rose to move, That the Grand Committee do report to the House that it has considered the National Minimum Wage Act 1998 (Amendment) Regulations 2007.

The noble Lord said: I present to the Committee two sets of regulations on the national minimum wage. The national minimum wage is an established part of policy, and ensures a minimum wage floor below which pay may not fall. It has made a real difference to the lives of hundreds of thousands of low-paid workers. These regulations include the yearly uprating for the minimum wage. As in previous years, the rates are those recommended by the independent Low Pay Commission, which undertook a range of research projects, analysed data from the Office for National Statistics and consulted with employers, workers and others before arriving at its recommendations. This year’s uprating stands to benefit around 1 million workers.

We will also be debating regulations relating to further and higher education and the minimum wage, and the accommodation offset and registered social landlords. The first set of regulations amend Section 3 of the National Minimum Wage Act. This section allows for regulations to be made to prevent certain classes of people qualifying for the minimum wage. The purpose of our amendment is to amend an existing class, those attending a course of higher education, to those undertaking a course of higher education which requires a period of work experience. The current exemption for attending higher education is unnecessarily restrictive. The broader term which I am proposing in these regulations reflects the reality of today’s world, in which students are increasingly able to access learning through more flexible routes, including distance learning and e-learning.

In addition, we are introducing a new class of persons who will, in the second set of regulations, be exempt from the minimum wage. This new class are students undertaking a course of further education requiring attendance for a period of work experience. This is necessary to ensure that students can learn through practical application alongside their studies in the workplace.

The second set of regulations are probably the ones of most interest to the Committee, since they include the annual upratings to the minimum wage. They also make changes to the accommodation offset, which is the maximum amount which may be offset by an employer for the provision of accommodation against the wages due to a worker for national minimum wage purposes. The regulations make changes to how the accommodation offset applies to workers who are employed by a local authority and live in accommodation provided by that authority, and workers who work for a registered social landlord and live in accommodation provided by that landlord. The regulations also exempt people who are participating in certain European Union training schemes and those on certain further education work placements, where the placements are undertaken as part of their course.

I move on to the detail of the second set of regulations. Regulation 1 provides for them to come into force on 1 October 2007. The rates were announced in March, giving sufficient time for business to prepare and plan for the rate increases. Regulation 2 deals with the increase to the adult minimum wage rate, from £5.35 to £5.52, as recommended by the Low Pay Commission. This is a rise of 3.2 per cent. Regulation 4 increases the development rate for workers aged 18 to 21 from £4.45 to £4.60, a rise of 3.3 per cent. The 16 and 17 year-old rate will increase from £3.30 to £3.40 per hour, a rise of 3 per cent. Additionally, the regulations will uprate the accommodation offset, as recommended by the Low Pay Commission, from £4.15 per day to £4.30 per day.

Regulation 3 exempts from the national minimum wage post-16 learners required to attend a period of work experience as part of a further education course in respect of the work they do for an employer as part of the course. The practical application of classroom-based and theoretical aspects of learning in the workplace is an integral part of education. Many further education courses include an element of work experience and/or work-based assessment provided by employers, which is valuable to the learner since it develops his or her understanding of a particular issue and gives a better perception of the world and workplace. This practical application of skills is integral to a learner’s education and there should not be a requirement to pay the national minimum wage to students in the workplace. This exemption will ensure that employers continue to offer this valuable experience.

Regulation 3 also exempts participants in the European Union’s Leonardo da Vinci and Youth in Action programmes, which allow incoming vocational trainees and young volunteers from Europe to receive funding from the EU to take part in training or volunteering activity for up to a maximum of a year in another participating country. The training and volunteering activities are designed to ensure that they do not replace a post that would otherwise be occupied. These programmes are reciprocal, which means that UK students can visit other European countries on similar terms to students coming here.

Regulations 5, 6 and 7 clarify the position in respect of local authorities and registered social landlords and the accommodation offset. At present in some cases, a local authority or registered social landlord may provide work and social housing to an individual. Where the two are connected—for example, where the individual is a care warden—the accommodation offset should apply. We are not intending to change this. However, where there is no connection between employing a person as a worker and housing the same person as a tenant, this amendment will ensure that they are not accidentally caught by the policy on the accommodation offset. In these cases, the level of rent paid is set through government policy on social rents. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the National Minimum Wage Act 1998 (Amendment) Regulations 2007. 19th Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

I think that we are considering the National Minimum Wage Act 1998 (Amendment) Regulations 2007 and the National Minimum Wage Regulations 1999 (Amendment) Regulations 2007 together. Section 3 of the Act sets out the classes of persons in relation to whom regulations may be made that exclude them from qualifying for the minimum wage or prescribing an hourly rate other than the main rate of minimum wage. That is okay.

The 10 regulations in the National Minimum Wage Regulations 1999 (Amendment) Regulations 2007 amend the National Minimum Wage Regulations, and the principal rate of the national minimum wage is increased. The Minister kindly outlined all the other things that fell from that. The regulations insert three new classes of persons who do not qualify for the national minimum wage. As I heard it, those include workers who attend a period of work experience as part of a course of further education, and workers participating in two specific European vocational training schemes. The regulations also amend the Act, so that Regulation 31(1)(i) of the principal regulations will not apply to deductions made by or payments to a local housing authority or registered social landlord in respect of the provision of living accommodation, save where a connection exists between the provision of the living accommodation and the employment with the local housing authority or registered social landlord. Regulations 6 and 7 provide that, where the deduction or payment in respect of the provision of living accommodation is exempted from Regulation 31(1)(i) by Regulation 31(3), it will not be taken into account under Regulation 31(1)(g) or (h).

That is all very well and good. The worry with all these things is that a minimum wage works only if it is properly enforced, otherwise law-abiding employers lose out every time while unscrupulous employers receive an unfair advantage. This will affect 1 million more people. How many successful prosecutions have there been thus far? How much strengthening is being done, in terms of appropriate staff and funding, to carry out this extra work for this extra amount of people? We may find ourselves disadvantaging the law-abiding employer and making the provision look unfair. It would be very helpful if the Minister could give me some information on that today. If not, perhaps it could be put on the record somewhere.

I obviously welcome the regulations, which relate to the National Minimum Wage Act 1998. I think that I am probably the only Member of the Committee who was involved in the debate on that Bill, so I well remember the arguments that ensued. It was a controversial Bill.

Two points emerge from the regulations. The first point, which was significantly made by the then Conservative Party spokesman, was that the implementation of the national minimum wage would at best decimate and at worst destroy British industry. I am delighted to hear from the thrust of the noble Baroness’s question that clearly her party no longer takes that position. I would like to share her question and I look forward to the answer. Clearly, if we are to have a national minimum wage it needs to be, first, supported and, secondly, enforced fairly.

The second point where I am not sure that in 1998 the Government and our Benches were entirely ad idem was that we moved a number of amendments to ensure that the national minimum wage could be determined only by the Low Pay Commission, and that there should be no governmental discretion in it as we thought it important that this should be taken out of party politics. I am very pleased with the noble Lord’s comment that £5.52 for £5.35 is in line with the recommendation of the Low Pay Commission. Will the Minister remind us whether on every occasion in the past nine years the national minimum wage increase has been in accordance with the recommendation of the Low Pay Commission?

I can reassure the noble Lord that all recommendations have been in accordance with the independent commission’s views. I am grateful to him for highlighting the success of the minimum wage policy, which this Government introduced.

The noble Baroness, Lady Wilcox, asked about sanctions—to what extent the system is working well, and what is done if we discover that the minimum wage is not being adhered to. The Act entitles almost all workers in the UK to the national minimum wage. The Government have always made every effort to protect this entitlement and to restore arrears to workers who have been underpaid, helping tens of thousands to recover £25 million in unpaid wages since 1999. There are 16 compliance teams around the country which monitor, investigate, and, if necessary, take action.

In January this year we announced that we would be issuing the penalty available to us in current legislation, a minimum fine of £224.70, in virtually all cases where an enforcement notice has not been complied with. The most serious wilful cases of non-compliance are and will be prosecuted, and there are many investigations under way right now. In the past year the Government helped restore over £3 million in arrears to over 14,000 workers. However, the best protection we can offer workers and compliant businesses is to strive to ensure that arrears do not arise in the first place.

I hope I have managed to reassure the noble Baroness that the Government, through our compliance units, do everything we can to ensure that the minimum wage is paid.

On Question, Motion agreed to.