Politics: Loophole may leave young unprotected by low-pay law

The Government was accused of putting a loophole in its minimum wage legislation by excluding those under 26 years of age. Colin Brown, Chief Political Correspondent, says employers face fines of up to pounds 5,000 for breaking the laws designed to help six million workers.

The Minimum Wage Bill was hailed by Margaret Beckett, the President of the Board of Trade, as the "beginning of the end" to poverty pay, but Tory MPs said it paved the way for another Government U-turn.

Clause three of the Bill gives the Government the power to exempt workers aged under 26 from the minimum pay legislation, or to apply a different rate, if it is recommended by the Government's low pay commission, which is due to report in the Spring.

The inclusion of the let-out clause for a large part of the workforce, which is facing low pay, will be seen as a partial victory for Peter Mandelson, the minister without portfolio, who called for flexibility in its operation during the Labour Party conference in October.

Mrs Beckett won her argument that the minimum wage will be the same across the country, but she could be forced to concede the lower rate for younger workers.

While trade union leaders welcomed the Bill as a "landmark", a lower rate for trainees raised some fears it could be used to water down the impact of the Bill. John Edmonds, general secretary of the GMB, said he remained "very concerned" that young workers could be discriminated against.

The Tories, too were sceptical. "It looks as though the Government is going to do a complete U-turn. Mrs Beckett is still saying she may not use the powers but it is pretty odd to put such a strong clause three into the Bill if there is no intention of using it," said John Redwood, the Tory spokesman on trade and industry.

The Bill carries strong powers to fine employers breaking the law up to pounds 5,000. But the rate at which the national minimum wage will be fixed will not be known until after the Low Pay Commission reports. Its recommendations will then be considered by the Cabinet.

There is speculation that the final figure could be pounds 3.50-pounds 3.75 an hour, but Mrs Beckett refused to be drawn. She said she was "proud" to bring forward the legislation, which campaigners estimated could boost the pay of six million workers, including low paid homeworkers, domestics, nannies and agency staff.

"It will be a single rate that will apply to all regions, sectors and size of firm," said Mrs Beckett, adding that the Government was keen to make sure the rate was set as a "sensible" level.

"This is both a very important day and a very proud day because it is the beginning of the end of poverty pay."

The legislation also sets out six new offences aimed at employers who refuse to pay the new wage. These cover refusal or wilful neglect to pay the rate, failure to keep records, or failure to give information to enforcement officers.

Trade minister Ian McCartney said that most workers will be covered by the new rate, including homeworkers, who can earn at present as little as 35p an hour.

The only people not covered will be the self-employed, people who do a few hours a week voluntary work for groups like the Citizens Advice Bureaux, children below school leaving age and prisoners.