allied Workers. I also thank the Living Wage Foundation, the Young Women’s Trust, Young Labour and my incredibly hard-working parliamentary assistant, Matt Dawson. As one of Parliament’s younger MPs—although I confess I am ageing rapidly, Mr Deputy Speaker—I am pleased to have been able to give this campaign a platform once again, in the hope that the Government are listening.

I am conscious of the time, but I suspect that, although I love him to bits, the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Burton (Andrew Griffiths), has quite a lengthy speech prepared, so I want to give some slightly more positive comments on the issues we have just heard about.

Let us be clear that, when we talk about the wage rates under the law, they are the minimum rates that an employer has to pay someone so that they do not get prosecuted; they are not about setting a rate for the job. It was interesting to hear the observations of the hon. Member for Halifax (Holly Lynch) on what would, rightly, happen to an employer who decided to, shall we say, put aside a candidate aged 26 or 27 who was more skilled for the job in favour of a 22 or 23-year-old, purely so that that employer could take advantage of the discount deal.

It would be interesting if the Government produced some analysis of what would happen if, instead of an age-based system—we would all accept the difference at 18, because there is a difference with employing children—we switched to a system in which a different rate applied in a first period of employment. First, that might be a period in which people are training and building up skills, as we already reflect in the different rate for apprentices; and secondly, that might encourage employers to take back into employment people who have been out of employment for a while. That would be fairer than a system in which someone can work for four or five years and be quite experienced, but stay on a different rate. By that point, there is clearly not going to be any productivity difference between someone aged 23 who has worked for five years and someone who is 28 and has worked for five years. If we are being sensible, we are not going to see a difference.

Those are some of the things that could be sensibly considered. If the Bill had perhaps had more time for debate, we could have explored, for example, the differences between 18 and 21, applying the rate around training and employers being prepared to sponsor people to go to university. It is positive that we are having this debate and that we have such a positive image of young people. Too often, there is this idea in the media—

The debate stood adjourned (Standing Order No. 11(2))

Ordered, That the debate be resumed on Friday 23 November.