Philip Davies position on the Minimum Wage – from 2009

Philip Davies has been in the news this weekend for his views on the Minimum Wage and whether or not disabled people should be allowed to work for less.

But his outspoken views on the Minimum Wage go back much further than this weekend (as I’ll explain over the next coming days). Back in 2009 he set out his views to people who emailed him in opposition to his position on the Minimum Wage as set out in support of Christopher Chope’s Employment Opportunities Bill, which he spoke on this week but was originally put forward in 2009.

Davies’ views can be seen below, you can see hidden away beneath the misleading statistics about people on benefits or out of work his references to people who are or ex-prisoners or ‘other vulnerable groups’ working for less than the Minimum Wage, which I’ve highlighted in bold. To be fair to Philip Davies, I’ve reproduced his email in full to allow his full opinion (and the thinking behind it) to be explained in his own words):

People might think that when a political consensus exists between all political parties about an issue then it must follow that the policy concerned must be self-evidently good and should therefore be supported.

However, in my experience, such a political consensus usually means the exact opposite. Take joining the ERM back in 1990 which led to Black Wednesday, the setting up of the Child Support Agency and the introduction of tax credits as just a few examples. All had cross party support and all proved to be disastrous in their own ways. A political consensus is usually a reflection of the fact that the policy concerned is well meaning and more importantly is popular. It does not necessarily mean it is right and that I fear is the situation with the National Minimum Wage which is supported by all Parties in Parliament, including my own. Indeed I should make it clear that these views are my own and are in no way the views of the Conservative Party as a whole which is committed to maintaining the NMW if we win the next General Election.

When the Government introduced the NMW in 1999 both of the main opposition parties opposed it due to fears that it would lead to people losing their jobs. Given that the following 8 years saw higher levels of employment and lower levels of unemployment, it was taken as read that the NMW must not have any negative impacts on levels of employment. Given that we all want to see people properly rewarded for the jobs they do and no politician wants to be seen to be asking for lower pay for people means we now have a political consensus in support of the NMW.

However those 8 years saw high levels of economic growth and so it was always inevitable that employment levels would rise during that time with or without a NMW. Indeed it may be that even more employment would have been created without the NMW. The real test of it comes during an economic slowdown, and I think there are legitimate concerns about the effect of the NMW which it would be irresponsible (even if politically expedient) to ignore, especially during a recession.

I have to concede that I have never supported the principle of a National Minimum Wage. I think that payment between an employer and employee should be a private matter, and if someone is happy to do a job for a certain wage I don’t believe that it should be any business of the Government to prevent them from so doing. However I have to accept that this philosophical argument was lost, and my concerns now are based on its practical and unforeseen impact on some of the most vulnerable people.

My biggest concern about the NMW is that I fear it prevents the most vulnerable of all from being given a chance. Before the NMW, although some people very paid extremely poor wages, very few people were paid those wages for the entirety of their working lives. People would be paid those low wages for a relatively short period which would give them the experience they needed to move on to higher paid jobs. It was the first rung on the ladder for those people. I am becoming extremely concerned that due to the NMW this first rung on the ladder has become so high that too many people are unable to get on to it.

Because an employer must legally pay the NMW, is it less likely that they would be prepared to take a chance on a former prisoner looking for a job, somebody with no qualifications at all, or somebody with mental health problems. I believe that it is now less likely and is leading to some of the most vulnerable people in our society finding it harder than ever to find a job and instead being left on a lifetime of welfare which is not good for the person and certainly of no benefit to society as a whole. Surely it must make more sense to allow employers to pay less in order to give people in these categories a chance to prove themselves and hopefully move on to much bigger and better things, rather than have people being left on benefits. For those who feel this problem does not exist need only look at the figures for the numbers of people who have been on incapacity benefit for 5 years or more. In 1997 this figure stood at 47,000; today it is over 1.5 million (and that was before the current recession)! Clearly we are seeing far more people who are finding it difficult to access work at all and I believe this is linked to the introduction of the NMW.

We also know that some employers are breaking the law and paying below the levels set out in the NMW. In order to get away with this, it is likely that many of the offenders are employing illegal immigrants knowing that they are not in a position to complain about this to the authorities. It would be extremely sad, although in my view quite likely, that the NMW has encouraged and given rise to higher levels of illegal immigration into the country.

The truth is that we don’t really know what impact the NMW has had on these matters. Indeed I tried to find out the statistics on these issues for the purpose of this article. I asked for the levels of illegal immigration into the country before and after the NMW was introduced, the levels of employment amongst former prisoners and other vulnerable groups and unfortunately no reliable figures seem to exist. Surely we should commission research into these issues to see if there is (or isn’t) a problem.

Whatever problem may be caused by the NMW to levels of employment generally, the affect it has during a recession must be worse. People may recall that workers at JCB and Corus amongst others agreed to take a pay cut in order to avoid compulsory redundancies. The option was put by the employer to the workers and was accepted. At the time the unions and the Government amongst others rightly praised this flexible approach to the problems caused by the recession. However why should this opportunity and choice only be given to relatively highly paid workers? Why shouldn’t workers on the NMW wage be given this option if the same scenario arises? Even if the National Minimum Wage is not scrapped generally it may well be sensible to consider if it should be suspended during an economic recession or at least suspended if the workers concerned vote to suspend it to safeguard their jobs.

We shouldn’t forget that there are many people in this country who work for below the minimum wage, and not just those doing so illegally. There are many people who are self-employed, especially in this current economic climate, who also work hourly rates below the levels of the minimum wage and yet I am not aware of anybody saying that this should be banned.

The insistence on the current figure of £5.73 per hour for a National Minimum Wage by the Government is clearly a nonsense as anybody working full time at this level has to pay tax on their earnings back to the Government. Surely somebody paid the minimum amount allowed by law should be exempted from taxation; otherwise it must be the case that the NMW is set at a level too high. Based on a 40 hour week a full time employee on the NMW earns an annual salary of £11,918 which the Government clearly feels is above the level needed by somebody as they tax this income to the tune of £1887 in income tax and national insurance contributions. In this economic downturn, when the Government is claiming to want to help small businesses struggling to cope, surely it would make sense for the Government at the very least to reduce the NMW to £4.82 and exempt them from taxation. This would mean that the worker concerned would be no worse off at all as their take home pay would remain the same, but would give a much needed boost to small businesses who would see their costs reduced.

I fully appreciate that the NMW is popular and that it is politically expedient not to oppose it. However in politics it is crucial to do the right thing even if it is unpopular to do so. It is essential that we have a proper sensible debate about these issues to ensure that we get them right. Instead of engaging in a sensible debate where we can all agree that everyone has the best interests of the public and low paid people at heart, I suspect that those politicians who do not agree with me about this will engage in rather childish name calling and abuse. However I do have every faith that the public will see that there are some genuine issues here which need to be considered and debated and I am sure it would be sensible if work was done to see if any of the concerns I have are justified as we all want to see the most vulnerable people of all in society given the best opportunities in life.

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