National Minimum Wage allowed to “wither on the vine”

12 April 2013 The sixth in a series of articles looking at what the Coalition Timeline has taught us so far, focusing on the weakening of the National Minimum Wage and other pay and benefits issues.

Commentary icon12 Apr 2013|Comment

Sarah Glenister

National Development Officer, Institute of Employment Rights

12 April 2013

The sixth in a series of articles looking at what the Coalition Timeline has taught us so far, focusing on the weakening of the National Minimum Wage and other pay and benefits issues.

May 12th 2010, the day the Coalition agreement between the Liberal Democrats and Conservative Party was signed, marked the beginning of the first opportunity the Tories have had to abolish the National Minimum Wage (NMW).

Coming into effect under Tony Blair’s Labour government in 1999, the NMW has many supporters, and to destroy it could create a public outcry that the Conservatives cannot afford if they are to win the next election in 2015. But that has not put them off their campaign to scrap this important protection for vulnerable workers in the UK. Instead of abolishing the NMW outright, they are finding more insidious ways to destroy it and the peace of mind that comes with it for the nation’s poorest workers.

When analysing the Coalition’s policies on pay and benefits, it is essential to bear in mind the ideology of the Conservative party and doing so is made easy by some of the astonishing pronouncements they have made in the press. In 2008, a senior Tory source provided an insight into the aims of the government, telling the Mirror that if Cameron were to come into power he would take action on the NMW.

“The minimum wage won’t be scrapped but it will be allowed to wither on the vine. A series of smaller, more affordable increases will mean it will just melt away,” he disclosed.

Our Coalition Timeline is evidence of how the Tories – and their Liberal Democrat conspirers – have stuck to this plan.

Pressure on the National Minimum Wage

It began almost as soon as Cameron had taken the nation’s helm, with the Low Pay Commission (LPC) instructed on 21st June 2010 to keep the minimum wage low in order to maintain the “competitiveness” of small businesses. In February 2012, David Cameron admitted he was considering freezing the NMW and for some workers this became reality in October of that year. While adult pay rose by a fractional 1.8%, young people’s salaries were frozen, resulting in a real-terms pay cut for the nation’s poorest workers.

Meanwhile, on June 21st 2012, the LPC was receiving further instructions on how to weaken the NMW, being told to review how minimum pay levels could be ‘simplified’ for employers, while a consultation was launched into the provision of accommodation for the lowest paid.

The most recent government remit given to the LPC made the news, with the government instructing the body to change the way it calculates the level of the minimum wage to take into account the “economy and employment”, even if this means a pay cut or freeze for people across the UK. Questioned over whether such an event would be seen as reasonable by the government, a spokesperson for the prime minister said: “It’s something we are looking at”.

Other government policies which are not as directly connected to the NMW are also making a mockery of its existence. For instance, the government Work Programme which forces the long-term unemployed into unpaid work with private companies leads to a reduction in paid jobs for workers and amounts to slavery for those made to participate. Elsewhere, the apprentice wage of £2.65 per hour is being used by companies who are abusing the government’s apprenticeship scheme – through which they receive public funding – by providing ‘apprenticeships’ that are in actual fact a full-time job amounting to similar as much as learning to be cashier in a shop. With seemingly no pressure forthcoming for these businesses to change their ways, there is no longer an incentive for them to pay the NMW.

A change in the ideology lying behind the NMW, from a means to keep salaries in line with inflation to a more employer-focused policy, should not be surprising to those who listen to the views of Tory party backbenchers. In fact, in 2008, the source speaking to the Mirror said “it would be foolish to continue hiking up the minimum hourly rate by the rate of inflation every year”. Several Conservative MPs have spoken out since then, revealing their hardline opposition to the NMW.

Tory MP Christopher Chope launched a Bill to promote the “right” of employees to opt out of the NMW in June 2011, while MP Damian Collins praised youngsters who have been forced to busk in order to afford travel to their unpaid internships, arguing that 18-year-old school leavers are “worthless” to employers and should be paid the miserly £2.65 hourly rate of apprentices at the age of 16.

Iain Duncan Smith’s idea of a good day’s pay also appears to be bizarrely skewed, as he claimed in February 2013 on a radio programme that those forced to provide unpaid work through the Work Programme were in fact earning a salary – that salary being their Job Seekers’ Allowances. In the same month, he also called graduates ‘stuck up’ for turning down unpaid placements through the Work Programme, accusing them of thinking they are “too good” to be shelfstackers – rather than too valuable to work for nothing.

Other out-of-touch pronouncements have come from right wing think tank Policy Exchange, which encouraged part-time workers to take on more hours – an impossibility for many in today’s labour market.

It is not only the National Minimum Wage that is under threat, however, the Agricultural Minimum Wage faces imminent abolition.

The abolition of the Agricultural Wages Boards

The first news that Agricultural Wages Boards (AWBs) – and with them the Agricultural Minimum Wage – would be closed down came in 2011, with MPs voting to ditch the AWBs despite a campaign run by Unite warning of the implications of this. Without the Agricultural Minimum Wage, supermarkets will be able to put more pressure on farmers to cut their prices through slashing their workers’ wages. Even farmers themselves do not want to see it go.

The issue was debated extensively as part of the Public Bodies Act and a procedure was agreed, which the government must follow if it wishes to shut down AWBs in the future. This would include undertaking a three-month consultation, giving due consideration to alternatives, providing a full explanation to the Houses of Parliament and laying a special memorandum before the House before a change in law could be considered.

However, in 2012, the government ignored all of these procedures. Instead of a three-month consultation, there was a one-month consultation for changes affecting England and another lasting just seven days for those affecting Wales (where there was strong opposition to the government’s plans). All other stages were skipped and the proposal was forced into the Enterprise and Regulatory Reform Bill just two days before Christmas, to be debated in the House of Lords at the beginning of 2013, where the Coalition’s actions were heavily criticised.

“I am afraid that the Government are on somewhat dodgy procedural and legal grounds,” Labour’s Lord Whitty said of the way the proposals had been brought to the House of Lords.

“I can think of a couple of procedural reasons why the Government are in a bit of bother on this one. One of them is the Delegated Legislation Committee and the other one can be summarised by saying ‘Wales’,” he stated.

Public sector regional pay threats

Elsewhere, public sector pay has been under repeated threat from plans to introduced regional pay scales, which would lead to those working in the poorest areas of the country to be paid less for doing the same job. Regional Pay was recommended for the police force in the Winsor Review, which was published in March 2012, and which also suggested cuts to overtime and bank holiday benefits and a potential abolition on the force’s right to strike. Policy Exchange later suggested regional pay should come into effect among all public sector workers.

However, in December 2012, the government was forced to scrap its proposals for regional pay in the public sector after consulting experts on the matter. We can only hope that this is the last of such unfair plans, but if the Coalition Timeline has taught us anything, it has taught us that the Tory party seldom give up on their ideological drive to weaken pay rights across the country and we should be vigilant for regional pay policies rearing their heads again, perhaps under another guise, but likely with no mandate, and minimal consultation with the public.

Click here to visit the Timeline. In order to see just pay and benefits stories click the spanner in the bottom left of the timeline, select ‘categories’, then select ‘pay and benefits’.

Click here to see more articles from this series

Sarah Glenister

Sarah Glenister Sarah Glenister Sarah Glenister is the Institute of Employment Rights' IT Development and Communications Assistant.