National Minimum Wage (Amendment) (No. 2) Regulations 2010

My Lords, I am grateful to all noble Lords who have participated in the debate. I believe that the regulations raise important issues of principle about the minimum wage and the rights of workers and employers, so it is essential that we give them very careful consideration. I was therefore happy to hear the comments today and to hear some supporting views, which is always nice. I really had not taken it on board that my noble friend Lord Cotter had been a member of the national minimum wage committee in another place. Hearing that he sat for 24 hours, our Chief Whip would, no doubt, remind us that other people in other places sit longer than we do. However, it was a wonderful piece of work and it has been supported over the years. The noble Lord, Lord Myners, asked several questions and I think that I can answer a goodly few. On the first, we recognise that workers participating in travel and subsistence schemes may see a small reduction in their take-home pay as a result of the changes in the regulations. However, our experience is that the direct cash benefit to the worker is minimal in comparison to the direct cash benefit to the employment business. We consider it wrong in principle that profits should be made by employers from low-paid workers through the application of salary sacrifice schemes. There is evidence that significant numbers of low-paid workers do not understand the way in which these schemes work. Indeed, the noble Lord, Lord Young, pointed that out in his remarks. The regulations will remove the risk that, by participating in travel schemes, low-paid workers will not be able to meet the requirements for entitlements to earnings-related benefits, in particular the basic and additional state pension. Again, I pick up on something that the noble Lord, Lord Young, said: let us make sure that everybody knows and understands what is happening to them because they are already complaining that they do not at the minute. We must be very sure that what we do makes that clearer. On the second question from the noble Lord, Lord Myners, about a percentage of temporary workers as opposed to workers on the national minimum wage, we estimate that approximately 1 million workers are earning that national minimum wage so 90,000 is, for interest, roughly 10 per cent of that total. His third question was on why we have not waited until the result of the judicial review to put forward the regulations. We consider that the judicial review application has no merit and we are strongly defending ourselves against it. There are good reasons for the Government to make these regulations and we are confident that the court will agree with us. We therefore see no reason to delay the regulations until the result of the judicial review is known. On the noble Lord’s fourth question, it says here that there is an error in paragraph 10.1 of the memorandum, for which we apologise. We thank the noble Lord, Lord Myners, very much for bringing it to our attention. Yes, jolly good. On enforcement compliance, this Government are firmly committed to the national minimum wage and to effective risk-based enforcement. Enforcement is essential in ensuring a level playing field for legitimate businesses and in protecting workers who are at risk of abuse by those who refuse to play by the rules. BIS has published a strategy for national minimum wage compliance. It focuses on how the compliance and enforcement landscape should look over the next three to five years and recognises that our approach must continue to be based on intelligence and data. In the context of reduced budgets we will need to prioritise, but we are clear that underpayment is not an option. The strategy will help us to make informed choices to ensure that we have the right tools for the job and that resources are focused where they are most effective. The noble Lord, Lord Jones, also talked about his time in the other place. He spoke with Welsh passion about the national minimum wage. It was very nice to hear him and good to have his support for the work going forward. I hope that we do not disappoint him. The noble Lord, Lord Young, talked of the beneficial effects of the previous Government’s work in this area and of closing the gap between men and women’s pay. To that, I would say, ““Yes, but we are not there yet.”” We will keep trying to improve on the previous Government’s work. The noble Lord also paid tribute to the excellent work of the Merits Committee. I agree with that, as I am sure would all other noble Lords. I was asked whether we would make sure that people were properly informed of the changes. Yes, we certainly will. I was asked also whether workers will face a claw-back of overpaid tax credits at the end of the year as a result of their pay being adjusted. No, they will not. For tax credits to be adjusted downwards for 2010-11, there would need to be a substantially greater increase in taxable pay for 2010-11 than will arise from the proposed amendment to the regulations. There were one or two other questions which the noble Lord, Lord Myners, very kindly put to me as I was waiting for the answers to the first ones. I am not sure that I am able to answer them all at the moment; if that is the case, I shall write to him.