Minimum Wage

Mr. Jamie Reed
To ask the Minister of State, Department for Business, Innovation and Skills what estimate his Department has made of the number of businesses in (a) each district in Cumbria and (b) the UK using tips as a means of ensuring their employees receive the national minimum wage; what estimate his Department has made of (i) the number of employees involved and (ii) the monetary value of such tips in the last 12 months; what steps his Department plans to take on the matter; and what assessment has been made of the effects of the practice on expenditure on benefits.

Mr. McFadden
It is not possible to provide an estimate of the number of businesses in (a) each Cumbrian district, and (b) in the UK, using tips as a means of ensuring their employees receive the national minimum wage as these data are not collected.

Using the Annual Survey of Hours and Earnings we have estimated that (i) the number of employees who could be receiving tips to make up wages to the national minimum wage is around 60,000 and (ii) the monetary value of such tips to be £82 million per year.

The Department for Work and Pensions is responsible for benefit payments. DWP has not made an assessment of the effects of the practice on expenditure on benefits as to do so could be done only at disproportionate cost.

From 1 October 2009 we will be amending National Minimum Wage regulations so that tips can no longer be used to pay national minimum wage.