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National Minimum Wage Regulations 1999 (Amendment) Regulations 2008

rose to move, That the Grand Committee do report to the House that it has considered the National Minimum Wage Regulations 1999 (Amendment) Regulations 2008. The noble Baroness said: The minimum wage is a key protection for the UK’s workers that provides a floor for workers while protecting business through a level playing field without competition on the basis simply of low pay. The regulations will increase the national minimum wage rates by 3.8 per cent from 1 October this year and will benefit around 1 million people. The Government have accepted the recommendations of the independent Low Pay Commission on the new rates. As always, the Low Pay Commission considered a wide range of evidence before making its recommendations. This included talking to business and workers and considering economic, sectoral and labour market data and forecasts. The rate is intended to balance an increased minimum wage without damaging employment prospects by being set too high. The regulations also make changes relating to the Jobcentre Plus work trials programme, and clarify the position of participants in some government employment programmes. Work trials are a long-standing, successful employment programme on which individuals claiming benefits agree to be placed with a potential employer for a short trial period with the intention of being offered the job permanently. Evidence suggests that employers sometimes screen out the long-term jobless because of misconceptions or stereotypical views about their work experience and skills. Work trials can help to overcome this by allowing employers to find out more about an individual’s actual performance in a job. At the same time, they help demonstrate to individuals that their barriers to work are not as high as they might have thought. Work trials have proved very successful, with consistently around half of the 10,000 to 15,000 people annually converting their trial into a permanent job. The Government have announced their intention to extend the maximum three-week period of the programme to six weeks. This is to update the programme in line with developments in our wider welfare reform agenda, which is progressively extending help and support to economically inactive groups. For example, many people on lone parent and incapacity benefits will have been out of work for a long time, and have only a weak attachment to the labour market. They may need more time to demonstrate their suitability to an employer, to develop the confidence that they can take a permanent job or to make decisions about the type of work they want to do. In addition, the extension responds to requests from local areas for additional flexibilities to help them improve the co-ordination of local support for unemployed and other jobless people, and be as responsive as possible to the needs of individuals. That flexibility will be carefully implemented at the local level by Jobcentre Plus staff so that it is targeted to the needs of the individual. We would expect it to be used in only a minority of cases, and only with the agreement of both the individual concerned and their prospective employer. Jobcentre Plus also has controls in place to prevent work trials being abused. During the trial the participant continues to receive benefits from the DWP and so is exempt from the national minimum wage. The regulations before your Lordships today will enable the current three-week minimum wage exemption to be extended to six weeks. The regulations also make an amendment to the wording of the current regulations applying to participants in certain government employment programmes. Those programmes provide a range of tailored options to provide jobless people with training, work experience or temporary work. Participants usually remain on benefits or receive a benefit-based training allowance. However, some may opt for a period of subsidised employment with an employer, during which they will receive a wage. Current regulations ensure that that must be at least the national minimum wage. The amendment before your Lordships will not change the current position, but clarifies which programme participants are entitled to the minimum wage and which continue to receive a benefit-based training allowance or benefits. That will assist participants and their employers alike, helping to ensure that workers obtain their entitlement if the minimum wage is due to them. I turn to the detail of the regulations. Regulation 1 provides that the increase to the minimum wage rates will come into force on 1 October 2008. The new rates were announced in March, ensuring that business had sufficient time to prepare and plan for them. That is a well-established pattern. The provisions on work trials and employment schemes will take effect from the day after the day on which the regulations are made to ensure that individuals will be able to benefit as soon as possible from extended work trials. We would expect the impact on business and individuals to be beneficial. The DWP has ensured that guidance is available on these matters, and those arranging placements will ensure that businesses and participants are aware of how the provisions apply to them. Regulation 3 increases the adult rate of the minimum wage from £5.52 to £5.73 per hour. Regulation 5 increases the rate for workers aged between 18 and 21 from £4.60 to £4.77 per hour and the rate for workers under 18 from £3.40 to £3.53 per hour. The amount of the accommodation offset is increased from £4.30 to £4.66 per day by Regulation 6. As noble Lords will be aware, the accommodation offset is the maximum daily amount which an employer may deduct from a worker to pay for accommodation. Regulation 4 clarifies the circumstances in which workers on schemes made under government arrangements qualify for the national minimum wage. Workers who are entitled to pay under the terms of the arrangements by Government, or who receive pay from an employer, must receive the minimum wage. Regulation 4 also extends the current three-week exemption from the national minimum wage for individuals taking part in a work trial to six weeks. That exemption applies only to work trials arranged for customers of Jobcentre Plus and not to any other trial arrangements agreed between workers and employers, to which the national minimum wage would apply. I commend the regulations to the Committee. Moved, That the Grand Committee do report to the House that it has considered the National Minimum Wage Regulations 1999 (Amendment) Regulations 2008. 21st report from the Joint Committee on Statutory Instruments.—(Baroness Vadera.)