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An Act to establish a minimum wage for workers in the United Kingdom.

WHEREAS it is expedient to provide for the payment of a minimum wage to workers in order to secure a decent standard of living and to protect workers against exploitation;

AND WHEREAS the government has a responsibility to ensure that all workers receive a fair wage for their labour;

BE IT ENACTED by the Queen's most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:


(1) A national minimum wage shall be established by the Secretary of State for workers in the United Kingdom by statutory instrument. Such instrument shall be subject to approval by the Houses of Parliament.

(2) This minimum wage shall apply to all workers, including those who are employed on a full-time, part-time, or casual basis, except those who are self-employed or who are working under a contract for services.


(1) The Secretary of State shall be responsible for the administration of this Act, including the enforcement of the minimum wage.

(2) The Secretary of State may appoint such officers as are necessary for the administration of this Act, and shall have the power to delegate any of his functions under this Act to such officers.


(1) Any worker who believes that he or she has not received the minimum wage as established by this Act may make a complaint to the Secretary of State, who shall have the power to investigate such complaints and to take such action as may be necessary to secure compliance with this Act.

(2) Any employer who fails to pay the national minimum wage shall be guilty of an offence.

(3) The financial penalty for the first offence shall be a fine not exceeding £1,000.

(4) The financial penalty for a second offence shall be a fine not exceeding £2,500.

(5) The financial penalty for a third and subsequent offences shall be a fine not exceeding £5,000.

(6) In determining the financial penalty for a third or subsequent offence, the court shall take into account the ability of the business to pay the fine, as well as any other relevant factors.

(7) For the purposes of this section, a second or subsequent offence shall be an offence committed within three years of the previous offence.


(1) There shall be a Low Pay Commission, which shall advise the Secretary of State on the level of the minimum wage.

(2) The Low Pay Commission shall consist of not more than ten members appointed by the Secretary of State, who shall include representatives of employers, workers, and independent experts.

(3) The Low Pay Commission shall be chaired by an independent expert appointed by the Secretary of State.

(4) The Low Pay Commission shall have the power to call for evidence and to consult with such persons and bodies as it considers appropriate.

(5) The Low Pay Commission shall make annual recommendations to the Secretary of State on the level of the minimum wage, taking into account the needs of workers and the economy as a whole.

(6) The Secretary of State, after such consultation with the Low Pay Commission as may be reasonably practicable, may by order suspend the operation of this Act if he is satisfied that such suspension is required in the public interest by extreme economic circumstances.


(1) This Act may be cited as the National Minimum Wage Act 1986.

(2) This Act shall come into force on 1st April 1987.

(3) This Act extends to England, Scotland, Wales, and Northern Ireland.

Edited by Stephen Armstrong

Stephen Armstrong MP

Chancellor of the Exchequer

Member of Parliament for Tooting (1974-present)

Labour Party

Nikita Khrushchev: The difference between the Soviet Union and China is that I rose to power from the peasant class, whereas you came from the privileged Mandarin class.
Zhou Enlai: True. But there is this similarity. Each of us is a traitor to his class.

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Mr. Speaker,

It is with more than a small sense of pride that I stand before the House today to move the Second Reading of the National Minimum Wage Bill. The Bill will establish minimum wage protection for all workers in the United Kingdom for the first time.

Having no floor for wages in Britain has led to businesses large and small being undercut by rogue operators. People who are employed are forced to depend on benefits to supplement their income, which is a drain on the public purse. Wage councils provide minimum pay rates for those employed in some industries, but not all. Jobs have become so scarce due to Conservative policies that people are forced to take whatever job they can find, even if it means accepting poverty pay. No one who works multiple jobs, much less one job, should go wanting when it comes to affording necessities.

Poverty increased under the Conservative Government from 13% in 1979 to 22% in 1985. This was due to a deep recession in part, but also to harsh cuts to benefits and changes in eligibility criteria. People on low incomes saw their level of support fall sharply. Cuts in public spending and reduced investment in public services like health and housing have also hurt the most vulnerable among us. The Conservatives did their level best to turn Britain, the workshop of the world, into the sweatshop of Western Europe. The minimum wage marks an absolute departure from that philosophy.

The minimum wage will reduce unemployment by encouraging people to work. People will be more likely to accept a job if the pay is at least a certain minimum level. They will also be less likely to depend on government assistance programs to cover expenses. This has the added benefit of reducing the burden on benefit spending for other purposes.

A minimum wage will also increase consumer spending. When workers earn more, they have more money to spend, which stimulates the economy. This in turn will mean more profits for businesses, and thus more hiring. And with a minimum wage making jobs more attractive to workers, there will be less turnover for employers, which will lower the costs of hiring and training new employees. This Bill is good for business.

Of course, this is not about cold economics. There is a moral argument to be made for instituting a minimum wage. All workers, whatever their occupation or level of skill, should be paid an amount that permits them to live with dignity and meet basic needs. As a former industrialist myself, I believe employers have a responsibility to their workers and also their communities to behave in a way that is responsible and ethical. While I would love to live in a world where all employers did not exploit their workers for their benefit, the sad truth is we do not live in such a world. Until we do, we must use the law to guarantee all workers are treated fairly and with respect.

The Government understands there is debate among economists about how minimum wage laws affect employment levels. However, the evidence so far suggests major job losses do not follow when minimum wage levels are set at sensible levels. That is why the Government is establishing a Low Pay Commission made up of representatives from workers and employers as well as independent experts. The Commission will study the economy and make reports to the Government on what the minimum wage should be. This way, proper consideration will be given to the broader economic context to reduce any negative impacts on employment levels. And, as already said, increased consumer demand and reduced turnover will make this Bill a net gain economically.

I would like to thank the Deputy Prime Minister and the leader of the Liberal Party for the suggestion of graduated offenses for this Bill. In addition to making this Bill not implemented until the next fiscal year in April 1987, the Government has also made it so first-time offenders are not punished the same as repeat offenders, and that the ability of a business to afford any penalties is up to discretion in deciding such penalties. After all, the point of this Bill is not to push down employers but to lift low-paid employees.

Mr. Speaker, make no mistake: this is a Government that values labor. Whereas the previous Government showed nothing but contempt for the working man, nothing but cold indifference to rising unemployment and the loss of industrial towns, this Bill is our flagship legislation because we respect the workers. A minimum wage will not only help the economy but provide a living wage for all, and I commend it fully to the House.

Stephen Armstrong MP

Chancellor of the Exchequer

Member of Parliament for Tooting (1974-present)

Labour Party

Nikita Khrushchev: The difference between the Soviet Union and China is that I rose to power from the peasant class, whereas you came from the privileged Mandarin class.
Zhou Enlai: True. But there is this similarity. Each of us is a traitor to his class.

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Mr Speaker,

Barbara Castle, serving as the Employment Secretary at the time, considered introducing a minimum wage in Britain during the late 1960s. However, after much consideration, she ultimately decided against it. One of the key reasons for this decision was her concern that a minimum wage could result in an increase in unemployment. Castle believed that employers would be less likely to hire new workers if they were required to pay them a minimum wage. As a result, she felt that introducing a minimum wage could do more harm than good.

One of the fundamental principles of a free-market economy is that wages should be determined by supply and demand, rather than by government intervention. When the government sets wages, it can distort the market and lead to unintended consequences. Even with educated deliberation, if the government sets a minimum wage that is higher than what employers are willing to pay, it could lead to unemployment as employers cut jobs to save on labour costs. The market should be left to determine wages based on the skills and experience of workers and the demand for their labour. This allows for a more efficient allocation of resources and ultimately benefits both workers and employers.

Unemployment can be broadly divided into two categories: necessary unemployment and unnecessary unemployment. Necessary unemployment refers to situations where unemployment is considered an acceptable side effect of a policy designed to achieve a larger goal. For example, when a government lowers inflation by raising interest rates, it may lead to temporary unemployment as businesses cut back on investment and hiring. However, this type of unemployment is seen as necessary to achieve the larger goal of reducing inflation.

On the other hand, unnecessary unemployment refers to situations where unemployment is created due to inefficient government policies or market distortions. For example, when the government imposes wage controls that prevent employers from paying workers their market value, it can lead to unemployment as employers cut back on hiring or reduce employee hours to save on labour costs. This type of unemployment is considered unnecessary because it is not a necessary side effect of any larger policy goal, but rather the result of a flawed policy.

That is what this bill represents: a flawed policy. The Conservative Party would pursue deregulation and lower taxes, to get government out of the affairs of the market, and let business take the lead in fostering the conditions where businesses prosper. Every time the Labour Party has tried to engineer wealth and happiness, the result has been anything but. When will we learn the lesson that government is not the solution to our economic problems but the cause of it? How much money will be thrown after bad simply to satisfy the socialistic ideals of effete ministers?

I urge the House to vote against this bill.

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Mr Speaker,

I rise today in proud support of this legislation. I thank the Chancellor for his work in putting it together. The structure this legislation takes, of a Low Pay Commission and graduated offences, will ensure sufficient attention to broader economic conditions, sensitivity to the needs of businesses and employees alike, and guarantees that innocent mistakes and errors in bookkeeping will not be treated with the same approach as deliberate undercutting of fair wages. 

A minimum wage was, as astute observers will know, one of those manifesto commitments on which the parties of this coalition already enjoyed a ready-made consensus. A minimum wage is, bluntly put, the right thing to do. It is how we boost consumer spending, ensure the dignity of work, and fight the injustice of in-work poverty. 

The party opposite has, as predicted, opposed this legislation. It is, I think, very telling that their leadership does not consider the abolition of in-work poverty a desirable policy goal. Very telling indeed. 

Now, I do believe that market forces are of course an important factor in determining the appropriate wage levels. But let us not pretend that that is the entire picture, and that the profitability is the only morally relevant factor in determining wage levels. We need a guarantee, across sectors, including in relatively non-unionised sectors, that exploitation will not be permitted, that living wages will be secured, that there will be fair compensation for work. That is what this legislation achieves. 

Is the Conservative Party saying, as I think they are, that they will leave the settlement of wages entirely down to the forces of supply and demand? Because if so, can we take that to mean that they support the abolition of wage councils? As the Chancellor has already pointed out, it is government policy already, and has been for decades, that this kind of intervention is appropriate. What this does is rationalise the process, provide those protections for workers everywhere, and 

On another note: the minimum wage is not a novel idea, nor is it one without a history of successful application in strong economies throughout the globe. Indeed, no country defines the ethos of free market economics more robustly than the United States, for good and for ill. They have had a minimum wage for decades, and the somewhat cataclysmic depictions of its consequences, as described by the party opposite, have not come to pass. 

Laurence Foltyn, Liberal MP for Colne Valley

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