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Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)Launch of NMW Best Practice Materials |
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Thank you Mr Chairman. As the Minister of State responsible for introducing the National Minimum Wage in April, I would like to welcome you all to this launch event. As many of you will be aware, the introduction of the National Minimum Wage involved considerable consultation. In the light of that consultation and, following representations from business and those closely involved in the development of the National Minimum Wage, I asked my staff to prepare materials to help smaller companies face the challenge of the new business environment. With the help of the LPC report, we have identified six sectors where low pay has traditionally been a problem:
The pack of booklets aimed at these sectors, together with the generic booklet and its complementary CD ROM, are the result of this work. I think the material is excellent and I would like to thank all those - the businesses themselves, the trade associations, and other Government Departments for participating in this exercise. I have no doubt that the benefits flowing from this work will be widespread, and there are a few key points I would like to make. GB is at the forefront of change:
Poor working environments have been taken for granted. I say that with all the conviction of someone whose working life included being a very low paid worker in the hospitality industry - sacked for asking for a £1 per week pay rise. You will understand, ladies and gentlemen, if I see this conference as a cause for celebration because I have been arguing, for as long as I can remember, that there is no future in what I might call the old fashioned ways. The case studies we have gathered together, and the examples we shall be hearing later this morning, bear out my views. The best companies know that one simply cannot respond to the challenges in today's markets and the ever changing demands of customers without a well trained and motivated workforce. To me, the case studies in these booklets are the unsung heroes of British business. Almost all are small or medium sized enterprises and only a few have attained anything like national celebrity, but each one, in its own way, has achieved exceptional business performance. It is these firms and many others whom, I am sure, we could have chosen, who will help to transform the reality problem I mentioned above. This is essential if these sectors are going to attract and retain good staff and, hence, respond to the challenges which lie ahead. I am delighted, therefore, that the trade associations have worked so closely with us to develop these messages. You will be crucial to the success of getting the message of good business practice across. The simplicity and accessibility of the management concepts My second main point, is that this is not rocket science. Quite exceptional business performance has been achieved by the application of rather simple business principles. It is, of course, a bit unfair to pick out any example from the many we have covered, but I shall, in any event, because it illustrates the point so well. Jeremy Dew, of Roxby Hair Design, was frustrated at the lack of dynamic growth in his business, when he received some excellent advice from his accountant: stop cutting hair and concentrate for a few days a week on running the business as a business. How many small businessmen get too close to their businesses - firefighting and failing to delegate - so that key strategic opportunities and decisions pass them by. By taking time out to benchmark his business against local rivals: their prices and quality he identified his competitive edge. By developing a plan, communicating more effectively with his staff and delegating more, he could concentrate on the business and his staff had a new sense of direction. The result has been a staggering 70% increase in profits over the past 12 months and he is planning a second salon. The value of Investors in People and NVQs A third point, which emerges from the case studies, is the importance and value of programmes, such as Investors in People and the use of the NVQ qualifications, in helping to transform businesses. I have, like you, heard criticism of the bureaucracy of NVQs, and that Investors in People is not for small firms. But if a fish and chip shop in Northumberland, a small nursing care home in Kent and a textile and clothing firm in Bolton have all used Investors in People and the NVQ qualifications as a means of engaging and developing their staff, and to improve business performance so successfully, then the problem seems to me to be one of commitment by individual businesses to change, rather than the vehicle for change. The importance of TEC / Business Link activity to help firms This leads my final point which is aimed at business intermediaries, such as the Chambers of Commerce, the TECs and Business Links, and the banks. I am sure that many of you will already be working effectively with firms in our target sectors. It is clear from these case studies that the performance of better firms in these sectors compares favourably with many other sectors. The profitability and growth performance has been truly impressive. But there are many more firms in our target sectors who are in need of guidance about how to improve their performance and I believe that we have developed some excellent materials which will help you engage such firms. The case studies and key themes provide a benchmark against which you, and the firms themselves, can judge performance. They also, hopefully, help you and your clients identify opportunities for improvement. I would urge you to be active in running Business Workshops in your areas, targeted at these sectors, which operate in all regions of this country and account for around 20% of GDP. I think the CD ROM and the booklets are a powerful communications tool to attract firms into the world of business improvement. They are based on real life case studies, and I was struck by the conviction of the participants in the CD ROM. I commend it to you all. Conclusions And so to conclude, Mr Chairman. There were some who criticised the introduction of the National Minimum Wage and I expect there are even some who would criticise it now. However, 90% of employers now support the principle of the minimum wage. One only has to look at current levels of inflation - below the target rate - to realise that there is no evidence of it fuelling higher prices. And employment in the service sector continues to rise. Undoubtedly, the Minimum Wage will be seen in years to come as a force for good. What is so pleasing is that these case studies confirm it for small businesses in traditionally lower paying sectors. It is not just good for the worker but also good for the companies which are being forced to rethink their strategies - with greater priority attached to offering a quality service and value for money. With the sure and certain knowledge that they are not going to face unfair competition by the use of pay rates as low as £1.20 or £1.50 per hour. Thank you. |
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Other speeches by Ian McCartney - Former Minister of State for Competitiveness (May 1997 - Jun 1999)
(the following are available from the archive) |
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