Only Labour can be trusted to strengthen the minimum wage

Despite ministers promising to name and shame firms which aren’t paying the legal minimum, not a single firm has been named so far.

Can you imagine earning £1.75 an hour for a hard day’s work?  How is a person expected to live on such a sum? And that the employer who paid that sum was doing it legally. This is not a rhetorical question to shock, but was evidence taken from a woman, who had worked as a home worker for over a decade, by the Low Pay Commission in the late 1990s when considering the level of the minimum wage.

Fifteen years have now passed since the introduction of the National Minimum Wage and cases such as these are now thankfully illegal. It is undoubtedly one of Labour’s proudest achievements in government and it is undeniable that it has been a huge success for employees and employers.

The contribution of those Labour MPs who sat late into the night to ensure this crucial legislation passed should not be underestimated. Whilst Tory naysayers bitterly opposed the minimum wage, Labour persevered to ensure that it became a political and economic fact of life. Many of those who opposed it back in the 1990s are now in ministerial posts, like then Tory backbencher Michael Fallon, now Business minister, whose scaremongering claim in 1997 was that the minimum wage "will add costs to British business". The Tories argued that increasing wages at the bottom would cost more than a million jobs. It did nothing of the sort.

It gave more than one million workers an average pay rise of 10-15% and now nearly two million workers directly benefit from the minimum wage, around one worker in ten. For women in particular, a group in the UK workforce often most susceptible to low pay, the national minimum wage made a significant impact. And over the years, studies have repeatedly shown that the minimum wage has had no adverse impact on aggregate employment, individual employment or unemployment probabilities.

Now the Tories pretend they love the minimum wage, all in an attempt to once again detoxify the conservative "brand". But the problem of low pay has got worse under this government. Families are on average £1,600 a year worse off since David Cameron took office in 2010 and the value of the minimum wage has declined by 5% under his watch, contributing to the cost-of-living crisis that has engulfed the country. But this government have failed to notice, let alone take the action we need.

The Tory-led government is not doing enough to enforce the minimum wage. Despite ministers promising to name and shame firms which aren’t paying, not a single firm has been named so far. Incredibly, this government have made more announcements on naming and shaming firms that flout the minimum wage than actually naming them. Since 2010, three separate ministers have repeated three announcements on the policy.

Today, we have yet another re-announcement, that fines on businesses that don’t pay the minimum wage will rise to £20,000, a repeat of remarks made by David Cameron in November last year. Whilst it’s a small step in the right direction, following Labour’s lead, and in response to the opposition day debate we have called this week, we need the government to back up its empty rhetoric on enforcement with real action. A recent report by the Centre for London found that only two employers in four years have been prosecuted for paying below the minimum wage, despite evidence that over 300,000 people in the UK are earning less than the legal minimum.

And the Lib Dems are no better. At every turn since 2010, they have supported measures making it easier to fire not hire people at work. Vince Cable didn’t vote for the National Minimum Wage and later admitted that he’d had "reservations". In 2003, he warned that raising the minimum wage would set a "dangerous precedent".

The next Labour government will strengthen the minimum wage. In September last year, Ed Miliband announced a review into low pay, led by Alan Buckle, formerly Deputy Chairman of KPMG International, to examine how to restore the value of the minimum wage and promote the living wage.

And in November, Ed Miliband outlined how a future Labour government will provide tax incentives for employers that sign up to become living wage employers in the first year of the next Parliament through new "Make Work Pay" contracts. We also need to see higher penalties for rogue companies who don’t pay employees the minimum wage and far more effective enforcement, including by giving local authorities new powers. Penalties against those rogue employers should be higher and we would set them at £50,000 – a real deterrent to the minority of businesses that exploit workers and undermine firms that do the right thing.

These measures will enable us to earn our way out of the cost-of-living crisis. But this is also about more than pay. The way to get the social security bill down dramatically is to get people into work with proper wages.

It is no surprise that in 2010, the National Minimum Wage topped a poll of political studies academics to find the best policy of the last 30 years. Labour created it and Labour will strengthen it for all of the low-paid people around our country, working together with representatives of both employers and employees to find a consensus and moving together towards the shared goal of making work pay. And it is Labour that will take proper sanctions against those that do not pay it.

Ed Miliband speaks to an audience on living standards at Battersea Power station on November 5, 2013. Photograph: Getty Images.

Ian Murray is shadow minister for employment relations, consumer and postal affairs, and Labour MP for Edinburgh South

 

Photo: Getty Images
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Why are boundary changes bad for Labour?

New boundaries, a smaller House of Commons and the shift to individual electoral registration all tilt the electoral battlefield further towards the Conservatives. Why?

The government has confirmed it will push ahead with plans to reduce the House of Commons to 600 seats from 650.  Why is that such bad news for the Labour Party? 

The damage is twofold. The switch to individual electoral registration will hurt Labour more than its rivals. . Constituency boundaries in Britain are drawn on registered electors, not by population - the average seat has around 70,000 voters but a population of 90,000, although there are significant variations within that. On the whole, at present, Labour MPs tend to have seats with fewer voters than their Conservative counterparts. These changes were halted by the Liberal Democrats in the coalition years but are now back on course.

The new, 600-member constituencies will all but eliminate those variations on mainland Britain, although the Isle of Wight, and the Scottish island constituencies will remain special cases. The net effect will be to reduce the number of Labour seats - and to make the remaining seats more marginal. (Of the 50 seats that would have been eradicated had the 2013 review taken place, 35 were held by Labour, including deputy leader Tom Watson's seat of West Bromwich East.)

Why will Labour seats become more marginal? For the most part, as seats expand, they will take on increasing numbers of suburban and rural voters, who tend to vote Conservative. The city of Leicester is a good example: currently the city sends three Labour MPs to Westminster, each with large majorities. Under boundary changes, all three could become more marginal as they take on more wards from the surrounding county. Liz Kendall's Leicester West seat is likely to have a particularly large influx of Tory voters, turning the seat - a Labour stronghold since 1945 - into a marginal. 

The pattern is fairly consistent throughout the United Kingdom - Labour safe seats either vanishing or becoming marginal or even Tory seats. On Merseyside, three seats - Frank Field's Birkenhead, a Labour seat since 1950, and two marginal Labour held seats, Wirral South and Wirral West - will become two: a safe Labour seat, and a safe Conservative seat on the Wirral. Lillian Greenwood, the Shadow Transport Secretary, would see her Nottingham seat take more of the Nottinghamshire countryside, becoming a Conservative-held marginal. 

The traffic - at least in the 2013 review - was not entirely one-way. Jane Ellison, the Tory MP for Battersea, would find herself fighting a seat with a notional Labour majority of just under 3,000, as opposed to her current majority of close to 8,000. 

But the net effect of the boundary review and the shrinking of the size of the House of Commons would be to the advantage of the Conservatives. If the 2015 election had been held using the 2013 boundaries, the Tories would have a majority of 22 – and Labour would have just 216 seats against 232 now.

It may be, however, that Labour dodges a bullet – because while the boundary changes would have given the Conservatives a bigger majority, they would have significantly fewer MPs – down to 311 from 330, a loss of 19 members of Parliament. Although the whips are attempting to steady the nerves of backbenchers about the potential loss of their seats, that the number of Conservative MPs who face involuntary retirement due to boundary changes is bigger than the party’s parliamentary majority may force a U-Turn.

That said, Labour’s relatively weak electoral showing may calm jittery Tory MPs. Two months into Ed Miliband’s leadership, Labour averaged 39 per cent in the polls. They got 31 per cent of the vote in 2015. Two months into Tony Blair’s leadership, Labour were on 53 per cent of the vote. They got 43 per cent of the vote. A month and a half into Jeremy Corbyn’s leadership, Labour is on 31 per cent of the vote.  A Blair-style drop of ten points would see the Tories net 388 seats under the new boundaries, with Labour on 131. A smaller Miliband-style drop would give the Conservatives 364, and leave Labour with 153 MPs.  

On Labour’s current trajectory, Tory MPs who lose out due to boundary changes may feel comfortable in their chances of picking up a seat elsewhere. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.