Defence ministers want minimum wage exemption

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The Independent Online
Defence ministers have demanded a blanket exemption from the minimum wage for the armed forces. The minister in charge of the minimum wage, Ian McCartney, is trying to block the move. Fran Abrams, Political Correspondent, reports on the latest attempt to water down the reform.

The minimum wage would cost the Ministry of Defence about pounds 3m per year, the Liberal Democrats have calculated. That is just a tiny proportion of the department's pounds 21.8bn annual budget.

But despite plans to spend The Ministry of Defence can afford to spend pounds 16bn on 232 new Eurofighter warplanes, but is arguing that it cannot afford to upgrade the pay of all its employees.

The trade and industry minister, Ian McCartney, is fighting back. He is believed to be determined not to give in to the demands. Although no other government departments are known to have asked for exemptions, the move could create a dangerous precedent. The NHS, for example, will be hit much harder.

Earlier this month Mr McCartney was forced to deny a report in the Independent on Sunday that he had threatened to resign on the eve of his draft Bill's publication because of pressure to water it down. He is believed to have been angered by Peter Mandelson's sudden announcement at the Labour Party conference that young people under 26 could be exempted - something that is now in the draft Bill.

The level of the minimum wage is to be set by a Low Pay Commission, which is due to report next year. Trades unions have argued for pounds 4 per hour, though there have been suggestions the final figure may be nearer to pounds 3.50.

An investigation for the NHS Confederation by Pay and Workforce Research has shown that 37,000 hospital staff would have their pay upgraded if the minimum wage was set at pounds 3.70 per hour. If it was set at pounds 4.15 per hour, 104,000 people would be affected. However, a spokeswoman for the confederation, which represents NHS employers, said yesterday she did not believe it had requested a similar exemption.

The second most vulnerable department would be John Prescott's Department of Transport, Environment and the Regions, which would probably have to pay about pounds 1m extra per year in wages to 1,200 staff paid under pounds 4 per hour. That department, too, is expected to be prepared to pay the extra.

However, spokesmen for both the Ministry of Defence and Department of Trade and Industry confirmed yesterday that a request for an armed forces exemption was being discussed.

A DTI official said the draft Bill published at the end of last month had left the possibility of some limited exemptions for the armed forces open. ``The Minimum Wage Bill is enabling legislation, and will give the Secretary of State the power to set a rate. There is opportunity for variations, though what those variations will be is under discussion,'' he said.

A Ministry of Defence spokeswoman pointed out that the bill was ``just a draft''. ``This is the time for the department to have a look at the Bill and if there is something that could be damaging of course that will be addressed," she said.

David Chidgey, the Liberal Democrats' industry spokesman, has calculated the cost of the move from Parliamentary answers. John Spellar, the defence minister, told him 3,402 were MoD civilian staff were paid less than pounds 4 an hour. Paying that rate would cost pounds 3m a year

``I can understand why the MoD are gibbing at this,'' he said. ``This is the cost on basic time alone. With overtime, God only knows how much it will cost.''

There was confusion last night over whether the Ministry was seeking an exemption for civilian staff. A DTI spokeswoman said she did not believe it would. Although Mr Chidgey supported a minimum wage he said it should have flexibility built into it, particularly in terms of regional variations.