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Low Pay: Resolution Foundation Report

Volume 757: debated on Tuesday 11 November 2014


Asked by

To ask Her Majesty’s Government what is their assessment of the report by the Resolution Foundation Low Pay Britain 2014.

My Lords, the Government note the report and conclusions, particularly the recognition of the economic recovery. The economy is on the road to recovery as a result of the Government’s long-term economic plan. There are now more people in work than ever before, more people able to support their families with the security of a regular wage, and we have seen the first above-inflation increase in the minimum wage since 2007.

Is he aware that in responding to this Question he has two audiences. He has this Chamber; and what he has said may satisfy noble Lords. However, does he agree that to his other audience—to the people in this report whose lives and jobs are on a downward trend, and whose lives are becoming much more difficult—his response is irrelevant? In fact, they may even say that his response is complacent. Does the Minister have any words to connect with them?

I thank the noble Lord for the first part of his remarks welcoming me. I am sorry that he already thinks I am going to seem complacent. The reason we address those people who we acknowledge are in the difficult position that the report has mentioned, is that we believe that the economy is the foundation for increasing personal wealth. In fact, the Office for Budget Responsibility forecasts that real household disposable income will rise every year to the end of the forecast period 2018-19.

Does this report cover the issue, which I have raised in the House before, of people in jobs such as carers being paid nothing at all for travelling between work, and whose pay therefore comes out at about £2 an hour? Sometimes it is even worse, particularly if they are self-employed. There is a minimum wage if one is employed but if one is self-employed or working for any of the agencies, one is not covered in any way. Is it covered in the report?

I think that it is covered, but the position on workers such as those mentioned by my noble friend is that if one is working as part of one’s job, one should be paid the minimum wage. People who are travelling should be paid the minimum wage. If they are not, that is a question of fact, which should be taken up at employment appeal tribunals. That would determine whether they are paid the minimum wage.

My Lords, we are in an economic era of falling unemployment but falling wages, with the number of people earning less than £7.69 an hour at a record 5.2 million in the United Kingdom. Do the Government recognise that economic growth alone will not solve this problem and that we need new policy initiatives in the labour market so that we do not end up with a working society of haves and nearly-haves?

I completely agree with the noble Lord. It is not just the economy itself but the other things that need to be done to address this issue. We need to create jobs, reduce the tax burden on the lower paid—in that respect, 3.2 million in this Parliament have been taken out of income tax—and invest in skills.

My Lords, now that the economy is picking up, will the Minister comment on the living wage and on whether the Government believe that the minimum wage really is enough?

The right reverend Prelate is right to bring this subject up. The minimum wage is a minimum as a catch-all; the Government support people and businesses paying above that, if they can pay the living wage, but only when it is affordable and not at the expense of jobs. In BIS, the department I represent, we have recently increased the pay of the lowest-paid workers in the department so that everyone receives the living wage. We support that as long as it is not at the expense of jobs.

My Lords, I welcome the Minister’s last point—that BIS is paying everybody in the department the living wage—but it would be even more welcome if he could give us a guarantee, as the Government say they support the living wage, that every government department should pay its employees the living wage. Also, should there not be a condition that people who have the advantage of gaining a public sector contract should be paid the living wage as well?

The noble Lord is being a bit mischievous in trying to get me to give guarantees on behalf of every government department. I agree with him that it is a recognisable and suitable aspiration and we would like to do that.

My Lords, after the success of the coalition Government in raising employment and tax thresholds, is the next priority to raise the contribution rate for national insurance?

My Lords, in his Answer the noble Lord commented that the Government had ensured for people the security of a weekly wage. How does he ally that with the growth in zero-hours contracts, when more than 1.5 million people do not know on Friday what hours—and, therefore, what earnings—they will get on Monday?

We have looked at the position of zero-hours contracts. We think that all workers, regardless of the type of contract they have, are entitled to core rights. We think that the flexibility offered by zero-hours contracts will suit some workers. Interestingly, the research from the CIPD found that those on zero-hours contracts say that they are equally satisfied with their job, but we are going to deal with some criticisms and problems with zero-hours contracts, such as exclusivity clauses and lack of transparency. That will be dealt with very soon in the business Bill.