Opposition peers go to work against 'forced labour' pay and 'forced labour'

Minister says jobseekers should not hold out for better wages

Baroness Williams of Crosby last night accused the Government of creating not a free labour market but a "coercive market", as a junior minister struggled to justify forcing jobseekers to accept work paying less than income support.

Lord Inglewood sat in awkward silence as Baroness Hollis of Heigham, a La- bour frontbencher, repeatedly pressed the old Etonian on whether he thought 50p an hour was an acceptable wage.

Earlier, he declared he was not going to engage in a Dutch auction. "We believe people should not hold out indefinitely for a given level of remuneration," the minister said as peers considered the Jobseekers Bill on Report.

Lady Hollis had moved an amendment protecting claimants from being required to accept work at less than income support rates - £37 a week for someone under 25, £46.50 for over 25s, and £73 for an unemployed couple without children.

"It is a poverty line. They can't live below it," she said. Yet 1.25m were now earning less than £2.50 an hour and 660,000 people were earning less than £1.50 an hour - well below income support rates.

"Cutting wages doesn't create more jobs. It merely pays less for the same job." Lady Hollis argued that employers, with the support of Department of Employment staff, would be able to offer what they liked, knowing that the claimant would be forced to accept. Under the Bill, to refuse could mean the loss of benefit.

"That is not a labour market, it is forced labour at exploitative pay," she said.

Lady Williams, the former Labour Cabinet minister turned founder Liberal Democrat, said claimants would face a "prisoner's dilemma" when asked by the department what was the lowest wage they would accept. Too low a figure and his family might suffer; too high and it might be an unreasonable condition. Without the amendment, the route proposed by the Government would be expensive for the taxpayer and come close to "coercive labour".

Lord Inglewood emphasised there was no point in holding out for a rate of pay that was no longer realistic. "After six months we would expect the jobseeker to place no restriction on the rate of pay."

Provoking an angry interruption from the veteran employment specialist Lord McCarthy, he said the service placed 4 million people a year, yet since present arrangements began in 1989 no example could be found where it had been "an instrument of exploitation on behalf of the employer".

Lord McCarthy said that was simply because the minister did not recognise "starvation wages" as exploitation. But Lord Inglewood did not want to bandy wage rates and insisted Labour's amendment would "close off opportunities for job-seekers of getting back to work".

No one other than the minister spoke on the government side. However, numbers spoke louder than words and the wages floor amendment was rejected by 160 votes to 121.

Employment was briefly a contentious issue in the Commons when a Tory backbench Bill to make it an offence for anyone knowingly to employ an illegal immigrant cleared its first Commons hurdle with a nine-vote majority.

MPs approved the introduction of Nigel Waterson's Employment of Illegal Immigrants Bill by 74 to 65. The Eastbourne Tory told the House that the Home Office was unable to say how many illegal immigrants were in Britain. It was claimed 40,000 entered each year with only one in seven being caught. "A significant number of those employed in hotels and restaurants or factories or farms at harvest-time are illegal immigrants." He would have offending employers jailed for up to five years. But Neil Gerrard, Labour MP for Walthamstow, said it was a "nasty, vicious little proposal" based on prejudice. If implemented it would "foster prejudice and destroy good race relations".

It will not be implemented, as there is no room for more private members' Bills on the parliamentary timetable. The same constraints do not apply to Government measures such as the Gas Bill. Aimed at opening up the industry to competition, the measure completed its Commons stages last night, getting a Third Reading by 297 votes to 228, and now goes to the House of Lords.

Douglas Hurd, the Foreign Secretary, twitted his Labour shadow Robin Cook for indulging in a "nostalgic dream" of his unilateralist past as the two extracted party points from last week's agreement to extend indefinitely the nuclear Non-Proliferation Treaty.

Mr Cook particularly welcomed the Government's endorsement of the declaration aimed at the elimination of nuclear weapons - a declaration he said it had privately lobbied against. The Government would be judged on its remaining two years on what steps it took "on working towards a world without nuclear weapons", he added.

But, defending the Trident force as a minimum deterrent, Mr Hurd said Britain's nuclear explosive power in 1998 would be 59 per cent below that of the 1970s. "In a world in which American and Russian nuclear forces were counted in hundreds rather than thousands, this would be one in which we would respond to the challenge of multilateral talks on the global reduction of nuclear weapons. I think that is reasonable."