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House of Lords Hansard
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Small Business, Enterprise and Employment Bill
11 March 2015
Volume 760

Report (3rd Day)

Relevant documents: 11th, 13th and 19th Reports from the Delegated Powers Committee.

Clause 122: Abolition of requirements to hold meetings: company insolvency

Amendment 57B

Moved by

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57B: Clause 122, page 98, line 31, leave out “prescribed proportion of the” and insert “minimum number of”

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My Lords, these amendments relate to Clauses 122 and 123 which remove the requirement for face-to-face meetings in insolvency proceedings.

I am grateful to the noble Lord, Lord Stevenson, and my noble friends Lord Flight and Lord Leigh for their questions about when face-to-face meetings should be held and the position of small creditors. I have also met R3, the trade body representing insolvency practitioners, as I promised to do in Committee, and am grateful to it for the valuable insight that it provided.

After further consideration, the Government intend to expand the thresholds so that a face-to-face meeting may be requested by 10% of the total number of creditors or contributories, as well as 10% by the value of their claims, which was, of course, the Government’s original proposal. This would mean that on average three or four creditors could trigger a meeting in a liquidation case. Moreover, to account for the larger insolvency cases with lots of small creditors, a further threshold of an absolute number of 10 or more creditors or contributories—a third 10—has also been introduced.

I thank the Delegated Powers and Regulatory Reform Committee for its recommendations on this part of the Bill. We have listened to its concerns and moved the various thresholds to the face of the Bill so that they will appear in the Insolvency Act as amended. Any changes to these thresholds will also now be subject to the affirmative resolution procedure.

Before I sit down, I should like to comment on another insolvency issue raised in Committee by my noble friend Lord Flight. This was the temporary exemption from the scope of the no-win no-fee reforms in Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 for insolvency officeholders to bring civil proceedings. The Government have listened to the concerns raised in this House and elsewhere. As a result, we announced on 26 February that we would defer commencing the no-win no-fee reforms for proceedings brought by insolvency officeholders beyond April 2015.

I am most grateful for the input of noble Lords on all sides of the House and I hope they will agree that we have found a sensible solution on all these issues. I beg to move.

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My Lords, I thank the Minister for listening to the various concerns in this territory and for the government amendments. I am aware that the insolvency industry is comfortable with the legislation as it now stands. It understandably has the view that it hopes creditor meetings will not disappear as they can be extremely useful. However, a most satisfactory compromise has been achieved, for which I thank the Minister.

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My Lords, as the Minister said, in Committee we were concerned that, rather than increase creditor engagement, the original clauses in the Bill would reduce it. We reported that the Federation of Small Businesses believed that the proposal would be detrimental, the British Property Federation had concerns and that R3, to which the Minister referred, wanted the Government to think again about the issues.

We take the view that creditor engagement is a core part of a strong, transparent, fair and trusted insolvency regime. Indeed, we have such a regime in our country. Creditor meetings are an essential part of that and build trust and confidence in that regime. Although the clauses also included proposals on virtual meetings—we are not against that—we wondered whether it was a bit previous to suggest that they might entirely replace face-to-face meetings. I am delighted that the Government have listened to the arguments from all around the House and have agreed to come forward with these amendments, which we support. The noble Lord, Lord Flight, has been assiduous in his attendance and has pressed amendments without number. There were so many, it was hard to keep track of them. I think that only one has landed, but I am glad it is this one on no-win no-fee conditions, which will make a big difference. I am grateful to him for his support for this.

Amendment 57B agreed.

Amendments 57C to 57J

Moved by

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57C: Clause 122, page 98, line 32, leave out “of the”

57D: Clause 122, page 99, line 7, at end insert—

“(6A) For the purposes of subsection (3) the “minimum number” of creditors or contributories is any of the following—

(a) 10% in value of the creditors or contributories;(b) 10% in number of the creditors or contributories;(c) 10 creditors or contributories.(6B) The references in subsection (6A) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class.”

57E: Clause 122, page 99, line 12, leave out “In this section references” and insert “Except as provided by subsection (6B), references in this section”

57F: Clause 122, page 99, line 36, leave out “prescribed proportion of the” and insert “appropriate number of”

57G: Clause 122, page 99, line 37, leave out first “the”

57H: Clause 122, page 99, line 47, at end insert—

“( ) For the purposes of subsection (4) the “appropriate number” of relevant creditors or relevant contributories is 10% in value of those creditors or contributories.”

57J: Clause 122, page 100, line 10, at end insert—

“246ZG Power to amend sections 246ZE and 246ZF

(1) The Secretary of State may by regulations amend section 246ZE so as to change the definition of—

(a) the minimum number of creditors;(b) the minimum number of contributories.(2) The Secretary of State may by regulations amend section 246ZF so as to change the definition of—

(a) the appropriate number of relevant creditors;(b) the appropriate number of relevant contributories.(3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of—

(a) a proportion in value,(b) a proportion in number,(c) an absolute number,and the definition may include alternative, cumulative or relative requirements.(4) Regulations under subsection (1) may define the minimum number of creditors or contributories by reference to all creditors or contributories, or by reference to creditors or contributories of a particular description.

(5) Regulations under this section may make provision that will result in section 246ZE or 246ZF having different definitions for different cases, including—

(a) for creditors and for contributories,(b) for different kinds of decisions.(6) Regulations under this section may make transitional provision.

(7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument.

(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.””

Amendments 57C to 57J agreed.

Clause 123: Abolition of Requirements to hold meetings: individual solvency

Amendments 57K to 57Q

Moved by

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57K: Clause 123, page 101, line 10, leave out “prescribed proportion of the” and insert “minimum number of”

57L: Clause 123, page 101, line 22, at end insert—

“(6A) For the purposes of subsection (3) the “minimum number” of creditors is any of the following—

(a) 10% in value of the creditors;(b) 10% in number of the creditors;(c) 10 creditors.(6B) The references in subsection (6A) to creditors are to creditors of any class, even where a decision is sought only from creditors of a particular class.”

57M: Clause 123, page 101, line 27, leave out “In this section references” and insert “Except as provided by subsection (6B), references in this section”

57N: Clause 123, page 102, line 8, leave out “prescribed proportion of the” and insert “appropriate number of”

57P: Clause 123, page 102, line 17, at end insert—

“( ) For the purposes of subsection (4) the “appropriate number” of relevant creditors is 10% in value of those creditors.”

57Q: Clause 123, page 102, line 24, at end insert—

“379ZC Power to amend sections 379ZA and 379ZB

(1) The Secretary of State may by regulations amend section 379ZA so as to change the definition of the minimum number of creditors.

(2) The Secretary of State may by regulations amend section 379ZB so as to change the definition of the appropriate number of relevant creditors.

(3) Regulations under this section may define the minimum number or the appropriate number by reference to any one or more of—

(a) a proportion in value,(b) a proportion in number,(c) an absolute number,and the definition may include alternative, cumulative or relative requirements.(4) Regulations under subsection (1) may define the minimum number of creditors by reference to all creditors, or by reference to creditors of a particular description.

(5) Regulations under this section may make provision that will result in section 379ZA or 379ZB having different definitions for different cases, including for different kinds of decisions.

(6) Regulations under this section may make transitional provision.

(7) The power of the Secretary of State to make regulations under this section is exercisable by statutory instrument.

(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.””

Amendments 57K to 57Q agreed.

Amendment 58

Moved by

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58: Before Clause 147, insert the following new Clause—

“Equal pay: transparency

(1) The Secretary of State must, as soon as possible, and no later than 12 months after the passing of this Act, make regulations under section 78 of the Equality Act 2010 (gender pay gap information) for the purpose of requiring companies to publish information showing whether there are differences in the pay of male and female employees.

(2) The Secretary of State may consult such persons as the Secretary of State thinks appropriate on the details of such regulations prior to publication.”

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My Lords, I start by thanking all supporters who have put their names to the amendment—the noble Lord, Lord Low, and my noble friends Lady Prosser and Lord Young—and also those who failed to put their names to it, because there were many others who wished to offer their support and were keen to support the purpose of the amendment.

I thank the Minister for the two meetings that we had to discuss the amendment and the issues it raises. I welcome the amendments that she has put to my amendment and congratulate her on doing so. I inform the House from the outset that as long as the Minister intends to accept my amendment, as amended by her, the proposers of the amendment are happy to accept her amendments.

I thank my colleague Gloria De Piero MP for her leadership in this recent campaign. I also thank the TUC and Unite the union for their briefing and continuous commitment over many years and pay tribute to Frances O’Grady and many women trade unionists who have worked without cease and done a huge amount to support women in the workplace against discrimination. I also thank Grazia magazine for its inspiring campaign and petition, reflecting always what its readers have had to say about equal pay and the injustices that they have experienced. Finally, I thank the unsung heroine Nicola Jayawickreme in our Labour Party office here who had the idea that the Bill might lend itself to bringing forward this amendment. She has done a great job.

One of the strengths of this House is that we can and do seize the moment on issues. I suggest that this is one of those times. We were wise to put the powers on transparency in Section 78 of the Equality Act 2010 and I hope that we will now be wise to enact those powers. It is 46 years since the machinists walked out of Dagenham’s Ford plant in protest over the pay divide which prompted the Equal Pay Act. Overall, women in the UK are still earning just 81p to every pound that men earn. According to the new figures based on the Office for National Statistics annual survey of hours and incomes, the pay gap between men and women in their twenties has almost doubled since 2010, from 2.6% to 5%, and it has also increased for women over 50.

We are falling down the international scales on equal pay. Women across the world still earn only 77% of the amount that men earn, a figure that has improved by only three percentage points in the past 20 years, according to the United Nations International Labour Organization report this week. Frankly, I do not think we can wait another 40 years to get equal pay.

The most exciting moment for me in the recent equal pay campaign was meeting the Dagenham women last December. They were right to be astonished and dismayed that we still do not have equal pay. At the time, I wished we had better news for them. Perhaps after today’s business we can say that we are absolutely on our way to delivering the equal pay that they fought for all those years ago.

It is without doubt true that under this Government some progress has been made by exhortation and encouragement, but the truth is that it is not nearly enough when one considers that, despite this effort, a mere five companies actually publish their gender pay scales: PricewaterhouseCoopers, for example, is one of them. The company says that it has had only a positive impact, because it is tangible proof that it is a fair employer. Why would our large employers not wish to embrace such a programme and have such a reputation with their employees?

Amendment 58 calls for the enactment of Section 78 of the Equality Act within a year. Last week, my noble friend Lady King mentioned some of the examples that Grazia has so usefully collected from its readers. Shannon, aged 25, works in advertising and felt too insecure in her job to ask for a pay rise, despite knowing that her male counterpart was earning more than she was. To make matters worse, for an end-of-year bonus he was given £2,000 in cash while she received a £100 Liberty voucher. Erin, 30, is a lawyer who was asked to take a pay cut to avoid redundancy, only to find that none of her male colleagues had been asked to do the same. Amanda, who works in the media, was stunned when two of her male colleagues drunkenly boasted about their salaries as she realised both were being paid an average of £10,000 a year more, despite having the same experience as her.

Last autumn, an overwhelming majority of 258 MPs voted yes to the implementation of Section 78 of the 2010 Equality Act, so we know that there is support for this in the Commons.

We do not believe that this new clause will place a disproportionate burden on British business. Of the 4.9 million private sector employers in 2013, 7,000 employ more than 250 staff and will be affected by this legislation. These are data that these companies already routinely collect and which they would publish with their annual reports. That will make a difference to women, because close to 50% of the employees in the private sector in Britain work in these large firms.

What of the EHRC? During the passage of the Equality Act 2010, it said in relation to Section 78 that if a voluntary regime,

“is achievable, then there would be no need for the clause to be brought into play”.

It made it clear that over time it would,

“be looking for an increase in the proportion of employers measuring and sharing information on the differences between men’s and women’s pay”.

Indeed, during that time the EHRC has supported the Government’s Think, Act, Report initiative to encourage companies to improve gender equality on a voluntary basis. However, can the Minister confirm that only 270 employers are involved in the Think, Act, Report initiative, compared with 7,000 companies with more than 250 employees in the United Kingdom? Indeed, of those, only five have signed up to publish their gender pay gaps. This suggests that a voluntary approach on its own will not deliver the transparency needed to achieve a change in companies’ behaviour. This is what the EHRC says:

“The persistence and extent of the pay differences between women and men suggest that considerably more needs to be done to reduce the gender pay gap. In light of the low impact of voluntary gender pay reporting and the recent increase in the size of the gender pay gap, the Commission believes that the time is right for implementing section 78 of the Equality Act through this New Clause. By having to publish information about their gender pay gaps, companies will be encouraged to address those gaps in order to demonstrate that they are complying with equal pay legislation and to attract and retain talented women in their workforces”.

Closing the gender pay gap is a priority for all political parties—possibly with the exception of UKIP, but who knows—so I think we need to get on with it. I beg to move.

Amendment 58ZZA (to Amendment 58)

Moved by

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58ZZA: Before Clause 147, line 6, leave out from “requiring” to end of line 7 and insert “the publication of information showing whether there are differences in the pay of males and females”

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My Lords, I thank the noble Baroness, Lady Thornton, for her amendment and all her supporters, including Grazia magazine. I pay tribute to her tireless campaigning on gender equality. This is a very timely debate, following International Women’s Day on Sunday. I am pleased to confirm that it is the Government’s intention to accept the noble Baroness’s amendment, subject to changes that I am proposing by way of government Amendments 58ZZA and 58ZZB.

Before turning to the amendments, I remind the House of some key facts about the pay gap and the work that the Government have already been doing to close the gap and improve transparency. First, it is important not to lose sight of the fact that, according to ONS figures, the gender pay gap has fallen to its lowest level ever. It has been virtually eliminated among full-time workers under the age of 40, which is a more positive way of looking at the statistics. We are broadening the career aspirations of girls and young women by encouraging them to get into STEM-related careers through the Your Life campaign. Opening up these highly skilled areas ensures that women are less concentrated in sectors that offer narrower scope for reward and career progression.

We have also championed the voluntary, business-led drive by the noble Lord, Lord Davies, to get more women on boards. Women now account for around 23% of FTSE 100 directors, up from 12.5% in February 2011, and there are now no all-male boards in the FTSE 100. It is a huge step forward. Last night I attended the fantastic dinner for women on boards, hosted by the Secretary of State for Business, Innovation and Skills and sponsored by Lloyds Banking Group, encouraging this key group of women to drive forward further progress, which I believe is very important.

We are modernising the workplace to give women a fair chance to get to the top. Last June, the right to request flexible working was extended to all employees, and from April we will introduce a new system of shared parental leave. Further, almost 2 million families could benefit from our new tax childcare scheme from autumn 2015, which is worth up to £2,000 per child.

In January we published new guidance for employees on the gender pay gap. Research has shown that organisations perform better when they have a good balance of women across teams and in senior roles. Our guidance helps women to check if they are being paid fairly and encourages good practice of the kind the noble Baroness mentioned. Furthermore, new EU software to help UK employers analyse their pay data can now be downloaded for free. We are already encouraging greater transparency about pay. We have banned pay secrecy clauses, changed company reporting on boardroom diversity and introduced mandatory equal pay audits for companies that lose equal pay claims. We have also been working in partnership with business to tackle the root causes of the gender pay gap and promote culture change and greater transparency through the Think, Act, Report initiative, which the noble Baroness mentioned.

Because of Think, Act, Report we now we have a powerful business community of best practice with more than 275 leading companies—the figure is right—employing more than 2.5 million people, leading the way on gender equality. Of course, Think, Act, Report was never intended as a substitute for Section 78; it is so much broader and has achieved a lot. We said that we would keep Section 78 under review and that is exactly what we have done. We now want to build on the progress we have made. We need to take into account that one size will not fit all and that is why the Government feel strongly that we must consult on how Section 78 is taken forward. I welcome the amendment from the noble Baroness, Lady Thornton. I am proposing two amendments to it—Amendment 58ZZA to ensure it fits properly with the Equality Act provision, and Amendment 58ZZB to require consultation before implementation—which the noble Baroness has graciously indicated that she will accept.

We know that business is particularly concerned about being required to report more information, so we also want to ensure that the Government actively engage business during a proper consultation. This will ensure that we find the best way of implementing Section 78 in a business-friendly way, making use of information employers already have available and without being bureaucratic. In order to bring forward tailored, workable regulations, it will be essential for the Government to consult business properly, as well as others with interests and expertise in the area. We want to ensure that the requirements on business can be fulfilled and that the data published are of real use. I am therefore grateful to the noble Baroness for agreeing to these important adjustments to her amendment.

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My Lords, I was glad to put my name to the amendment in the name of the noble Baroness, Lady Thornton, and I am equally delighted to support the government amendment that essentially accepts the noble Baroness’s amendment but makes some minor modifications to the text. In view of the welcome degree of consensus that is breaking out, I will endeavour to speak quite briefly.

The Equal Pay Act was passed in 1970—all those years ago—but 45 years on there is still a significant gender pay gap. In 2014, women in full-time employment earned 9.4% less than men in full-time employment. The gap was wider for part-time work. Female part-time employees earned 37.9% less than male full-time employees. For all employees, the gender pay gap was 19.1%.

The Government’s equality strategy, published in December 2010, stated that they were working with business and others to develop a voluntary scheme for gender pay reporting in the private and voluntary sectors, and that, while they were doing so, they would not commence, amend or repeal Section 78 of the Equality Act 2010. They committed to annually review the number of companies releasing information and the quality of that information to assess whether this voluntary approach was working. The Government have accordingly been pursuing a Think, Act, Report initiative to encourage companies to improve gender equality on a voluntary basis. However, as the noble Baroness, Lady Thornton, told us, only 270 employers have taken part in this initiative, compared with 7,000 companies with more than 250 employees in the UK. Of those, only five have signed up to publish their gender pay gap. This suggests that a voluntary approach on its own will not deliver the transparency needed to achieve a change in companies’ behaviour.

The EHRC surveyed 900 private and voluntary sector employers in 2011. The survey suggested that employers might be reluctant to report and to address pay gaps voluntarily. Most employers, with no apparent or planned analysis of their gender pay gap, said that they would consider measuring the gap only if employees complained or took action against them, or if legislation required it. Of the 23% of organisations which had conducted a formal gender pay review, very few reported the findings. Of all organisations surveyed, just 3.7% reported their gender pay gap internally to their own staff, and only 1.3% reported it externally.

Five years on from the passing of the Equality Act in 2010, more action would seem to be needed to improve transparency about differences in the pay of men and women by shining a light on the issue to encourage companies to take steps to close their gender pay gap. The persistence and extent of the pay differences between women and men suggest that considerably more needs to be done to reduce the gap. By having to publish information about their gender pay gap, companies will be incentivised to address those gaps in order to demonstrate that they are complying with equal pay legislation and to attract and retain talented women workers into their workforce.

In the light of the low impact of voluntary gender pay reporting and the recent increase in the size of the gender pay gap, the case is very strong for implementing Section 78 of the Equality Act through this proposed new clause, and there is a very strong case for doing this now. I support the amendment.

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My Lords, I, too, thank the Government for fiddling with Labour’s amendments so that they now feel able to embrace this area of gender equality. Anyone who has followed this debate closely cannot help but be aware that this is Labour policy, tabled by Labour Peers and others. Our amendment has been on the Marshalled List for weeks. In the debate on International Women’s Day last Thursday, I made this the main focus of my remarks, but not a single Liberal Democrat or Conservative Peer spoke in favour of it. But rejoice—a week is a long time in politics. I am absolutely thrilled that suddenly the Liberal Democrats and Conservatives are all over this like a rash, as they should be, and I have come to heap praise upon them for this most athletic U-turn.

My noble friend Lady Thornton has given the requisite thanks to organisations such as the TUC, but I, too, must come back to the role played by Grazia magazine, which has shone a light on this issue. Ordinary women up and down the country are being paid less every minute of every day in Britain in 2015. It is a scandal. I take on board what the Minister said about being able to look on the figures in a more positive light. However, the case of Shannon, 25, who is getting a £100 Liberty voucher when her male colleague is getting £2,000 in hard cash, shows that we need pay transparency. This amendment on its own will not solve the whole problem but it is a first step in the right direction. Therefore, I thank all those involved.

I hope that this will encourage Grazia to continue its campaigns. It is possible for ordinary women to change the law even though there are not enough ordinary women in Parliament. The voices of those Grazia readers who bothered to write on this subject have now been heard in Parliament. The result will give women in companies with more than 250 employees the right to pay transparency. We cannot continue to hide blatant and illegal sexism under the cloak of darkness. I very much welcome this amendment.

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My Lords, I congratulate wholeheartedly the noble Baroness, Lady Thornton, on her amendment and on raising this issue. I also congratulate the Minister and the Government for agreeing to bring forward the amendments, to which I added my name and which the noble Baroness, Lady Thornton, has agreed to accept. It is a good move. My group has been committed to equal pay for a number of years. We accept that there is still a long way to go in terms of culture and practice to achieve it. This measure will publicise more widely gender pay gaps in companies and will be a step in the right direction, so I welcome it immensely. It builds on some of the Government’s other policies, in particular to improve the gender balance on boards. It also shows the benefits of cross-party agreement to achieve better legislation that is likely to be more effective and more influential in its impact in the country.

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I welcome the Government’s acceptance of the amendment in the name of my noble friend Lady Thornton and their decision to take it slightly further by changing “may” to “must”. That is an improvement and it is to be welcomed as well. I am not quite sure that I would go as far as my noble friend Lady King who was rather effusive—perhaps she was indulging in irony—in saying that the Conservatives and Liberal Democrats were now all over this like a rash. Having been involved with various aspects of this Bill through its passage, I suspect that the driving force in this is in fact the Minister herself and that some of her colleagues may not be entirely signed up to it. I suspect that the word “burdens”, which we have already heard today, will be one that will appear more than once this afternoon in terms of zero-hours contracts, fixed-term contracts, internships and so on—and yet the burdens will always be the burdens on industry and never the burdens on the individual workers who have to work those hours.

This particular amendment is about women. I hope that we can hear a bit more about the burdens that people have to suffer. Earning only 81p in the pound is a burden that no woman should have to suffer. If the amendment opens things up and exposes companies that for whatever reason are paying at different levels, that is a real step forward. I welcome the amendment—and the amendment to the amendment

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My Lords, I thank the noble Baroness, the noble Lords, Lord Low and Lord Watson, and the noble Baroness, Lady King of Bow, for their contributions to the debate. I am pleased that there is widespread support for the approach. It builds on the Equality Act 2010 and the progress that I believe has been made since 2010. I also pay tribute to the noble Lord, Lord Stoneham, and thank him for what he said about culture, since culture and transparency are very important in promoting gender equality. I ask noble Lords to support these amendments.

Amendment 58ZZA (to Amendment 58) agreed.

Amendment 58ZZB (to Amendment 58)

Moved by

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58ZZB: Before Clause 147, line 8, leave out “may” and insert “must”

Amendment 58ZZB (to Amendment 58) agreed.

Amendment 58, as amended, agreed.

Amendment 58ZZC

Moved by

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58ZZC: Before Clause 147, insert the following new Clause—

“Employment: compensation for shift cancellations

The Secretary of State shall make regulations requiring employers to pay compensation to workers, including zero hours contract workers, whose shifts are cancelled with short notice as defined in the regulations.”

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My Lords, there are many benefits to a flexible labour market but I believe, and I am sure your Lordships believe, that exploitation of staff by employers should not be one of them. One woman who worked in hospitality on a zero-hours contract said, “I never worked no hours in a week but couldn’t find out until the Sunday before the working week began how many hours I would have in the coming week—never more than 30, sometimes as few as 13. My hours were often changed on very short notice and you would be sent home if it was quiet”. She would turn up for work and be told that, “It wasn’t busy enough for me to be needed, even before I could take off my coat”. She went home unpaid. She could not complain as she would be punished with fewer hours the next week. You could not call in sick even if you were because you would be punished with fewer hours the next week, and you could not risk leaving the job without fear of being sanctioned by the DWP.

Let me remind the House that under ZHCs you have no guaranteed hours of work. People on such contracts include cooks, cleaners, call centre and customer services staff, drivers, waiters, hotel and shop workers and domiciliary care workers—there are 300,000 of those. They are mostly women. Over 1 million people on or around the minimum wage are on ZHCs and do not usually know on Friday what hours they will be working on Monday. Three-quarters of those on ZHCs find their hours vary every week. Nearly half are given no notice at all. As one SportsDirect worker said, “Shifts are changed and cut without any notice. Shifts vary week by week”. Another call centre worker never knows whether she will work 48 hours or no hours the next week.

We all want people to work. It is right that they should but insecurity and exploitation from ZHCs can sabotage the rewards of work, including people’s efforts to build a job, a home and a life for their family. These are not temporary jobs: one-quarter of people have worked in their job for 10 years or more. Without a steady income, they cannot buy, or sometimes even rent, a home. They cannot replace a broken washing machine because the next week they may have only five hours instead of 25 hours of work. They cannot get credit or enter into a financial contract, even for a mobile phone. Instead, of course, they go into debt.

As the Government rightly remind us, ZHCs work for some—students, obviously, or the recently retired supplementing their income. But let us just imagine what it is like for the rest, particularly those with children, who work on ZHCs for hours on end and really do not know from one week to the next what they will earn and what they can feed their children, for five, or even 10, years.

I am very pleased that, in the Bill, the Government are banning exclusivity contracts, under which you are tied to an employer 24/7, whether there is work or not. That is good and right. However, there is one minor but deeply unpleasant issue that we could and should address today, if your Lordships agree. Nearly half of ZH workers get no notice when their shift is cancelled. A further 10% get up to 12 hours’ notice. Only 4% have one week’s notice.

A Domino’s Pizza driver reported that he had such unstable hours that, as he said, “I never really know how much money I will make from week to week. The worst part is, if I come in to work for an evening and the shop is quiet, my boss can send me home after just one hour’s work. This means that I get paid only for that hour, so I actually end up losing money in the evening as it costs me more than an hour’s pay to get to work”.

A door steward, working for a security company, said, “I never knew where I would be placed, how far I would have to travel or how many hours I would get”. He could be sent home early, getting three hours’ work instead of the five promised, having spent almost two hours-worth of pay in petrol to get there for his three hours’ wage.

A lone parent expected to work on a Friday. She had arranged and paid for childcare in advance, as she must. Her shift was cancelled at an hour’s notice and she was told to work on the Saturday instead. She had to pay for the childcare that she did not need on Friday and could neither find nor afford the childcare that she needed on Saturday. She had to refuse the Saturday job, and her hours were cut the next week as punishment.

This exploitation of people called in and turning up for work, having incurred costs for travel and childcare—and, increasingly, elder care—only to find themselves denied work and then sent home without any compensation, is surely wrong. Bluntly, as the House of Commons Scottish Affairs Committee said, it is,

“unacceptable and a symptom of lazy workforce planning”.

At the evidence sessions on this Bill in the other place last October, the CBI and the independent Chartered Institute of Personnel and Development both called for compensation for lost pay and travel costs incurred. The Minister for Employment confessed:

“Late-notice cancellations are clearly an issue for some individuals, as we heard in the evidence sessions, so I have some sympathy with the spirit of the amendment and the thinking behind it”.—[Official Report, Commons, Small Business, Enterprise and Employment Bill Committee, 6/11/14; col. 553.]

I hope that we can turn her sympathy into policy today.

The amendment is modest, simple and fair and, of course, it has no cost for the taxpayer. It makes clear that it is wrong that people plan or turn up for work as required by the employer but then find their hours suddenly cut or scrapped without compensation—as one woman said, before she even had time to take her coat off. Then, to add insult to injury, they have to fund their work-related costs—for travel and child or elder care—from their own pocket, without any pay to cover them. They are penalised and poorer simply because they have come to work as required. They have done what they were asked to do. They have kept their side of the ZHC and then find themselves worse off for doing so.

The right to modest compensation is not only fair to the worker but just might—this is what I hope—encourage employers to plan their staff needs properly. This amendment would require the Secretary of State to make regulations to that effect. He could consult as widely as he wished and include in the regulations whatever content he thinks appropriate if he needs that power.

I cannot believe that anyone would defend this practice of cancellation without pay, when the worker has turned up as required—often summoned overnight by text—and then finds themselves having to pay for the privilege of being denied work by paying for their costs out of their own pocket. I cannot believe that anyone in your Lordships’ House today would defend this practice. Along with the CBI, we all know that it is not right. With your Lordships’ help today, we could change that. I beg to move.

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My Lords, the drive behind the amendment is to encourage employers to give workers reasonable notice before work which has been offered is withdrawn and to require, where a shift is cancelled at short notice, that workers have the right to compensation.

The recession in 2008 led to lower levels of unemployment than anticipated, due in part to employers responding by using more flexible employment to manage the consequences of the downturn. Their response heralded significant changes in the UK labour market, including a sharp increase in the use of zero-hours contracts. The ONS annual business survey of employers conducted in early 2014 estimated that there were 2.7 million zero-hour contracts on employers’ books, of which 1.4 million provided work to people and 1.3 million did not. By August, those figures had risen to 1.8 million and 1.4 million respectively. Those contracts are now common among larger employers, with 50% of those with at least 250 employees using them.

Those findings are consistent with a survey conducted by the Chartered Institute of Personnel and Development. The Labour Force Survey estimated that in the last quarter of 2014, there were 697,000 people on zero-hour contracts in their main job, up from 586,000 in 2013 and 250,000 in 2012. Increased awareness following media coverage may partly explain that rise, but, as the ONS concedes, the survey may also significantly underestimate the true level because it is based on interviews with workers who often lack awareness of their type of contract. Whatever the qualifications about the data, the trend is undeniably upwards. With concentrations in sectors such as education, accommodation and food, and health and social care, women accounted for 55%, and young workers 50%, of those on those contracts.

The advantages for employers are clear: managing peaks and troughs in demand and cost-efficiencies from a supply of workers available at short notice. Zero-hours contracts may give some people choice, but others are offered them on a take-it-or-leave-it basis. The ONS Labour Force Survey confirms that zero-hours workers’ average weekly earnings were just £188, compared to £479 for permanent workers. One in three has no regular amount of income and is far more likely to want more working hours compared to other types of staff.

In 2008, 19% of zero-hours contract workers reported that they were in temporary work because they could not find a permanent job. By 2014, that figure had jumped to 41%. For those in the 25 to 29 age group, more than 58% said that that was because they could not find a permanent job—a depressing statistic.

Although there is a place for such contracts in the modern economy, their misuse causes real concern. In some sectors, they are becoming the default setting. True flexibility rests in a genuine reciprocal arrangement, but the increasing body of evidence reveals an imbalance in the employment relationship, not least when the promise of work is withdrawn at short notice, leaving the worker high and dry. The imbalance means that the employer reaps the benefit of flexibility and the risks and insecurity are transferred to the worker. Employers are required to pay zero-hour contract workers only for the time that they actually work. They are under no obligation to pay an individual who, at the behest of the employer, prepares to go to work or turns up but for whom work is not provided. The employee loses the chance to earn wages and may have paid for fruitless travel costs or childcare.

Findings from the survey revealed that 46% of zero-hour staff receive little notice or find out at the start of a shift that work has been cancelled. The CBI and the Chartered Institute of Personnel and Development recognise these problems. In its March 2014 zero hours briefing the CBI stated:

“An intervention which creates a simple formula for compensation … when a shift is cancelled at short notice … would be better targeted.”

Peter Cheese, chief executive of the Chartered Institute of Personnel and Development told the Bill Committee that people on zero-hours contacts had concerns,

“if they were called in to work at short notice and that work was then not subsequently provided. So, for example, they had to travel for half an hour … and then be told, ‘Really sorry, but the shift is not available’. We think there should be some form of compensation for that … a reflection of what we saw as good practice”.—[Official Report, Commons, Small Business, Enterprise and Employment Public Bill Committee, 14/10/14; col. 65.]

This amendment is not challenging flexibility or making the UK labour market uncompetitive; it addresses a real and deep unfairness. When an employee is offered work which they accept and then at short notice that work is not subsequently provided, they should receive compensation. Many zero-hours workers already face a pay penalty. The unpredictability of their earnings makes it difficult to access credit or secure mortgage and tenancy agreements. Constantly varying hours impacts on families, making it difficult to organise childcare and have a social life. Compensation for employees who are offered work which at short notice is not then provided is a most modest correction to the imbalance in the employment relationship, one which my noble friend Lady Hollis has confirmed that both the CBI and the Chartered Institute of Personnel and Development say they support.

An uncertain employment status can make it difficult for zero-hours contract workers to complain. If they do, they may be “zeroed out”, meaning they receive even fewer hours. This makes it even more important that regulations should require employers to pay compensation to workers whose shift is cancelled at short notice. This is not a challenge to flexibility but a call for simple fairness.

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My Lords, no one wants to see exploitation of zero-hours contracts, but we need to see the wider picture. There are obviously some particular issues which need to be addressed but we need to have a wider view of the benefits of some of these practices. I obviously welcome what the Government are seeking to do on getting rid of the unwarranted exclusivity aspects of zero-hours contracts, but let us not forget that we are recovering from a recession and the most important thing in a recession is to find jobs for people. That gives them confidence and well-being. In previous recessions we found it much more difficult to get flexibility and enable jobs to be created at the pace that they have been in the last couple of years.

We may have certain concerns about the growth of zero-hours contracts, but they have certainly provided flexibility both for employers and employees in the labour market. As the labour market tightens, as we hope it will as growth picks up and productivity improves, we expect that the growth of these contracts will probably slacken because employers in a tighter labour market will have to offer permanent contracts to keep people in the jobs that they have offered them. They will obviously have to do that; that is the nature of the labour market at the moment and there has been a huge benefit to people in it remaining flexible.

We have had certain statistics about people on zero-hours contracts and we have to understand the nature of people who are doing this work. Some 17% are in full-time education, 6% are over 65; people on these contracts work more than 25 hours per week: there is no great resistance to them, in fact. We have already heard that a lot of people on these zero-hours contracts have been on them for some while. Maybe it is convenient to them as well. Some 60% have been on these contracts for more than a year, 66% do not want more hours, only 3% want additional jobs and only 10% want to change jobs to get more hours. So there are some benefits on both sides.

By all means, we should consult and review what is happening with zero-hours contracts, but wait a year or two and see whether we can maintain the growth of employment that we have had over the last couple of years and whether the economy is genuinely moving ahead before we start to interfere with these contracts in a way which could be detrimental to the growth of employment.

There are lots of other things we should be doing, such as looking at public sector contracts which are forcing some of these zero-hour practices in the public sector. I declare my interest as a director of Housing & Care 21, which is involved in the care sector, so I understand that we need to work on that area. We want also to look at the living wage but you cannot at the same time put your costs up, unless productivity is rising and we can sustain employment. There was quite an influential article in the Sunday Times a couple of weeks ago by David Smith, who said:

“People need to be safeguarded against exploitation but clamping down too hard on zero-hours contracts would risk throwing the baby out with the bathwater”.

I ask the House to be very cautious about supporting this amendment.

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My Lords, I very often find myself in disagreement with the noble Baroness, Lady Hollis, as she knows very well, but on this occasion I strongly support her powerful and very moving speech. We are talking about a disadvantaged section of the workforce. As the noble Lord, Lord Stoneham, has just said, the wording of the regulations is a matter for the Government of the day, who could therefore keep regulations in such a way as to allow the maximum flexibility. However, I felt that he was not thinking about the single mother or the examples given by the noble Baroness, Lady Hollis, such as the woman who gets somebody to look after her child on Friday, then finds that she has not got the job on that day but has still had to pay for care. She is then expected to turn up on Saturday and cannot afford the care for the child or to go to work. She is therefore penalised the following week. That cannot be what the noble Lord thinks that we should be cautious about.

I absolutely recognise that in a time of austerity—a time when the GDP is at long last rising and we want the utmost flexibility in business—we should not generally be putting curbs on business. However, speaking as a woman, we have to look at this. As a mother and grandmother who had to play my job as a barrister, and then as a judge, against the care arrangements when the nanny did not come in or the au pair was sick, I just said, “What do I do? How do I get to court?”. I was very lucky—I was very privileged—but these women are not. To suggest that we should keep the flexibility at their expense is something that I feel very concerned about. I am speaking rather passionately about this because of what the noble Lord, Lord Stoneham, said.

For goodness’ sake, the CBI, which cares about improving the GDP and having flexibility in business, supports some form of compensation. That is very significant support for what, to me, is a modest amendment. I hope that the House agrees.

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My Lords, I must confess that I find myself in a very difficult position. Your Lordships will know that I usually have views on things and people will know pretty clearly which side I am on. I find this one of the most difficult things to come to terms with because, for example, having some experience of employment in France I am perfectly clear that the unemployment rates there are very strongly affected by the stupidity of French employment laws. We in this country have had a much more open way of dealing with employment and, although we may think that zero-hours employment is not the ideal form of employment, it has certainly provided people who would otherwise not have a job with one.

As an employer who does not use this employment in any circumstance, I can honestly say that that is because I am privileged to run businesses which have been able to hold their head well above water during this depressing time. Businesses which have not been able to do that would not have been employing anybody if they could not have managed their way through recession in the way that they have done, through the use of employment practices of this kind. My concern is that this House should be very careful about making decisions that replace a form of employment with these disadvantages with no employment at all. I am sorry, but that is the issue. We are, I think, in danger if we say to ourselves, “This is what we would like to see, and we don’t see why we shouldn’t see it, and therefore we must see it”. I have a problem with that.

On the other hand, I accept very strongly that there is a difficulty for the single parent who has to make all sorts of arrangements in advance if they are to do a job at all. This Government have been absolutely right in trying to find ways in which we could encourage such women back to work. They do that not only because it contributes to society but because it also contributes to the women themselves. There is nothing as depressing as trying to live on a very small income and not being able to get out of that very closed-in situation. Those of us who have been lucky enough to bring up children in relative comfort and with two parents know how important it is for one or other of you—usually your wife—to hand the child to the other and say, “Look after it, I just have to have a moment”. That is the nature of bringing up children, and I have every sympathy with that.

I wonder, though, whether we should be careful and mindful of what the amendment says and whether the Minister will think on this: we do not want to do something that replaces less than good employment with no employment at all. The issue that the noble Baroness raised is very important. I am not sure that the amendment is right, but it is not an issue which we can just leave and let it go on. We really do have to see whether we can find proper evidence for a way of doing this that is not going to have the downside that I suggested. Is it possible for the Minister to give us some suggestions as to what she might do to meet the gravamen of the case in a way that does not have the downside that my noble friend Lord Stoneham has put forward? Is there a way in which we could get better evidence and find a more precise way of helping people, particularly the women concerned?

I think that it is very difficult for young people. But, in the end, young people are normally resilient enough to overcome those difficulties and I am not sure that I would risk anything to remove that. However, there is a specific case here for a specific group of people. I wonder whether the Minister can find a way through that, because otherwise I, along with my noble friend Lord Stoneham, think that the balance is just too dangerous for us to step over. But I would still like us to do better than that. Perhaps the Minister will find a way of helping me, for a rare time, find a clear answer to what seems a very difficult problem.

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Does the noble Lord recognise that all that this amendment does is force the Government to make regulations? In making those regulations, they can find a way of doing precisely what he is asking the Minister to do—to meet this problem in those areas where it needs to be met without damaging the principle of zero-hours contracts.

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I think that I am being tempted to answer in an uncharacteristically charming way. The people who are going to make these decisions are, if I may say so to an old friend and civil servant of mine, civil servants. I want this House to be a little bit careful about that, because very few civil servants have ever run any business in their life. It is one of our biggest problems that we have a system in which business is not understood by those who make most of the decisions. I want to know much more about what this regulation would be. If we agree to an open-ended provision that regulations shall be made, I am not sure that I would be happy to trust such regulations without a closer understanding of what they would be.

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My Lords, I support the intervention of the noble Lord, Lord Butler, who seems to have got to the nub of this issue: the amendment is not about abolishing anything; it is about abolishing exploitation at the lower end of this employment policy. I could not disagree more with what the noble Lord, Lord Stoneham, said, which seemed to be a hagiography of the system. He seemed not to recognise that vulnerable people are regularly and deliberately exploited by it. I believe that the amendment in the name of my noble friend Lady Hollis is aimed at correcting that exploitation and nothing more. It is not about abolishing the system, as the noble Lord, Lord Stoneham, seemed to imply—I apologise if I have misinterpreted his comments. The noble Lord, Lord Butler, has got this absolutely right. That is why I urge the House to support my noble friend’s amendment.

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My Lords, I, too, support the amendment and I do not share the difficulties which it is obvious are felt by the noble Lords, Lord Stoneham and Lord Deben. If those difficulties have any force, they were surely answered by my noble friend Lord Butler.

I support the amendment on the simple grounds of fairness. It is not confined to zero-hours contracts, but one imagines that those will be the most frequently affected. The facts in relation to them have been clearly set out by the two noble Baronesses who introduced the amendment. If an employee on a zero-hours contract is given notice by his employer that there will be work for him the following morning, and if he turns up having incurred expense and finds that his shift has been cancelled, it seems only as a simple matter of fairness—I think that that was how it was put—or of justice that some compensation should be payable.

I suggest to your Lordships that that is how we would all behave in our private lives. If I had a gardener, which I do not, and they turned up hoping for work and found then that the weather was against them or that the ground was too hard, of course I would offer them any expenses that they might have incurred in coming for work which in the event was not available. If that is the way in which we would behave in our private lives, is it not sensible that that is how we should require employers generally to treat their employees? I can see none of the difficulty seen by the noble Lord, Lord Deben, in terms of employment drying up as a result. This is a simple matter of fairness to avoid exploitation—a word which was also used. That reason seems to me to be enough to persuade the Government to accept the amendment.

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My Lords, I oppose the amendment, which I appreciate might make me rather unpopular in this House today. First, I declare an interest: I run a large public company, TalkTalk. We do not in TalkTalk use any zero-hours contracts today, but I have worked for a number of organisations which do, one of which is very much in my thoughts today—Cheltenham racecourse, where I imagine some noble Lords are today. Many people in the entertainment industry will work on zero-hours contracts.

The noble Baroness, Lady Hollis, spoke powerfully and emotively about the evils of zero-hours contracts, and I am sure that there are individual instances that would deeply shock us all in all forms of employment across this country, but I want to put some facts into the debate. The CIPD did a study in 2013, asking people on zero-hours contracts whether they enjoyed their job and whether they felt they were being well treated. The results were quite interesting, compared to the comments we have heard in the debate so far. Those on zero-hours contracts were just as satisfied as people in more standard contracts—60% said they were satisfied, versus 59% in more standard contracts. They said that they had a better quality of work-life balance—65% versus 58%. They believed that they were less likely to be unfairly treated by their employer—27% playing 29%. So we have to be careful not to make assumptions about people who are making choices to lead flexible working lives in a way that we might not. Those are the facts, as opposed to my personal opinions.

In general, I do not think that zero-hours contracts are evil. Actually, they allow businesses to serve an important constituency that has not been mentioned yet—their customers. Businesses that have highly seasonal, highly variable demand need to be able to react quickly; hence my thoughts about my friends at Cheltenham racecourse today.

I am also troubled by the specific wording of the amendment. I do not know how a group of civil servants, however well trained or smart, can define what “late notice” is in every single walk of life in this country. For example, in racing, I do not know whether late notice is the night before. What happens if there is a frost overnight and there is no decision to race until 7.30 in the morning, or perhaps midday when the jockeys decide it is not safe? Which is late notice? I know a lot about horseracing and I could not make that judgment. Yet, in this amendment, we are giving the Government the ability to define that detail in every industry. We are likely to get highly perverse results because of it. We would be much better encouraging different sectors to develop codes of practice, publicise how they are doing it and ensure that the very people who say they really value these contracts get the chance of more jobs. I oppose this amendment.

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My Lords, I want to follow the powerful points made by my noble friend with a small point which has occurred to me while listening to this debate. We heard the very moving thoughts of the noble Baroness about the single mother on a zero-hours contract who has to pay her babysitter when she turns up and then cannot afford her the next day. I, too, have been a working mother who has needed to use babysitters for my children if there was a sudden crisis and one of them was ill and could not go to school on the day that I was due to work. Like that single mother’s babysitter, my babysitter was also on a zero-hours contract. She was able to be paid for the day she turned up but, when she was not needed the next day, she was cancelled. We need to think more broadly about the needs even of single mothers who use a babysitter on a zero-hours contract just as much as we think about the needs of those on zero-hours contracts in other kinds of jobs.

My noble friend made the point that there is a varied range of employment positions and a wide range of ways in which people are employed. The way in which people are employed in domestic situations is usually on zero-hours contracts. We use our babysitters when we need them, not when we do not. Sometimes we cancel them at the last minute because we do not need them after all. We need to stop trying to see everything in terms of good and evil, right and wrong; there are shades. Trying to make regulations across that range would be a very dangerous thing.

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My Lords, I intend to be brief. My noble friends Lady Hollis and Lady Drake have given a forensic examination, based on factual analysis, and I do not feel I need to go through it again. I want to address some of the comments made by the noble Lords, Lord Stoneham and Lord Deben, and the noble Baroness, Lady Harding.

On the UK labour market, the first thing we need to understand is that it is probably the most flexible labour market in Europe. Nobody could say that we are like France, Italy or Spain or that we have something that makes it almost impossible for employers to hire people flexibly. I will leave noble Lords with the following thought. On grounds of fairness, are we going to say that a zero-hours contract means zero rights? Just to remind us, under zero-hours contracts there is no sick pay, no holiday, no national insurance contributions and nothing towards a pension—that is a pretty demanding contract as it is, and it is hardly weighted against the employer.

Nobody on this side who has supported these amendments has suggested that we want to do away with zero-hours contracts in their entirety. We accept that, for some people, they are a valid and necessary means of employment, both for the employee and the employer. However, there ought to be some reasonable ground rules. If you are running a business, yes, there will be changes in circumstances; that is undoubtedly right. However, this amendment aims to lay down a principle which it says will be interpreted in regulation and which will not just be dealt with by the spectre of solitary civil servants, who apparently between them have never experienced an hour of work in industry at all. From my brief ministerial career, I know that that does not necessarily apply to all civil servants, so I do not accept the idea that they will work in a total vacuum—that is an unnecessary fear.

Are we really putting forward the basic argument that, if I am being contacted and told by the employer, “I want you to turn up for work”, and I turn up, honouring my side of it, the employer has no responsibility whatever? I listened carefully to the noble Baronesses, Lady Perry and Lady Harding, and there might be other circumstances, but that is a question of taking into account how we phrase the regulations, so we can take those into account. That is not an argument for saying that there should be no control over this situation at all.

The noble and learned Baroness, Lady Butler-Sloss, reinforced the point, which my noble friend Lady Hollis had made, that it is curious that the CBI supports this. That is hardly an organisation that would support something it thought totally inflexible. Surely this is about basic fairness, is it not? If we are enjoying the services of somebody who is working under those conditions, surely it is right that they should have some fairness applied in the way they are summoned to their employment.

Surely we are seeking to encourage reasonable standards of management. I will give another statistic from the Chartered Institute of Personnel and Development: only one in five British managers has any training at all. I point that out to the noble Baroness, Lady Harding, because it is as important as some of the other statistics she quoted. Of course, people will declare that they are satisfied—they need the money and are glad to get into work. However, when we are being served by those people, do we not feel that there should be certain basic rights? This is one of them.

We commend the Government for getting rid of the exclusivity provisions in such contracts, which was clearly unfair. However, because of the way this amendment has been made it ought to attract cross-party support. We are not taking a political stance here, but a stance on responsible and effective management—that is what it is all about—and on giving a reasonable right to the employee. It can be dealt with very effectively in regulations, and I hope that the House will overwhelmingly support it.

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I thank the noble Lord, Lord Young, for his intervention. I am very grateful to the noble Baronesses, Lady Hollis and Lady Drake, for their amendment and for allowing us the opportunity to return to the important provisions on zero-hours contracts in the Bill, and specifically to the matter of compensation for late-notice shift cancellations.

We had a debate in Committee, but I see that the noble Baronesses’ amendment now seeks to apply their proposal much more widely across the workforce. I also listened to the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Perry, both of whom brought the benefit of their own experience of this matter. I have some myself, as I have four children —although the noble Baronesses are right to say that that is not necessarily relevant to the debate. I thank the noble Lords, Lord Butler and Lord Cunningham, and the noble and learned Lord, Lord Lloyd. I was also pleased to hear my noble friend Lord Deben comment on the dilemma of replacing less good employment with no employment.

The noble Lord, Lord Stoneham, rightly reminded us of the need to be careful not to throw the baby out with the bathwater. We in this country have done a lot with our flexible labour market, which has helped us to create 2 million jobs in this Parliament. I was also glad to hear from my noble friend Lady Harding, who came at the matter as a practical business person and thought about customers and the detailed definitional issues that we always get into on these matters.

Perhaps I should remind those who were not in Committee of what we are already doing about zero-hours contracts. Our consultation identified exclusivity clauses as the biggest issue. We have acted, and as a result of Clause 151, no zero-hours worker will be forced to be exclusive to an employer that does not guarantee them any work. There is also new information. The Government have published today our response to the consultation on zero-hours contracts, Banning Exclusivity Clauses: Tackling Avoidance. We have also published draft regulations that illustrate how the Government intend to use this power in the Bill.

The draft regulations propose that those employed on a zero-hours contract will have protection against suffering detriment on the grounds of working for another employer, and will be able to make a complaint to an employment tribunal. If a complaint is upheld, they may receive compensation. I know from our Committee debates that this is something that noble Lords opposite were keen to see, and I hope it will be welcomed.

In addition, the draft regulations propose to widen the ban on exclusivity clauses to all contracts of employment or workers’ contracts where the individual is not guaranteed a certain level of income. I hope that this, too, will be welcomed by the noble Baronesses, and will improve the situation. The regulations will extend the protection and ban exclusivity terms for other vulnerable groups in the labour market, beyond zero-hours contracts alone. People will be able to work more hours and boost their income if they so wish. This is in line with the responses we received.

What is more, the Government are updating the guidance on zero-hours contracts, and we intend to publish this on GOV.UK before the end of the Parliament. This is in addition to any sectors producing their own codes of practice on the responsible use of these contracts, as some noble Lords suggested.

We consider that a business-led approach is the best way to ensure a lasting culture change in the treatment of zero-hours workers, which the whole House wants. I hope that that demonstrates that we are listening to the concerns raised in this House and are acting to protect vulnerable workers—because I take the point that it is the vulnerable workers whom we are concerned about.

Amendment 58ZZC seeks to provide compensation for short-notice shift cancellations—but it proposes that the rights should apply to all workers, not just zero-hours workers. So it is not, as the noble Baroness suggested, a modest amendment, and I am not sure that the CBI supports the proposal. In March 2014 it said that a simple system of compensation might work for some zero-hours contracts. That was before we introduced the changes in this Bill—and the CBI’s comment did not apply to all workers. More recently, it has, I think, come round to the idea of regulating zero-hours contracts, and has said that the Bill’s,

“ban on exclusivity clauses in zero hours contracts … is a proportionate response to tackling examples of poor practice, and strikes the right balance between flexibility for both employers and workers”.

All those in work in the UK will have an employment status, which determines the protections to which they are entitled. Most commonly, individuals are “employees”, “workers” or “self-employed”. As the “worker” category includes all “employees”, this means that this amendment would potentially extend to the vast majority of the labour market. It requires the Secretary of State to make regulations—the wording is “shall”—and requires employers to pay compensation to workers whose shifts are cancelled without notice.

As we set out in previous debates, we have sympathy with the intention of the amendment, but have great concerns about how it would work in practice and the risk of potential unintended, negative consequences for the individuals affected. We all agree that individuals deserve to be treated fairly, regardless of what type of contract they are on. The noble Baroness referred to some very bad individual cases. However, legislating for a one-size-fits-all solution is not the right answer and could lead to some very perverse effects. Like my noble friend Lady Harding, I have been a business executive in a small and a big company, and I worry that the proposal could lead to unscrupulous employers attempting to circumvent the rules. Most obviously, this could be done by avoiding planning shifts too far in advance and calling individuals at short notice instead to avoid compensation payments.

For instance, those who currently receive a week’s notice of their shifts could find themselves being informed at the last minute, resulting in them having to stay in, waiting for the phone to ring. This would increase insecurity for those individuals whom the amendment aims to help. What is more, an attempt to deal with this kind of avoidance by introducing compensation for late-notice rostering—a logical next step—could also impact heavily on workers who rely on late-notice call-ups for work or employers who need to call in cover for the unexpected absence of others. The obvious example of that is locum doctors.

In addition, given the breadth of this provision, covering all workers in the labour market, it would be almost impossible effectively to define key terms to make the regulations meaningful. There would be considerable complexity legislating for a universal approach that covers a multitude of different sectors and work patterns. While the Government have a role in delivering clear guidance, we also believe that the answer to ensuring that employers deal with cancellations fairly lies with sector-specific codes of practice and the sharing of best practice on the responsible way to use casual arrangements such as zero-hours contracts.

I hope that I have assured the noble Baroness that we have sympathy with her case and the examples that she has given and are taking steps to address it, in part through clearer guidance. As I said, in the case of compensation for late-notice cancellations, legislation of this kind is not the answer. Rather, we should encourage lasting culture change, led by business, on the basis of the clear new legislation we have brought in on zero-hours contracts.

Given the actions already taken by the Government, the response we published today and the commitment to update our guidance, I hope that the noble Baroness will acknowledge that we are listening and will be content to withdraw her amendment.

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My Lords, I am grateful to all my noble friends who took part in the debate—my noble friends Lady Drake, Lord Young and Lord Cunningham. Indeed, I am grateful for all the contributions from around the House. However, what has puzzled me a little about the contributions from around the House is the fact that most of the argument seems to have been about the need for, and virtues of, zero-hours contracts as such, and the need for a flexible labour market. I had hoped that we had been at pains to establish that of course customers, consumers, passengers and patients now live in a 24/7 economy. The issue is not about ZHCs; it is not even about codes of practice, because good employers such as Marks & Spencer do not abuse ZHCs, whereas Boots does. Pret a Manger does not abuse them, although McDonald’s does. Good employers can already decide how best to employ their staff. Whether a company does or does not have ZHCs is not the issue.

The issue is that there are some people with ZHCs, as the noble and learned Baroness, Lady Butler-Sloss, and the noble and learned Lord, Lord Lloyd of Berwick, rightly said, who are exploited and suffer because although they are summoned to work by text, often overnight, they turn up and are then sent home again without a penny. What is more, they may have spent £5 or £8 in travel costs to get there and back. They may have spent £15 or £20 in childcare to get there and back and they get not a penny of recompense for the expenditure they made to uphold their side of the ZHC contract.

All that I am asking for is fairness, as the noble and learned Lord, Lord Lloyd, said—fairness between the employer who can dispense with the services of somebody and the employee. He may need to do that—I can see the point—but it should not be the worker who exclusively and solely bears the cost of the cancellation. That is what is unfair; not ZHCs, not flexible labour contracts, but the fact that only one party, the most vulnerable, the poorest, the weakest, should bear the cost of a zero-hours contract when they turn up to work and the work is taken away from them, even though they are doing exactly what the employer requests.

The noble Lord, Lord Deben, was worried. I thought that the speech by the noble Lord, Lord Butler, was admirable in putting the simple point that the amendment would require the Secretary of State to make regulations, but keeps the content entirely open. However, we expect them to reflect the spirit of the discussion in this House tonight that zero-hours contract workers—the people we are concerned about—should be able to be protected in this way.

In Committee, the Minister said that the Secretary of State already had powers to do that. This was followed up by a letter saying that that was not the case. The order-making power does not extend to other issues around ZHCs such as compensation for late-notice cancellations. I repeat that the Secretary of State has no power presently to regulate this anomaly at best—this exploitation, bluntly, at worst—that we all agree is unfair. He has no such power. The amendment would give him that power. After consultation with the sector—it may take months, I fully accept that—he can then introduce appropriate requirements for codes of practice or whatever may be proper to defend the people of whom the noble and learned Baroness, Lady Butler-Sloss, so eloquently reminded us: the lone parent who may be £20 or £30 out of pocket because at five minutes’ notice her shift is cancelled. At the moment, the Secretary of State does not have the power to do that.

This is not about ZHCs or the flexible labour market, I am asking your Lordships to do what this House is always at its best in doing: say to the Secretary of State, “We are willing to give you the power, we expect you to handle it sensibly, in consultation with industry, but it is not fair, as the noble and learned Lord, Lord Lloyd, said, that the most vulnerable should pay the cost of the employer’s requirements”.

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The noble Baroness’s amendment goes beyond zero-hours contracts. She is emphasising the zero-hours aspects, but this is compensation to all workers, as I sought to explain—and I sought to explain the perversities.

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If the noble Baroness is worried that the technical quality of the amendment is insufficient, it can be overturned in the other place and replaced with an amendment that embodies what she and the Secretary of State would wish to see. There is no problem about that. When I was a Minister, I accepted amendments all the time that were technically defective but which reflected the spirit and will of this House, because it was the right thing to do. If they needed tidying up, that could be done perfectly easily in the other House. That is not a reason not to accept the amendment today.

We are talking about ZHCs; all of us have been talking about ZHCs. As the noble and learned Lord, Lord Lloyd, said, this is fair and the right thing to do. Workers who keep their side of the contract should not then find themselves out of pocket, because the employer does not. The CBI agrees. I hope that your Lordships will also agree tonight. I beg leave to test the opinion of the House.

Division 1

11 March 2015

Division on Amendment 58ZZC

Content: 221
Not Content: 235

Amendment 58ZZC disagreed.

View Details

Clause 147: Protected disclosures: reporting requirements

Amendment 58ZA

Moved by

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58ZA: Clause 147, page 127, line 2, at end insert—

“( ) In section 43K(1) (extension of meaning of “worker” etc. for Part 1VA), after paragraph (d) insert—

“(e) is or has been a job applicant.””

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My Lords, I shall speak also to Amendment 59 and Amendments 59A to 59F. All these amendments seek to provide additional protections for whistleblowers, and they follow on from discussion of these issues in Committee.

I shall take Amendment 59 first. It arises from the Government’s response to the amendment that I moved in Committee seeking to place a code of conduct for whistleblowing on a statutory basis. I shall not repeat all the arguments that were made in Committee, but a statutory code of conduct would send out to all organisations a powerful signal about the importance that Parliament attaches to providing adequate protection for whistleblowers, and it would help to drive cultural change within organisations to encourage whistleblowing.

In Committee, the Minister engaged with this very constructively—I repeat my thanks to her for doing so—and she did not reject the case for this. However, she felt that the voluntary code that the Government are developing would offer sufficient protection. She said:

“We will keep this under review, and if this is not bringing about the change that we expect to see, we will consider introducing a statutory code of practice”.—[Official Report, 26/1/15; col. GC 9.]

All Amendment 59 seeks to do is to ensure that such a review does indeed take place.

The government measures in the Bill to improve protections for whistleblowers are welcome, and I congratulate the Minister and all her colleagues on them, but I am sorry that I could not convince her in Committee to go further. Loopholes remain in these protections and, where loopholes exist, all history suggests that the powerful take advantage of them.

The action that the Government are now taking on whistleblowing is being driven by terrible recent scandals, which might have been prevented had better protection for whistleblowers been in place. This is a clear lesson from, for example, the Francis reports into the NHS and the recent inquiry into the Rotherham abuse scandal. Despite this, the facts of Westminster life are such that scandals fade as time passes. Unfortunately, Ministers and officials come and go, collective memory is increasingly eroded and there are always new pressures on new Ministers and officials. In these circumstances, we should not wait for another scandal to be revealed to introduce any necessary new whistleblowing protections.

Continuing scrutiny is required to ensure that whistleblowers receive all the protections that they need to prevent such scandals recurring. This amendment seeks to set up a regular review process to do just that. It is not onerous. It simply puts in place a system to guarantee delivery of what the Minister has said that the Government will do. I accept, of course, the Minister’s good faith in offering reassurances, but because of the circumstances that I have just described future delivery of those cannot necessarily be guaranteed and relied upon. In these circumstances, I hope that the Minister will accept this simple amendment.

Amendment 58ZA provides improved protections for whistleblowers who are job applicants. Unlike other areas of discrimination law, the Public Interest Disclosure Act 1998 does not currently consider job applicants to be workers and so they do not receive protection for whistleblowing. Your Lordships’ House discussed the case for tackling this anomaly in Committee. Again, I do not intend to repeat all the arguments, but the Minister said then that, while she appreciated the amendment that I moved, she rejected it because,

“there is work to be done to get this right and it will take time, beyond this Parliament, to reach a suitable solution. It would not be right to add this half-cooked work to a Bill designed primarily to help small business and not to introduce new burdens for employers”.—[Official Report, 25/1/15; col. GC 10.]

The noble Baroness, Lady Mobarik, expressed from the Government Back Benches her concern that this important Bill should not be held up. I am delighted that, between Committee and today, the Government have reconsidered the situation and have decided that after all there is time to introduce new protections for whistleblowing job applicants. I congratulate them. I particularly congratulate the Minster on their change of heart and I thank her for her characteristic courtesy in alerting me of it in advance.

But—I am afraid that there is a “but”—the Government’s amendment covers only the NHS. There is no logical reason why it should be so restricted. That is why Amendment 58ZA is still necessary. It extends the Government’s proposals for protecting whistleblowing job applicants in the NHS to all workers. The risk of the sort of informal blacklisting that government Amendment 58A tackles occurs far more widely than just in the NHS. For example, in the construction industry there have been notorious instances of workers failing to find new work after raising concerns about safety. No Government have adopted such a piecemeal approach to other legislation that outlaws discrimination. Actionable offences of sex and race discrimination are not restricted to the NHS, so why should discrimination against whistleblowers be so restricted?

This is a short, simple amendment. It will prevent what I assume is the unintended consequence of the government amendment in creating what would be a two-tier system of protection, with NHS workers, important and valuable as they are, privileged to enjoy protections not extended to all other workers who seek to protect the public by whistleblowing. Such a two-tier system would be unfair to individual workers and would hinder the development of the culture of transparency, which I think all your Lordships would agree has been shown in scandal after scandal to be so critical in protecting the public. I hope that the Minister will finish today the work which her own amendments have started and accept Amendment 58ZA.

Finally, Amendments 59A to 59F follow up discussions in Committee about an amendment I moved then to set up a whistleblowing ombudsman. At that point the Minister felt such an institution would be too broad in its remit but, in my view, the need for some such institution remains. Again, I am delighted that, between Committee stage and today, the Government have reconsidered their position and have said that such an institution should now be set up in the form of a national review officer. This is welcome news but, again, the Government are restricting this new approach to the NHS, and, again, there is no good reason to do so. The problems that the Government seek to tackle with the establishment of the national review officer are not confined to the NHS. There is no reason to restrict it in this way.

All large organisations which serve the public in both public and private sectors are powerful institutions. Many are driven by a potent internal culture. Every case of whistleblowing challenges the powerful interests who run such organisations. After a scandal has been revealed, the abuses tackled, the guilty punished and the words about whistleblowers spoken, there is always the risk that it is too easy for those vested interests to find ways to carry on much as they did before. The powerful never like being challenged.

There is a gap in the legislative framework. The Minister identified it in Committee. It was identified also by Sir Robert Francis in his recent report on whistleblowing in the NHS. That is the gap created by the fact that the Public Interest Disclosure Act protects whistleblowers by compensating them when they are dismissed or forced out of their job, or victimised by the employer in some other way, but that Act does not address failures to investigate the public interest concerns, which so often lie at the heart of such employment disputes. That is why the establishment of an institution such as the national review officer, which has been proposed by Sir Robert Francis and is now endorsed by the Government, or the establishment of an ombudsman which was proposed in Committee, is so important.

These amendments do not follow the ombudsman model which I proposed in Committee. Instead, they adopt the Government’s concept of a national review officer and they apply it more widely than the NHS. The national whistleblowing review officer in these amendments is a role that could be set up in any sector by the Minister or by the relevant prescribed person. This means that the power to review this vital issue can be flexible. It could be set up, for example, to review whistleblowing in the financial services sector, or in the safeguarding of vulnerable adults and children in the education system, or in relation to health and safety reporting within the construction industry. I hope that the Minister will today at least agree that all these are vital areas where whistleblowing can be critical in protecting the public.

Recently in the NHS and elsewhere, we have seen that regulators have too often not done enough to encourage and protect whistleblowers. These amendments provide that a national whistleblowing review officer can be created for any industry or sector where there is a need to challenge an overly defensive or hierarchical or fractured regulatory environment. The review officer will have the power to investigate complaints over a failure to investigate issues of wrongdoing or malpractice by the employer or the regulator. From there, the review officer can advise the employer or the regulator how to follow best practice and be responsible for providing guidance on best practice for investigations. Where that review officer believes there is a problem with a system, an industry regulator or an oversight body, they can recommend that the relevant authority address any continuing risk, correct any failure in investigation, correct non-compliance with good practice and recognise the contribution made by the whistleblower in raising their concerns.

These are proportionate and modest amendments. The Government have already accepted the principle behind the approach. These amendments simply ask them to accept that it should not be restricted to the NHS and should be applied more widely, wherever the public interest is sufficiently involved to require a regulatory mechanism. I beg to move.

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My Lords, I have put my name to all these amendments, which have been spoken to so ably by the noble Lord, Lord Wills. I will speak very briefly to them in the order in which they were grouped.

I very much welcome the Government’s speedy response to the recommendations of the report by Sir Robert Francis on speaking up, or whistleblowing, in the NHS. However, like the noble Lord, Lord Wills, I am concerned that too narrow an approach has been taken to the issue of protecting whistleblowers in the job application process. Surely it is not right to adopt such a piecemeal approach to the development of legal protection for whistleblowers. This is why I support Amendment 58ZA, tabled by the noble Lord, Lord Wills, which calls for the protection of anyone who, in applying for a new job, is discriminated against for making protected disclosures or for blowing the whistle in a previous job. I emphasise anyone, not just workers in the NHS. The Government’s movement on this issue and their recognition of the principle is very welcome but, like the noble Lord, Lord Wills, I cannot for the life of me see why they should confine their approach to the NHS. Surely what is good for workers in the NHS must be just as good for workers in any other sector. This is an issue that many whistleblowers have said results in real hardship, as is evidenced in the Francis report. I believe that anyone who is not employed because the potential employer knows about their whistleblowing activity in a previous job should be able to remedy such discrimination in law.

I also support Amendment 59, as I believe that it will assist the Government in taking a cross-sector, strategic view of the UK whistleblowing framework. As the noble Lord has indicated, now is the time to put in place a structure that will collect and analyse not just the reforms in this Bill but recommendations from other inquiries that will impact on the whistleblowing framework, whether these come from the banking sector, the NHS, social services or the police. There is real value for employers, regulators, the Government and society as a whole in reviewing these issues on a regular basis. I hope very much that the Minister will see this amendment, which provides for a regular review of the whistleblowing framework, as a useful mechanism not just for identifying what is missing from the framework but also for helping to spread and encourage good practice among employers.

Turning finally to Amendments 59A to 59F, which give power to the Secretary of State to establish a number of national whistleblowing review officers, I agree with the noble Lord, Lord Wills, that a role such as this will help to plug the regulatory gap that exists in the whistleblowing framework. This would make it possible for such a national whistleblowing review officer role to be created, by order of the Secretary of State for Business, Innovation and Skills, in any industry, not just in the NHS, as the noble Lord, Lord Wills, said. This role complements the regulatory reporting provisions contained in the Bill that the Government intend should drive change in relation to whistleblowing across all industries. It will enable a review officer to be created in any sector or industry, whether that is financial services, the health and care sectors, or services in relation to vulnerable adults and children.

Given the very many scandals brought to light by whistleblowers in recent years—in our care homes, our schools and our local authorities—I consider that such a role could only do good in driving forward the development of good practice in whistleblowing across all sectors. What is more, a role that has the features described in this amendment will provide a quick and simple warning system for regulators and organisations where there is a failure to deal properly with a whistleblowing issue. I therefore look forward to hearing the Minister’s response on these amendments, which I am pleased to support.

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My Lords, my name is also to this group of amendments. I thank the noble Lords, Lord Wills and Lord Low of Dalston, for making most of the points that need making, and making them forcefully.

It seems extraordinary that the Government should have introduced Amendment 58A in the wake of the 200-page report by Robert Francis QC, entitled Freedom to Speak Up and published only last month. It is bizarre that they confine the provisions in the amendment to the National Health Service, for reasons which have been touched on by the two Peers who have already spoken. The need for the protection of Amendment 58A is universal.

I should perhaps say that in my long legal career I have dealt with a number of whistleblowing cases, and was charged back in the 1980s with trying to register a charity which had as its principal purpose the support of whistleblowers. That was successful—not, I may say, without vast and prolonged effort, because at first the Charity Commission viewed the very idea as bizarre. In 1993, the charity Public Concern at Work was formed and is still operating with huge effect. All of us here tonight are grateful for the work that it has done and the information which it has provided to us under the leadership of Cathy James. Its work leads it even now—or perhaps more than ever now—to advise about 800 people a year who have personal, direct, often plangent problems in relation to their employment and their attempt to try to get those who employ them to take seriously malfeasance—sometimes corruption, sometimes wilful and terrible illegality.

Public Concern at Work is, as I said, better informed than any other agency in this country as to just what whistleblowers have to go through. Our point is that whistleblowers are not some little sideshow. If we are serious about attacking the widespread and growing corruption and criminality that, I fear, infects so much of what we value in this country, we have to support whistleblowers. Frankly, they are the only people who can uncover criminality at source, often at a time when, if it can be dealt with, doing so will save vast loss and suffering. One has to look only at the collapse of the financial markets of the world, led by the City of London in 2008, to realise just what terrible losses we have all suffered—trillions rather than billions—by reason of the fact that there were virtually no whistleblowers from within the City of London, or indeed the other financial centres, who were able to get the facts relating to what was going on in their entities to the authorities in time for them to take action.

Again, I have a certain amount of personal experience of this. One thinks, for example, of Paul Moore of HBOS. He blew the whistle, except that he blew the whistle to his own board, saying openly and clearly that the measures taken in that bank to balance risk and opportunity were unsustainable and were leading the bank, and had led the bank, into the most dangerous of situations. He not only got no succour when he took this matter up the scale in the bank but has not had a job in the City of London since then—we are talking about 2007 or 2008—despite his huge experience as a former partner at KPMG and senior financial officer at HBOS.

I can think of another person. Wendy Addison was one of the youngest female chief executives of a major corporation in South Africa. She found that the two owners of the company were engaging in fraudulent activity and confronted them with it. They sacked her and because it was South Africa they were able to square the police and the authorities. She had to leave in danger of her life and came here only to find that the whispering machine that operates, I fear, within financial markets had put her name on the blacklist in London. Despite being a qualified accountant and a very senior and successful executive she failed, over 11 years, to get a job. She was driven, because she had a young son, to live on the streets, begging.

Noble Lords who know about whistleblowing, of which there is far too little, will have to agree with this key finding of Robert Francis QC, which appears in the letter he wrote to the Secretary of State for Health and included in his report. It says that in the course of inquiries within the health service,

“over 30% of those who raised a concern”—

namely, whistleblowers—

“felt unsafe afterwards. Of those who had not raised a concern, 18% expressed a lack of trust in the system as a reason, and 15% blamed fear of victimisation”.

This is not a story confined to the National Health Service. It is, I suspect, to be found in the majority of large entities in this country. The larger the entity or corporation becomes, the more impersonal, the more distant, the more depersonalised and bureaucratic. The reason we feel so strongly about this set of amendments is because they build on changes that I commend the Government for having introduced into the Bill. They build on sound reforms that are included now, by amendment, but extend them to the whole business sector; and not just the business sector because some of these things, I fear, go on in the public sector. We only have to think of child victimisation among many other sectors.

Finally, the issue of public trust seems to me to be perhaps the greatest issue of our times. It has steadily diminished, let us be honest about it, in virtually every quarter of our national life, including, I fear, in this place. Frankly, public trust is to society what oxygen is to our bodies: we cannot do without it. I make no pretence that the group of amendments we are debating will solve the problem. The only thing that will solve the problems we are grappling with—grappling is the word—is the restoration of good values and a remoralisation of our society. However, what I and my colleagues are saying is that part of that—a small but crucial part—is to give protection to those extraordinarily brave people who will speak out when faced with a corrupt culture in the institution or company in which they work. They must be given fair protection and frankly, if we do not give it to them we are encouraging the sort of conduct that we all utterly deplore and which is utterly self-defeating and self-destructive. I hope that my noble friend the Minister will look kindly on these amendments.

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My Lords, this is a very important group of amendments. The government amendment, which the Opposition are supporting, clearly comes on the back of the Francis report on Mid Staffordshire. I also point noble Lords to the very recent report by Dr Bill Kirkup and an expert panel of members, who looked into maternal care at the University Hospitals of Morecambe Bay NHS Foundation Trust.

That report, as the Statement which we had last week in this House said,

“found 20 instances of significant or major failings of care at Furness General Hospital, associated with three maternal deaths and the deaths of 16 babies at or shortly after birth. It concludes that different clinical care would have been expected to prevent the death of one mother and 11 babies”.

It described,

“major failures at almost every level … mistakes by midwives and doctors, a failure to investigate and learn from those mistakes, and repeated failures to be honest with patients and families, including the possible destruction of medical notes. The report says that the dysfunctional nature of the maternity unit should have become obvious in early 2009, but regulated bodies”,

including the north-west strategic health authority, primary care trusts, the CQC, Monitor and the PHSO—that is, the ombudsman,

“failed to work together and missed numerous opportunities to address the issue”.—[Official Report, 3/3/15; cols. 158-59.].

For the purpose of our debate, the report also showed that the drive for a transparent and open culture in the NHS has some way to go. Notes were destroyed and mistakes were covered up. Dr Kirkup’s assessment is that it was,

“possibly because of a defensive culture where the individuals involved thought they would lose their jobs if they were discovered to have been responsible for a death”.—[Official Report, 3/3/15; col. 160.].

It seems from Francis, the Morecambe Bay report and our general experience of the NHS that there is a pressing need for a transparent and open culture, in which the protection of whistleblowers is an important element.

Ministers in this Government and the previous Government have from time to time issued various edicts about the importance of the protection of whistleblowers. There has been guidance on this, but it is clear that a whole swathe of staff in the NHS still do not feel confident about raising concerns on patient care. That is why the Opposition very much support government Amendment 58A but I, like other noble Lords, do not think that we can stop at the NHS. That is why I also support the amendments tabled by my noble friend Lord Wills and the noble Lords, Lord Low and Lord Phillips.

As my noble friend Lord Wills said, there are “significant gaps” and loopholes,

“in the current protections for those making disclosures in the public interest”.—[Official Report, 26/1/15; col. GC1.]

While we have at least had a lot of debates about failures in the NHS, one has only to think of the issues following the Hillsborough football disaster, as my noble friend said in Committee, more recently in Rotherham with child abuse and then recently in Oxfordshire, again with child abuse. I am not sure whether this has been corroborated by an independent inquiry, but the point has certainly been put that a junior member of staff in Oxford City Council was subject to discouragement for raising concerns because of approaches made by Oxfordshire County Council, which was responsible for childcare, to senior officials in Oxford City Council to try to stop this person raising what seemed to be eminently sensible concerns about the way that these cases were being dealt with—or not being dealt with—in Oxfordshire.

The noble Lord, Lord Phillips, mentioned the banking world and my noble friend Lord Wills mentioned the construction industry, which is a great example. If a construction worker raises health and safety concerns, there are very good companies in the construction world where they are taken seriously. Overall, my noble friend knows that there has been considerable improvement but there are companies where, if employees raise those concerns, they are blacklisted and cannot get work in the industry. Again, where is the protection for those people?

What about education, a notorious sector where if teachers raise concerns they can look for very little protection? In education, the principal or head often has a dominant role in the governing body. In schools and colleges, there are often no procedures whatever for whistleblowing. At least in the health service there are procedures and very strong corporate governance, with a tradition of company secretaries who should be able to make sure that the procedures work. In the education sector, there are no such guarantees at all. It seems to me that my noble friend and his colleagues are absolutely persuasive. We need protections which go far beyond the National Health Service. I very much hope that the Minister will listen to these arguments and agree either to support these amendments or come back with amendments on Third Reading which would meet the point raised by my noble friend.

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My Lords, I thank the noble Lords, Lord Wills and Lord Low, and my noble friend Lord Phillips for these amendments. I pay tribute to the tireless campaigning of the noble Lord, Lord Wills, on whistleblowing. I am not sure that we would be where we are, if not for him. I also thank others who have been involved. The noble Lords, Lord Young and Lord Stoneham, and the noble Baroness, Lady Mobarik, were involved in Committee. It is good and right to hear also from the noble Lord, Lord Hunt, given the health aspect of this problem.

I make it absolutely clear that the Government share the widespread support in this House for whistleblowers and will continue to make strides in strengthening the whistleblowing framework, obviously not least because of the scandals at Mid Staffordshire and Morecambe Bay, which have been so eloquently referred to. That is why we are taking action through this Bill and elsewhere. I was glad that my noble friend Lord Phillips and the noble Lord, Lord Hunt, acknowledged that. First, we are protecting whistleblowers from being discriminated against when applying to work in the NHS. The noble Lord described some graphic examples. Secondly, we are taking action to improve transparency in the way that regulators handle whistleblowing concerns.

On the first point, the Government have tabled an amendment in response to the recent Francis review. This recommended that the Government,

“review the protection afforded to those who make protected disclosures, with a view to including discrimination in recruitment by employers”.

Based on Sir Robert’s findings, we are convinced that blacklisting applicants for NHS jobs because they are whistleblowers causes a very serious injustice. They are effectively excluded from the ability to work again in their chosen field. When NHS staff raise concerns, they can save lives and prevent harm. That is why we are taking the opportunity, very much at the last stage of the Bill, to protect whistleblowers seeking employment in the NHS.

Amendment 58ZA, tabled by the noble Lord, Lord Wills, seeks to protect all job applicants who have blown the whistle. I have listened to his arguments around other sectors; I think that this evening people have mentioned policing, social care, construction, banking and education. I sympathise. No job applicant in whatever sector should be disadvantaged by being a whistleblower but—I have to use the word of the noble Lord, Lord Wills—when we debated this in Committee, I expressed my concern about the lack of evidence that there was a widespread problem right across the board. We do not have the level of evidence for other sectors on the nature of the gap or the scale of the problem.

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Is the point not that for all the NHS’s failings, it probably has a more open culture than many other sectors? That is why we know more about the problems of whistleblowing there. In education, it is much more difficult to have central government intervention in cases where staff have clearly been intimidated. In a sense, some of these other sectors need much more attention. The noble Lord, Lord Phillips, talked about the banking industry. Does anyone have any confidence at all that if someone working in the City raised concerns, even after the failures, they would be taken seriously? I rather doubt it.

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We have very good evidence from the Francis review. We do not have evidence for all other sectors and, of course, the amendment would apply to the private sector and the coverage would be very wide-ranging. Several noble Lords asked why it is a two-tier system and the noble Lord, Lord Hunt, asked why we are not doing it universally. Sir Robert’s findings were health-specific. He reported that he had seen evidence of individuals suffering serious detriment in seeking re-employment in the NHS after making a protected disclosure. That is what we are talking about. The health sector has one of the highest instances of whistleblowing reporting, perhaps for the reasons that the noble Lord, Lord Hunt, suggested, and, consequently, has the greatest potential for discrimination against whistleblowers, who therefore cannot get another job. The NHS is one of the largest employers in the world, I am glad to say, and should operate to the very highest standards of integrity in its recruitment practice.

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I thank the Minister for giving way. She makes the case that we have particular evidence in relation to the health service and so she wants to act on the health service. With regard to all the other sectors that we have asked the Government to take into consideration as well, would it not be better to put a system in place to stop the scandal before it happens rather than wait and close the stable door after the horse has bolted?

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I thank the noble Lord, Lord Low, for his intervention. We have to legislate in an informed and evidence-based way. We have brought forward the provisions on the NHS and it is very good that noble Lords opposite support that at this late stage. We are not in the same situation in relation to other sectors. There are various arrangements and we are making general improvements on whistleblowing.

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I am sorry to interrupt. I just want the Minister to clarify something. She said that our support for her amendment was at a late stage. I point out that that is not the case. We saw the amendment at noon one day and I signed up to it as soon as it appeared. It was certainly not at a late stage. We are very supportive of what she is doing. Our problem is that she is not doing it in nearly enough other cases. Her case that more evidence is required really does not stack up.

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I am sorry if I caused confusion. What I was saying is that this is a relatively late stage in this Bill and that what we have done is taken steps to bring forward some of the actions that follow from the Francis review. Noble Lords opposite have been extremely helpful about supporting that and supporting it instantly. I am very glad to have been able to end that confusion.

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I am very sorry; the Minister is gracious in giving way yet again. Before she leaves this amendment, will she clarify the points that she is making about process? Just to be clear—she can indicate with a nod, if she wishes, rather than getting to her feet yet again—does she accept that whistleblowing can be essential in protecting the public interest and the public in other sectors apart from the NHS, such as the financial sector, the police, and adult and child social care? That is my first question to the Minister.

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I thank the noble Lord, Lord Wills. Of course whistleblowing can play a vital part in all areas. I said that right at the beginning. As far as this Bill is concerned, we are taking specific steps in relation to the NHS. Perhaps if I could make a little bit more progress, I could explain some of the other things that we are also doing.

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I wonder whether I could just push the Minister a little bit further on this process. She says that the Government do not have the evidence to take the measures for other sectors that they are currently taking in relation to the NHS. She said that the Francis report has produced the evidence that the Government feel they need to proceed. I accept that. It is a perfectly reasonable approach. However, if she accepts that whistleblowing is so important in all these other vital sectors and that there is a loophole in protections that the Government are seeking to plug—clearly they accept that there are loopholes because they are seeking to plug them in relation to the NHS—why will the Minister not commit now to launching an inquiry to see whether such evidence exists? The Government did it with Mid Staffs; they have done it with other scandals; they know that there is a problem here; they know that it is important to tackle this problem. Why do the Government not commit now to collecting the evidence to see how best they can move to plug these loopholes?

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My Lords, I am not sure that we are going to agree this evening on extending to other areas the provisions that we are very happy to include for the NHS. I have made clear that we need an evidence base and that we are doing things in other areas. The things that we are doing in other areas, to which I hope to move on, will also help to show what is happening on the ground. The debates that we have had in the House, which the noble Lord, Lord Wills, has encouraged us to have, will also change the culture in relation to whistleblowers. The very fact of the disastrous circumstances in the NHS has shown how important whistleblowers are, which is why we are making the changes that we are in relation to recruitment in the NHS.

If I may make progress, I will turn to the noble Lord’s Amendment 59, which seeks to introduce a rolling statutory review of the whistleblowing legislation. I can reassure the noble Lord, Lord Wills, that it was only last June that the Government reported the findings from their call for evidence that reviewed that legislation. The Government have also carried out an extensive employment law review during this Parliament. Looking to future review processes, we see that post-legislative scrutiny is applied to all changes to legislation five years after the measures have come into force. We have an impressive rolling programme. The changes that we introduced to the whistleblowing framework in the Enterprise and Regulatory Reform Act 2013, and the changes in this Bill, will be included in the rolling process. Considering the steps that we have taken to review employment legislation, and specifically whistleblowing legislation, I do not believe that it is necessary to introduce another review next year.

I turn now to Amendments 59A to 59F, which seek to create a national whistleblowing review officer. The Government fully understand the intention behind the proposed new clauses, which is to ensure that concerns raised by whistleblowers are acted upon. We know from research carried out by the University of Greenwich and Public Concern at Work that 75% of whistleblowers believe not enough is done about the concerns that they report. We want employers or the relevant authority to take action. That is why we are introducing the important measures in this Bill to require prescribed persons to report on how they handle whistleblowing concerns. That will increase transparency and reveal any circumstances where whistleblowing concerns are not addressed. The Government will want to allow time for this measure to take effect before they consider yet further measures. Introducing a body that has oversight of all investigatory action in response to whistleblowing concerns would be one way of going further, depending on what the need for further action was. But of course there could be other options for the Government to consider, based, as I have said, on evidence. Before introducing legislation, the Government will want to carry out a proper assessment of all available options to ensure that they are not introducing a body that was duplicating the existing functions of the regulators. This is a complex area.

Evaluation work will begin by the Department of Health publishing a consultation, which will explore the case for creating an independent whistleblowing guardian for the NHS. The Government will be able to use the evidence gathered from that consultation to look at the situation in other sectors. I cannot emphasise enough the importance of having a proper evidence base and the fact that we have been able to fast-track the Francis recommendations because of the very powerful work that he has done.

The Government are committed to addressing the barriers that whistleblowers face. In addition to the measures in this Bill, we have made significant progress. Perhaps I could mention some other measures that we have taken forward. We are updating a set of comprehensive guidance for whistleblowers and employers as well as introducing a non-statutory code of practice for employers. The Government intend to publish this shortly. We have carried out work to update the list of prescribed persons. This is a list of more than 60 individuals and bodies, which includes all MPs, that a whistleblower can approach to raise their concerns. The Government have recently introduced separate legislation, which comes into force in April this year, to extend the scope of the whistleblowing framework to student nurses and student midwives.

The whistleblowing framework is improving and robust processes are in place for future work and the continuous review of the legislation that we have introduced. I hope that the noble Lord will agree that much further exploratory work would be required before proper consideration could be given to his proposal for a national whistleblowing review officer and for extending legislation to cover all job applicants, whether in the public or the private sector.

We have made a major change in relation to the NHS. Perhaps that has eclipsed the other important changes in this Bill and other progress that we have made on whistleblowing. I commend the Government’s amendment and invite the noble Lord to withdraw his amendment.

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My noble friend the Minister said a number of times that there is insufficient evidence for extending what the Government are doing in this Bill vis-à-vis health to other sectors. Let us think again of the financial centre of this country. The collapse that we had in 2008 was perhaps the greatest financial collapse in our entire island history. It involved extensive and universally accepted huge breaches in the criminal law: the LIBOR fixing, the forex fixing, PFI—the list goes on and on. How can my noble friend say that there is insufficient evidence to warrant extending to this sector, if none other, some of the requirements that we are now extending to the health service?

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My Lords, we are bringing in the new process provided for in the Bill which will allow greater review and engagement in those other sectors.

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My Lords, this has been a short but worthwhile debate on some important issues about improving protections for the public through whistleblowing. I am grateful to all noble Lords who have taken part. I am particularly grateful to the noble Lords, Lord Low and Lord Phillips, for adding their names to the amendments and for their compelling arguments in support of them. I also thank my noble friend Lord Hunt for his powerful support. I am grateful also to the Minister, who throughout our discussions, both in Committee and again today, has engaged thoroughly and thoughtfully with all these complex issues and has been helpful and constructive.

In view of everything that the Minister has done so far, it is all the more disappointing that she has so summarily dismissed all the amendments. I accept the case that she made about review; I accept that there is a review process in place. Personally, I would like to see rather more frequent review, which may be a matter we can return to—although I reassure her that it will not be at Third Reading. I also accept the arguments that she made about the national review officer. This is a big and complex issue. There is a case to be made for seeing how the Francis recommendation beds down to learn the lessons from that, but I hope that it will remain on the Government’s agenda because it would be well worth pursuing.

However, I can see no good reason for the Government not to accept Amendment 58ZA. There is no good argument for confining protection for job applicants to those working in the NHS. The Minister made great play of the need to acquire more evidence. There are two problems with that approach. The first was identified by my noble friend Lord Hunt, which is that, by definition, it is extremely hard to find evidence of the harm that is done in advance of a scandal happening. When people working in professions such as the NHS, the financial sector and the police look at the examples, perhaps the rare examples, of their colleagues who have blown the whistle, they see the acute detriment that they have suffered as a result. Who is going to come forward and suffer in that way—which is actually the evidence that the Minister appears to be asking for? We know that there is a problem; we should be tackling it.

If we persist with the desire for more evidence and if that is what the Minister needs to make progress in tackling the loopholes that the Government have conceded exist, why has she just rejected my plea for her to commit to seeking out such evidence? The only reason that we are discussing the government amendment today is that a scandal happened with Mid Staffordshire, and Sir Robert Francis conducted his exhaustive and excellent inquiry and came up with the evidence. Do we have to wait for another such scandal in the financial sector finally to get to the bottom of all the skulduggery that lay behind the crash of 2008 and subsequently, or another scandal in the police such as Hillsborough, before the Minister acquires the evidence that we need to plug the loopholes?

I want to encourage the Government to think again. They have already shown themselves to be extremely flexible between Committee and Report. To encourage them to be similarly flexible between today and Third Reading, and in the hope that they will move forward in some of the ways that I have suggested today, I would like to test the opinion of the House on Amendment 58ZA. If I am successful, may I assume that the Government will accept my Amendment 59A as consequential, as it so closely mirrors the Government’s Amendment 58A on the creation of a national review officer?

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11 March 2015

Division on Amendment 58ZA

Content: 174
Not Content: 231

Amendment 58ZA disagreed.

View Details

Amendment 58A

Moved by

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58A: After Clause 147, insert the following new Clause—

“Protection for applicants for employment etc in the health service

(1) The Employment Rights Act 1996 is amended as follows.

(2) After section 49A insert—

“Part 5Aprotection for applicants for employment etc in the health service49B Regulations prohibiting discrimination because of protected disclosure

(1) The Secretary of State may make regulations prohibiting an NHS employer from discriminating against an applicant because it appears to the NHS employer that the applicant has made a protected disclosure.

(2) An “applicant”, in relation to an NHS employer, means an individual who applies to the NHS employer for—

(a) a contract of employment,(b) a contract to do work personally, or(c) appointment to an office or post.(3) For the purposes of subsection (1), an NHS employer discriminates against an applicant if the NHS employer refuses the applicant’s application or in some other way treats the applicant less favourably than it treats or would treat other applicants in relation to the same contract, office or post.

(4) Regulations under this section may, in particular—

(a) make provision as to circumstances in which discrimination by a worker or agent of an NHS employer is to be treated, for the purposes of the regulations, as discrimination by the NHS employer;(b) confer jurisdiction (including exclusive jurisdiction) on employment tribunals or the Employment Appeal Tribunal;(c) make provision for or about the grant or enforcement of specified remedies by a court or tribunal;(d) make provision for the making of awards of compensation calculated in accordance with the regulations;(e) make different provision for different cases or circumstances;(f) make incidental or consequential provision, including incidental or consequential provision amending— (i) an Act of Parliament (including this Act),(ii) an Act of the Scottish Parliament,(iii) a Measure or Act of the National Assembly for Wales, or(iv) an instrument made under an Act or Measure within any of sub-paragraphs (i) to (iii).(5) Subsection (4)(f) does not affect the application of section 236(5) to the power conferred by this section.

(6) “NHS employer” means an NHS public body prescribed by regulations under this section.

(7) “NHS public body” means—

(a) the National Health Service Commissioning Board;(b) a clinical commissioning group;(c) a Special Health Authority;(d) an NHS trust;(e) an NHS foundation trust;(f) the Care Quality Commission;(g) Health Education England;(h) the Health Research Authority;(i) the Health and Social Care Information Centre;(j) the National Institute for Health and Care Excellence;(k) Monitor;(l) a Local Health Board established under section 11 of the National Health Service (Wales) Act 2006;(m) the Common Services Agency for the Scottish Health Service;(n) Healthcare Improvement Scotland;(o) a Health Board constituted under section 2 of the National Health Service (Scotland) Act 1978;(p) a Special Health Board constituted under that section.(8) The Secretary of State must consult the Welsh Ministers before making regulations prescribing any of the following NHS public bodies for the purposes of the definition of “NHS employer”—

(a) a Special Health Authority established under section 22 of the National Health Service (Wales) Act 2006; (b) an NHS trust established under section 18 of that Act;(c) a Local Health Board established under section 11 of that Act.(9) The Secretary of State must consult the Scottish Ministers before making regulations prescribing an NHS public body within any of paragraphs (m) to (p) of subsection (7) for the purposes of the definition of “NHS employer”.

(10) For the purposes of subsection (4)(a)—

(a) “worker” has the extended meaning given by section 43K, and(b) a person is a worker of an NHS employer if the NHS employer is an employer in relation to the person within the extended meaning given by that section.”(3) In section 230(6) (interpretation of references to employees, workers etc) for “and 47B(3)” substitute “, 47B(3) and 49B(10)”.

(4) In section 236(3) (orders and regulations subject to affirmative procedure) after “47C,” insert “49B,”.”

Amendment 58A agreed.

Amendments 59 to 59F not moved.

Clause 148: Financial penalty for failure to pay sums ordered by employment tribunal etc

Amendment 60

Moved by

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60: Clause 148, page 127, leave out lines 20 to 23 and insert—

“(2) “Financial award”—

(a) means a sum of money (or, if more than one, the sums of money) ordered by an employment tribunal on a claim involving an employer and a worker, or on a relevant appeal, to be paid by the employer to the worker, and(b) includes—(i) any sum (a “costs sum”) required to be paid in accordance with an order in respect of costs or expenses which relate to proceedings on, or preparation time relating to, the claim or a relevant appeal, and(ii) in a case to which section 16 applies, a sum ordered to be paid to the Secretary of State under that section.(2A) Subsection (2)(b)(i) applies irrespective of when the order was made or the amount of the costs sum was determined.”

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My Lords, our penalty measure provides incentives for full and prompt payment of employment tribunal awards and creates sanctions for non-payment. This is supported by our non-legislative work to improve guidance to help individuals understand how to enforce their rights.

In Committee I agreed to consider an amendment to include costs in the relevant amount on which the financial penalty is to be calculated. We have been persuaded by the principle that the penalty should incentivise workers receiving all that they are owed by their employer, and that where a tribunal has decided that costs are to be paid, an employee is entitled to receive them. Our amendments do exactly that.

The amendments also allow the Government to make changes by regulation if, in practice, waiting for costs to be finalised before financial penalties can be issued causes too much delay. These amendments also deal with some other minor and technical issues. For example, they make it clear that penalties which are payable to the Secretary of State are not included, and clarify technical points such as when an award is considered paid in full.

I hope that noble Lords will be reassured that the Government have listened to the concerns raised in Committee and that we are creating the right environment for a worker to be able to receive their full employment tribunal award promptly. I thank noble Lords for the debates we have had on this subject, and I beg to move.

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My Lords, I thank the Minister for her contribution. If I may paraphrase, “Never look a gift horse or a gift concession in the mouth”. However, in this case I will make a slight exception. We had a useful meeting with the noble Baroness—who has disappeared out of sight now, but not, I hope, out of hearing—and her civil servants. I was asked by the noble Lord, Lord Low, to make his apologies. As the noble Baroness knows, he has been a frequent participant in this debate, and he regrets that he cannot be here tonight, so I said that I would apologise on his behalf.

In the meeting that we had with the Minister I raised the disparity between two cases. If an award is made for a failure to pay the national minimum wage and the employer does not respond after having been contacted by HMRC, and does not pay the outstanding national minimum wage, an enforcement officer takes action against the employer. In the case of somebody who has struggled, probably for a significant period of time, gone through enforced mediation, and who has been successful at an employment tribunal, if the employer still fails to pay, it is true that they now incur penalties—and the Minister has told us about the improvements made in that area. However, we suggested that the successful claimant ought to have first recourse to those payments—but the Minister rejected that, saying that for a variety of reasons it could not be done.

I then suggested in the discussions we had that if that were the case, why at that point in time—which could be anything between a year and two years —should the cost of enforcement fall on the claimant, who will have been through mediation and an employment tribunal, been successful, and won an award? I suggested that the Government should examine the possibility of enforcement, as they are doing with the national minimum wage. That was what I hoped the Minister would take away.

That has not been the case. I am not expecting a detailed response this evening, but I make a plea that she might take that away, and between now and Third Reading perhaps we can meet to see whether any further progress can be made. However, with those few comments, we are happy to support the amendments.

Amendment 60 agreed.

Amendments 61 to 74

Moved by

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61: Clause 148, page 127, line 30, leave out “In subsection (2)”

62: Clause 148, page 127, leave out line 33 and insert—

“( ) a decision to make, or not to make, an order in respect of a financial award (including any costs sum) on the claim,”

63: Clause 148, page 127, line 34, leave out second “the” and insert “any such”

64: Clause 148, page 128, line 6, leave out “subject to subsection (4),”

65: Clause 148, page 128, line 10, leave out from “17(3))” to end of line 26 and insert “together with any costs sum, and

( ) in any other case, the sum or sums of money ordered to be paid (including any costs sum).”

66: Clause 148, page 128, line 28, at end insert—

“( ) when the worker could make an application for an order for a costs sum in relation to—(i) proceedings on the claim to which the financial award relates,(ii) proceedings on a relevant appeal,( ) when the worker has made such an application but the application has not been withdrawn or finally determined,”

67: Clause 148, page 128, leave out line 31 and insert—

“( ) a decision to make, or not to make, a financial award (including any costs sum) on the claim,”

68: Clause 148, page 128, line 32, leave out second “the” and insert “any such”

69: Clause 148, page 129, line 24, at end insert—

“( ) The provisions of this Part apply where a financial award consists of two or more sums (whether or not any of them is a costs sum) which are required to be paid at different times as if—

(a) it were a relevant sum to be paid by instalments, and(b) those sums were the instalments.”

70: Clause 148, page 135, line 20, leave out from “in” to end of line and insert “particular cases”

71: Clause 148, page 135, line 30, at end insert—

“(3) The Secretary of State may by regulations make provision for this Part to apply with modifications in cases where a financial award has been made against an employer but is not regarded as outstanding by virtue only of the fact that an application for an order for a costs sum has not been finally determined (or any appeal within section 37B(5)(a) so far as relating to the application could still be made or has not been withdrawn or finally determined).

(4) Regulations under subsection (3) may in particular provide—

(a) for any provision of this Part to apply, or to apply if the enforcement officer so determines, as if the application had not been, and could not be, made;(b) for any costs sum the amount of which is subsequently determined, or the order for which is subsequently made, to be treated for the purposes of this Part as a separate relevant sum.”

72: Clause 148, page 136, line 19, at end insert—

““costs sum” has the meaning given by section 37A;”

73: Clause 148, page 136, line 24, at end insert—

““relevant appeal” has the meaning given by section 37A;”

74: Clause 148, page 136, line 40, at end insert—

“( ) For the purposes of this Part a relevant sum is to be regarded as having been paid in full when the amount unpaid in respect of that sum on the date of payment has been paid.”

Amendments 61 to 74 agreed.

Clause 151: Exclusivity terms unenforceable in zero hours contracts

Amendment 74A had been withdrawn from the Marshalled List.

Amendment 74AA

Moved by

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74AA: Clause 151, page 140, line 12, at end insert—

“(4A) An employer must offer a fixed-hours contract to a worker who has worked regular hours for a continuous period, or series of continuous periods, of employment, to be determined by the Secretary of State.

(4B) The Secretary of State shall by regulations make provision for the determination of “regular hours” under subsection (4A).”

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My Lords, we have again had a long debate this afternoon about the flexibility of zero-hours contracts and what constitutes fairness in such contracts. The last Division was on an amendment which looked at the question of cancellation; unfortunately, we were not successful on that. Again, in this area there is an unfairness to zero-hours contracts. The House will note that we have not specified the period; we just wished to draw attention to a serious problem.

A number of contributions this evening talked about the need for flexibility in those contracts. As my noble friend Lady Hollis—who I see is in her seat—made clear, we are not opposing the principle of zero-hours contracts, but trying to lay the foundation for what we believe to be fairness in the arrangements. In a situation where regular hours are being worked for a continuous period or even a series of continuous periods of employment, surely that does not constitute the kind of flexible zero-hours contract that workers ought to expect. In those circumstances, we believe that the employer should be bound to offer the employee a fixed-hours contract.

If we look at the statistics behind the number of workers employed on contracts that last for a year or even two years, we find that they are not the kind of thing that we envisaged, or what was described today by noble Lords who talked of the need for a very flexible contract. That is, we believe, the justification for injecting fairness into a contract that in previous circumstances would probably have been a standard contract of employment. I look forward to the Minister’s contribution, and to hearing about the Government’s attitude to the amendment. I beg to move.

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My Lords, I am grateful to the noble Lord, Lord Young, for tabling the amendment and giving us the opportunity to return to the matter of zero-hours contracts. I know that he genuinely wants the new regime to work, and I am grateful for that.

The amendment relates to a right to request fixed hours. However, it goes beyond zero-hours contracts and would introduce a right for all workers to demand a fixed-hours contract. This means that it would extend the right to the vast majority of the labour market. I have some sympathy with the noble Lord’s intention, but I am afraid there is a clear risk of negative consequences for the individuals affected, with some unscrupulous employers finding relatively simple ways to circumvent the legislation. For example, some employers could be incentivised simply to let people go before the qualifying period. That would impact negatively on the very people the amendment seeks to help.

None the less, I hope that I can reassure the noble Lord that the spirit of his amendment has already been addressed. The amended flexible working regulations, brought in on 30 June last year, give all “employees” the right to make a request to change their pattern of working after 26 weeks’ continuous service. The amendment would go further, by extending this right to all workers, but it is possible that individuals on zero-hours contracts who can prove a requisite qualifying period of 26 weeks may well be considered to be “employees”, and therefore be entitled to this right.

The Government’s approach has been proportionate in ensuring that employees have the right to request a change to their working pattern, while ensuring that businesses retain the flexibility they need to help drive economic growth. This flexibility will sometimes include a legitimate need to hire someone on a casual contract.

By extending the provision to all “workers”, the amendment could end up capturing many contractors and freelancers who may not want or need this right. What is more, many businesses rely on these individuals and other casual labour to provide specific tasks, and do not expect to hire them on a permanent contract at the end of their contract. A right to fixed hours after a certain period would obviously restrict this ability. I believe that the amendment could open a loophole, and might encourage employers simply to let individuals go before the end of the qualifying period. That is clearly not the outcome that any of us wants. I hope that on that basis, the noble Lord will feel able to withdraw his amendment.

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My Lords, I listened carefully to the Minister. If the wording of the amendment is not perfect, that does not stop her accepting the principle contained therein: and proposed new subsection (4A) does end with the words,

“to be determined by the Secretary of State”.

Yes, there will be a need for regulations, and I accept the noble Baroness’s point about freelancers and so on; there will be some exclusions. However, I return to the basic principle of fairness. We are talking about people who are not necessarily in a traditional freelance role but who, in a significant number of cases, are employed on a zero-hours contract for a year or even two years. We therefore feel that this is an important enough issue to test the opinion of the House.

Division 3

11 March 2015

Division on Amendment 74AA

Content: 133
Not Content: 208

Amendment 74AA disagreed.

View Details

Amendment 74B

Moved by

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74B: After Clause 151, insert the following new Clause—

“Growth and impact of unpaid internships

(1) The Secretary of State must publish a report on the growth of unpaid internships within the United Kingdom labour market over the past five years.

(2) The report shall include details on, but is not limited to—

(a) the incidence of unpaid internships by industrial classification;(b) the average and median length of unpaid internships;(c) an analysis of those who undertake unpaid internships including details on age; gender and ethnicity;(d) the impact of unpaid internships on social mobility;(e) the impact of unpaid internships on graduate prospects; and(f) current legislation and provisions available to address the exploitation of unpaid internships.”

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My Lords, in moving this amendment, I restate my interest as the chairman of Instant Impact, a graduate recruitment company.

In speaking to her amendment in Grand Committee, my noble friend Lady Donaghy asked the Minister to respond to several questions. Some were addressed and some were not. I aim to push these points a little further. Whether we like it or not, intern experience is a key component of many CV statements. Competition for top jobs is fierce. In my time, I have looked at many CVs and found that each one seems to be more impressive than the last. Much time and energy are expended by a candidate to show himself or herself in the best possible light. In my day, you could wing it and hope that it would be all right on the night; today, that is no longer the case. These days, organisations look for the brightest and the best. They look at not just the quality of their degree or of the university they attended, but at the kind of person they are. Is he or she well rounded? Will they fit into the team? Do they have resilience? Can they articulate an argument? Will they make a positive contribution to the organisation? And perhaps the most important question of all: what is their employment experience?

We on these Benches support internships, much as we support schools’ work experience. The relationship between schools and business needs to be much improved and there is nothing better than sixth formers spending time getting to understand the work environment. In such situations we understand that it is unrealistic to expect payment. However, this amendment is concerned not with work experience but with internships, which often become quasi-employment or, indeed, actual employment.

A couple of weeks ago, I read an article in the Sunday Times which highlighted a recruitment company that charges young people a fee of up to £3,000 to secure unpaid internships in the City. I have been present at a charity auction which raised tens of thousands of pounds by offering internships at a major fashion magazine. Such extreme examples illustrate the lengths to which people will go to spice up their CVs. The media, fashion, advertising, PR as well as high-tech and, indeed, our Palace of Westminster, are the prime offenders. They have bright young things working for them free of charge simply because they can. They get away with it because people are desperate for good jobs and they want the kudos of good names on their CVs. In some ways it resembles the unpaid pupillage that used to exist in the legal profession. It was banned there; it now ought to be banned in the wider world.

The Chartered Institute of Personnel and Development estimates that there are 20,000 unpaid interns. I bet that it is significantly more. The Sutton Trust says that the cost to a young person of being an unpaid intern in London is nearly £1,000 a month. A poll has said that 70% of the population say that unpaid internships are unfair and 65% of businesses want to end them. Many have suggested that the full minimum wage should come into effect after a four-week internship. Intern Aware, to which I pay tribute, has lobbied hard on this issue and I have much sympathy with this position.

In Grand Committee, the noble Baroness the Minister stated that mechanisms are in place to ensure that there should be no unpaid interns. However, I think she knows—I know this for certain—that the powers available are rarely enforced. I would love to hammer the Government harder on this issue, but the truth is I do not have the data in my hands—hence this amendment.

I suspect that the Government are sympathetic to our position. After all, both the Conservative Party and the Liberal Democrats believe in meritocracy and equal opportunity for all our young people, but they, too, do not have the data in their hands. Getting the best job available is the first and possibly most important step on a long career path. Surely, we owe it to our young people to ensure that artificial barriers are not put in their way. We need the level playing field that compulsory payment for work would introduce.

The amendment asks the Secretary of State to engage a study that reports on the growth of unpaid internships in the UK labour market over the past five years. The report should include: the incidence of unpaid internships by industrial classification; the average and medium length of unpaid internships; an analysis of those who undertake unpaid internships, including details on age, gender and ethnicity; the impact of unpaid internships on social mobility; the impact of unpaid internships on graduate prospects; and current legislation and provisions available to address the exploitation of unpaid internships.

Unpaid internships benefit those whose parents can afford to support them and detrimentally affect those whose families simply cannot afford to do so. This is a problem we need to solve, but we need the data available to do so. I beg to move.

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My Lords, I wonder who would collect the data. Could we be assured that the data would always be fully acknowledged? I can see companies saying, “Well, I’m not going to fill in that form”. Many is the time one gets questionnaires and just throws them out. I am slightly concerned about the way in which this could be done. I agree with the noble Lord that there is an awful lot of difficulty in this whole area, partially because careers advice is not great in schools. As a result, people are really desperate to know what sort of jobs would be available. If they are offered an unpaid internship I can see them being tempted to take it, but I absolutely agree that it creates yet more haves and have-nots. But how does the noble Lord think that it would actually work?

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My Lords, that is the important issue. Let us be quite honest about this: a number of MPs, for example, have unpaid interns with parents who can afford to bankroll them. But if a young person is living on a council estate in Newcastle or Liverpool, how on earth would they be able to come to Westminster and have that experience? If we talk about social mobility, opportunities for all, the raison d’être of internships should be about providing those opportunities for every single person. It does not happen, which is very sad indeed.

I am pleased to say that some internships are paid and one applauds the businesses and individuals who pay interns at the minimum or living wage. Many internships are unpaid and there are businesses—advertising, for example—where the whole ethos is to take on unpaid interns who fight their way to the top. That is true of other businesses as well. It is interesting to look at America, where legal action is being taken against those companies that do not pay internships. In many cases, those businesses are putting their hands up and saying, “Right, we are going to pay our interns”. The same should happen in this country. We have work experience, which is about helping not the employer but the person gaining that short work experience. We have volunteering which, as the name says on the tin, is about volunteering because you want to do something good for a particular cause. Maybe for the first few weeks, an internship should be at your expense, but if it is any longer, you should be paid at a living wage.

I know the Government are sympathetic to this. I think right across this House we are sympathetic about it. There are issues to do with taxation and salaries that we need to understand. I realise it is very late in the day and the Minister cannot give any commitments. I guess nothing can change now, unless we push this to a vote, and I perhaps hope we do not. However, perhaps the Minister can meet us to go over in our own minds about how we might take this forward. I have talked to Ministers and I know that there is a degree of wanting to support this move.

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My Lords, I am grateful to the noble Lord, Lord Mitchell, for giving us the opportunity to come back to the important subject of interns, to my noble friend Lady O’Cathain for her helpful and insightful comments, and to my noble friend Lord Storey for reminding us that this is a complex subject. I will begin by answering his first question. Obviously, I would be entirely happy to meet him to talk through this issue. I do not think it is possible—as I will come to explain—to do anything in this Bill, but that does not mean that we should not be exchanging comments, knowledge and evidence on this very important area, which I am also passionate about.

I think we all agreed in Committee that we wanted to encourage internships and that they should be fair, open and transparent in order to encourage candidates from a wide variety of backgrounds. The flexibility of our labour market is a great source of pride, as we discussed earlier. Of the growth of 2 million jobs in this Parliament, nine out of 10 were employees and nearly eight out of 10 were full-time jobs, so there are a lot of opportunities for young people, the unskilled and the long-term unemployed. Youth unemployment fell in the past year by 188,000, so that is good news.

Obviously in any part of the labour market, not just internships, we have to take action where there is any exploitation of individual workers. The use of internships is relatively new in the UK labour market. There is a lot more practice elsewhere, especially in the United States, and there is no definition of internship in our legislation. Individuals undertaking an internship will be workers, employees, or volunteers, depending on the reality of their employment relationship, and not their job title or what an employer decides should be set out in a contract.

Where the intern is an employee or a worker, they are entitled to at least the national minimum wage from day one and all other rights attached to their employment status. The Government are very clear that employing unpaid interns as workers to avoid paying the national minimum wage is illegal. Through tougher enforcement measures, such as increasing the maximum penalty fourfold, and naming and shaming employers, we have shown that we will crack down on employers who break that law. The Bill will also ensure that the maximum penalty is calculated on a per-worker, rather than per-notice, basis, as we discussed in Committee. We have also increased HMRC’s enforcement budget from £8 million to £9.2 million and we will increase the enforcement budget by a further £3 million in 2015-16.

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While I recognise that it cannot be done now in the Bill, it would be helpful to investigate the difference between work experience and internships. All of us are absolutely committed to work experience; the noble Baroness, Lady O’Cathain, and I have discussed this on several committees recently. Work experience cannot go on for ever; it cannot go on for week after week or month after month. There is a real difference. We need to encourage work experience, but that is, in essence, very different from the sorts of internships one comes across. One talks to people who are on their third unpaid internship and are clearly working. They can reach the age of 25 or 26 before they get paid employment. That is in particular sectors of the economy. Collectively, around the House, I think we are anxious to make sure, in encouraging social mobility, that we differentiate properly between work experience and internships.

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I thank the noble Baroness for her intervention. She is absolutely right: we need to think about work experience and internships. I will come on to mention the work we are doing. We should certainly look at both aspects.

Before I finish on enforcement—this is an important point and I was asked about it in Committee—in this financial year alone HMRC has identified more than £41,000-worth of arrears for 21 interns who were underpaid the national minimum wage, so enforcement is taking place in this area.

One of the issues that we believe may make some interns uncertain is determining their employment status, which is obviously an essential precursor to understanding what their rights are and whether they are entitled to the national minimum wage. Determining an individual’s employment status can be difficult, as the noble Baroness showed so clearly. There is no one single test to determine whether a contract of employment exists and therefore whether an individual is an employee. We understand that, at times, this is very confusing. It affects various employers, but it also affects interns. Therefore, my right honourable friend in the other place the Secretary of State announced a review in October of employment status to consider these issues. The review will conclude soon.

I understand the concerns raised about pay and social mobility. Some young people probably do not know about opportunities or have access to internships that already exist. That is why the Government fund the Graduate Talent Pool to ensure that all young people have access to internships. That service is on GOV.UK. It is free to employers and graduates, and provides information on all aspects of internships. I am sure that we can do more, but I think it is good that we have done that. We want to encourage social mobility in particular and the Government’s Social Mobility Business Compact, which was launched in 2011, gets employers to commit to fair and open work experience and paid internship opportunities. I know from personal experience that many employers provide such internships and not just for the privileged few. We need to encourage that and keep it going.

My noble friend Lady O’Cathain mentioned career advice. We have recently committed new resources to career advice. That is an interesting addition to the debate.

I turn to the amendment. Internships are not formally defined and therefore the Government do not collect reliable information on a consistent basis that would allow the robust provision of data sought in the amendment. The Government have undertaken research on wider issues that may relate to internships, such as social mobility. We need to be properly informed of the issues around internships to ensure that policy is set appropriately to maximise flexibility and prevent exploitation.

As part of our employment status review, the Government are gathering information through consultation with stakeholders to understand both the current position of groups in the labour market and whether future changes are appropriate. This includes internships and will no doubt provide useful information and data for future discussions.

In summary, I understand and share some of the concerns raised in this debate. We take exploitation of interns very seriously and we already try to act through national minimum wage enforcement to prevent exploitation. Other employment measures in the Bill, such as changing the penalty regime, will of course be helpful. There must be more that the Government can do—that is why we have undertaken a review of employment status—but I hope that the noble Lord will support what the Government are doing and will be content to withdraw his amendment.

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My Lords, I thank the Minister for that reply. What she has said is certainly very helpful. If I detect the mood in your Lordships’ House at the moment, everyone seems very supportive of improving the situation regarding internships, ensuring that these young people are paid and taking the necessary action on it. I thank the noble Baroness, Lady O’Cathain, for the supportive comments that she made. She made a fair point about how the information will be gathered. I suspect that lots of companies are deluged with information; one more piece of information is probably not a good thing, but all the same, it has to be obtained otherwise decisions cannot be taken. The noble Lord, Lord Storey, has been very supportive on this all the way through. I thank him very much for that, and for the helpful comment from my noble friend Lady Morgan.

As I said, there is unanimity in the House on this issue, for which I certainly feel very grateful. I will of course withdraw the amendment.

Amendment 74B withdrawn.

Amendment 74C

Moved by

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74C: After Clause 151, insert the following new Clause—

“Workers: inclusion within national insurance system

All workers shall be eligible for inclusion within the national insurance system where the relevant worker’s annual earnings reach or exceed the annualised level of Job Seeker’s Allowance.”

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My Lords, I hope that your Lordships will forgive an amendment that superficially seems nerdish, but it is an issue that will make or break many people’s lives. Please bear with me.

National insurance is a contributory system entitling you to sick and holiday pay, and, above all, the state pension. You come within it if, in any one waged job, you earn £5,700, which is about 16 hours a week’s work at minimum wage, which is the lower earnings limit—the LEL—although you do not actually pay national insurance until you earn £7,500. Over the years, all parties have rightly recognised that people in unwaged work—primarily women caring for children or elderly people—should be credited into NI and not lose their right to the state pension because they put their family first. All around the political spectrum, we have also respected the position of disabled people with difficult work prospects, who are also credited in, and those who are unemployed on JSA—assuming, of course, that they are properly searching for and training for work. They, too, get credited into national insurance.

Who, then, is left out? It is workers with part-time jobs, which includes two groups in particular. The first is middle-aged women. They have juggled a portfolio—to put it grandly—of part-time jobs, such as cleaning and shop work, with family care. It is a splintered workload, none of which separately qualifies them for national insurance. At least in the past married women could rely on the 60% dependency pension from their husbands. That disappears from 2016, so they will then not get a pension from their husband and currently they do not get one from their own waged and unwaged work. Depending on their back history, they will not get much from the state either. That is how we will reward them for doing what most of us believe is right: fitting their work around their family responsibilities. As a result, they lose years of state pension.

The second group is young people. They may be on JSA. They do everything that is required of them. They apply for countless full-time jobs and do not even get their application acknowledged. Going to Jobcentre Plus, nearly all of the jobs available are part time; many of them are also on ZHCs. It has been estimated that one-third of young people under the age of 30 are in short-hour or ZHC jobs. They do what we should be cheering them on to do. They come off JSA and cobble together a portfolio of perhaps three part-time jobs such as a sandwich job at lunchtime, security work in Boots of an afternoon and bar work in Wetherspoons of an evening. It is hard, risky, expensive and tiring work travelling to and maintaining several insecure jobs whose hours may change and clash with each other every week. They just hope that one of those jobs may lead to secure work but with the portfolio work they lose the NI rights they had when they did nothing but remain on JSA. Stay passively on JSA, come into national insurance and get your pension; come off JSA into several part-time jobs, work 30 hours a week or more but because no one single job is above the LEL lose your national insurance rights, holiday pay, sick pay and, above all, pensions. Can you imagine anything more morally perverse?

The national insurance problem is not exclusive to ZHCs; it affects perhaps up to 6 million people, largely women, with part-time jobs, but ZHCs make it far worse. On ZHCs you may work 20 hours in week one, 10 hours in week two, 20 in week three and, because that is all your employer wants, 10—back down the snake—in week four. So in weeks one and three with 20 hours a week you seek tax credits from HMRC to top up your wage. In weeks two and four on 10 hours you cannot, so instead you turn to the DWP for JSA, only you will probably not get it because you are not fully available for work and, as your 10 hours may suddenly become 20 hours, if that is what the employer requests, you are excluded from JSA. Simultaneously you are dealing with HMRC for tax credits, the DWP perhaps for JSA and the local council for fluctuating housing benefit payments and council tax support. It is a nightmare. It is a full-time job just applying for benefits.

Universal credit will help, and I support it, but it will take until 2020—another five years—before it is fully rolled out, if then. It should help that lone parent but not the older woman whose partner’s earnings float them off universal credit, nor the young man with the sandwich shop job, security job and bar work. Even for the lone parent, UC is paid monthly and in arrears, so what does she do in a low-pay job in a low-hour week? She goes for payday loans.

I could not do it. I could not cope, especially if I had children to care for, with not knowing my hours or my wages each week, or what the three bureaucracies of HMRC, the DWP and the local authorities might do about it either. Nor could I cope with not knowing when any or all of the money may come in and when it does, whether it is even correct. These are years when you may lose all entitlement to accrue a state pension. Lose seven years of NI and you lose £30 a week for the rest of your life. Have 10 years on a set of ZHC jobs and lose NI and you lose £45 a week for the rest of your life. What to do?

In a vote a few months ago, your Lordships agreed to allow two jobs below LEL to be aggregated to bring someone into NI. A number of Conservatives—although I do not think any Lib Dems—spoke in favour of it. I am not sure of that. The coalition Government, however, said no and overturned it. I then suggested that we should treat such people as self-employed. That was not accepted by the coalition Government. Could a part-time job or three be regarded as meeting JSA conditionality and, as with JSA, get you into national insurance? That was not acceptable to the coalition Government either. I tried in Committee on the Bill to reduce the LEL, bringing it down to about £3,000; I calculated that the cost would be trivial. That was not acceptable to the coalition Government either. So what then?

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What was the noble Baroness doing for the 13 years of the previous Government, if she is accusing this Government of doing nothing?

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That is a perfectly fair question. I point out to the noble Lord who sat opposite someone like me throughout the passage of the Welfare Reform Act from 2011 to 2012, with something like 17 Committee sittings, that I believe that the phrase “zero-hours contract” was not mentioned once—certainly not by me nor by the noble Lord, as far as I am aware. Therefore, in that context, the issue did not arise.

I tried to reduce the LEL but I could not. This time I suggest we again lower the LEL—the cash threshold at which you come into NI—to the cash value of JSA, which is £72.40 a week or near enough £3,750 a year. On JSA, at £72.40, you are currently credited into NI. With this amendment if you are earning £72.40 per week in any one job, 11 to 12 hours per week at minimum wage, you also get your NI stamp. It is simple and fair. If it is good enough for JSA, it should be good enough for part-time work. Get JSA and get your pension, work hard in three 12-hour jobs, each below the LEL, and do not. What sort of message is that?

The question is do we want social security to support a flexible labour market, to abate some of its risks, to ensure for workers some of its rewards such as the state pension or do we simply not care what happens to them down the line? If so, what are we saying to people about wanting to come off benefits and go into work? Why, under the system we now have, would they want to? It is not rational to do so. Too many people have more to lose than to gain and this amendment would help overcome that moral dilemma. I beg to move.

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My Lords, I support Amendment 74C. It is an argument that many in this Chamber are familiar with. As my noble friend Lady Hollis so clearly explained, there is a group of workers caught by the rules whereby someone has to earn in a single job an amount above the lower earnings limit—the LEL—currently £5,700 a year, to come into the national insurance system. If, however, someone has two jobs, both of which pay below £5,700, but which may still involve them working, say, 30 hours a week, they cannot add the wages of those jobs together to get above the lower earnings limit and into the national insurance system. If they are not in the national insurance system, this affects their eligibility to statutory sick pay, statutory maternity pay and the accrual of the state pension.

In the past it was thought that perhaps 50,000 people, mostly women, were affected, but the scale of the problem is now far greater because of the increase in the use of minimal-guaranteed-hours contracts in the economy, particularly over the last five to six years. It is the scale of the increase in the problem in recent years that has made this such a significant issue on the agenda—not that it was not always significant for the 50,000 people who were previously affected.

Contracts with minimal guaranteed hours deliver little or no wages in some weeks, if little or no work is offered. Workers may need several casualised jobs to get an income and may then find that not one of them pays above the £5,700 entry level for the NI system. It is estimated that two in five zero-hours contract workers earn less than £111 a week, which is the approximate weekly equivalent of £5,700. The incidence of working zero-hours contracts, agency working and limited-hours contracts has, as I said, increased since the recession and brought with it the incidence of low and unpredictable pay. As I quoted in a previous debate, in August 2014 there were some 3.2 million zero-hours contracts on employers’ books, of which 1.8 million provided work to people in the period when the survey was undertaken.

A modern welfare state has to be responsive to the realities of the contemporary labour market. In the earlier debate on zero-hours contracts we heard arguments from the Benches opposite that one has to keep flexibility in the labour market. However, if that is the case, the welfare system has to be responsive to the realities of that contemporary labour market.

Over the years, Parliament has recognised the unfairness of locking certain groups of people out of the national insurance system and has been willing to amend the rules accordingly. Thus, mothers of young children under 12, disabled people, carers, a grandparent caring for a child while the mother works and the unemployed on JSA are credited into the national insurance system.

As my noble friend Lady Hollis convincingly argued, the Government give a certain value to those who have the misfortune to be unemployed and are available for work. They are eligible to receive £72 per week—approximately £3,750 per year—in JSA and are credited into the national insurance system. It therefore seems unfair and inconsistent to rule that someone who then finds work with a job paying £5,400 or two jobs both paying below £5,700 is not credited into the NI system.

It is now suggested that the Government will raise the threshold before income tax is paid to £11,000 to make work pay for modest earners—a policy with some merit. If that is correct, it makes it even more inconsistent that a group of workers whose pattern of employment and earnings does not deliver wages of £5,700 in any one job is not credited into the national insurance system. One hundred pounds a week, which is below the entry point, equates to almost 16 hours on the national minimum wage, so a person with more than one such mini-job could work a significant number of hours but still be excluded, which is not fair. Increasing the personal allowance may not be a tangible benefit to those on limited hours and low wages because they do not earn enough to gain from the increase, but at least they should be let into the national insurance system.

I acknowledge, as my noble friend has done, that under universal credit 800,000 more people will be credited into the NI system. That is great, but significant numbers will still be excluded. For example, universal credit is income-based. Therefore, if a single person earns more than £4,000 a year in any job, they are above the level for universal credit and so do not get credited into the NI system. But £4,000 is significantly below the lower earnings limit of £5,700, and if none of their mini-jobs pays above this level, they still cannot get credited in.

My noble friend powerfully described the situation of many women who are impacted, and I will not repeat that detail. However, I stress, as she did, that their position is made even more urgent because from April 2016 women will no longer be able to gain a state pension through their husband, as the married women’s dependency pension will cease. It is intended that women will accrue a pension in their own right, which is a good thing—I have campaigned for that for more than a decade—but you cannot accrue if you are not in the NI system.

The Secretary of State, Vincent Cable, and the CBI argue that zero-hours contracts have a place in today’s labour market and that employers need flexibility in today’s economy. If that is correct, the issue of workers who accrue wages across one or more contracts but cannot enter the NI system is here to stay. And if it is here to stay, that means that it is here to be addressed, too. Indeed, the persistency of zero-hours contracts is evidenced by the Chartered Institute of Personnel and Development, which finds that, of the workers affected, 65% have been on such contracts for two or more years, 40% for five or more, and 20% for 10 or more.

The Government will ban the use of exclusivity clauses in zero-hours contracts. Again, that is a good thing and it is welcome, but it will not provide a definitive solution to this problem. The freedom to have several contracts does not provide entry into the national insurance system if none of them produces a wage above £5,700. My noble friend Lady Hollis has argued this case for many years and has faced varied rebuttals from the Government on her proposed solution to the problem, which she described. However, persistent rebuttal is becoming increasingly hollow; we need to find a solution.

Over the years, Parliament has recognised the unfairness of locking certain groups out of the national insurance system and has amended the rules accordingly. This is another unfairness, and the amendment poses a solution. Basically, it says that if you are unemployed and looking for work, you can receive £72 a week in JSA and enter the NI system. So if a worker is employed and earning the annual equivalent of JSA—that is, approximately £3,750—they should be eligible for inclusion in the national insurance system.

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My Lords, the noble Baroness, Lady Hollis, is again bringing to our attention the issue of workers in multiple low-paid jobs. We debated this matter in Committee and the noble Baroness put forward a number of proposals then for dealing with the situation. We have before us today a proposal to include people with earnings at or above the annual value of jobseeker’s allowance. As contributory jobseeker’s allowance is payable for only six months and there are different amounts, I assume that the noble Baroness means to proxy the higher rate of around £4,000.

Just so that we are clear about the figures that we are talking about, I can confirm the characteristics of the workers that the noble Baroness is concerned about. They are people whose earnings in a single job fall below the threshold for paying or being credited with national insurance, that threshold being £5,700. That is the band of people the amendment is dealing with.

The noble Baroness has been very dogged on this issue and has suggested a number of other ways in which we might deal with it, such as changing the system to allow earnings to be aggregated; treating those people as self-employed and being able to pay class 2 contributions; treating them as unemployed and being able to receive NI credits; or lowering the earnings entry point for access to the NI system to £3,000 or, now, £4,000.

However, as I explained in our previous debate, I am afraid that none of those solutions is at all straightforward and there is a danger that they could all, to a greater or lesser extent, involve unnecessary administrative expenditure, perverse outcomes and possible new inequalities in the national insurance system. I know that such potential unintended consequences are not the noble Baroness’s intention, but they exist and they underline the reason for treading carefully in this area.

The proposal before us today would, for example, create a new cliff edge for those who earn below the threshold and increase the exchequer cost in terms of both administration and benefits paid, with little or no corresponding revenue. It would also bring in workers who might not need protection, such as students with weekend jobs working fewer than 12 hours a week. Such students are highly likely to gain sufficient years to qualify for a full state pension later in their working lives. The noble Baroness’s other solutions would increase the burdens on businesses, require a significant compliance regime to police people’s employment status or need to be extended to everyone with more than one job in a tax year to avoid unfair consequences.

The noble Baroness has expressed a view on the likely size of the group, the persistence of this type of work pattern and its effect on benefit entitlements. In February, the Department for Work and Pensions published updated estimates that around 50,000 people a year have multiple low-paid jobs and are not paying, or being treated as paying, national insurance that they would otherwise do if their earnings were aggregated —that is 0.2% of the workforce.

In response to concerns from your Lordships’ House during debate on the Pensions Bill last year, the DWP set up a forum of analytical experts last July, with an independent chair, of which the noble Baroness, Lady Hollis, is a member. This forum’s remit is to consider the available evidence, the characteristics of this group, the effect of zero-hours contracts and the implications for state pension outcomes. The forum has looked at a number of alternative data sources, but none was found to provide more reliable information than that available from the Labour Force Survey on which DWP based its analysis. Having been party to the forum, the noble Baroness will be aware that it has yet to draw any firm conclusions, so in our view it would be premature to legislate now.

I accept that, of this group of 50,000 people, around 80% are women. However, this population is by no means static. Many of those affected are likely to build up their national insurance record in the future through paid or credited contributions. Under state pension reform, over 80% of people would be entitled to the full pension amount by the mid-2030s. There is also no evidence that this is a growing problem. The number of women working in two or more jobs has hardly changed for the past 10 years, remaining at about 5% of those in work. Furthermore, the recent Johnson review concluded that earnings change significantly over a lifetime and most low earners go on to earn more.

I reassure the noble Baroness and the House that the Government are continuing work in this area, and the findings of the forum, once available, will help inform what, if any, action should be taken. However, I believe that it would be premature to pass this amendment now. In part, that is because the point of setting up the forum was to examine the evidence presented and then move to the next stage. Secondly, before taking any action in this very complicated area, we should undertake a full analysis of the costs and benefits of the various courses before us—something that, in general terms, I believe the noble Baroness has been in favour of.

I doubt that I shall have satisfied the noble Baroness, but none the less I hope that she will feel able to withdraw her amendment.

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My Lords, I thank my noble friend Lady Drake for her superb contribution. She put it wonderfully well.

Although the noble Lord, Lord Stoneham, intervened, I thought that he might make a fuller contribution. His basic charge was that we did not do anything about this. We did. I do not normally go around shouting about this, but we persuaded James Purnell that grandparents who were caring for children and carers of older people should come into the national insurance system and be credited at 20 hours a week. Previously, carers of older people came into the system only if they worked for 35 hours a week—effectively full time—for one person only. I persuaded the then Secretary of State that a carer doing more than 20 hours a week should get, not carer’s allowance, but national insurance credit. I also persuaded him that grandparents caring for their grandchildren and thus freeing their daughter to work should benefit from what was then HRP. This was effectively transferred from the daughter, who, since in work, would be in the national insurance system in her own right. I thank James Purnell, the last Secretary of State with whom I worked on this, who agreed both those changes.

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I am grateful to the noble Baroness for giving way. Now that she mentions them, I accept that there are things that her Government did. Will she also accept that there is quite a lot that this Government have been doing to look at what is quite a complex problem?

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I do not accept that at all. We shall come back to that point when we talk about the forum. Apart from the wider issue of universal credit, the Government have not done anything to help these groups in the last four and a half years—I can think of not one thing. If the noble Lord, Lord Stoneham, can think of something, then we shall see whether we agree on the evidence. Not only did we persuade James Purnell, who responded generously and positively, but also, as my noble friend rightly said, women had the safety net of a 60% dependency pension. The noble Lord’s party, through his right honourable friend, Steve Webb, has got rid of that 60% dependency pension for married women from 2016 so that a group of women who would have had some pension in retirement have now lost it. I should not be too keen on boasting about that if I were the noble Lord, Lord Stoneham.

At that time we were also told that the number of people with multiple jobs was only 20,000—mostly women, so they did not count. Now we have 50,000 and apparently they still do not count. The noble Lord, Lord Stoneham, said earlier today that zero-hours contracts were a response to the recession. The increase in jobs has come largely since 2010 and has only been apparent for most of us since about 2012. We went through very many mostly happy hours in which this was never discussed when we were considering the Welfare Reform Bill.

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The zero-contracts did not come about—

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Order please. We are on Report. I am afraid that intervention is limited.

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It is my fault, my Lords—I tempted the noble Lord and he could not resist. The point about zero-hours contracts and short hours is that they were seen largely as a middle-aged women’s problem, but there was some degree of protection. What has happened since the recession is that a third or perhaps a half of those under the age of 30 are cobbling together 30 or 35 hours’ work a week from splintered jobs, none of which, as far as we can see at the moment, would for many of them bring them into the national insurance system. That is the new dimension. It is the very dimension that the noble Lord, Lord Stoneham, mentioned in his speech on the previous amendment.

The noble Lord, Lord Newby, said that we should be introducing a new cliff edge for those below the JSA level who might be working only 12 hours a week. However, in this case, they would be better off on JSA, which they could still receive. The first £20, or the first £5 depending on their status, would be disregarded for these purposes. The rest of the hours would not be counted up until they hit JSA level, at which point the person would get JSA. That can already be done now. Therefore it is not true that there would be a cliff edge—it is not an adequate offer back. When people work 10, 12 or 14 hours, it is deducted off their JSA and if their JSA is higher, they keep it. The argument is invalid.

Secondly, the noble Lord, Lord Newby, says that many students will not need to be within the national insurance system since in later years they will go on to build their contributions. In that case there is no cost or problem to the Government at all. The problem now is that people only know at the end of their working lives whether they have got a sufficient contribution record. If you are poor and you have got missing years you are not able to fish your earlier years. If students are building up redundant ones they are no different from anyone who works for 40 years’ worth of stamp and only needs 35 to get into the national insurance system. What we are giving them is a measure of protection that they might not otherwise have. Therefore I do not see why the noble Lord, Lord Newby, is worried.

The noble Lord’s third and final point was that this affects only 50,000 people, as if 50,000 people do not really matter. There were something like 25,000 or 30,000 women who were partners or spouses of people in the armed services who lost national insurance when they accompanied their partner abroad. I made this point. His right honourable friend in the other place, Steve Webb, conceded and brought those partners— mostly women but not invariably so—into the NI system. They were only half the number we are talking about today, but he deemed that it was appropriate and desirable. Even though it was far more complex than what we are dealing with today, he did it. I hope we are not being told that 50,000 is too trivial to bother about in one area but that 20,000 is fine in another. That argument simply will not run.

Finally, as I have said, the Minister says that we are talking about only 50,000. I reckon that that is a gross underestimate. He is drawing on the ONS and the Labour Force Survey in which people self-report their status. The CIPD figures we talked about earlier drew instead on a survey of employers who had far more accurate information about the employment status of their staff.

As he will know, the forum we set up, of which I was fortunate enough to be a member, recently has had information which suggests that if you look at the P14s, which is what the employers submit to HMRC, as opposed to what the employees submit, it looks as though something like 130,000 people additionally may come into this situation, as well as another 30,000 or so who we do not know about because the employers are too small. Therefore, the figure clearly is more likely to be 200,000 based on more reliable information coming from the employers through P14s than the 50,000 figure that the noble Lord offered us, which is based on incomplete and inaccurate information or on people simply not fully understanding their legal status as far as their contract of employment may be concerned.

Those are the arguments of the noble Lord. I do not think that any of them is true. The cliff edge argument is not relevant; the number argument is not the case; and the question of students making it unnecessary does not matter because there will be no cost or complication for us.

As for having to wait for the results of the forum, I have tried to get that forum to discuss the policy options. The civil servants have been most helpful. The forum was explicitly told by the Minister’s right honourable friend Steve Webb that we were not to discuss policy but only to try to get some accurate numbers. That is fine but we could have discussed policy on the basis of this; that was prohibited and therefore we were not able to do so. I am afraid that he attributes to this forum greater powers, greater range, greater extensiveness and greater capacity to encourage change, which is an assumption that I would have liked to share with him, than his right honourable friend permitted.

I am sorry but I do not think that anything the Minister has said tonight takes us one step forward. He does not rebut a single argument that my noble friend Lady Drake and myself made. None the less, given the time, obviously I beg leave to withdraw the amendment.

Amendment 74C withdrawn.

Clause 152: Regulations in connection with public sector exit payments

Amendment 75

Moved by

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75: Clause 152, page 141, line 29, leave out “prescribed” and insert “qualifying”

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My Lords, Clauses 152 to 154 give Her Majesty’s Treasury powers to make UK-wide regulations with regard to public sector exit payments. Amendments 77 to 80 seek to address concerns raised by the Delegated Powers and Regulatory Reform Committee that these powers are framed more broadly than is required for the stated policy intent. The Government are grateful to the DPRRC for its scrutiny of the Bill.

Since the Government have now consulted on the detailed use of the powers, we are able to narrow their scope to match our settled intentions for implementation. This intention is that exit payments may only be recovered within a year of exit from the employment or office in respect of which the payment was made. None the less, in order for the regime to work effectively, it is crucial that we retain sufficient flexibility in the powers to enable the regulations to deliver the policy intent. This flexibility may include the types of exit payments that can be recovered to circumvent any potential for avoidance by using new or novel types of payment. Regulations will also set out prescribed circumstances for recovery, so that subsectors can be adequately defined and in order to accommodate changes in the machinery of government. Both flexibilities will be subject to the overriding requirement of return to the public sector within a year.

Further to the DPRRC’s most recent report, I can also announce today that the Government intend to bring further amendments at Third Reading to enable the first set of the secondary regulations to be made by the affirmative procedure. This first use will be the substantive one, which establishes the exit payment recovery regime. Further regulations which make minor and technical changes, for example to the list of bodies covered by the regulations, will be made by the negative resolution procedure. I should take the opportunity to say that we have also published draft regulations which will provide a further indication of how these powers are intended to be used.

Amendment 81 is a minor and technical amendment to ensure that the Scottish Parliamentary Corporate Body falls under the scope of Scottish exit payment regulations. The body has the duty to ensure that the Scottish Parliament is provided with the property, staff and services required. It controls its own remuneration, and the Government and Scottish Government always intended for it to fall within the Scottish exit payment regime.

Finally, Amendments 82 and 83 are further minor and technical amendments to correct potential ambiguity in the drafting of Clause 159. I beg to move.

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My Lords, I thank the Minister for his introduction to the amendments. He will be pleased to know that at this time of night we do not wish to pick holes in them. We think that they address an understandable concern, which I suppose became apparent in the NHS reorganisation that we thought we would never see where people disappeared out of one door and came back through another. It is right that a hole is being plugged that needs to be plugged. I welcome the point made about flexibility to prevent any avoidance tactics and the assurance that some of the important further amendments will be the subject of affirmative resolution. We are happy to support them.

Amendment 75 agreed.

Amendment 76

Moved by

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76: Clause 152, page 141, line 30, leave out “qualifying exit payments” and insert “the repayment mentioned in subsection (1)”

Amendment 76 agreed.

Clause 153: Section 152(1): further provision

Amendments 77 to 80

Moved by

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77: Clause 153, page 142, line 17, leave out subsection (1) and insert—

“(1) For the purposes of section 152(1) circumstances are qualifying circumstances if—

(a) an exit payee becomes—(i) an employee or a contractor of a prescribed public sector authority, or(ii) a holder of a prescribed public sector office,(b) less than one year has elapsed between the exit payee leaving the employment or office in respect of which a qualifying exit payment is payable and the event mentioned in paragraph (a), and(c) any other prescribed conditions are met.”

78: Clause 153, page 142, line 22, leave out subsection (2)

79: Clause 153, page 142, line 31, after “(1)” insert “(a)”

80: Clause 153, page 142, line 41, after “(1)” insert “(a)”

Amendments 77 to 80 agreed.

Clause 154: Power to make regulations to be exercisable by the Treasury or Scottish Ministers

Amendment 81

Moved by

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81: Clause 154, page 143, line 24, leave out “an” and insert “—

(a) the Scottish Parliamentary Corporate Body, or“(b) any”

Amendment 81 agreed.

Amendment 81A

Moved by

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81A: After Clause 155, insert the following new Clause—

“Concessionary coal

(1) This section applies to an entitlement to concessionary coal or payments in lieu of concessionary coal—

(a) arising in connection with employment by a company which on 1st January 2014 was carrying on the business of deep coal-mining in the United Kingdom, and(b) which is not being met otherwise than by virtue of this section.(2) The Secretary of State may, out of money provided by Parliament, make such payments as the Secretary of State considers appropriate for the purpose of securing that an entitlement to which this section applies is met.

(3) Payments under this section may be made only with the consent of the Treasury.

(4) “Concessionary coal” means coal or other solid fuel supplied free of charge or at reduced prices.”

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My Lords, Amendment 81A provides the Government with an enabling power under which to provide support to persons with an entitlement to concessionary coal, or cash in lieu of concessionary coal, in accordance with the rules on regular and proper expenditure. This entitlement arises in connection with employment at UK Coal Production Ltd, UK Coal Kellingley Ltd and UK Coal Thoresby Ltd.

In November 2013, the Government assumed responsibility and met the costs associated with the lost concessionary fuel allowances of a previous cohort of UK Coal under the Supply and Appropriation Act. Unfortunately, the same basis could not be used for concessionaires at Kellingley and Thoresby collieries because this cohort, when taken in conjunction with the last, exceeds the £1.75 million per annum threshold permitted by the Act. It is therefore necessary for the Government to take a new, bespoke power to enable this support provision to continue.

The persons covered by the power are employees, redundant persons, retired persons and in some cases, depending on the terms of contract, dependants of such persons. A dependant will not have direct contractual entitlement to concessionary coal or cash in lieu with the company. However, their entitlement would be referable to a right in the employment contract. These entitlements must be contractual entitlements. In particular, the company must have been carrying on the business of deep coal mining on 1 January 2014.

The UK Coal group has been restructured on a number of occasions. In January 2015, UK Coal Production Ltd submitted a request for support in relation to the managed run-down of its last two deep mines—Kellingley and Thoresby. Around 730 employees will be affected by the run-down. This important provision provides the reassurance that the Government are able to act quickly to meet the concessionary fuel entitlements of persons affected. Amendment 83A to Clause 162 simply provides that the clause will commence automatically, two months after the Bill receives Royal Assent. I hope that noble Lords will support the inclusion of these important amendments and I beg to move.

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I thank the Minister for her explanation of the amendment. Even if today the closure of a mine is not of the significance that it was a generation ago, it is still an important matter to the industry, to the local community around the pit and to the people directly involved. It is right that the Government should be able to provide appropriate support in this amendment through concessionary coal payments.

The amendments in this group are welcome as they can help to provide assistance at a time of great anxiety and stress to employees, who will appreciate the security that they can provide. In order that these concessionary coal payments can have some certainty as well, I ask the Minister if she can provide a bit more clarity on certain points with regard to subsection (3) of the new clause proposed by Amendment 81A, concerning Treasury consent. I understand that her department is preparing to submit these proposals for clearance under state aid rules. Does this mean that this enabling power could never be needed should the Treasury refuse to sanction her department’s submission? What would be the scope of that decision? Is it likely to lead to a reduction in the concession?

I understand from my honourable friend Tom Greatrex in the other place that the Minister, Matt Hancock, has promised to submit the proposal before Dissolution. I would be grateful if the Minister can confirm that commitment tonight and make the announcement before Parliament rises. For the comfort of the people who will be nervous of their situation in the coalfield, can she provide as much information as possible concerning how long she would envisage clearance to take on this state aid submission to the EU? Every week that goes by without state aid, the sum required actually increases. Should clearance be received before Dissolution, will she make the commitment that this will be announced to Parliament? However, should clearance not be received before Dissolution, can an announcement be made between Parliaments? Clarity and certainty in her assurances will be vital to those in these vulnerable communities.

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My Lords, I am extremely grateful to the noble Lord, Lord Grantchester, for his support for the amendments. He raised a couple of questions which I hope I will be able to clarify. The Treasury has confirmed that it will meet the entitlements, although the reinstatement remains conditional, as the noble Lord is aware, on the Government securing the necessary approvals, including one from the Commission. We can assure concessionaires that entitlements will be reinstated, as they have been in the past, on the same terms and conditions.

We will be discussing state aid aspects with the Commission at the earliest opportunity and will formally notify the concessionaires as soon as practicable. The state aid clearance processes can take time, as the noble Lord is aware, so it is difficult for me to provide your Lordships with definitive assurances at this time. We will discuss, of course, with the Commission at the earliest opportunity to ensure a prompt and smooth clearance process. I reassure the noble Lord that no concessionaries will suffer loss as a consequence of any inertia in the process. Entitlements will be backdated, as they have been in the past, should any delays arise. I am extremely grateful to the noble Lord for his support and I hope that my response has satisfied him.

Amendment 81A agreed.

Clause 159: Supplementary provision about regulations

Amendments 82 and 83

Moved by

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82: Clause 159, page 146, line 36, leave out “made by regulations” and insert “included in an instrument”

83: Clause 159, page 146, line 39, leave out “made by regulations” and insert “included in an instrument”

Amendments 82 and 83 agreed.

Clause 162: Commencement

Amendments 83A and 84

Moved by

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83A: Clause 162, page 148, line 20, at end insert—

“(j) in Part 11, section (Concessionary coal) (concessionary coal).”

84: Clause 162, page 148, line 23, leave out “section 89D” and insert “Part 4A”

Amendments 83A and 84 agreed.