Minimum Wage

In winding up a debate on the minimum wage for the Conservatives, David Gauke calls for effective enforcement of the national minimum wage to protect law-abiding employers from being undercut by employers who flout the law. Mr. David Gauke (South-West Hertfordshire) (Con): It is a great pleasure to have you in the Chair, Dr. McCrea. I think that you also participated in the last debate that I attended in Westminster Hall, on HMRC matters. It is a pleasure to congratulate the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate, which has been useful and passionate at times, and which has helped to flush out one or two important issues.

Several hon. Members have mentioned the position of the Conservative party. We have supported the principle of the minimum wage for eight years, and the concerns that we had before its introduction were widely held. Indeed, the hon. Member for Twickenham (Dr. Cable) expressed some scepticism, as he has said. We were concerned that a minimum wage set at a high level would endanger jobs. It is difficult to argue against the proposition that the minimum wage endangers jobs at some point, but the independent Low Pay Commission has been successful in balancing those dangers against the ability to increase pay for low-paid workers.

The hon. Member for Linlithgow and East Falkirk (Michael Connarty) argued for a substantial increase in the minimum wage. If he were still in his seat, I would suggest to him that there would be difficulties in doing that. None the less, recognising the principle behind the minimum wage, the fact that the legislation exists is, in itself, a reason why it should be enforced. People should abide by the law as a matter of course, but it does benefit employees whose wages have increased.

I am pleased that the hon. Member for Twickenham raised an issue that I was going to raise. Enforcement and compliance with the law are important for employers who abide by the law, who would be undercut and faced with unfair competition if rogue employers were flouting the law and were therefore able to undercut those other employers. That is an important issue. The Conservatives support calls for effective enforcement of the existing national minimum wage.

We have heard that there have been few prosecutions regarding the national minimum wage. I expect that the Minister will say, by way of explanation, that when employers are found not to have complied with the national minimum wage, they rectify the position and pay money in arrears, so there is no need for prosecution. Today is not the day to debate the detail of the Employment Bill, which the hon. Member for Hayes and Harlington (John McDonnell) has mentioned. The Minister and I have just spent the best part of two days debating HMRC's powers more generally and we have not finished yet, so I do not want to go through a detailed analysis of the proposals that might be in the Employment Bill. However, I ask the Minister to consider whether the low number of prosecutions is in any way due to HMRC's lack of power to enforce the national minimum wage.

There are other indications that there might be problems. We have heard about the level of arrears, and we have statistics from the Office for National Statistics on the number of people who are not receiving the national minimum wage. To what extent does the Minister think that the absence of adequate powers at HMRC has caused the problem? Has it been more to do with HMRC's resources?

I shall not speak at length about the problems that HMRC faces-we debate them fairly regularly-but clearly there are issues of low morale in HMRC. It faces very challenging budgets and, as a whole, it is suffering from a tightening of the belt. We heard reference to the increased expenditure announced in the 2006 pre-Budget report for tackling failure to comply with the national minimum wage, but to what extent has that aspect of HMRC's expenditure been immune from any Gershon savings, or is it not possible to analyse it in that way? To what extent has the expenditure been ring-fenced, and have the pressures that undoubtedly have been felt in HMRC in general also been felt with regard to enforcing the national minimum wage?

We should not consider the HMRC issue in isolation. Whether in this Room or elsewhere, we have debated VAT repayments, tax credits and other important issues, in respect of which there is serious concern about HMRC's performance. One reason why I am grateful to the hon. Member for Edinburgh, North and Leith is that he has highlighted this issue as needing to be addressed.

I seek from the Minister more information on the difficulties in enforcing the minimum wage. For example, have any particular groups been affected? Other hon. Members mentioned migrant workers. Anecdotally, we often hear about eastern Europeans doing agricultural work who are being exploited. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) would not want me to highlight eastern European migrant workers in particular. I am referring to migrant workers from throughout the world. Are particular sectors, locations or migrant groups especially affected?

I would be grateful if the Minister touched on an issue that "Panorama" highlighted-accommodation or transport costs being deducted from the wages of migrant workers in particular. The employers are apparently complying with the national minimum wage, but in reality what ends up in the pockets of the workers is substantially below it. Can the Minister provide guidance on that?

I return to the rate of the national minimum wage. As I have said, the Low Pay Commission has worked well, partly because of its independence. It takes representations and then makes an assessment of the level of the minimum wage. However, we saw in the debate about the 10p rate of income tax that one proposal that was clearly considered by the Government was using the minimum wage as a way of trying to compensate those who had lost out as a consequence of the Government's policy. That would appear to be an interference with the way in which the Low Pay Commission works. It would appear to be the Government setting the agenda or giving instructions to the commission, which would be a departure from previous practice.

I cannot help but observe that the trade unions, entirely understandably-this is part of their role-are very strong in calling for substantial increases in the national minimum wage, and the influence of the trade unions on the Labour Government appears to be increasing. I think that 92 per cent. of the funding for the Labour party now comes from trade unions. Therefore, to respond to demands from the trade unions, will the Government put pressure on the Low Pay Commission to increase the national minimum wage above the level that would otherwise be determined?

Mr. David Hamilton: I was getting a bit lost at the end of the hon. Gentleman's argument. Can he provide clarification? Is his party committed to continuing the above-inflation increases-minimum wage though it is-that the Government are putting forward? Is his party in favour of that, or is it moving towards a position from which that will be taken away?

Mr. Gauke: We have no particular desire to change the system. We believe that, over 10 years, the Low Pay Commission has acted in a responsible manner that has not endangered jobs and has benefited low-paid workers. We have no particular desire to change that. I am merely pressing the Government on whether there will be any change in their policy-today of all days, the Government are listening to their Back Benchers-whether it be with regard to the Employment Bill or a range of other matters. I would be grateful if the Minister responded on that point. To conclude, enforcement is important. Particularly at a time of rising fuel bills, food bills and taxes, the national minimum wage should be enforced properly.

3.45 pm

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