UK Newspapers and News Magazines: Foreign Investment
Baroness Stowell of Beeston
To ask His Majesty’s Government when they intend by regulations under Schedule 7 to the Digital Markets, Competition and Consumers Act 2024 to provide exemptions for certain funds associated with foreign powers, such as sovereign wealth or public-sector pensions funds, to invest in UK newspapers and news magazines.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the Government are clear that foreign states should not be permitted to influence the policy or operation of UK newspapers and news magazines. Exceptions to the new foreign state intervention powers in the Enterprise Act are required to permit sovereign wealth funds, public sector pension funds or similar to invest up to strict limits. As I mentioned to the noble Baroness in our previous debate on this, we are carefully considering responses to the consultation published by the previous Government. We hope to publish a response to that very soon and lay the SI shortly after.
Baroness Stowell of Beeston (Con)
My Lords, the Minister will not be surprised that I am disappointed that the department has not provided her with any more information than that which she gave us last time. If the Minister is not able to tell us when the Government will bring forward these important regulations—they are important to the whole news industry and to the sale of the Telegraph—I must ask her why they have not done so. It is not a question of time—they have had eight months since the consultation closed. We are left to assume that the Government are prioritising the sensibilities of a foreign Government, who do not share our commitment to press freedom, over the news industry, the importance of press freedom and the survival of one of our national newspapers. I ask again: could the Minister please tell us why the Government are not acting in line with the intentions of Parliament when we legislated last year to ensure the financial sustainability of the news industry and to protect press freedom?
Baroness Twycross (Lab)
The purchase of UK newspapers and news magazines by foreign states, as the noble Baroness will be aware, runs the risk of eroding trust in the press. We agree that it is right that the UK has explicit protections in relation to this. Since the consultation closed in July last year, DCMS Ministers and officials have been considering the responses carefully. The consultation raises complex issues and involves multiple interests across government. We are committed to considering this carefully and ensuring we understand the implications of such changes, including on the industry. It is important that we get this right.
Lord Moore of Etchingham (Non-Afl)
My Lords, I declare an interest as a Telegraph employee. I regret the way the Minister appears to be just reading out the same answer. It is important in a news business that we can get on. The most important word in the Question rightly repeated by the noble Baroness, Lady Stowell, is “when”. Are we not entitled for a term to be brought to this absurdly long process?
Baroness Twycross (Lab)
I can only apologise for having the same answers, but the issue has not yet been resolved. We are working to resolve it as soon as possible, but, as I mentioned, there are complex issues that need to be dealt with effectively. It remains the case that I am confident I will be able to report back to your Lordships’ House in the near future. Clearly, I would have liked to have been able to have done so before today.
Lord Beamish (Lab)
My Lords, the debate around the Telegraph is obviously important, but local newspapers are key to local democracy. In my own region of the north-east the Northern Echo and the Newcastle Journal are struggling. What will the Government do to ensure the survivability of local and regional newspapers, which are vital to our local democracy?
Baroness Twycross (Lab)
My noble friend is right that local journalism is vital to local democracy. We are developing a local media strategy in recognition of the importance of this vital sector. DCMS and the Secretary of State hosted a round table recently with a group of local news editors to discuss our proposed approach to the strategy and how we can collaborate with industry for the benefit of communities across the country.
Lord Fox (LD)
My Lords, perhaps it might help your Lordships’ House if, rather than giving a specific answer, the Minister were able to give a process answer. Given that the purpose of this is to distinguish between two different sorts of investor, perhaps she could tell the House how the Government are going about making that separation of two different sorts of investor. Is the Government’s view as to how that process will be delivered materially different from the view that was clearly being formed by the previous Government?
Baroness Twycross (Lab)
I am going to frustrate and potentially annoy your Lordships’ House by not responding directly to that question. We are clear that we need to address the complex issues raised during the consultation. This is not about us not recognising how important the issue is; it is actually the opposite.
Viscount Colville of Culross (CB)
My Lords, I will have one more go at trying to get a clear answer from the Minister. Many in the media industry are concerned that UK companies will not be able to use debt financing from foreign government institutions to finance acquisitions of newspapers. This is in contrast to simply preventing equity investment from foreign government institutions, which is the real intention of the rules. Will the Minister address these concerns directly?
Baroness Twycross (Lab)
The noble Viscount raises exactly the type of complex issue that requires careful consideration. I am committed to bringing this matter back to your Lordships’ House in the near future—I have been told that I can continue to say “in the near future”—and we will bring an SI to your Lordships’ House shortly thereafter.
Lord Forsyth of Drumlean (Con)
My Lords, I sympathise with the Minister’s position. Later today, we are going to discuss the Employment Rights Bill. Are the Government considering the position of the employees of the Telegraph and the uncertainty that is occurring, as well as the important issue of the newspaper? She gave a commitment to the House today that they would table the necessary secondary legislation. Will that be soon, shortly, in due course, or before the Summer Recess?
Baroness Twycross (Lab)
I reassure the noble Lord that it will be very shortly—though how you define “very” in that context is probably open to interpretation. As noble Lords will know, I did go back and press the point, having been told that I could say “very shortly” last time, as to whether that was still the case. On staffing, I do not underestimate how unsettling this would be for staff. I note the noble Lord’s commitment to the Government’s legislation that is being discussed later this afternoon, which is welcome. Staffing is clearly a matter for the paper itself, but we hope that all decisions made in the interim would be in the best interests of both the paper and the staff.
Lord Brennan of Canton (Lab)
My Lords, it may come as a surprise to learn that most young people do not get their information from the Daily Telegraph. As we found out recently through TV series and so on, they get a lot of information and misinformation and disinformation online. What steps can we take to ensure that young people have access to accurate information rather than content that fuels division?
Baroness Twycross (Lab)
I feel strongly that we owe it to young people to ensure they have access to accurate information rather than content that fuels division. On a cross-party basis, we need to make sure that we do not fuel that division in our discourse. Platforms need to act now. As many noble Lords will be aware, since Monday 17 March this year, platforms have been required to proactively address illegal content and behaviour, much of which disproportionately affects women and girls. This includes harassment, sexual exploitation, stalking, controlling or coercive behaviour, extreme pornography and intimate-image abuse, all of which are matters of concern across your Lordships’ House. This is a matter that all of us should be concerned about.
Lord Parkinson of Whitley Bay (Con)
My Lords, I sympathise with the position that the Minister is in, but it is more than a year since the House passed what is now the Media Act 2024, and, even accounting for the general election, it is eight months since the consultation on this matter closed. As she will have heard from the questions across the House, this is causing concern for the staff and readers of the Telegraph. It is giving rise to questions about what representations the Government are receiving from other governments. It is also adding to confusion about the policy intent. Our understanding was always that foreign powers, as defined under the 2024 Act, will not qualify for an exemption. Is that still the case? Is she able to shed any light on that matter between now and the measure that she will bring forward?
Baroness Twycross (Lab)
I genuinely do not underestimate the frustration that noble Lords feel on this point. In relation to the future of the Telegraph, there is a pre-emptive action order in place which prevents parties taking action to transfer ownership or control of the Telegraph, integrate the Telegraph business into other enterprise, or make any significant changes to the structural management of the Telegraph without the Secretary of State’s consent. This is to safeguard the business and its employees during the sale process. I can only restate the Government’s position, which is that I will be able to report back to your Lordships’ House very soon. I have highlighted to the department that there will be a debate shortly after Easter in which this issue is likely to come up again.
UK Resettlement Scheme 2025
(1 month, 1 week ago)
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Lord German
To ask His Majesty’s Government what progress they have made in setting a quota for refugee resettlement through the UK Resettlement Scheme for 2025.
Lord German (LD)
I beg leave to ask the Question standing in my name on the Order Paper, and in doing so I draw attention to my interest that I am supported by the RAMP organisation.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
The United Kingdom works closely with the United Nations refugee agency, UNHCR, to determine the appropriate quota in any given year. We are focusing on the delivery of existing commitments, and we will continue to work with the UNHCR on an appropriate quota for 2025.
Lord German (LD)
My Lords, I thank the Minister for that Answer. This is a safe and legal route, but, unfortunately, there are few people in the queue. The queue sometimes lasts five to seven years, and so, quite clearly, the United Nations authorities need time to prepare people to come here in waiting for that length of time. What they are doing in that queue, of course, is not going for routes that are dangerous—crossing the channel and so forth—so, given the importance of reducing the number of people who come via irregular routes, what assessment have the Government made of trying to make these allocations to the United Nations not sporadically but in a regular format with multi-year assessments?
Lord Hanson of Flint (Lab)
The UK Government continue to discuss on a yearly basis with the UNHCR what the requirements and pressures are. As the noble Lord will know, both the previous Government and this Government have given safe and legal routes to around 680,000 people in the past 10 years alone. We are continuing to work with the agency and we are looking at that for next year—in my original Answer to the noble Lord, I said that we are looking at potential quotas for 2025. He makes an interesting suggestion for certainty, but we need to examine the requests of the UNHCR, what their demands on us are and how we can potentially accommodate any or all of those requests.
Lord Kirkhope of Harrogate (Con)
My Lords, I had the honour of being the Minister responsible for the conduct of the Bosnian resettlement programme in 1996 under the auspices of the United Nations. Although I can see the merit of a quota, I hope that the Government will have enough flexibility in such schemes to allow for the changes that take place across the world and the pressures that arise from different places at different times.
Lord Hanson of Flint (Lab)
The noble Lord makes a very important point. He will be aware that, three and a half years ago, for example, nobody would have suggested that we would have the number of Ukrainian individuals on temporary placement in the United Kingdom because of the pressures of the illegal war by the Russians in Ukraine. Therefore, that flexibility needs to be maintained. What we are saying is that we are in constant discussion with the UNHCR and we want to meet our legal obligations. The 680,000 people in the past 10 years show that we are. The noble Lord makes a valid point that we do not know what may happen in the future which may cause challenges for the United Kingdom and indeed for the UNHCR.
Lord Purvis of Tweed (LD)
My Lords, as the Minister knows from my question yesterday, the Home Office scores all in-country migration costs as official development assistance. At the end of this Parliament, that level will be halved by this Labour Government, which have also chosen to make a policy decision to continue to score in-country migration costs as 100% aid, but they are not proposing to reduce that level in relation to the overall pot of aid. Why?
Lord Hanson of Flint (Lab)
The noble Lord makes his point again. We have set out our position on overseas aid through, and prior to, the Statement yesterday. We are setting out our position in relation to the UNHCR and the potential help and support that we can give now. We will address many of the points that the noble Lord has alluded to in a future immigration White Paper, which will be presented to this House and to the House of Commons in due course. We will debate this issue in due course. I think that we are meeting our obligations, and we will still, through our colleagues in the Foreign Office, support overseas aid and do so in an effective way, but that debate will undoubtedly continue.
Lord Davies of Gower (Con)
The United Kingdom has a proud history of providing protection for those who genuinely need it through our safe and legal routes. I am sure that the Minister will agree with me that we need to make sure that, when we commit to helping refugees, we have the capacity to support them, not only in housing but in schooling and healthcare too. It is right, however, that this support is given only if it does not disadvantage the taxpayers in this country who fund these services. I therefore ask the Minister: what other specific limited resources, besides suitable accommodation, does his department consider before allowing people using the UK resettlement scheme to move to the UK? How do this Government ensure that their commitment to support those using the scheme does not disadvantage the UK taxpayer?
Lord Hanson of Flint (Lab)
The noble Lord makes an important point that is absolutely vital. Individuals who come here as a part of our international obligations put pressure on public services, and that needs to be taken into account in relation to the issues on which we are in discussion with the UNHCR. The noble Lord mentioned housing, transport, medical services and education; they are all considerations. That is why, to go back to the point by the noble Lord, Lord German, and indeed the point made by the noble Lord, Lord Kirkhope, the Government are assessing on an annual basis with the UNHCR what assistance and support we can provide for refugees coming to this country. We want to meet our obligations, but we need to do so in a way that allows us to provide the required services in support. That is why I cannot give a figure to the noble Lord, Lord German, and why I welcome the flexibility mentioned by the noble Lord, Lord Kirkhope. It is an issue that noble Lords will continue to press me on, rightly, but this is important for the sustainability of the UK taxpayer as well as our international obligations.
Lord Sahota (Lab)
My Lords, in secondary legislation the Government claim that India is a safe country for refugees to be returned to. Are the Government absolutely sure about that, given India’s human rights record?
Lord Hanson of Flint (Lab)
We are guided by the requests that come to the United Kingdom from the UNHCR, and we will consider whatever requests it wishes to bring forward for the United Kingdom. My noble friend will appreciate that, at the moment, I do not think we have had any requests from the UNHCR in relation to India but, again, it is a matter for the agency, in discussion with us, to look at which countries it believes are generating refugees who need help and support. When it does that, the assessment is passed on to countries such as the United Kingdom to see where, how and if we can help; we stand ready to do so if, when and however we can.
Lord Kerr of Kinlochard (CB)
It is obviously a bit early to say, but it is possible that positive developments in Syria, and possibly even in Sudan, may lead some who are here as asylum seekers to want to go home. Will the Government assist them?
Lord Hanson of Flint (Lab)
The Government have been and are currently—as the noble Lord will be aware from previous questions—looking at how we can assist with voluntary returns to countries that are now deemed safe for people who have come seeking asylum or refugee status in the United Kingdom. The situation in Syria is particularly fluid, which is why we have put a pause on some of the challenges that we are facing there at the moment in making some assessments. The noble Lord makes an important point, and we want to ensure, in all cases, that if people can return to their country of origin, they do so if that country of origin remains safe for them. The reason they are here now is because they were refugees from a regime; if that regime changes and stability comes forward then, self-evidently, the UK Government would want those individuals to return home should they wish to.
The Earl of Clancarty (CB)
My Lords, the Minister will recall our meeting last year concerning the ongoing concerns of EU citizens trying to settle in this country. At some stage, can we have an update on progress that has been made in that area?
Lord Hanson of Flint (Lab)
Yes, I will examine where we are post that meeting that we had with the noble Earl, and I will respond to him as a matter of some urgency.
Official Development Assistance
(1 month, 1 week ago)
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Lord Carey of Clifton
To ask His Majesty’s Government what assessment they have made of the moral implications of their policy of reducing Official Development Assistance to 0.3 per cent of gross national income.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Collins of Highbury) (Lab)
My Lords, protecting our national security is the first duty of any Government. This difficult choice reflects the evolving nature of the threats we face and the strategic shifts required to meet them. This Government remain fully committed to the United Kingdom playing a globally significant role on development. We will use all levers to support our development aims and we will work to mobilise finance beyond ODA to better meet the development needs of our partners.
Lord Carey of Clifton (CB)
My Lords, I am very grateful to the Minister for that very clear and helpful response. William Temple, in his famous book Christianity and Social Order, written in 1942, famously stated that
“the art of government in fact is the art of so ordering life that self-interest prompts what justice demands”.
I believe that that tension is with us today and was clearly expressed in the Labour manifesto last year, which promised that, on the international level, Britain would be a good neighbour and regain its global leadership on development. I want to put two questions. First, what strategies will the Government take forward to carry on UK aid’s crucial work, bearing in mind the straitened circumstances in which we live? Secondly, is this not now an opportunity to deepen the links between UK aid and the many organisations that do such fantastic work, such as Christian Aid, CAFOD, Tearfund, Islamic Relief and many other voluntary compassionate groups?
Lord Collins of Highbury (Lab)
I thank the noble and right reverend Lord. On his first question, importantly, the Foreign Secretary will lead a cross-departmental process to consider all the aid allocations. We will work through how our ODA budget will be used as part of ongoing spending review and resource-allocation processes, based on various factors, including impact assessments.
To repeat the point I made before, it is important that our development efforts are seen not just through ODA. The United Kingdom uses expertise, policy influencing, global convening and other trade and economic levers. I have visited many African countries in the last six months; I know what leaders are telling me. Our new approach to developing partnerships is about leveraging greater investment, economic growth and empowerment through the creation of jobs. That is how we will deliver change, and that is what we will continue to do.
Lord Browne of Ladyton (Lab)
My Lords, I draw the House’s attention to my entry in the Register of Members’ Interests. I also draw the attention of my noble friend the Minister to a question I asked last Thursday, in the debate on the G7 Statement, about the precarious nature of the FCDO’s global demining programme, which was threatened at that time because the money came from ODA. I do this because, in many contexts, an artificial dichotomy between aid and security spending is something of a false dichotomy. Consequently, I ask my noble friend: what are we doing with our allies to ensure that the ODA money, which we have to spend collectively, is targeted where it can do the most good and, importantly, yield tangible benefits for peace and security?
Lord Collins of Highbury (Lab)
My noble friend makes a really good point. The demining projects are about increasing security, but they are also vital for economic growth and development. I have been to countries where we have supported those projects and where agriculture has increased as a consequence of being able to deal with that issue. So my noble friend is absolutely right: this is about economic growth but it is also about security. As he knows, we have secured the contract for HALO to ensure that we can continue this excellent work.
Baroness Sugg (Con)
My Lords, the Minister will know that, following the decision to cut aid to 0.3% of GNI by 2027, there have been calls to maintain spend until 2027 to protect vital programmes and to ensure that the cuts are done in a careful and considered way. The Minister referred to the process; may I press him on a timeline? When will the decisions be made and the impact assessments published, and when will Parliament have the opportunity to debate the details of these decisions?
Lord Collins of Highbury (Lab)
It is very difficult to give a direct answer; what I can say is that we are currently working through all programmes. We want to avoid a cliff-edge like that which, as the noble Baroness knows, happened in the past: programmes were stopped midway through, and damage was done to our credibility and confidence. We are not going to do that. We are looking at all programmes and making plans to reduce spending over time. Let me reassure her that we will come forward with details when the spending review is completed. We are going to avoid some of the mistakes of the past, and we will work with partners, multilaterally and bilaterally, to ensure there is not the sort of damage we saw in the past.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, we will hear from the noble Lord, Lord Purvis, next, and then from my noble friend Lord McConnell.
Lord Purvis of Tweed (LD)
My Lords, yesterday the Government failed to implement the global tax avoidance scheme for businesses earning profits of more than €20 billion, and which would raise over half a billion pounds this year, because they are waiting for President Trump’s approval. Also yesterday, the Government announced in the Statement an immediate £0.5 billion cut to official development assistance, contradicting what the Minister has just said. What is the morality of allowing large companies like Elon Musk’s X to avoid paying tax in the UK, while implementing programme cuts that disproportionately affect the most vulnerable women and girls around the world? What morality is to be found there?
Lord Collins of Highbury (Lab)
I come back to the point I made at the beginning, because I am absolutely passionate about this. When I visited African countries, they were concerned about ensuring that they have a proper tax base in their own country. That is why the HMRC—[Interruption.] The noble Lord does not need to shout at me. We have embedded people in a number of African countries to help them widen their tax base, and we are working collaboratively with partners to ensure that that happens. We want to see economic growth as the driver of change around the globe, and I am absolutely committed to that. I do not accept the hypocrisy argument that the noble Lord is making.
Lord McConnell of Glenscorrodale (Lab)
My Lords, one of the more disappointing aspects of the Government’s decision was to retain payments through ODA towards refugee and asylum costs in the UK. The Government have promised to reduce those costs. Will any savings from ODA spending on hotels and other asylum and refugee costs in the UK be retained within ODA and therefore be freed to again increase the resources available for overseas development?
Lord Collins of Highbury (Lab)
My noble friend makes a very good point. The Home Office and the Government are absolutely committed to reducing those asylum and hotel costs in this country. Yesterday, it was also confirmed that the FCDO is no longer required to adjust budgets to hit a calendar year spending commitment. This is a positive change that means the FCDO will not automatically be exposed to the volatility of GNI or spending by other departments on, for example, asylum costs.
The Earl of Effingham (Con)
My Lords, to quote the Prime Minister when he was Leader of the Opposition in the other place:
“Cutting aid will increase costs and have a big impact on our economy. Development aid … reduces conflict, disease and people fleeing from their homes. It is a false economy to pretend that this is some sort of cut that does not have consequences”.—[Official Report, Commons, 13/7/21; col. 177.]
Does this remain His Majesty’s Government’s assessment of the impact of cutting foreign aid?
Lord Collins of Highbury (Lab)
I am glad the noble Earl asked that question, because he needs to be reminded that we are in a different situation. We are in a generational change: the threat this country faces has never been faced before, and we know that we have to return to defence spending to ensure that the people of this country remain secure. I am not going to be lectured by noble Lords opposite about defence spending, when they reduced it so much over the years that we have to work so hard to return to it.
Grangemouth Oil Refinery
(1 month, 1 week ago)
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Baroness Bryan of Partick
To ask His Majesty’s Government what assessment they have made of Project Willow in securing the Grangemouth oil refinery and the jobs of the skilled workers currently employed there.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, Petroineos’s decision to cease refining at Grangemouth is deeply disappointing. The Government have stood with workers from the outset. Alongside the Scottish Government, we announced a £100 million Falkirk and Grangemouth growth deal package to support the local community. We launched Project Willow to find an industrial future for the site, identifying nine low-carbon business models that could create 800 jobs by 2040.
Baroness Bryan of Partick (Lab)
I thank my noble friend the Minister for his reply and for the commitment to the future of Grangemouth. The Project Willow report was paid for by the UK and Scottish Governments but was prepared
“solely on the instructions of Petroineos”,
the current owner of the site. Jim Ratcliffe, the billionaire majority owner of Ineos, is adept at getting Governments to pay for his projects while his company, and he personally, keeps the profits. The nine projects suggested in Willow offer a blizzard of possibilities when what is needed is a clear project that can be implemented as soon as possible. Will the Minister consider fast-tracking sustainable aerospace fuel, along the lines of the proposals from Unite the Union?
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to my noble friend and of course I am very much aware of Unite’s proposal to transition Grangemouth into a sustainable aviation fuel plant. We are very grateful for the input from Unite and will continue to engage with the union. I have to say, though, that I think the Project Willow approach is the best way forward. It evaluated over 300 technologies and identified nine potential technologies. We have £200 million available from the National Wealth Fund to invest. The focus at the moment is twofold. One is to give support to the workers who are going to lose their jobs. The second is to encourage private investors to look at these proposals. We have the National Wealth Fund, with £200 million to invest, to act as an incentive and we are working very hard in relation to that.
Baroness Sheehan (LD)
My Lords, I draw the House’s attention to my role as chair of the Environment and Climate Change Committee. What will be the process by which the preferred option or options will be chosen out of the nine front-runners identified by Project Willow? To what extent will the Circular Economy Taskforce be involved in the decision-making?
Lord Hunt of Kings Heath (Lab)
My Lords, Project Willow set out nine potential developments. The most near-term developments include hydrothermal plastic recycling, dissolution plastics recycling and ABE bio-refining. On the question about the task force, I will certainly discuss with my colleagues the ability of the task force to input into this. Clearly, in terms of decision-making, the key thing now is to find investors for those projects. Clearly, the National Wealth Fund, with the £200 million that it is going to make available, will play an important role in that.
Lord Offord of Garvel (Con)
My Lords, the closure of Grangemouth is indeed a tragedy for the UK, and even more so for Scotland and for the 400 highly skilled jobs that are being lost. Of course, we know that this is what is referred to as the transition as we go from hydrocarbons to renewables, but, if you talk to the folk in Grangemouth, the problem, they say, is that this just transition is not very just. Indeed, if you talk to the folks in Aberdeen, they say that the just transition is not very just, as we now have data that shows that the transition of jobs from the North Sea oil and gas fields to renewable wind farms is running at 58%, and that jobs that were previously paid at £55k are now paid at £35k. So I ask the noble Lord to consider the patronising language of this just transition. Will he please go back to the department, drop the concept of a just transition and perhaps introduce a new concept called an affordable transition?
Lord Hunt of Kings Heath (Lab)
My Lords, I think the noble Lord is being unfair. Of course we want to see workers who are being displaced by changes in the industrial sector being helped and supported as much as possible, with additional training to enable them to accept good jobs in other sectors. At Grangemouth, a support facility is being made available, with training need analysts for each worker, and I gather that 300 such employees have already requested to take advantage of that. There are open evenings, career fairs and direct engagement with local employers.
As for the North Sea, I just make the point to the noble Lord that, although he has an obsession with gas, the fact is, as he knows, that the UK continental shelf is a declining basin. In the last 10 years, 70,000 people lost their jobs under the stewardship of the Government he served. I did not see much effort there by that Government to establish programmes to provide good jobs. We are at the early stages. We are working very hard. The green energy sector, including nuclear, has huge opportunities and we need to do everything we can to ensure that skilled workers being displaced in some areas of the energy sector are given every opportunity to take up new roles.
Baroness Hayman (CB)
My Lords, I declare my interests as set out in the register. Given what the Minister has just said, is it not important that the sorts of skills, advice, training and support that he has described for Grangemouth are available much more widely if the transition is to take place effectively—and justly—in other areas? What plans are there to bring in the skills passporting programme that we have argued for for many years, as well as the specific training that will be needed?
Lord Hunt of Kings Heath (Lab)
My Lords, I take the point, although I think it is right that we have some specific measures in relation to Grangemouth. I also think it is right to refer to a 2023 report by the CBI, which showed that there was a 9% increase in the green economy that year compared with 1% overall, and 950,000 people are now working in what could be described as a net-zero green economy. These are often very good, very well-paid jobs. We have a number of regional skills hubs. In the nuclear sector, we have a separate nuclear task force taking work forward in relation to this. The challenge we face is that, over the next few years, we need thousands more people to come into the low-carbon energy sector. We are doing everything we can, working with industry and with further education, to ensure that that happens.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, there are reports that, because of a loophole in the key energy scheme, Petroineos will get a windfall payment of £6 million. Rather than going to the multimillionaire Jim Ratcliffe, surely this money should be used for the retraining of the workers who are going to lose their jobs.
Lord Hunt of Kings Heath (Lab)
My Lords, obviously we should look very carefully at any loophole that may have been identified. I should make it clear that Petroineos has said that it has invested $1.2 billion since 2011 to maintain Grangemouth’s operation, recording losses in excess of $775 million during that period. Unfortunately, that is clear evidence that Grangemouth is not a viable commercial proposition.
Lord Lilley (Con)
My Lords, the closure of Grangemouth will make us more dependent on imports, as will the Government’s policy of not giving licences to extract shale gas or new licences for oil in the North Sea. The Government think that we can cope with being less dependent in normal times—I do not agree—but surely the Government must accept that there may come a time, in an emergency, when we will need to exploit our own resources. So why are the Government, on Saturday, cementing in the only successful shale wells on land in Lancashire, meaning that we will not be able to take advantage of them in future? Is that not an act of vindictive vandalism?
Lord Hunt of Kings Heath (Lab)
So why then did the party opposite, when in government, not allow fracking to take place? It is pure hypocrisy to attack us for a decision that we have made firmly that we will not allow fracking to take place. I take the point about energy security and reliance on imports, but I say to the noble Lord that the UK Government are required to hold stocks of oil as a member of the International Energy Agency. At the end of January 2025, we had the equivalent of 130 days of net imports, substantially higher than the required 90 days set by the IEA. There is no complacency here at all: we of course keep that under very close review and energy security is always going to be our number one priority.
Spring Statement
(1 month, 1 week ago)
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Baroness Neville-Rolfe (Con)
Let us start by standing back and considering this Statement—which is really an emergency budget—and the Government’s actions more generally against their stated economic objectives. The main one, emphasised by Ministers many times, is growth. Fine—we all want growth. One would expect, therefore, that the Government’s policies and actions would be consistent with that objective, but they are not. First, the Chancellor and other Ministers talked down the economy, ruining morale. Then she chose to put taxes up by £40 billion, depressing animal spirits further and taking tax in the UK to its highest level in the last 50 years. The most egregious announcements were the wholly unexpected jobs tax of £25 billion—devastating businesses and social enterprises such as hospices—and, out of the blue, the farms tax, which imposes IHT on family businesses and undermines confidence across the country.
The Government also gave large pay rises to their friends in the unions, without any productivity strings. Even today, they are proceeding with the Employment Rights Bill, which will undoubtedly have negative effects on the supply side and hence on growth. Interestingly, the OBR has said—ominously, for the Government—that it has yet to take a view on the Bill’s effect on growth, should it pass. If growth is the main objective, the Government’s economic policies are, quite simply, incoherent.
The Government are also in a mess about the position of the OBR. The OBR is given a status by the Government above anything warranted. UK fiscal policy now appears determined by the need to meet detailed targets derived from the Government’s rules and the OBR’s estimates. Instead, the Government need to take informed common-sense choices that promote growth and, crucially, confidence in our economy, using best estimates as a guide to sensible behaviour.
In short, the Chancellor appears, wrongly, to believe that openly fiddling with the numbers to please the OBR leads to positive economic outcomes. It does not. Paul Johnson, the director of the Institute for Fiscal Studies, concluded yesterday by saying that
“the Chancellor has all but guaranteed … another six months of damaging speculation and uncertainty over tax policy”.
It does not take an economist to see that these conditions are damaging for growth, business and people across the country. Our economy needs certainty and stability. The Chancellor’s Statement leaves our country vulnerable, and it will be British business and the British taxpayer who pick up the pieces when her plans come into contact with reality.
My first area of questioning is: how would the Treasury react to adverse events—if, for instance, the UK were to become the victim of tariffs, which seems all the more likely this morning? It has no reserve for a rainy day. The OBR’s model suggests that the introduction of tariffs could
“entirely eliminate the headroom against the fiscal mandate”.
Can the Minister say which taxes the Government would hike, or which services he would cut, to keep in line with the Chancellor’s recklessly tight limits?
We are not in a good place, as can be seen from the numbers published yesterday. Public spending is far too high as a share of GDP. It is forecast to rise to 45% in 2025-26 and will still be at 43.9% in 2029-30, according to the OBR. Moreover, debt interest is at an appalling £101.3 billion, rising to £105.9 billion in 2029-30. The prospects for improving the position are modest. The OBR has halved its forecast for growth from 2% to 1% this year, and growth thereafter remains relatively anaemic, despite some welcome policy changes that I will come on to.
As we have discussed on previous occasions, growth and productivity are intimately linked, and we desperately need productivity to grow, especially in the public sector. The measures announced so far will not go very far to improve it. If we want growth, we need a step change in the public sector and a bigger share of the economy in the more productive private sector.
Defence spending was a key element of the Statement, and we on these Benches support an increase in funding for our Armed Forces. However, the Chancellor has not been clear about how and where the money from overseas development aid is going. Can the Minister kindly clear this up?
We support reform of planning and more housebuilding, on which the growth forecasts depend. However, can this be realised quickly? The plan is to invest £2 billion in social and affordable housing in 2026-27, which is, I understand, lower than the average under the previous Government. I welcome the £625 million to train up to 60,000 more construction workers. However, with my experience of the sector, I have doubts as to whether the proposed changes will speed up planning sufficiently or provide the skills needed in the building and planning trades quickly enough to fill current gaps and fire up major expansion.
We also believe that welfare reform is necessary, but it must be done in the right way and the process in the run-up to this Statement was, frankly, shambolic. For a very complicated subject, this is no way to proceed.
Before I sum up, perhaps the Minister can clear up one puzzle. I cannot understand how the OBR can legitimately assume—see the table on page 10 of the Green Book—that employment is going to rise by 400,000 people this year when everything seems to be going in the opposite direction.
The Chancellor’s decision to leave herself with such little headroom means that the Government’s fiscal policy is not about making the right decisions to support our economy in the long run. It is now about fiscal fine-tuning, which leaves us inflexible, vulnerable to external events and liable to future tax rises—which the Chancellor failed to rule out. Since the Budget, our economy has been wallowing in the doldrums of stagflation. Unemployment is up, the gilt rate has remained sky-high, businesses are staring down the barrel of crippling national insurance hikes, and we face the punitive Employment Rights Bill.
When we discuss all these technical terms and percentages, we need to be clear that what the Chancellor announced yesterday will hit taxpayers in this country hard. They will notice the effects of this Statement in their everyday lives. That includes those who are affected by her welfare changes, those who will be made redundant as a result of her national insurance hikes, and those who may find themselves paying more tax come the Budget later this year. It is these factors which affect living standards. We need to build an economy that supports investment, rather than encourages some of our most talented entrepreneurs to move overseas; to see high levels of employment; to allocate money sensibly to efficient public services; and to show flexibility in the light of external events—thus directly improving the lives of people across our wonderful country.
I am afraid that the Statement delivered by the Chancellor yesterday did not meet these standards. We need a Treasury, and a Chancellor, willing to make the decisions needed to support business, promote growth and confidence, and make Britain productive again.
Baroness Kramer (LD)
My Lords, when I listened to the Chancellor yesterday, the only thought that kept chasing through my head was that this is someone who is completely out of touch with the real experience of people today. The whole Statement glossed over a halving of the growth forecast for this year to 1%, and the reality of benefit cuts. These and ongoing high inflation—an average of 3.2% forecast for this year—are pains that people will experience in their daily lives.
The average loss for an individual on PIP is £4,500 a year. According to the Resolution Foundation, a couple on universal credit, where one is disabled and the other is a full-time carer, could lose £10,300 a year.
We all agree that people need to work if they can, but this is not primarily a back-to-work programme; it is a cutting programme. It does not just hit vulnerable individuals; it hits their communities and will have a knock-on effect particularly in disadvantaged areas of the country. It looks to me as though the cuts are very much front-loaded and back-to-work support is back-loaded. Can the Minister tell me if that is correct?
As a result of the cuts, a quarter of a million people of working age will now fall into poverty, and worse, 50,000 children—I am using the Government’s own numbers. Was this really Labour’s goal? Should this not have been the time to revive the bank levy, raise tax on online gambling, close capital gains loopholes and increase the digital services tax? I will say more on that tax in a moment.
Even at the end of the forecast period, despite all the pain, borrowing is expected to be £3.5 billion higher than forecast in October, and the Chancellor will be faced with very little headroom—only £9.9 billion. Can the Minister tell us how much of that headroom disappeared just last night with Trump’s tariff announcements? The headroom also relies on very uncertain expectations of a major increase in productivity. In other words, uncertainty about tax rises and spending cuts will continue; they were not ended by this Statement. That uncertainty will further undermine any possible growth scenario.
Since the focus of this Statement was supposed to be growth, why was there nothing in it for small businesses, which face a crunch in just a few days as the rise in employer NICs kicks in? It is no wonder that the Federation of Small Businesses reports the lowest levels of confidence post-Covid. When the Chancellor spoke of cutting red tape, she could at the very least have focused on the endless Brexit red tape. If she had announced negotiations on rejoining the customs union and removing the current trade barriers, small businesses would be quickly planning a return to exporting and recovery of their roles in European supply chains.
And there was nothing in the Statement to shore up social care, GPs, dentists, hospices and all the services which are crucial to the NHS and to the return-to-work project, but which are making cuts now as higher employer NICs hit home.
I conclude by pressing the Government on the digital services tax. This exists not as some kind of windfall tax or as a special punishment for tech companies; it is a modest attempt to claw back a portion—some £800 million this year—of aggressive tax avoidance by the mega US tech companies. We have just voted into law with the Finance Act an undertaxed profits rule, which would let us claw back much more of that money lost to tax avoidance by this group, in the range of £2 billion to £3 billion a year. However, the Government are now hinting that the digital services tax will be cancelled and the undertaxed profits rule mothballed if they offend the Americans—I refer the Minister to a Treasury press release on 17 January.
The Chancellor spoke, as she should, of reducing tax avoidance by British people and companies, but why should American firms be exempted? Will the Minister give me an answer? Are the Government going to turn a deliberate blind eye to aggressive tax avoidance by the US mega tech companies in the faint hope of winning favour with President Trump, while at the same time they slash benefits to disabled people, burden social care and small businesses, eviscerate overseas aid and need to increase spending on defence?
The Financial Secretary to the Treasury (Lord Livermore) (Lab)
My Lords, I am very grateful to the noble Baronesses, Lady Neville-Rolfe and Lady Kramer, for their questions and comments. Let me start with economic growth, this Government’s number one mission. The noble Baroness, Lady Neville-Rolfe, spoke about the global context in the Spring Statement, and the Chancellor yesterday quite rightly pointed both to the rapidly evolving global threat and to a global economy which is becoming much more uncertain.
The OECD recently downgraded its forecast for every G7 economy this year, and yesterday, the OBR revised down its growth forecast for 2025 from 2% to 1%. The noble Baroness, Lady Neville-Rolfe, blamed this on the decisions taken in the October Budget, which wiped the slate clean and repaired the public finances from the mess that we inherited. They were not easy decisions, but the truth is that they were the right decisions. Imagine if we were now facing this global economic uncertainty with a £22 billion black hole still in the public finances. What confidence would that have given to the Bank of England to cut interest rates? What signal would that have sent to investors about the stability and the resilience of our economy? What flexibility would that have provided for the Government now to increase defence spending in the face of this changing world?
The noble Baroness, Lady Neville-Rolfe, said that we need stability, but she opposes any action to get it. I am afraid that it simply is not credible to say that we should not have repaired our public finances nor rebuilt the foundations of our economy. Are we satisfied with the growth forecast? No, of course, we are not, which is why we are taking the serious action needed to grow our economy in the future and to go further and faster to invest in infrastructure with the Planning and Infrastructure Bill—which the party opposite opposes—and a third runway at Heathrow, increasing investment with pensions reform and a new national wealth fund, and dismantling red tape and burdensome regulation in every sector of our economy. This is a serious plan for economic growth with the right long-term decisions.
The noble Baroness, Lady Neville-Rolfe, focused on future growth, but she did not mention the pleasing fact that the Office for Budget Responsibility yesterday considered and scored one of the central planks of our plan for growth, concluding that our planning reforms will permanently increase the level of GDP by 0.2% by 2029 and by 0.4% of GDP within the next 10 years. That is the biggest positive growth impact that the OBR has ever reflected in its forecast for a policy with no fiscal cost. Again, the noble Baroness, Lady Neville-Rolfe, did not mention that the Chancellor was able to confirm yesterday that the OBR has upgraded its growth forecast next year and every single year of the forecast thereafter, so that by the end of the forecast, our economy is larger now compared to the OBR’s forecast at the time of the Budget.
The noble Baronesses, Lady Neville-Rolfe and Lady Kramer, asked about tariffs. As they will know, we are pursuing an economic agreement with the US, and we are discussing what this means for the UK. That is our focus. We will continue to stand up for free and open global trade, because tariffs would damage both our economies. Those conversations continue. I am not going to give a running commentary, but we should see where we get to in the next few weeks.
The noble Baroness, Lady Kramer, asked me about the digital services tax. The Chancellor said very clearly yesterday that it is up to the UK Government to set tax policy for the UK economy. The digital services tax was intended to be temporary until there was a global agreement as part of pillar 1 and 2 of the OECD agreement, but we believe that companies should pay tax in the countries in which they operate. This is why we introduced the digital services tax in the first place, and our views on that have not changed.
The noble Baroness, Lady Neville-Rolfe, spoke about living standards, but she did not mention that living standards will now grow this year at double the rate expected at the time of the Budget and will rise twice as fast in this Parliament compared to the last. The noble Baroness, Lady Kramer, asked about inflation. Having peaked at over 11% under the previous Government, the OBR forecasts that CPI inflation will average 3.2% this year, falling quickly to 2.1% next year and meeting the inflation target of 2% from 2027 onwards. The noble Baroness, Lady Neville-Rolfe, asked about employment. The OBR expects employment to increase by 1.2 million over this forecast period and unemployment to fall to 4.1% by 2029.
Yesterday, the Chancellor also set out the consequences that increased global uncertainty has had on our public finances, and the noble Baroness, Lady Neville-Rolfe, spoke about the fiscal rules. I was disappointed to hear her follow the Liz Truss path of criticising the Office for Budget Responsibility. The fiscal rules are the embodiment of this Government’s unwavering commitment to ensuring economic stability, because we saw in the Liz Truss mini-Budget what happens when a Government lose control of the public finances. Mortgage rates soared, for which working people are still paying the price. That is why our fiscal rules are non-negotiable and why we will always deliver economic stability.
The Chancellor yesterday restored in full the headroom against the stability rule, moving to a surplus of £9.9 billion in 2029-30. The noble Baronesses, Lady Neville-Rolfe and Lady Kramer, said that this was insufficient, but it is considerably higher headroom than the £6.5 billion headroom left by the previous Government, and we are of course not now carrying a £22 billion black hole in the public finances. We believe that we have got the balance right, and nobody should be in any doubt about how seriously we take the fiscal rules.
The noble Baroness, Lady Neville-Rolfe, asked about the savings from our reforms to welfare. When the Secretary of State for Work and Pensions set out the Government’s plans, she rightly said that the final costings will be subject to the OBR’s assessment. The OBR has said that it anticipates the package will save £4.8 billion in the welfare budget.
The noble Baroness, Lady Kramer, in her assessment ignored the fact that we are investing £1 billion to help people back into work. She also knows that the impact assessment that she referred to does not take into account in any way the consequences of that £1 billion investment; it does not take into account the consequences of anyone getting back into work. She will rightly know that the OBR will do that assessment and come back in the autumn with updated figures.
The noble Baroness, Lady Neville-Rolfe, asked about our spending plans. She said spending was too high, so I would be fascinated to know now where she intends to cut that spending from. The Spring Statement confirms that day-to-day spending is growing in real terms in every single year of the forecast period—by an average of 1.2% a year, in real terms, from 2025 to 2029. The spending review envelope is fully protected. That means we are spending £50 billion more on day-to-day spending in 2028-29 than the previous Government’s plans. I would be interested to know what, of that £50 billion, the noble Baroness, Lady Neville-Rolfe, would like to cut.
In the Budget last October, we increased capital investment by £100 billion over the course of the Parliament, including investing in transport, beginning the delivery of 1.5 million homes, supporting new industries and protecting record R&D funding. The OBR has looked at the growth impact across a decade; it is clear that particularly our capital investments—which the party opposite opposed—will lead to a significant 0.4% increase in growth. We are not cutting capital spending, as the party opposite did time and time again, because that choked off growth.
The noble Baroness, Lady Neville-Rolfe, asked about tax. I know she would not expect me, even if I could, to write the next Budget now. The Government are delivering on the fiscal strategy set out at the Budget last October, and we are going further and faster on growth because our planning reforms show that changes to tax and spend policy are not the only way to strengthen the public finances.
Over the past nine months, this Government have restored stability to our economy, giving the Bank of England the confidence to cut interest rates three times since the general election. We have begun to rebuild our public services with record investment in our NHS, bringing waiting lists down for five months in a row. We have increased the national living wage to give 3 million people a pay rise from next week. The backdrop to this Spring Statement was a world changing before our eyes. The responsible decisions we have taken mean that we can now act quickly and decisively in this more uncertain world to secure Britain’s future and deliver prosperity for working people.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, I have doubled the time available for Back-Bench questions to 40 minutes. The House wants short, sharp, succinct, to-the-point questions, not speeches. We will go around the Chamber, seeking to get as many noble Lords in as possible. Please note that, when a noble Lord asks a question, it is unlikely that the next question will come from the same Benches.
Lord Lamont of Lerwick (Con)
My Lords, is the Minister aware that there is considerable support on this side of the House for the aims of the Government’s welfare reforms? We agree that the programme is unsustainable and that there are perverse incentives, but if changes are to be made, do they not need to be made on a targeted and very sensitive basis? Will the Minister therefore tell us—this was raised by the Liberals but not really answered by the Minister—why, as a result of these reforms, 250,000 will go into poverty? It has also been reported by many MPs that people unable to wash the lower half of their body will be deprived of all benefits, and that people who cannot go to the toilet without assistance will lose all benefits as well. If, as the Minister says, this is being done on a targeted basis, why are these the results? Can the Minister actually convince us that this is a programme that is being done on a targeted basis and not just the cobbling together of some cuts at the last minute in order to make the books balance?
Lord Livermore (Lab)
I am grateful to the noble Lord for his question and for his concern and compassion in the examples he sets out. I will set out our three principles when it comes to welfare. First, the state should always be there to support people when they need it, and I think the reforms set out in the Green Paper deliver on that point. Secondly, the system should better incentivise work, and everyone who can work should work. Thirdly, we need a system that is sustainable, so that we have a welfare state that is there for generations to come. As I said in my answer earlier, the impact assessment that has been published today does not take into account the £1 billion being reinvested into the system from the £4.8 billion of savings. It is very clear that that £1 billion will help people get back into work. As we know, and I am sure he knows, work is the best route out of poverty.
Lord Livermore (Lab)
The noble Lord’s question is about the impact assessment, and I am answering that. The impact assessment takes no account of the extra £1 billion being invested. The OBR will look at that £1 billion over the summer and will come back with an updated impact assessment at that point.
Lord Pitkeathley of Camden Town (Lab)
My Lords, the UK continues to lag behind many EU countries in overall productivity—something that cannot be explained solely by differences in how the French choose to measure theirs. Could the Minister outline which specific measures in yesterday’s Statement are designed to boost productivity both within the Civil Service and across the wider economy?
Lord Livermore (Lab)
I am grateful to my noble friend for highlighting a very important point. The Governor of the Bank of England, in his speech last week, highlighted the link between productivity growth and living standards, so we know how important it is to increase productivity. Public sector productivity is one of the few issues that the noble Baroness, Lady Neville-Rolfe, and I agree on: I know that she, too, is focused on increasing public sector productivity. The difficulty is that the previous Government spoke about it but never took any measures to do anything about it. Yesterday, the Chancellor announced a £3.25 billion transformation fund to increase the productivity in our public sector, so that we can spend more money on the front line and get money in public services where it is needed. In terms of the private sector, in answer to my noble friend’s question, the thing I would point to most in yesterday’s Statement, is the importance of capital spending. We know that continual cuts to capital spending, under the previous Government, seriously restricted our productivity growth. The IMF consistently said to us that lack of public sector investment was a serious barrier to growth in our economy, because it is a serious barrier to productivity. Protecting, yesterday, £100 billion of capital spending, that we put in the Budget, is a central point for getting productivity up in our economy. The other thing I would point to is skills investment; we know that we need the higher-skilled workforce in order to do the construction work we are setting out.
Lord Bilimoria (CB)
My Lords, would the Minister agree that neither the Autumn Budget nor the Spring Statement mentioned trade at all? I have been appointed as the chair of the International Chamber of Commerce—the ICC UK—and we have just unveiled that we could unlock £25 billion in trade growth, £224 billion in efficiency savings and £22 billion in SME working capital by digitising trade and cutting transaction times, from two to three months to one hour, and reducing trade transaction costs by 80%. So why do the Government not run with this, full steam? With the trade and tariff wars emanating from the United States of America in full flow, digitising trade is the way ahead; modernising trade is the way ahead.
Lord Livermore (Lab)
The noble Lord is quite right to focus on trade and the importance of trade to growth. I think he is wrong to say that neither the Budget nor the Spring Statement mentioned trade; I think both did, because clearly trade is a big part of our growth strategy. We want to increase our trade flows with our nearest neighbours and biggest trading partner, the European Union, through our reset of our relationship with the EU. The Chancellor has been to visit China, the third largest economy in the world, which I think the previous Government had not engaged with it at all since 2019. We are engaged in trade negotiations with India and the GCC, and we have just acceded to the CPTPP, so trade is absolutely at the heart of it. Of course, many of the conversations already have revolved around our trading relationship with the United States, which again is a very incredibly important trading relationship to us. On digitising and streamlining trade, he is absolutely right. The Government have an agenda in that respect, but it is very expensive and we need to move ahead when fiscal conditions allow.
Lord Fox (LD)
My Lords, when I was sponsoring the Carer’s Leave Bill through your Lordships’ House, I saw how much unpaid carers benefit our economy, providing free services that would otherwise cost the state. That is why I was disappointed that the spending review will leave many unpaid carers struggling with financial hardship and increased care-giving demands without adequate support. Does the Minister not recognise that this is a false economy? These people give to the community their services. If they do not, and they are not adequately supported, those services will end up costing us.
Lord Livermore (Lab)
I agree with much of what the noble Lord says: supporting carers is very important. He talked about the spending review leaving them unsupported. Of course, the spending review has not yet taken place; it will take place in June of this year, and I think perhaps we should wait until the spending review reports to see what it has to say.
Baroness Coffey (Con)
Some 250,000 more people will be plunged into poverty, including 50,000 children. The OBR forecasts lower employment as a direct result of Labour’s welfare announcements, with unemployment rising overall and even more applications for PIP with changes to the UC health element. We will face the worst of all worlds, with arbitrary cuts and the Government dismissively discarding the previous Government’s proposals. Over 1 million people will be impacted; they face fear every day. When will the Government communicate to those people individually how they will be impacted, so that we do not see a rise in the genuine distress that people are facing right now?
Lord Livermore (Lab)
I am grateful to the noble Baroness for her concern. She talks about employment, but, according to the OBR, it will rise by 1.2 million people over the course of the forecast, so I am not sure that what she is saying there is correct. As I have said repeatedly during this Question, the impact assessment she refers to takes no account of the £1 billion investment in helping people get back into work, so I am afraid that the impact assessment figures she is using are not correct. The OBR will look at the additional £1 billion over the course of the summer and come back with an updated impact assessment that takes it into account.
The Lord Bishop of Leicester
My Lords, I appreciate the work that the Government are doing to stimulate the economy and to get people back into work. I understand the dilemma that the Government face with the spiralling costs of welfare. But I am left to wonder: how is it that the DWP’s own impact assessment, which I understand includes the £1 billion investment that the Minister referred to, does also state that 250,000 people will be pushed into relative poverty, including 50,000 children? How can the Government of one of the richest countries in the world justify policies that push people into poverty?
Lord Livermore (Lab)
I hate to contradict the right reverend Prelate, but I am afraid that the impact assessment does not take account of the dynamic effects of the £1 billion invested from the £4.8 billion of savings—the OBR has said that very clearly. It will look at that and come back with its assessment of what the impacts will be. He asked me how I can justify reforming the system. I do not know how we can justify a system where one in eight young people is not in employment, education or training. I do not understand how we can justify a system that writes off an entire generation and leaves them consigned to a life on benefits. I do not understand how we can have a system that writes off people and does not give them the support to get them back into work. I think that is the moral thing to do.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
We will hear from my noble friend Lady Hayter and then from the noble Lord, Lord Lansley.
Baroness Hayter of Kentish Town (Lab)
I congratulate the Government on grasping the nettle of the security challenge caused by Putin to the integrity of both Ukraine and the UK, and on repairing the damage that the party opposite did to our Armed Forces and growing it now for new challenges. Does my noble friend the Minister agree that our own national security and economic stability are absolutely linked? Does he also agree that we need a strong, resilient economy independent of global uncertainty and that the welcome increase in defence expenditure will boost jobs and growth across the whole of the UK?
Lord Livermore (Lab)
I am grateful to my noble friend for the points that she makes. I of course agree very much with her. As she knows, it was announced yesterday that we are increasing the defence budget by £2.2 billion in 2025, taking additional spending on defence to over £5 billion since the Autumn Budget. She is absolutely right that defence spending is a huge contributor to the future growth of our economy. That is why in the industrial strategy we have set out eight sectors that we believe will fuel the growth of the economy in future, and defence is one of them. Shortly in the spring, we will publish an industrial strategy for defence, which will set out how we can get highly skilled jobs throughout the UK as a result of the increase in spending that we are carrying out.
Lord Lansley (Con)
When the Government came into office, the disability employment gap was 28.6%. With the £1 billion return-to-work funding that the Minister has referred to repeatedly, what is the Government’s target for reducing the disability employment gap by the end of this Parliament?
Lord Livermore (Lab)
I am afraid that I do not know what that target is. If there is one, I will find out for the noble Lord and write to him.
Lord Londesborough (CB)
I will follow up on a key point raised by the noble Baroness, Lady Neville-Rolfe. While the OBR forecast for growth has halved to just 1%, which I think many would argue still looks optimistic, it is forecasting that we will see a net gain of 400,000 people joining the workforce and becoming economically active this year, even though unemployment is forecast to rise. Can the Minister shed any light on this forecast? Specifically, how many jobs will be created in the public sector and how many in the private sector?
Lord Livermore (Lab)
I do not know whether the OBR has set that out in it forecast, but I will be happy to go away and look at that for the noble Lord, if that is helpful. Clearly, a central part of our growth strategy is investment, which creates jobs right across the country. We have already seen many jobs being created in this economy, since we came to office, as a result of various investments right across the country. As I have discussed already, the additional investment in defence spending will see very highly skilled jobs created across the country. However, I will happily find out the specific breakdown for the noble Lord.
Lord Razzall (LD)
My Lords, there are clearly a number of lessons to be learned from the Spring Statement, but I will draw two quite serious ones: an omission and a failure of communication. Turning first to the serious omission—noble Lords who know me will expect me to say this—this was an opportunity to attempt to improve our relations with the European Union, given the benefit that it would have for trade and growth, as my noble friend Lady Kramer indicated. I would welcome the Minister giving somewhat more extensive comments on that when he responds.
The second is the failure of communication. There is no doubt whatever that the problems around the Welfare Reform Act in this area have become far too high. The Economic Affairs Committee of your Lordships’ House, on which I have the honour to serve, looked at that several months ago and concluded that the structure and incentives are wrong and that something needs to be done about it. How did the Government manage to implement a potentially very successful reform in such a disastrous manner? They have all the disability charities down their throats and the noble Lord, Lord Lamont, complaining about it. How did they manage that?
Lord Livermore (Lab)
I am not sure that I liked the last part of the noble Lord’s question there. On our relationship with the EU, I am not sure that the Spring Statement is necessarily the place in which you update every single part of the Government’s policies. The Government are engaged in a reset of our relationship with the European Union. Anyone who has heard me speak in this House will know that I have very clear views on the economic impact of the previous Government’s Brexit deal; it reduced our GDP permanently by 4%. So, when we have a conversation about growth, we have to take that into account. That is exactly why the Government are engaged in resetting our relationship with the European Union. We have set out ambitious proposals for increasing our trade relationships and improving our security co-operation with the European Union. This Chancellor was the first to address European Finance Ministers since Brexit and this Prime Minister was the first to address his European colleagues since Brexit. This is a very serious set of proposals and we are taking it forward at pace. We are ambitious, even though we know that it will take time.
The welfare reforms were set out by the Secretary of State for Work and Pensions in the House of Commons last week. She said that the figures were subject to final costings by the OBR. The Chancellor came to the House yesterday and updated those costings.
Lord Kennedy of Southwark (Lab Co-op)
We will hear from the noble Lord, Lord Wigley, next and then from my noble friend Lord Davies of Brixton.
Lord Wigley (PC)
My Lords, is the Minister aware that in a Radio Wales interview this morning on yesterday’s Spring Statement, the Chancellor of the Exchequer did not seem to be aware that the First Minister of Wales, Eluned Morgan, had written to her two weeks ago about the serious financial issues facing Wales and still had not had a substantive reply? The Chancellor also did not seem to be aware that housing is a devolved matter in Wales or of how many new jobs her announcement about Newport will generate. In these circumstances, will the Government appoint a Welsh MP to a ministerial role in the Treasury explicitly to deal with matters relating to Wales?
Lord Livermore (Lab)
I am grateful to the noble Lord for his question. I am not in charge of the Chancellor’s correspondence unit, so I cannot say whether that letter has been replied to. I am also not responsible for appointing MPs to ministerial positions, so I cannot answer that point either.
What I can tell the noble Lord is that, as a result of the measures announced in the Spring Statement yesterday, £58 million of additional Barnett consequentials will be provided to the devolved Governments in 2025-26, £16 million of which will go to the Welsh Government. The UK Government have already made considerable progress on growth in Wales, including by confirming the Wrexham and Flintshire investment zone and designated tax sites in both the Celtic and Anglesey freeports, and by supporting steel communities through the Port Talbot Tata Steel transition board and providing £25 million of additional funding to the Welsh Government to keep coal tips safe.
Lord Davies of Brixton (Lab)
My noble friend will be aware that the two key figures projected in the OBR report are the future course of income in the form of taxation and expenditure. There is a high degree of uncertainty about both those projections, and yet under our fiscal rules, the Government are using the difference between those two highly uncertain figures as the control variable, causing an incredible degree of uncertainty. That is what the rules require. Does my noble friend share my surprise that using this highly uncertain figure is an appropriate basis on which to take away benefits from hundreds of thousands of people and put them into poverty?
Lord Livermore (Lab)
I hope my noble friend is not following the path of Liz Truss and the party opposite by criticising the OBR, because that is not a sustainable basis on which to build economic policy. The Chancellor has been clear that the fiscal rules are non-negotiable, and the OBR has confirmed that the Government are on track to meet them. On the wider policy of welfare reform, as I have said before, the system was unsustainable. It had the wrong incentives, and it is important that we get people back into work, because that is the best route out of poverty.
Baroness Gohir (CB)
My Lords, the welfare cuts will push women, children, the disabled and ethnic minorities further into poverty and lower their living standards. Surely, this is discriminatory and in breach of equality and human rights laws. Can the Minister tell us what consideration was given to equality laws? First, it was pensioners, now the disabled—why are this Government targeting the most vulnerable in society?
Lord Livermore (Lab)
They are not, and I am sure that the policies are fully in line with all equality laws, because that would have been signed up to before the policies were published. On what we are doing for working people, we saw yesterday that wages are now rising faster than prices, and that in this Parliament living standards will rise at twice the rate they did in the previous Parliament.
Lord Bellingham (Con)
During the Minister’s main response, he mentioned small businesses, SMEs, job creation and deregulation a number of times. Can he give the House the names of any SMEs that support the Employment Rights Bill?
Lord Livermore (Lab)
No, I do not have a full list of all SMEs in front of me, and I am not sure that that is a sensible question to ask me, if I am honest. Everyone is clear that we have a very clear small business strategy. We are helping small businesses to expand and grow, and to trade with the European Union.
Baroness Winterton of Doncaster (Lab)
My Lords, the fact is that areas such as South Yorkshire suffered from years of economic mismanagement and underinvestment by the previous Government. This Statement shows that, by stabilising the economy and investing in construction, defence and clean energy industries, the Government, with a hands-on approach, can create highly skilled, well-paid jobs and stimulate growth. But can my noble friend the Minister assure me that there will be a laser-like approach to areas such as South Yorkshire, which have been neglected for too long?
Lord Livermore (Lab)
I am grateful to my noble friend for that question and yes, I absolutely can give her that assurance. The Chancellor’s construction skills announcement yesterday—referred to by the noble Baroness, Lady Neville-Rolfe, in her opening comments –shows that, over this Parliament, the Government are funding a £625 million package to boost skills in the construction sector. This is expected to provide up to 60,000 more skilled construction workers to support the Government’s plans to deliver 1.5 million homes and progress vital infrastructure projects right across our country.
My noble friend talks about the importance of regional growth in areas such as South Yorkshire. As she knows, growth is the central mission of this Government. Through the growth mission the Government are restoring stability, increasing investment and reforming the economy in order to drive up prosperity and living standards across every single region of the UK—in our cities, our towns and our communities. So far, we have done a considerable amount of work to increase growth and living standards throughout the country, but I am very aware there is a lot more to do.
Lord Skidelsky (CB)
My Lords, do the Government believe that we have a shortage or a surplus of labour? The question arises because the OBR has calculated an output gap of 0.5%, closing by 2027, which suggests that we actually have full employment, yet that flies in the face of common sense. We have 1.5 million people, or 4%, unemployed; 8.4 million, or 20%, working part-time; 2.3 million, or 5%, on disability benefit; 3.3 million, or 8%, on incapacity benefit; and 4.2 million, or 10%, drawing sickness benefit. I am not suggesting that they are all available to work—of course that is not true—but some of them are. Can the Minister ask the OBR to make clearer the basis of its calculations of capacity and output gaps? On those depends the whole success of the Government’s economic strategy.
Lord Livermore (Lab)
I am grateful to the noble Lord for his question and his expertise on this matter. He rightly highlights one of the most important challenges facing this country, which is inactivity. We have far too many people who are economically inactive. We are the only country in which inactivity has not reduced to pre-pandemic levels at this point, and that clearly is not a sustainable situation. A lot of our policies are driven towards ensuring that people can re-enter the labour market, exactly as he says. On speaking to the OBR, I am more than happy to make that point to my colleagues.
Lord Forsyth of Drumlean (Con)
My Lords, the Minister is a man of integrity whom I hold in great regard and respect. So could he just be straight with the House and acknowledge that further cuts in public expenditure or more tax rises are absolutely inevitable, given the impact of the Budget on growth?
Lord Livermore (Lab)
I am grateful to the noble Lord for his very generous comments; I hold him in equally high regard and have enormous respect for him and his expertise in this matter. I do not think, however, that what he says is in any way inevitable. He talks about the impact of this Budget on growth. As he will know, yesterday the OBR upgraded its growth forecast from 2026 onwards for every single year of the forecast. For the first time, the OBR has recognised one of the major planks of our growth strategy—the planning and infrastructure work we are doing. It says there will be a permanent increase in growth of 0.2% by 2029, and 0.4% over the course of the decade. So the impact on growth of yesterday’s Spring Statement was positive.
The noble Lord talks about the risks. Of course there are risks. The OBR set out various scenarios for various risks, but the planning upgrade shows that there are also upside risks, as it were, in terms of growth. It shows that tax and spending is not the only way of meeting our fiscal rules; we can use growth to meet them, as yesterday’s planning announcement shows. It reduced the deficit by £3 billion in 2029 and as a result, there was growth of 0.2%. So I do not take what the noble Lord says as an absolute. Of course there are risks, and we are planning for those. We have rebuilt the headroom and eliminated the black hole in public finances, as he knows. That is an incredibly important way to set us up for the future.
Lord Lemos (Lab)
My Lords, the OBR forecasts that the Labour Government will meet two of the fiscal rules earlier and will be within touching distance of their new homes pledge. Can the Minister comment of those areas of progress on delivering growth, particularly the new homes pledge?
Lord Livermore (Lab)
I am grateful to my noble friend. Yesterday, the OBR said, as I have just outlined to the noble Lord, Lord Forsyth, that the Government’s planning reforms will increase our economic growth and, most importantly, will put us within touching distance of meeting our 1.5 million homes pledge. The OBR said that we will get to 1.3 million homes purely on the reforms we have introduced in the first nine months of this Government. Clearly, those additional homes are incredibly important. At the same time, we announced a major programme of construction skills works, so that we have the skilled workers necessary to build the homes we need.
Lord Evans of Rainow (Con)
Further to the question asked by the noble Baroness, Lady Kramer, regarding American corporations paying tax to the UK, what assessment has the Treasury made of the Republic of Ireland and its ability to attract American corporations? That is due to a combination of things—the corporation tax is half that of the UK’s, and there are lots of other tax incentives that are taken directly out of the UK economy. I appreciate that the Minister may not be able to answer this in full here, but can he write to me if there is an assessment? The Irish economy has been transformed by attracting American inward investment. Perhaps we could learn a thing or two from them.
Lord Livermore (Lab)
It is right to focus on inward investment. That is a very important aspect of our growth strategy. On corporation tax, we have set out clearly that we will cap it for the duration of this Parliament. If there is a competitive threat then we will act. That contrasts with the previous Government, under whom corporation tax rose and fell constantly, which did not give businesses the stability that they need. Inward investors tell us that planning is the number one barrier to bringing money into this country—it gets tied up in planning for years, with horror stories of planning applications lasting 13 years or more. Our planning reforms are vitally important, as they will raise skills to create that skilled workforce. The number one thing inward investors are looking for is stability. I genuinely believe that the Budget last October, in wiping the slate clean and repairing the public finances, provided an incredibly important platform of stability to allow such investment to take place.
Lord Scriven (LD)
The Minister believes in compassion and fairness. A couple in a non-disabled house receiving universal credit will be £370 a year better off with the reforms announced yesterday, but a couple on universal credit, where one is disabled and the other is a full-time carer, will lose £10,300 a year due to changes to PIP and the carer element of universal credit. How is this compassionate and fair?
Lord Livermore (Lab)
The noble Lord asks me what is compassionate and fair. I do not believe that one in eight young people not in employment, education or training is compassionate or fair. I do not believe that writing off an entire generation is compassionate or fair. I do not believe that 1,000 people coming into PIP every day is compassionate or fair. Is the noble Lord saying that we do not need any reform to our welfare system? I just do not believe that that is the case.
Lord Rosenfield (Non-Afl)
My Lords, as has been highlighted, the core fiscal judgment of the Chancellor is that the policy measures announced yesterday will maintain the fiscal headroom of £9.9 billion. If that is a balanced judgment, the risk of that headroom growing or shrinking in the near future should be broadly equal. However, in the light of the significant downside risks—tariffs, weak growth, policy risk—does the Minister agree that the risks are weighted to the downside? Although spending cuts and tax rises might not be inevitable, the implication is that it is more likely than not that further tax increases or spending cuts will be required to maintain that headroom.
Lord Livermore (Lab)
I thank the noble Lord for his question. I was lucky enough to work with him in the Treasury when he was an official there, so I know that he knows what he is talking about. Clearly, there are risks, as I set out to the noble Lord, Lord Forsyth. The job of the Government is to mitigate those risks and pursue a growth policy to ensure that we have sufficient growth and are resilient to the challenges that we are going to face. We have to get our public finances in order so that we have that resilience. We have to pursue stability, investment and reform. We are doing all those things to ensure that we have resilience. On tariffs, we are engaged in a conversation with the United States Administration, so we are doing what is necessary. We have rebuilt the headroom in full and we have, I think, provided the resilience needed to cope with an ever-changing and uncertain world.
Baroness Penn (Con)
The Minister has repeatedly cited figures on living standards. What impact will yesterday’s Statement have on the living standards of the poorest half of our population?
Lord Livermore (Lab)
The impact assessment that has been done so far does not include the £1 billion re-investment, so I am not sure that we can look at those figures right now. On real household disposable income, living standards will now grow this year at double the rate expected at the time of the Budget. The noble Baroness was a Treasury Minister when we saw the worst ever Parliament for living standards in history. Living standards will rise twice as fast in this Parliament compared with the last.
Baroness Bousted (Lab)
My Lords, the noble Baroness, Lady Neville-Rolfe, said that we all want growth. She will perhaps have seen the comments of the shadow Chancellor. He admitted that the party opposite’s approach to defining its economic policy is a
“blank sheet of paper exercise”.
There have been reports of Conservative Party researchers scouring their archives for policy inspiration. Is that not why we had no growth under the last Administration and why this Government need to correct the course, through the Autumn Budget and the Spring Statement?
Lord Livermore (Lab)
My noble friend very well draws attention to two key problems with the party opposite: the first is its record and the second is its future plans. Its record on growth is an absolute catastrophe. We saw austerity, followed by Brexit, followed by the Liz Trust mini-Budget. Growth was one of the biggest failures among a whole litany of failures of the previous Government. Looking forward, it has absolutely no plan for growth. All it can do is oppose. It has no plan of its own. It has no alternative policies. It opposes our measures to get stability, to get investment into the economy and to reform our economy. All it wants to do is criticise and talk down the economy. If the party opposite is going to criticise, it must come up with an alternative plan.
Lord Vaux of Harrowden (CB)
My Lords, the Minister has mentioned several times this £1 billion re-investment, which is not included in the OBR forecast. Can he confirm that the impacts of the Employment Rights Bill, which we are soon to discuss, are also not included in the OBR forecast, including the £5 billion cost to business that it will create? The OBR says that:
“Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material, and probably net negative, economic impacts on employment, prices, and productivity”.
Does he agree with that?
Lord Livermore (Lab)
I am grateful to the noble Lord for his question. I hate to correct him, but I did not say that the £1 billion is not included in the OBR’s forecast. I said that it is not included in the OBR’s impact assessment; that is something different. The £1 billion is included in its forecast, and he is right to say that the Employment Rights Bill is not. The OBR gives a commentary on it, which he quotes from, but the Employment Rights Bill is not included in the forecast because it is still working its way through Parliament—it has its Second Reading today. We are confident that the Bill will result in ordinary working people having more money in their pockets and the security to spend that money by not having to worry, from week to week, whether they will be in work or how many hours they will get.
Lord Purvis of Tweed (LD)
My Lords, last week, the Development Minister told this Chamber that it was government policy to return ODA to the legally required 0.7% when the fiscal circumstances allowed—meaning when the Government’s fiscal tests are met. However, yesterday, the Green Book showed a pound-for-pound cut in ODA, linked with another policy expenditure. Can the Treasury Minister be very specific that, if the Government’s fiscal tests are met within this Parliament, we will return ODA to 0.7% in this Parliament?
Lord Livermore (Lab)
I am grateful to the noble Lord. The two statements that he makes are perfectly consistent with each other. We are absolutely committed to returning ODA to 0.7% when the fiscal conditions allow and we are currently switching ODA spending into defence spending. Those two things are perfectly consistent.
Viscount Younger of Leckie (Con)
My Lords, the Government have had difficulty in scoring the £1 billion that has been mentioned and predict that there will be 16,000 fewer jobs as a result of the welfare changes. How have the Government come to this huge sum, where is it going to help and how many people are predicted to be helped? The Government must know this before the OBR revert in September. If they do not, why not?
Lord Livermore (Lab)
I am grateful to the noble Viscount; he has far greater expertise in these matters than I do. The Secretary of State, when she presented the package of reforms to Parliament, said that the costings that she was setting out were subject to final costings by the OBR. The OBR has now set out its final assessment of costings and confirmed that this welfare package will reduce welfare spending by £4.8 billion in 2029-30. Following the OBR’s final assessment of the welfare savings from the package, taking account of the £1.4 billion of investment the Government are putting towards the reforms, including the £1 billion of employment support, the net welfare savings of this investment is around £3.4 billion.
Viscount Stansgate (Lab)
Can my noble friend confirm that the Statement’s provision for capital spending is crucial if the UK is to sustain and safeguard its research and development budget and infrastructure, such as data centres, that will be vital for future growth? Does he agree that we will need a combination of our world-class universities, entrepreneurs, emerging AI companies and others not only to start up but to scale up businesses in this country? As your Lordships’ House’s Science and Technology Committee is now investigating, it is the scale-up that is the real challenge.
Lord Livermore (Lab)
My noble friend is right. The Autumn Budget increased capital investment by £100 billion over the Parliament, including investment to protect record R&D funding, which, as my noble friend said, is vital for growth. The OBR has looked at the growth impact of that investment across a decade and it has been clear that those capital investments—which, incidentally, the party opposite opposed—will lead to a significant 0.4% increase in growth over the longer term. Not cutting capital spending, which the party opposite did time and again, was one of the most significant growth measures that the Chancellor outlined in her Statement.
My noble friend also talked about start-ups and scale-ups. He knows that I agree with him 100% on that. This country is extremely good at start-up; it is much less good at scale-up. Getting the necessary capital to those scale-ups is one of the most important things that we can do.
Lord Howell of Guildford (Con)
My Lords, if the Government want to reduce the size of the Civil Service significantly, as I believe they do, will the Minister advise the Chancellor to go a long way back and look at the period 1970-82, when we succeeded in cutting the central Civil Service by a third, from about 800,000 to 500,000 people? Will he remind her that this was done not entirely by administrative efficiency, although there are always gains to be made there, but by removing whole functions, industries and services from the bureaucratic sector and putting them into the regulatory or competitive sector? Will he also remind her that it takes a very long time and very careful planning to do that?
Lord Livermore (Lab)
I am grateful to the noble Lord for his expertise and experience in this matter. I am more than happy to look back at the period that he mentioned. The world has perhaps moved on a bit since then. Most importantly, he will see in the transformation fund that the Chancellor set out yesterday the importance of AI tools, for example, to modernise the state. Clearly, these types of technology did not exist at the point he spoke about. Using modern technology to help us get productivity savings in the public sector, in the Civil Service and more widely, will be an important part of the modernisation programme.
Lord Katz (Lab)
My Lords, I thank my noble friend the Minister for the Statement. In the run-up to the Spring Statement there was a lot of guff, frankly, about a so-called return to austerity. Although there have been some difficult decisions to make, is it not the case that, far from delivering the ideological austerity that we saw under the noble Lord, Lord Cameron of Chipping Norton, the Government are delivering real-terms increases in day-to-day spending, as well as much needed capital investment?
Lord Livermore (Lab)
I am grateful to my noble friend for making that point. The Spring Statement confirms that day-to-day spending is growing in real terms in every single year of the forecast period by an average of 1.2% a year. The spending review envelope is fully protected. This means that we will spend £50 billion more on day-to-day spending in 2028-29. I remind the House that the noble Baroness opposite said in her opening remarks that she thinks spending is too high, so I am looking forward to hearing what she would like to cut from that £50 billion the next time we have a debate.
Tobacco and Vapes Bill
Thursday 27th March 2025
(1 month, 1 week ago)
Lords ChamberTobacco and Vapes Bill 2024-26 View all Tobacco and Vapes Bill 2024-26 Debates Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 26 March 2025 - large print - (26 Mar 2025)
Employment Rights Bill
Thursday 27th March 2025
(1 month, 1 week ago)
Lords ChamberEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Consideration of Bill Amendments as at 12 March 2025 - large print - (12 Mar 2025)
Baroness Jones of Whitchurch
That the Bill be now read a second time.
Welsh, Scottish and Northern Ireland legislative consent sought
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, when this Government came into office, we made a commitment to deliver the biggest upgrade to workers’ rights in a generation—a commitment I particularly support, given that I have been a proud member of UNISON for many years. We promised to introduce a Bill focused on improving workers’ rights and creating the necessary conditions for long-term economic growth within 100 days of taking office. This was delivered in October last year, fulfilling a key manifesto commitment.
This Bill addresses the pressing issues workers face today. Workers have waited too long for change due to the legislative stasis over the past decade and more. Average salaries barely increased under the previous Government and the average worker would now be over 40% better off if wages had continued to grow as they did leading up to the 2008 financial crisis. This lack of action means that there are far too many people in low-paid and insecure work. As few as one in six low-paid workers moves into and stays in better-paid work, and 2 million employees report feeling anxious about hours worked or shifts changing unexpectedly.
This is why Labour committed to making work pay as a key pillar of our election manifesto last year. In that manifesto, we were clear that our core mission as a Government would be not just economic growth but growth which raised living standards in every part of the United Kingdom so that working people have more money in their pocket. The mandate that the British people returned was clear. Further polling by Opinium and Focaldata since the election has highlighted that there is broad and strong support across the political spectrum for the policies in this Bill. British people have waited long enough. They now urgently want protections in their workplaces from day one of their job, an end to exploitative zero-hours contracts, and greater flexibility so that work works around their lives.
This legislation was developed in close collaboration with business and trade unions, and we are committed to ongoing engagement to ensure that all stakeholders, including SMEs, receive appropriate time to prepare for the ensuing changes. The improvements it offers in improving workers’ well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits worth billions of pounds per year. The Bill seeks to address the gaps and outdated provisions in current employment law and helps us turn the tide on the debilitating trend of in-work poverty.
I will now speak to the specifics of the Bill. Part 1 introduces changes to various high-profile areas of employment law. Here, we make good on our commitment to end exploitative zero-hours contracts. The Government are committed to ending one-sided flexibility, ensuring that all jobs provide a baseline of security and predictability so that workers can better plan their lives. The changes set out will require employers to offer qualifying workers guaranteed hours, reflecting the number of hours they work regularly during a reference period. This will be set out in regulations but is expected to be 12 weeks.
We will also require employers to provide in-scope workers with reasonable notice of shifts, as well payment for shifts that are cancelled, curtailed or moved at short notice. Corresponding rights are being introduced for agency workers who may also experience that one-sided flexibility. These changes could improve the security of work for around 2.4 million people, which is approximately 8% of all employed people in the UK.
On flexible working, this will be made the default, except where not reasonably feasible, to benefit workers and their families. Businesses also benefit from this change, as it will help give them access to a larger pool of candidates. However, we recognise not all workplaces can accommodate requests for flexible working. Businesses will still be able to reject unfeasible requests, provided the decision is reasonable and based on one of eight business grounds.
On statutory sick pay, the Government’s view is simple: no one should feel forced to struggle through work when they are unwell. This legislation will mean that the 1.3 million lowest-paid employees will have access to the safety net of sick pay at a rate of 80% or the flat rate, whichever is lower. We are also removing the waiting period for SSP, meaning employees will be able to access it from the first day of sickness, benefiting millions of people.
The previous Government took laudable steps to improve the law around tipping. We are building on this by strengthening the law to make it mandatory for employers to consult with workers at the place of business when developing their tipping policies.
Turning to entitlements to leave, we will improve access to paternity and unpaid parental leave by making them day-one rights and by allowing paternity and shared parental leave and pay to be taken in any order. This will give employees the peace of mind that changing jobs will not affect their access to this leave, and it will provide working parents with greater flexibility.
We will also establish a statutory entitlement for a day-one right to bereavement leave. Under this, at least 900,000 workers will benefit from bereavement leave following the death of a loved one every year. This sensitive issue is one we will consult on, with the detail to be set out in secondary legislation.
Regarding harassment in the workplace, it remains a sad reality that too many people often find their workplace unsafe. This can have a detrimental impact on people’s lives and careers, and this is particularly true for women. We are clear as a Government that we will do all we can to tackle this. We are legislating to strengthen the legal duty for employers to take all reasonable steps to stop sexual harassment before it starts, including harassment by third parties, and we will strengthen protections for whistleblowing to make it clear that, if an employee speaks up about sexual harassment, they can qualify for whistleblowing protections.
We are making changes around dismissal as well. First, we will make it unlawful to dismiss pregnant women and mothers during maternity leave and for a six-month period after their return to the workplace, although there will exceptions to this in specific circumstances. Secondly, we will create a new automatic unfair dismissal right for employees who have been unscrupulously fired and rehired, or fired and replaced, ending the unnecessary threats of these practices. Thirdly, we will ensure that all employees are better protected from unfair dismissal by making it a day-one right, benefiting nearly 9 million people.
Turning to Part 2, changes will be made to collective redundancy. These will ensure employers fulfil collective consultation obligations which will be triggered where 20 or more redundancies are proposed at one establishment, as is currently the case, or where a threshold number of employees are proposed to be made redundant across the organisation. The threshold number will be set in regulations following consultation with those with a stake in good employer-employee relations, and we will set the thresholds for this requirement at a level that balances the needs of growing business and protecting employee rights.
We are also amending notification requirements so that employers must notify the Government when they are proposing to make employees redundant across their business, and when they meet the new threshold. This will ensure employers acting in bad faith cannot circumvent their consultation obligations by proposing smaller numbers of redundancies across multiple worksites, allowing more employees to benefit from those collective consultations.
We are closing a loophole in the maritime sector to ensure seafarers have the collective redundancies protections they deserve.
We will also deliver on our commitment to reinstate and strengthen the two-tier code on workforce matters. This was first introduced by the last Labour Government and repealed by the coalition Government of 2010. By reinstating the code, we are taking a step towards ending unfair two-tiered workforces, where employees hired from the private sector to work on an outsourced contract have less favourable employment terms and conditions than those transferred from the public sector.
Our country has a national gender pay gap that stands at over 13%, so we are also taking overdue action through action plans. These will require employers to take action to improve gender equality, as well as to better support staff during the menopause. This is good for women, economic growth and our country as a whole.
Part 3 addresses pay and conditions in specific sectors. Chapter 1 will reinstate the school support staff negotiating body to give a voice to support staff, who make up roughly half of the school workforce. This body will not only negotiate pay and conditions but advise on training and career progression to properly recognise the vital role these staff undertake. While an important part of reinstating the body is to improve consistency, it does not commit us to a one-size-fits-all approach. Our intention is for support staff in all state-funded schools in England to benefit from a core pay and conditions offer, while allowing the flexibility for all schools to respond to local circumstances, above minimum agreements reached. We will be consulting on this over the summer. The body will help address the recruitment and retention challenges that state schools of all types face and drive up standards to ensure we give every child the best possible chances in life.
Chapter 2 will establish a framework for fair pay agreements in adult social care in England, and, after constructive discussions with the Scottish and Welsh Governments, this will be the case for the adult and children’s social care sectors in those nations too. This will help empower workers’ representatives and trade union officials, employers and others in partnership to negotiate pay, terms and conditions. The introduction of sectoral agreements aims to ensure that care professionals are properly recognised and rewarded for the important work they do. It will help tackle the long-standing workforce issues in this sector and improve the situation for workers and those for whom they care across Great Britain.
Chapter 3 focuses on two measures relating to seafarers. Together, these changes will benefit our seafarers, who are the present-day standard bearers of the UK’s proud maritime history, and send an important signal that we will continue to be a world leader in international maritime employment law. The first change will deliver a legally binding seafarers’ charter. This will be achieved by expanding the scope of the Seafarers’ Wages Act to provide powers to require harbour authorities to request safe working and remuneration declarations from operators in scope. It will require operators to confirm that they are meeting the requirements of these declarations, the exact details of which we will consult on in due course. Secondly, we will give effect to international maritime conventions the UK has ratified, such as the Maritime Labour Convention, which will fix a powers gap that has been left following the UK’s exit from the European Union.
Part 4 focuses on trade unions and the right to take industrial action. First, we will introduce a legal duty for employers to inform workers about their right to join a trade union. This aligns with the Government’s focus on empowering workers by ensuring they are fully informed of their rights. We will also be providing for a right of access for trade unions. This will provide a framework for the negotiation of access agreements between employers and trade unions. Once agreement is reached, trade union officials will be able to access the workplace to represent, recruit or organise members and to facilitate collective bargaining. These agreements can also cover digital forms of communication.
Changes will be made to the conditions for trade union recognition too. Where an employer refuses to recognise a trade union voluntarily, currently it can apply to the Central Arbitration Committee to obtain statutory union recognition. There are, however, unnecessary hurdles that apply to that CAC process that hinder the recognition process. The Bill will tackle these hurdles by, for example, deleting the current requirement for unions to have the support of at least 40% of the workforce in the proposed bargaining unit in a trade union recognition ballot. In future, unions will need only a simple majority of those voting, ensuring greater fairness in the process.
Other changes we are making include strengthening the existing right to reasonable paid facility time for union representatives to carry out their duties, simplifying the information required for industrial action notices, changing the law around blacklisting, ensuring those lists produced by predictive technology cannot be used to discriminate, protecting against detriment for those who take industrial action and protecting against dismissal for taking such action.
Turning to the punitive trade union legislation passed by recent Governments, we will be making repeals to the Trade Union Act 2016 to effectively return the law to its pre-2016 position. There are three exceptions to this. First, we will retain the industrial action ballot mandate expiration date but extend it to 12 months. Secondly, we will shorten the notice period for industrial action from 14 days to 10 days, rather than the seven days it was before 2016. Thirdly, we will retain the independence of the Certification Officer from political control.
We are also repealing the Strikes (Minimum Service Levels) Act, which has failed to prevent a single day of industrial action. The framework set by the Bill will foster a new partnership of co-operation between trade unions, employers and the Government.
The current system of state enforcement is fragmented and inefficient, which is complicated for workers and employers. Part 5 focuses on the enforcement of labour market legislation and lays the groundwork for the establishment of the fair work agency. This agency will deliver upgrades to enforcement of workers’ rights. It will bring together existing state enforcement functions, including the regulation of employment agencies, national minimum wage enforcement, gangmaster licensing, action against serious labour exploitation and the unpaid employment tribunal award penalty scheme. This will simplify the overall enforcement process and improve access to rights for workers, while levelling the playing field for the vast majority of businesses that already operate in good faith.
We also expect the agency to be able to make more effective and efficient use of the resources currently used by enforcement bodies. Creating this agency is more than just shuffling deckchairs. It will have a wider remit than just the existing enforcement bodies, such as enforcing holiday pay for workers. These reforms will help to ensure that non-compliance does not pay. That is fair for workers and fair for businesses, too.
Finally, Part 6 contains provision to increase employment tribunal time limits for making claims from three to six months. This will benefit both employees and employers by providing more time for disputes to be resolved internally, potentially reducing pressure on the employment tribunal system. The additional time will support employees to consider the merits of bringing a case to the employment tribunal, which will help improve the quality of claims entering the system.
The Bill is a significant upgrade to legislation and I look forward to the forthcoming debate, including the maiden speeches from my noble friends Lady Gray and Lady Berger, and the noble Baroness, Lady Cash, and the noble Lord, Lord Young of Acton.
In the context of our ambitions to make work pay, I hope noble Lords will agree that this Government are delivering on improving workers’ rights. I emphasise that this legislation seeks to benefit employers and the economy by levelling the playing field between good employers who already go beyond measures in the Bill and the less scrupulous ones. These benefits are recognised by many of the businesses we have engaged with throughout the Bill’s development and passage to date, including Centrica, the Co-op, Richer Sounds and Thomas Kneale & Co.
In the words of Nick Cooper, managing director of the Manchester-based SME Adept Corporate Services,
“fair treatment and job security aren’t luxuries—they’re the foundation of a high-performing workforce”.
When less scrupulous businesses are challenged, it is those that are already doing right by their workers—as the vast majority already do—that benefit.
I urge the House to support the Bill and the commitment it represents to improving the lives of millions of people and growing the economy. I beg to move.
Lord Hunt of Wirral (Con)
My Lords, I begin by drawing attention to my interests as detailed in the register, in particular as a practising solicitor and partner at DAC Beachcroft.
I thank the Minister for opening the debate and we look forward to the maiden speeches of my noble friends Lady Cash and Lord Young of Acton, and the noble Baronesses, Lady Berger and Lady Gray of Tottenham.
I have always believed fervently in workers’ rights and trade unions. Indeed, as a young solicitor, I often acted for the Transport and General Workers’ Union in a wide variety of cases. By the late 1970s, however, by which time I was a Member of Parliament, it had become abundantly clear that something had gone seriously awry with the trade union movement. The unions seemed to be abusing their powers, pursuing not only the legitimate interests of their members but an overtly political agenda.
I remember being in the House of Commons when, in the final year of the Callaghan Government, the unions all but brought the country to its knees. A new settlement was needed. Successive Conservative Governments, between 1979 and 1997, gradually changed the nature of the social contract between employers, employees and the unions. Days lost to strikes tumbled from tens of millions a year to a tiny fraction of what they had been. Thanks to the more flexible labour market we had created, renewed economic growth brought a dividend of rising employment and falling unemployment far more quickly than anyone expected. That was not the Wild West. Indeed, workers’ rights and protections were often extended, not diminished.
The last Labour Government, under both Tony Blair and Gordon Brown, broadly accepted that renewed social contract and embraced the flexible labour market that serves both employers and employees so well. So, what has changed? Furthermore, what has changed during the passage of the Bill? It has had a brief lifetime, yet we have already had 160 government amendments in Committee in another place, including 11 new clauses and two new schedules. This farrago was followed by a further 40 new clauses and five new schedules on Report.
It was an extraordinary decision to run the progress of the Bill in parallel with a series of directly connected public consultations. As they showered us with amendments of their own, Ministers used their majority in the other place to defeat some very sensible ones from my own party and from the Liberal Democrats. More amendments are now promised—or should we say threatened? No one can convince me that there has been fair, effective and comprehensive parliamentary scrutiny of this legislation, which is scandalous when we think of the profound effects it is bound to have on British business and how our businesses operate.
To date, 11 government Bills, including this one, have included Henry VIII powers. This Bill contains 11 such powers. So great is the uncertainty this creates that a meaningful Second Reading debate is almost impossible. What, in fact, are the principles of this legislation? Whatever they are today, might they change significantly with further amendments, or when the Henry VIII powers are triggered? Ministers are, in effect, asking Parliament today to empower them to do whatever they decide to do, whenever they decide to do it.
Apparently, in total, the Bill contains 173 delegated powers. I was musing that, if Henry VIII were alive today, he might be tempted to use this kind of skeleton legislation to legalise uxoricide—but whatever. Why are Ministers so disdainful towards the concerns expressed by the Attorney-General in his Bingham lecture on the rule of law last October, when he warned that
“excessive reliance on delegated powers, Henry VIII clauses, or skeleton legislation, upsets the proper balance between Parliament and the executive”?
He recommended
“a much sharper focus on whether taking delegated powers is justified in a given case, and more careful consideration of appropriate safeguards”.
Perhaps the most chilling warning about the specific inadequacies of the Bill came from the Regulatory Policy Committee, which identified eight of the Government’s individual impact assessments as being not fit for purpose, six of which were in the highest impact measure category. Surely it is the principal responsibility of Ministers fully to think through the potential impact of legislation before unleashing it on the world. This Government have failed in that basic task.
Meanwhile, the Recruitment and Employment Confederation’s Voice of the Worker campaign vividly reminds us that temporary work is often a choice made by workers, not an enforced compromise. Its survey of temporary agency workers found that 79% of respondents appreciated the flexibility that temporary work provides, while more than two-thirds believe it affords them a better work-life balance. These values—flexibility and balance—should be celebrated and supported by us all, not jeopardised by half-baked laws. Workers should be empowered to engage in the workforce in ways that best suit their personal circumstances. We must ensure that legislation does not restrict their ability to do so.
Although the intention may be to increase security, these measures risk overregulating agency workers, who are already well provided for under the Agency Workers Regulations. Under current law, these workers are made aware of permanent vacancies and enjoy protections that balance flexibility with job security. Additional regulations could well tip this balance too far, ultimately harming the very workers who the Bill seeks to protect. I also wonder whether Ministers have fully considered the financial, economic and social impact that the measure would have on public bodies, especially in the National Health Service.
Let us consider the proposal around statutory sick pay eligibility. Reducing the eligibility criteria and requirement for SSP to just one day would increase financial pressure on employers, particularly those who employ workers on temporary contracts or in sectors that rely on flexibility. Employers now face the prospect of greater tribunal risk when managing employees’ sickness leave, which could act as a further deterrent to hiring.
Small and medium-sized enterprises are so often the driving force in our economy, delivering growth in production and jobs. They need our encouragement and support, not new burdens. They will inevitably be more hesitant about taking on new employees, if they fear facing immediate legal risks from day one. I implore Ministers always to look at proposals from the point of view of an employer making a marginal decision on whether to take on that extra employee. The proposed new union recognition rules would also hit SMEs disproportionately and, as I will argue on these Benches, unnecessarily.
I turn, as the noble Baroness did, to strikes and ballot thresholds. Under current law, unions must provide 14 days’ notice before a strike, allowing employers sufficient time to prepare contingencies and manage the potential disruption. The proposed change to reduce this notice period to just seven days raises significant concerns. Will this help to generate the much desired and much needed economic growth about which we hear—and have heard today—so much?
In response to the latest ONS labour market data, the Institute of Directors shared some deeply troubling data of its own. That data showed that 47% of business leaders facing higher national insurance bills plan to reduce employment as a result. Business hiring intentions over the next year remain around lows last seen at the height of the Covid-19 pandemic. Even the Government’s own rather feeble impact assessment concedes that this Bill will impose a £5,000 million cost on businesses. What did they offer in return? Unfounded, optimistic speculation that this legislation could lead to growth—with no evidence and no guarantee. Their own declared primary mission is economic growth and yet they put forward a policy that actively undermines it.
The Bill is not only anti-business but, in my view, anti-worker. If it passes in anything like its current form, it would be more appropriate to call it an unemployment Bill. The measures in the Bill will make it harder for existing businesses to thrive and near-impossible for new businesses to emerge. The result will be a stagnating economy, diminished opportunities and worse outcomes for workers right across the country. The only growth that this Bill would deliver would be growth in industrial strife, growth in administrative costs for business, growth in uncertainty, and, ultimately, growth in unemployment. Unless it can be seriously improved, on these Benches we will oppose this Bill all the way, in the best interests of the working people of this country.
Lord Palmer of Childs Hill (LD)
My Lords, it is a privilege to contribute to this important Second Reading today. Unlike the noble Lord, Lord Hunt, I acknowledge that this Bill contains several provisions that, if implemented properly, could have a significant positive impact on many individuals. However, as we deliberate, I am mindful that the Bill presents both promise and areas of concern. In particular, I shall focus my remarks on the challenges faced by carers, an often-overlooked but integral part of our society. As the Bill progresses, their needs must be not only considered but prioritised. I shall rely on my noble friend Lord Fox to deal with many aspects of the Bill other than the bits that I am stressing.
First, I turn to paid carer’s leave. While the Government have committed to reviewing the Carer’s Leave Act 2023, I question why we delay a measure that is both necessary and beneficial. The Government recognise that carers’ inability to work costs the economy £37 billion annually. In light of this, paid carer’s leave should be a priority, not an afterthought. This is not an expensive proposal. Carers UK estimates that introducing paid carer’s leave would cost between £5.5 million and £32 million per year, depending on the level of compensation. In return, more than 2 million working carers would benefit, businesses would save billions through improved staff retention and workforce participation would increase. Given these clear advantages, why have the Government excluded this measure? During the passage of what became the Carer’s Leave Act, Members of the now-Government challenged this omission. It is striking that they have not prioritised it themselves. Will the Government commit to including paid carer’s leave in this Bill? To neglect this opportunity would fail both carers and the economy.
Beyond paid leave, employers should be required to consider employees with caring responsibilities in their equality action plans, alongside commitments to closing the gender pay gap and supporting employees experiencing menopause. If we are serious about workplace equality, we must acknowledge the specific challenges that carers face. Furthermore, the Government must prevent discrimination against carers. One solution would be adding caring as a protected characteristic under the Equality Act 2010. Many carers face workplace marginalisation and are penalised for their responsibilities. Will the Government explore this reform? Every year, 200,000 people leave the workforce to take on caring responsibilities, costing the economy £8 billion annually. By failing to support carers properly, we harm their well-being and weaken economic potential. Paid carer’s leave would help carers stay in work, strengthening both the labour market and the economy.
Another issue is the recognition of kinship carers. I recently heard of a couple caring for their grandchildren out of love and duty, yet they receive none of the employment rights or support given to foster carers. Is this not an injustice? The Government must consider extending employment rights to kinship carers.
Additionally, I support the Bill’s provisions on third-party harassment in the workplace. I have heard from young women in retail and hospitality who feel sick with anxiety knowing that they will face harassment during their shifts. Their employers must have a duty to protect them. While the Bill takes steps in the right direction—I acknowledge that—stronger action is needed to prevent non-disclosure agreements silencing victims.
I now turn to probationary periods. A balanced approach is needed to protect both employees and employers from unnecessary tribunal costs. I note what the Minister said on statutory sick pay, but will the Government consider a standardised probationary period of, say, three to nine months to provide greater certainty?
We must ask whether this Bill will genuinely drive economic growth. We can judge that the noble Lord, Lord Hunt, thinks that it will not, but I would say there is a possibility. Economic growth is one the Government’s cornerstone ambitions. Business leaders and HR professionals I have consulted welcome the Bill’s aims, but question whether it strikes the right balance between employee rights and employer obligations. It must not stifle economic activity, but nor should it miss opportunities for meaningful reform.
The noble Lord, Lord Hunt, spoke about the number of amendments in the other place, and I will not repeat those remarks, but I think there were 200 government amendments on Report, which shows a certain amount of indecision, if nothing else.
I agree that this Bill is driven by noble intentions, but it risks becoming a tangled quagmire of complex employment bureaucracy, with uncertainty over whether it will genuinely recalibrate the balance between employers and employees in a way that promotes fair and productive employment. A Member in the other place—I like this—likened it to Snow White’s apple: appealing in appearance but ultimately sending the economy into a slumber. Let us ensure that this Bill is not a missed opportunity but a transformative step forward for carers, families and our nation’s economic future.
Lord Londesborough (CB)
My Lords, I have just four minutes, so I will not beat about the bush. While I understand the need to bear down on unscrupulous employment practices, this Bill is fundamentally misguided, out of date and out of touch and will wreck the spirit of enterprise. It will damage jobs, productivity and wages across both the public and private sectors. That is not just my view, but the OBR’s. The impact assessment, which claims that the Bill will have a net positive impact on growth, is guilty of fantasy economics, suggesting that its authors have little feel for, or experience of, creating jobs, developing careers or even meeting payroll.
Perhaps most troubling is that all the clauses in this 300-page Bill, and its 200 pages of Explanatory Notes, apply to all employers without exception, whether you are a UK multinational with a workforce of 100,000, a start-up with 10 staff or a family business with two employees. It is one size fits all, whether we are talking about day one rights, probationary periods, guaranteed hours or flexible working. This Bill shows scant regard for building a competitive economy with modem working practices. It discriminates against SMEs—our country’s engine of growth—and offers nothing for freelancers and the self-employed, for which perhaps we should be grateful.
My views are shaped by my lived experience over 30 years as an entrepreneur and employer, from a start-up with two employees around the kitchen table to building a workforce that grew to 10 staff, then to 50, 100 and eventually to 300 employees, plus 100 freelancers. I learned what it takes to recruit and train people effectively, to incentivise and reward them and to develop their careers from probation to permanent, from junior to management and from internship to becoming an equity partner. I took risks and made many mistakes along the way, from hiring the wrong people, holding on to staff for too long, overpaying, underpaying, growing too quickly and having to downsize in the rough and tumble of the free market. But here is the thing: I never once ended up in an employment tribunal and my experiences with staff and freelancers were overwhelmingly positive, driven by common mutual interest and without the need to resort to onerous employment manuals, interfering HR departments or, indeed, employment lawyers.
This Bill suffers from overreach and will kill entrepreneurial spirit, coming as it does on the back of the misguided NICs Bill, on which I have fought hard to protect our smaller businesses—and I will go into battle again on their behalf in Committee on this Bill, mindful that the Federation of Small Businesses reports that two-thirds of its members say that the proposals in the Bill will make them curb hiring. There are two professions that will benefit from this Bill—HR practitioners and employment lawyers—but, in terms of productivity, this Bill is terribly timed and represents another giant vampire squid sucking the life out of our economy.
The Lord Bishop of Newcastle
My Lords, I am glad to speak in this Second Reading. I look forward to the maiden speeches and welcome new Members to your Lordships’ House.
Some years ago, I undertook research on the apostle Paul and work. Paul was never one to shy away from hard work and spoke of the personal cost of his tent making business, describing it as wearisome and fraught with the challenges of local politics. Two thousand years later, we continue to live amid diverse uncertainties.
The desire to make work pay and improve workers’ rights, as proposed by this Bill, must pay attention to the obvious: people who work are human beings. A strong economy needs resilient workers. As we scrutinise this legislation, we do so affirming that workers matter. If we get this right, we can move closer to a society in which people are viewed with inherent value and dignity. When people are valued and supported in what they do, they contribute to greater economic flourishing.
Noble Lords will know that in-work poverty has risen significantly in recent years, particularly in the north-east region, with those in less secure work much more likely to be experiencing poverty than those whose contracts offer basic protections and guaranteed hours. The disproportionately negative impact on the lives of children is well documented, with the North East Child Poverty Commission reporting heightened concern following yesterday’s Spring Statement. With the Bill before us today, legislating against exploitative contracts is a step forward in ensuring that every person can access good work, plan ahead and provide for themselves and their families. But there may be unforeseen consequences.
I welcome reforms to parental leave and strengthened flexible working. I would like to see a statutory right to paid kinship care leave on a par with adoption leave—a point made just now by my noble friend Lord Palmer. A right to paid leave would enable kinship carers to take time to make necessary adjustments and continue in paid employment. This is a matter I have already raised with the Minister, and I was very grateful for her time in listening. I raise this matter again here and look forward to further conversations.
At a time when SMEs face additional pressures, a challenging economic environment and additional costs through rising national insurance contributions for employers, I urge the Government to continue listening to the SME sector, much of which is part of the social enterprise economy, adding to community and individual resilience. There is deep concern among SMEs about the potential impact of union access to the cohesive nature of employer relations, points made noble Lords already.
In conclusion, while I welcome this Bill in extending basic rights, protections and entitlements to workers, concerns remain as to how these individual protections will truly enable collective flourishing and a stronger and resilient society for the confident future desired by everyone.
Baroness Noakes (Con)
My Lords, this is a very bad Bill for many reasons, and I will have to ration myself to just two areas.
First, the Bill is unequivocally bad for businesses and therefore bad for growth. It is not pro-growth to impose £5 billion-worth of costs on businesses. It would be pretty bad if this Bill existed in isolation, but it is not in isolation; it is part of a triple whammy which involves the jobs tax, which will add over £20 billion to private sector wage bills, and the national minimum wage increases, which will add many more billions.
The Government seem to have forgotten that they need private sector businesses to grow if they are to achieve their overall growth objective. The economic impact analysis which accompanied the Bill claims the possibility of a small positive impact on growth, but the probability is a big negative impact, as suggested by the OBR in its spring forecast yesterday. For that reason alone, the Government should have killed this Bill at birth. The country cannot afford it.
In response to the triple whammy, most businesses are expecting to raise prices and reduce pay increases and employee headcount. That will lead to inflation, lower employment, reduced profits and reduced taxes. It will create an environment in which businesses will not invest, thus hobbling another leg of the growth ambition. A key plank of the UK’s ability to attract inward investment has been the flexibility of our labour markets. This Bill destroys that competitive advantage. It is an economic disaster zone.
SMEs are particularly hard hit by this Bill. The economic impact assessment is clear about this. Of course, anything which is bad for SMEs is also bad for growth, but policies which bear down excessively on SMEs are particularly destructive to the foundations of the way we do business in this country. At the last count, there were more than 5.2 million micro-businesses with fewer than 10 employees and a further 220,000 small businesses with 10 to 49 employees. Between them, they have nearly 13 million employees. Why would the Government want to put this huge group of employees at risk? I will be looking at amendments to this Bill to protect SMEs from its excessive burdens, and I look forward to working with the noble Lord, Lord Londesborough, on that.
My second area of concern is that the Bill is bad for some significant employee groups. For example, people with a history of health-related absence and young people with no track record will be less attractive as employees because of day-one rights and higher sick pay. There are many people who value zero-hours contracts, but they may be deprived of that opportunity because employers will be trying to avoid the risks of getting involved in conferring rights to guaranteed hours. This Bill will make life worse for many who want to work.
There are many aspects of the Bill which will need to be explored in detail. Your Lordships’ House has a responsibility to ensure that the Bill, as a minimum, does no harm. That will be a difficult task because it has deep flaws, but we must try.
Lord de Clifford (CB)
My Lords, I wish luck to the new Peers with their maiden speeches, and I look forward to listening.
Employment legislation constantly needs to be updated to reflect the changing needs of our society. Therefore, a review is necessary from time to time, but does this Bill reflect a balanced review for both employees and employers? I ask the House to note my registered interest as a part-owner of a small to medium-sized company employing 130 people.
As a relatively small employer, I want to focus on Part 1 of the Bill. The changes to the right not to be unfairly dismissed and the removal of the qualifying period will generate uncertainty among employers, especially SME employers, who do not have significant HR resources. The change is not a bad one and it will focus employers on getting systems in place to ensure that the individuals they employ can fulfil the roles with the skills and knowledge required and have the right attitude for the business and the job. Therefore, I ask the Minister to clarify the probation period, as already requested by the noble Lord, Lord Palmer. This is essential to allow employers the flexibility at the beginning of a contract to see if the employee meets the needs of the job, and to terminate the contract in a responsible way if they do not. Meeting this requirement to dismiss someone in a way that is not unfair is time-consuming, costly and stressful for both employees and employers. To support this change, will the Government review the provision of occupational health services to the SME sector, which is so commonly needed when relations between employees and employers break down?
The second area I wish to address, and will look to research further before Committee, is dismissal for failing to agree to a variation of contract, more commonly known as “fire and rehire”. Will the Minister say why the change to the current legislation is needed, as it appears to be working? Having recently been through the process in our business of requesting variations to individual employees’ contracts to improve efficiency and services to our clients, I know that the current rules ensured that we treated them fairly and with respect and allowed us the flexibility to change things. These proposed changes will make it extremely difficult for employers to make small, reasonable changes to contracts, as the new arrangement is so unclear and demanding on businesses.
My third concern relates to sexual harassment and the question of “reasonable steps”. The change to “all reasonable steps” just creates fear and uncertainty for employers, who want to protect their employees but currently have no clear guidance. I therefore ask the Minister to provide a clearer explanation of what is meant by “all reasonable steps”.
Baroness Berger (Lab) (Maiden Speech)
My Lords, it is an honour to rise to contribute to this debate and to join this House. I begin by extending my sincere thanks to all the people in this place who have been extraordinarily generous in their welcome. Black Rod, the doorkeepers, the special advisers, the catering staff, the mailroom team, the clerks, the reception attendants, and the tech and security specialists: everyone has been so accommodating and helpful as I walk around in circles trying to navigate this side of the estate, or using my phone instead of my pass to “Apple Pay” my vote. I give special thanks to Mrs Mimi Tsehay Gebretsadek, who has been a warm, smiling face every time I have gone for a cup of tea in Milbank House.
I am particularly grateful to those who introduced me. I am in awe of my noble friend Lady Smith of Basildon and her leadership in this House; I look forward to learning much from my noble friend over the coming months and years. I also thank my noble friend Lord Mitchell, who has been a dear friend and mentor to me for two decades. I thank the Chief Whip, my noble friend Lord Kennedy of Southwark, for his extensive counsel and guidance; and to Members from all sides of this House, thank you for your kindness. I look forward to working with you on mutual areas of interest and expertise.
I am speaking in this debate because this vital new legislation speaks so much to what is important in our great land, my motivations for getting into politics, and the experience I have amassed. I grew up in Wembley Park and spent my weekends studying at Brent Town Hall Library. I loved the diversity of my neighbourhood. My dad is from Northampton, where all his family worked on the market, across the county. I started my working life helping my grandfather on his market stall, selling ladies’ fashions, and in London in my parents’ interior furnishing shop. I am certain that I was never paid the minimum wage in the family businesses, but what I did gain was an opportunity to listen and connect to so many different people.
It was at Birmingham University where I engaged in vociferous debate with my Labour economics tutor, Professor Siebert, as I advocated for workers’ rights—much to the amusement of fellow students—and I immersed myself in student politics. I joined Labour because I passionately shared the party’s values and goals of striving for equality, social justice and a world free of discrimination. Labour also spoke to my core Jewish values of tikkun olam—how we adequately take action to improve and repair our communities. I went on to start my working life in roles for the Commission for Racial Equality, various central government departments and the NHS Federation.
I am inspired and proud of my family’s political heritage. My great-great-uncle, Lord Shinwell, known as Manny, was a national trade union official before he was first elected to the other place in 1922. He was later elevated to your Lordships’ House in 1970. Lord Shinwell would have warmly welcomed the Bill that we are scrutinising today, which will bring the UK’s outdated employment laws into the 21st century, turning the page for our economy, which for far too long has been blighted by insecurity, poor productivity and low pay.
As a solo parent to Amélie, aged 8, and Zion, aged 6, and in my role as chair of the Maternal Mental Health Alliance, I applaud this Government’s commitment to bringing forward practical measures to value and support working parents. I am delighted that this Bill will establish day-one rights for parental and paternity leave.
I also strongly support the measures to ban exploitative zero-hours contracts. It was an honour and privilege to represent the people of Liverpool Wavertree and, in my nine and a half years as their Member of Parliament, I had many constituents come to my advice surgery who were adversely affected by these awful contracts. They could not plan their lives, their childcare or their finances. These damaging practices impacted on people young and old alike, and any mental health challenges were exacerbated by this precarious work. I can still hear my former constituent’s words ringing in my head: “I can’t lay out to buy a belt because I don’t know if I will be earning money next week, or the week after, to cover my bills and basic food”. The provisions in this Bill are foundational to the dignity and well-being of our workforce, and I know that this legislation will make a difference to thousands of people across the UK.
I hope to make a difference in this place, but will endeavour to do it slightly differently from my great-great-uncle. Lord Shinwell resigned the Labour Whip in 1982 in protest at left-wing militancy and sat as an independent until he passed away just before my fifth birthday. Although I never wanted to leave Labour during the dark years when antisemitism was rife in the party, I am so glad to have been able to return to my political home under the leadership of Sir Keir Starmer. Lord Shinwell famously had a piece of the ceiling of this place fall on his head. During my time here, I very much hope to protect my skull. Of course, Lord Shinwell was also the last person to throw a punch in the other Chamber when a Member told him to “Go back to Poland”. Although I will never shy away from necessary challenge, I will always aim to use the power of my words, rather than my fists.
Manny Shinwell, born into a world of tumult and revolution, once said that he chose “Parliament over the barricades”. Today, in a world today of increasing violence and populism, where dark elements threaten, it is here, in our Parliament, that the painstaking work of democracy is done. As part of that work, I will dedicate myself to serving in this House, and the people beyond it, with humility, diligence and all the passion and insight that I can offer.
Baroness Hazarika (Lab)
My Lords, it is a great honour to be the first to congratulate my noble friend Lady Berger on that truly wonderful maiden speech. There is no doubt that her great-uncle would be beaming with pride. He sounds like he was quite a character—he would be good at our group meetings, I think. It does not feel like that much has changed when it comes to maintenance of the building either. I look forward to the many other maiden speeches here today.
I first came to know my noble friend Lady Berger back in 2010, when she was first elected for Wavertree. I greatly admired her professionalism and passion for raising the issue of mental health; back then, it was not a fashionable topic to discuss. We became very good, indeed dear, friends and have been through so much together, from musical festivals to hen dos, to riding the infamous pink bus back in 2015—listen, I stand by her. We have very much been through the good, the bad and the ugly together, but none more ugly than the shameful years when she suffered untold misery, abuse and threats simply for being a young, Jewish, female, Labour MP. It is a time that really shamed our party and, on behalf of us all, I am deeply sorry for what she had to endure. Her dignity, strength, courage and grace during that time was inspiring and incredible. She did not hide; she stood up to the bullies and the antisemites and made the Labour Party and the wider world take action.
We on these Benches are so lucky to have my noble friend, as are we all in this House. I know that she will make a brilliant, principled and fearless contribution. On a selfish note, I look forward to spending the next 30 years hanging out—probably 40 years, in her case. We are also living proof that Muslims and Jews can be very good friends, which I feel is quite timely.
I now turn to the topic of our debate. There are many speakers and experts, especially from the trade union movement, who will make more detailed points, but I want to make a few broad arguments. We have seen and heard some predictably negative discourse about this Bill and its aims. I do not understand people who say that it is all too much and that giving workers more rights will somehow mean that the pillars of the temple will fall down. I remind my colleagues that the same was said about the introduction of the national minimum wage and giving parents more rights.
At the same time, we are having a discussion about why it is that people are reluctant to go back to work and why that is a terrible thing for society—which, by the way, I agree with. Why can we not join up the dots? If you want to encourage as many people as possible back to work and into the workplace, you have to ensure that work pays and that they have decent conditions. We were all appalled when P&O Ferries sacked 800 workers in the most dehumanising and appalling way. We have all been shocked and disgusted at how those women at Harrods were treated and subjected to sexual abuse—and I know that my noble friend Lady Kennedy will raise the issue of NDAs that silence women. As we have heard, we all know the difficulties of zero-hours contracts when someone is trying to plan their life and their family life.
We all need to recognise that having a workforce that is happy and treated well means having a workforce that will be motivated and productive. We need to stop demonising the work that trade unions do and pitting them against business. We should regard decent employment rights as part of our growth and industrial strategy. I consider myself very lucky to have known the late great trade unionist and MP, Jack Dromey, who taught me so much about industrial relations. He always made the case that good bosses and good business leaders understood the need for smart partnerships with workers and trade unions, particularly in big, heavy-duty sectors, such as car manufacturing.
We are all very fortunate to have made it to this place. Many of us have lawyers or headhunters—or even agents, as in my case—who can help us ensure that we have good terms and conditions. Why should other people not have some of that? If we want growth, decent standards are not a luxury but an imperative, and we should support trade unions to achieve them. As Jack Dromey said, a good trade union is like having a strong friend at work. That is something we should all strive for in a civilised, modern society.
Baroness Foster of Aghadrumsee (Non-Afl)
My Lords, I congratulate the noble Baroness, Lady Berger, on her excellent maiden speech, and I wish her well. I very much look forward to the remaining maiden speeches to come.
Ever since this Government were elected in July last year, we have been told that growth is their key marker for success. The Bill that we are debating today seems completely counterintuitive to that stated desire. Employees, of course, need to have rights in the workplace, and these have developed in a sensible and proportionate manner over the years, whether that be in connection with pay or conditions of employment. However, this Bill completely unsettles the balance required for competitiveness, growth and productivity on the one side and the rights of employees on the other. That can lead only to discontent and a lack of investment, and, inevitably, to a fall in growth and productivity, not an increase.
This Bill comes after hits have already been made to businesses across the country. The recent increase in the minimum wage is, on the face of it, a good thing. However, when taken with an increase in national insurance contributions at the same time, it is not hard to understand why many small firms are struggling.
Take one sector—the retail sector. Retail NI conducted a survey, published in February of this year, which established that 86% of those surveyed expect to cancel expansion plans following the increase in employer NI contributions and the rise in the minimum wage. It found that 74% of those surveyed were planning to reduce the number of employees and other staff following those announcements. These are significant figures that cannot be ignored or brushed aside.
The Government are certainly listening to the voices of trade unions, but are they balancing that in a responsible way by listening to the voice of job creators, both big and small? Speaking of the unions, small business owners are very concerned about how the Bill allows access by unions to workplaces, almost regardless of their size. As one small business in England said to me: “Typically, small businesses are run in the spirit of good teamwork, care for staff, with a drive and vision for the business to succeed. In a difficult trading environment small businesses could easily be overwhelmed by the legislative burden imposed by this Bill including the need to proactively engage with unions to comply with the law”. I hope that His Majesty’s Government will clarify that they are not intending to burden businesses with fewer than 250 staff with these proposals.
In the time left, I want to concentrate on one aspect of the Bill which I think is highly detrimental to growth and will need to be revisited by the Government: namely, the ability to gain full employment rights on day one of employment. That is definitely going to slow down business expansion and growing the workforce. I argue that it will impact on investment in research and development and innovation, as there is little incentive to innovate when the costs of growing the workforce are prohibitive. In a survey carried out nationally by the FSB on this, the largest issue was the worry of unfairly dismissed employees from day one: 75% of small business employers listed it as the number one concern, followed quickly by the removal of the current three-day waiting period, so that statutory sick pay will be payable at 74% from the first day of absence.
I quickly say that, in Northern Ireland, we have the added problem of a poor economic inactivity rate, currently at 26.6% of the workforce. If we cut the opportunities for more jobs, how can we deal with that issue, never mind the issue of the unemployed? The Government alone do not grow the economy, but they should facilitate the private sector to grow. To be competitive at home and internationally, we must give businesses the tools and the environment to grow, and I do not see that presently in this Bill. I look forward to the detailed examination of the Bill, where I hope we can deal with some of the issues raised.
Baroness Gray of Tottenham (Lab) (Maiden Speech)
My Lords, it is a huge privilege to stand here today. I start by thanking noble Lords on all Benches for the warmth of their welcome. I thank my supporters, the noble Lord, Lord O’Donnell, and the noble and learned Baroness, Lady Harman, for their personal encouragement, and of course my noble friends the Leader of the House and the Chief Whip. I also thank all the House staff, including the doorkeepers, digital services, catering, post and cleaning staff, for their patience and for so ably showing me the ropes these past few weeks.
My job today is to introduce myself and my background, and, I hope, to make a small contribution to today’s debate. My mum and dad came to London from Ireland in the 1950s, moving into a rented flat in Tottenham, the place I came to know as home. I grew up surrounded by aunts, uncles and cousins, who all played an important part in my life. My parents were proud to be Irish, and this was not the easiest of times to be Irish. They also embraced life in Britain, working hard to provide for their family and creating a home. My dad always had a minimum of two jobs and my brother and I were instilled with a strong work ethic, built on values of fairness, community and respect for others. I left school before completing my A-levels, on the early and unexpected death of my dad. My brother and I had to support our mum, who struggled with her mental health, before taking her own life some years later. The death of our parents had the biggest impact on our lives.
I joined the Civil Service at the most junior grade, which is why I chose today’s debate, and I commend the work of my good friend the Deputy Prime Minister and her team for the work and consultation they put into this legislation. On joining the Civil Service, I was not on a mission to work my way to the top. This was probably best illustrated when I took a career break which has been much commented upon. Put it this way: although the Civil Service encourages its future leaders to get outside experience, running a pub in Newry, County Down, in the late 1980s, was not on their list for outside placements. But a pub is a great place to get to understand communities and their needs, worries and aspirations. Throughout my career, I have learned, to take the words of the late Jo Cox, that we have more in common than that which divides us.
On returning to the Civil Service, I did indeed start working my way up. Some of the issues I worked on included creating the propriety and ethics function, which included conducting one or two high-profile investigations; establishing public inquiries into Grenfell Tower and infected blood, on which I wish to pay huge credit to the former Prime Minister the noble Baroness, Lady May of Maidenhead, for her steadfast commitment to ensuring the truth was told; initiating the scheme to bring prison leavers into the Civil Service, where my path first crossed that of the trailblazing noble Lord, my noble friend Lord Timpson, who recognised the importance of giving people a second chance; the boardroom apprentice scheme to encourage people from all backgrounds to serve on the boards of public bodies, an important part of the reform agenda which goes to the heart of the opportunities mission. Here I wish to acknowledge the work of the noble Lord, Lord Maude of Horsham, and the noble Baroness, Lady Finn, who provided the positive backdrop that allowed these initiatives to be developed and flourish—thank you.
Between 2018 and 2021, I undertook the role of Permanent Secretary in the Northern Ireland Executive’s Department of Finance. This was a very different experience for me, and demonstrates again the range of opportunities that exist in the Civil Service. The return of the Executive brought its own challenges, including working in a mandatory five-party coalition, which made the 2010 coalition seem remarkably straightforward.
Returning to Whitehall in 2021 allowed me to put into practice the benefits of closer and collaborative working with devolved Governments and mayors. Devolved government is an important and integral part of the architecture of this country, and the noble Baroness, Lady Foster, was a big part of that in Northern Ireland. I will continue to be a strong advocate for it from my position in your Lordships’ House.
A number of the senior officials with whom I had the privilege of working are now Members here, and I wish to say a personal “thank you” for their support. I also want to remember three important people in my career, who are sadly no longer with us: Baroness Jowell, Lord Prescott and Lord Heywood, who were exemplars of the very best of public service. I would also like to thank those who guided me in the challenging last few years of my career in and around Downing Street—whether working in it or investigating it—including Dave Penman and the FDA team. I am not sure what it is about the mention of my time in Downing Street that brings me to the issue of job security and employment.
More seriously, I want to return to my first set of jobs in what was the Department for Social Security, working in employment support, as it is highly relevant to today’s debate and to the future of our Civil Service. Back then, I worked with truly heroic and committed people, striving every day, in very difficult circumstances, to help people in even more challenging situations. They were the Civil Service at its best: on the front line, as far away from Whitehall’s machinations as it is possible to be. Today, I see the same sort of brilliance. What these and other civil servants are doing is central to the Government’s—and the nation’s—mission to bring growth back into our economy and security to our society. That is why I would caution all of us to be careful, not only about our decisions but our language also. When we hear phrases with “blobs”, “pen-pushers”, “axes”, “chainsaws” and other implements, they hear it too.
Difficult decisions are needed, of course, and the Civil Service will be keen to be part of any reform journey, but we need them and other public servants to succeed. I will continue to support a progressive Civil Service. I hope others will do the same. Thank you.
Lord Burns (CB)
My Lords, I am delighted to follow the noble Baroness, Lady Gray, and to be able to congratulate her on her fascinating maiden speech. She has a long and successful background in the Civil Service, and she described today some of the things that have affected that experience. My message to Ministers is that they would be well advised to take her advice when it comes to how to get the best out of civil servants, because she has been remarkably good at it.
I first met the noble Baroness, Lady Gray, when she was running the propriety and ethics function within government. I was chairing a commission investigating whether the Freedom of Information Act was working as intended. I have to say that the group of journalists who spent their time looking at FoI stories regarded her as the most powerful obstacle in their career—and that was before she was in the public eye. Maybe she wishes she might have stayed there. Instead, she became known everywhere for her forensic talents, which were brought to bear on the “partygate” scandal. There was a period when it appeared that no politician could appear on television and face a question without answering, “That is an issue for Sue Gray”. She did not seek the job; it was thrust upon her. She carried out that task with great skill and courage. She is a person of immense integrity and a delightful colleague, and she will be a very valuable Member of this House.
I also enjoyed the speech of the noble Baroness, Lady Berger. Somewhere, I have a photograph of myself with Manny Shinwell in County Durham, aged 16 or thereabouts. I have very fond memories of that occasion.
I also look forward to the maiden speech of the noble Lord, Lord Young of Acton. He swells the ranks of Members of this House—a very small group—who have families who support Queens Park Rangers. He is very welcome. I enjoy his match reports; I doubt that the manager and the team always feel the same about them, but I suppose that is freedom of speech. I also look forward to hearing from the noble Baroness, Lady Cash, and hope that she also enjoys the experience.
I will limit my comments on the Bill to the provision concerning trade union finances. Clause 59 would change the way in which trade union members pay the political levy. Under the proposal in the Bill, all trade union members will automatically pay the political levy unless they personally take the decision to opt out.
I am concentrating on this because I have been there before. In 2016, the Trade Union Bill introduced by the newly elected Conservative Government proposed to do exactly the opposite. They proposed to move to an opt-in system for political funds, with union members being required to opt in, in writing, if they wished to pay the political levy. Following the Lords Second Reading, the noble Baroness, Lady Smith, then the Leader of the Opposition, tabled a Motion to establish a Select Committee to consider the impact of the clauses dealing with trade union political funds. The Motion was agreed, and the committee was appointed, of which I was asked to be the chairman, and we were given a very short deadline for reporting.
The committee took evidence and came to the view that reintroducing an opt-in process for all members
“could have a sizeable negative effect on the number of union members participating in political funds”,
and that there would be a “significant reduction” in union payments to the Labour Party. The committee concluded unanimously that the opt-in system should apply to all new members—new members would be required to actively opt in to paying the political levy. However, there was disagreement within the committee on whether the opt-in should also apply to existing union members as well and whether they would remain on an opt-out basis. The majority of the committee thought that the opt-in should not be extended to existing members unless it was part of a wider reform of party funding. On Report, I tabled amendments that new members should opt in and that existing union members should remain on an opt-out basis. This was carried almost on a two to one basis in this House. Several days later, the Government accepted these amendments, despite some significant unhappiness on their own side.
Given this history, I am surprised that the new Government wish to move back to the pre-2016 position whereby all members automatically pay the political levy unless they opt out. I had hoped this issue had been laid to rest for the time being, but it appears not. I have some questions for the Minister. There is a long tradition of Labour Governments legislating for opt-out while Conservative Governments in turn legislate for opt-in. Do we really want this opt-in, opt-out ping-pong to go on with every change of Government? Do the Government really want to take the risk with the future funding of the Labour Party the next time there is a change of Government? Would it not be better to let this issue rest where it is and to maintain the compromise we reached in 2016?
Baroness Cash (Con) (Maiden Speech)
My Lords, it truly is an honour to take a place on these venerable Benches and make my maiden speech today. I start by congratulating the noble Baronesses, Lady Berger and Lady Gray, on their excellent maiden speeches—and no easy acts to follow. I do not really need to worry too much, I believe, because truly I am just the warm-up act for the noble Lord, Lord Young, today. He is someone who has already starred in many of his own features in life, and he is a fine colleague. So I look forward also to hearing his maiden speech.
I thank noble Lords on all sides of the House for the warmest welcome. It is true what everyone says about the courtesy and embrace when one arrives here. I am very grateful also to all the officials and staff, particularly our dedicated doorkeepers. I am grateful to my sponsors, some of the finest academic minds and most principled people I know: the noble Baroness, Lady Falkner of Margravine, who is also my chair at the EHRC, and the noble Lord, Lord Godson, who has been a dear friend for nearly 30 years. I am also grateful to the noble Baronesses, Lady Finn and Lady Morris of Bolton. I have two mentors. I have not dared to ask why they thought I might need double supervision, but I thank them for their courage in stepping up to do it.
Since learning that I would be joining your Lordships, I have received many kind messages and kind words—including, rather delightfully, from my primary 7 teacher Ken Cardwell. That reminded me that, when I was 10 years old in his class, he had also once trusted me to make a speech on a subject of my choice, on the day of a school inspection. Unaccustomed as I am, and have always been, to public speaking, I relished this prospect, and he was confident that this particular child would not let him down. When I ran into him 20 years later, the horror was still palpable on his face when he described how I had stood up in front of the class and announced, rather cheekily, “I’m not giving a speech today”. His heart sank and there was the most terrible pause, until I whisked from behind my back a hand puppet and announced, “He is” and proceeded to lecture them all on ventriloquism.
I will not be quite as random today. I have chosen this debate because I have a life that some of you do not know much about. I have been very lucky to know some noble Lords in parts of my career as a barrister, parliamentary candidate or, indeed, a policy wonk—something I still love. But what is less well known is that I have for 10 years, prior to now, chaired the UK’s leading behavioural science business, which we took on to the stock market. During that time, I have seen first-hand the challenges of running an SME. We confronted the pandemic, we then had costs ratcheting and salary insecurity as a result of the war in Ukraine. Now, we are looking forward to really strangulating increases in national insurance. I also know from running that business, because we work with 62% of the FTSE 100, that most employers want the best for their employees. It is not a them and us; talent is what makes businesses work and grow, and they are highly valued by the majority of people. It saddens me enormously to know so many people in business spoken about in some of the ways we have heard in the other place.
This was not my first experience of business. I grew up in Northern Ireland in the 1970s. That was the height of the Troubles, but it was also a low ebb for our economy. I spent my early years in the anteroom of a tiny newsagents run by parents. They worked incredibly long hours, while my father also held down a full-time job. It was not easy and costs were high.
Those micro-businesses—I owe my parents a world of thanks for the way they worked in theirs—employ 33% of the workforce. That is an enormous number of businesses with between nought and nine employees. The consequence of some of the changes introduced by this Bill in subjecting those tiny businesses to some of these new ideas will be to strangle them, mostly at birth. Costs are rising, taxes are rising and profits—that dirty old word—for them are falling. Profits for those businesses can mean a pair of trainers for their children, or the hope of a family holiday. Are we really going to do that to 33% of the providers of our workforce?
From the CBI to the Federation of Small Businesses, every representative group is warning—pleading—that the implications of this Bill mean a disaster for growth in this country. It is not all bad—of course we want to see more fathers take parental leave, and there are other good things—but the overall direction of travel is to create unintended consequences. If I have learned anything from leading a behavioural science business for 10 years, it is that, often, the things we do to achieve a certain outcome have exactly the opposite effect. This Bill is destined to destroy our growth.
Baroness Barran (Con)
My Lords, it is truly a great honour to follow on from my noble friend Lady Cash’s maiden speech. When I asked those who had worked with my noble friend over the past few years how they would describe her, there was absolute unanimity in their responses. The first thing they all talked about was her courage: brave as a lion—or, possibly, a lioness—which was perhaps learned, as we heard, from growing up in Northern Ireland at the height of the Troubles. They all said that there is no issue that is too hard for my noble friend to tackle, and that anything she tackles, she tackles with single-mindedness and rigour. She was described by the Observer as a modern “freedom fighter” and, without question, she has been a tireless and hugely effective advocate for free speech and western values.
The second word used when talking about my noble friend is “forensic”. Colleagues have described her to me as one of the most intellectually rigorous and honest people they have worked with, as well as a consummate professional in her approach. That of course is borne out by her track record. My noble friend has excelled in so many different areas: from her work as one of London’s most distinguished human rights lawyers, to upholding equality on the board of the EHRC, and to her leadership of Parent Gym with its practical approach, supporting parents and promoting social mobility.
Finally, colleagues and friends talk to me about my noble friend’s compassion and modesty—we heard her modesty in her opening words in your Lordships’ House today—and, crucially, her ability to build alliances, which we all know is so important in our work here. I know that all noble Lords across the House will, like me, be looking forward to working with my noble friend and agree that we are fortunate to have someone with such exceptional experience and skills.
Turning to the legislation, I will confine my remarks to two specific areas of the Bill. The first relates to the proposed reintroduction of the school support staff negotiating body and the second is that the Bill presents an opportunity to clarify the employment status of foster carers.
On these Benches, we support measures to improve pay and conditions for school support staff, who are so vital to the effective running of our academies and our schools, but we have concerns about the impact of the Government’s proposals in practice. Our worry is that their proposals will lead to a significant increase in workload and costs for academies, taking funding away from the front line. For example, the proposal to review and align working hours based on a 12-week reference period will create administrative complexity—particularly for staff on variable hours or term time-only contracts, such as midday supervisors, exam invigilators and music tutors. Without an exemption for term-time or education-specific roles, this will lead to higher costs and cumbersome recording and averaging systems. The vast majority of academies comply with the National Joint Council for Local Government Services’ terms and conditions while retaining a degree of flexibility—where needed—over local terms and conditions. Can the Minister reassure the House that this local flexibility will be retained and that the SSSNB will not be a one-size-fits-all approach?
In my experience, academy trusts use their flexibility to improve conditions for their staff—for example, by using the apprenticeship levy to allow all support staff to achieve level 3 qualifications and offering them 18 weeks of full maternity pay and eight weeks at half pay. Can the Minister confirm that nothing in the Bill will prevent academies improving on the terms and conditions agreed by the SSSNB if they feel it is in the best interests of staff and pupils? Rather than rigid uniformity, we need a system that encourages innovation and benefits pupils and staff. This is particularly true if we are to deliver reform of the special educational needs and disabilities system, where we must retain the ability to innovate and be flexible with our workforce.
Finally, the reduction in thresholds for strike ballots and the removal of minimum service levels legislation increases the risk of strike action, which puts the education of our children at risk and will require greater investment in contingency planning. Trusts typically have very good relations with their unions at a local level, but national negotiations are outside their control and risk straining staff relations unnecessarily.
On the employment status of foster carers, the Minister in the other place, himself a foster carer, stated
“it would not need a new clause but a new Bill”—[Official Report, Commons, 3/12/24; col. 193.]
to address this. As the Minister will be aware, there are serious concerns among foster carers and local authorities about the need for clarity on their status, to prevent piecemeal definition by the courts. Without that, there is a real risk of a decision at an employment tribunal in effect ending foster provision as we know it. I urge the Government not to take this risk and the Minister, first, to clarify that the Government have no intention that foster carers should be defined as employees and, secondly, to agree to introduce amendments to this legislation which address this important matter.
In closing, I congratulate all noble Baronesses who have already spoken. I offer an apology to the noble Baroness, Lady Gray, whom I pestered remorselessly in the many months when I was waiting to know whether I was coming to your Lordships’ House or whether someone had changed their mind. Hers was the only email address I had to contact. I think that she had more important things to worry about, but I am very grateful for her patience.
Lord Barber of Ainsdale (Lab)
My Lords and Ladies, I begin by expressing my congratulations to the noble Baronesses, Lady Berger, Lady Gray and Lady Cash, on their maiden speeches. I look forward with interest to the maiden speech of the noble Lord, Lord Young.
I express my wholehearted support for this landmark legislation, which aims—for the first time in a generation—to rebalance the labour market in the direction of fairness. This will not only eradicate some of the grossest injustices suffered by far too many people in recent years but drive higher standards across the world of work in place of the race to the bottom. Decent employers have nothing to fear from this. Instead, they will be protected from being undercut by rogue competitors. As Churchill said, where there is
“no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad employer is undercut by the worst ... where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration”.—[Official Report, Commons, 28/4/1909; col. 388.]
The objective of this Bill is nothing less than to establish a condition of progress.
Many groups of workers stand to gain if this Bill is enacted: those workers who have been fired, only to be offered rehiring if they accept a savage cut in their terms and conditions of employment; those workers unable to get a mortgage or even plan their week-to-week household budget because their income under a zero-hours contract is completely unpredictable and can disappear altogether at the whim of their employer, and victims of sexual harassment let down by their employer unprepared to accept their responsibility to take the necessary actions to prevent this kind of totally unacceptable behaviour towards their employees. Many of the provisions in the Bill strengthen the legal rights of countless workers currently feeling powerless and vulnerable.
However, the Bill is more ambitious than that, because it rightly recognises that the most powerful force to hold bad employers to account—and to uphold workplace legal rights—is effective trade unionism. This reality is recognised around the world and upheld in the conventions of the International Labour Organization on freedom of association and collective bargaining. It is a matter of shame that Governments led by the party opposite have been found too often to be in breach of those international obligations as a result of crude and unworthy attacks on free trade unionism.
Therefore, it is wholly proper that the rights for unions to secure employer recognition for bargaining purposes should be strengthened to allow workers to make that free choice. It is right too that trade unions should have proper access to workers without rogue employers being able to bully them out of exercising their right to effective representation at work. Of course, there are countless good and responsible employers who recognise that respecting and valuing their workforce is the right way to achieve success. They should not be undermined by the irresponsible or malevolent. Surveys have shown how popular this package of progressive change is with the community at large. Millions of people are crying out for change. Let us get this Bill on the statute book and begin to change the world for the better.
Baroness Coffey (Con)
My Lords, I congratulate my noble friends. I will start with the noble Baroness, Lady Cash, who I have known for 35 years from when we were students together. She was elegant and eloquent then, and that will continue. I am also looking forward to my noble friend Lord Young of Acton, as I am sure he will spice things up if we are to judge by some of his past publications. I extend my congratulations to the noble Baronesses, Lady Berger and Lady Gray of Tottenham. Without destroying their reputations in this House, I consider them to be friends, having come into the House together with them and worked with the noble Baroness, Lady Gray, in government too. I am sure that they will continue to staunchly uphold their principles as well as contributing to national debate.
In terms of national debate, this Employment Rights Bill entered the other House 100 days into this Government with 149 pages. After Committee in the other place, there were 191 pages, and now there are 299 pages, which it will be generous to get through in seven days of Committee consideration. Today, I want to focus on just a handful.
On Clause 59 relating to union finances, I agree with the noble Lord, Lord Burns. I do not understand the trend, with all the consumer and legislation protection that we put in place, for encouraging people to have to opt in to contractual arrangements. The default now by and large is that you are automatically opted out. I believe that should be continued, especially when there is a section in the legislation which suggests that union members who have not opted out should be reminded only every 10 years that they have the opportunity to do so.
On small businesses, I know the FSB is particularly concerned about two matters: the day-one risk of taking people on with there being no statutory probation period yet in law, and statutory sick pay. It used to be the case that SSP was rebated to all employers. I know that because when I worked at Mars, I used to fill out the forms every year to get the refund. However, that got taken away, recognising some of the improvements to be made in occupational health. It is important that the Government reconsider that with this shift to day-one rights, or at least produce an impact assessment.
On getting automatic rights on day one of employment and unfair dismissal, this already applies through the Equality Act. There is consideration of people with disabilities and other protected characteristics. I support the Government’s measures for a right to try in getting people a job, but perhaps the same should apply to employers. They have a right to try out employees and the statutory notice period should be put in the Bill and not left to regulations.
It is important that we continue the work of the occupational health task force to make sure that we have positive arrangements in place so that people can start, stay and succeed in work, but we need to remove the uncertainty, because I fear that companies will simply choose not to grow. I know that from my experience in Suffolk and some of the flexible working practices there. I understand why the Labour Government have chosen to put even more controls on them, but without the support of small businesses we will not get growth in productivity and, indeed, economic growth more generally.
On the fair work agency, I welcome the construction of this combination of regulators—it is a sensible approach—but I consider Clause 113 to be novel. When I asked the Minister in the other House, Justin Madders, he seemed to suggest that the EHRC had similar powers. The Equality Act actually gives the same powers as Clause 114, under which legal assistance can be provided, including advice, representation and other forms of assistance, but not the situation where the fair work agency could take a case on behalf of a worker, or somebody who has applied for a job and is not even a worker. Subsection (6) removes any liability from the Secretary of State towards that same worker. Of course there will be a need to recover legal costs from the worker. I understand that, if there is a big payout, the Government may want to recover the funds that they have given out, but the regulations need to change to the affirmative rather than the negative procedure. In Clause 114, who will get the money to take people’s cases to court? Will it be the unions or a bunch of law firms? That does not feel like the approach we should be taking with taxpayers’ money, although it admittedly strengthens rights.
I should say to the Government that I have nothing against trade unions; I actively encourage people to join them. They can play a valuable role. I have never felt the need to join one myself, although it is in my blood: I looked at the 1921 census and my grandfather was an apprentice shipbuilder. It was also noted in the census that he was on strike, so it certainly runs through the Coffey veins. Indeed, other people were trade union organisers. But we need to be careful that we do not end up destroying growth rather than promoting it.
Baroness Whitaker (Lab)
My Lords, I must first apologise: I need to honour a long-standing commitment, which might oblige me to miss the winding-up speeches. I declare that I am a lifetime member of the First Division Association. I warmly congratulate noble Lords on the three maiden speeches so far, and I anticipate with interest the next.
It is a pleasure to return to the intricacies of employment law, which I spent much time on a while ago, and to welcome this Bill, which puts right so many injustices. I will not rehearse the range of provisions, which will give back much of the security, the deterioration of which has so adversely affected the well-being of so many working people. They are widely welcomed.
I would like, drawing also on my experience as a former member of employment tribunals, to ask my noble friend the Minister questions in two areas. First, can she set out in a bit more detail how the new arrangements for the protection of seafarers—their charter—will be devised? Quite a few seafarers on British ships do not speak English, so how will they and their representatives be consulted? Ships are very dangerous places. In container ships, for instance—so important to our trading economy—seafarers have a higher rate of mortality, and of injuries and ill health, than workers on land, significantly so among the lower ranks but, until now, they have had much less legal protection against exploitation, dangerously long hours, and less access to medical care. It is a matter of pride that we can right these wrongs after so long, so clarification would be welcome.
My other point is about what is not in the Bill. On employment tribunals, many cases of sexual harassment or sackings while pregnant were settled after the first hearing and never proceeded to a full hearing and a decision. I heard of court cases with similar outcomes. There was a non-disclosure agreement instead. In some instances, an immediate settlement sum was so important to the victim that she preferred this, even though the sums might have been paltry. In some, the outlay for carrying on was, in any case, prohibitive, and quite severe allegations of behaviour that was very damaging to the woman concerned—and I only ever saw women in these cases—went unacknowledged and the perpetrators were never brought to book. That is injustice. I was heartened to see that the Minister in the other place, my honourable friend Justin Madders, said that
“we will continue to look at the issues”.—[Official Report, Commons, 11/3/25; col. 950.]
Can my noble friend the Minister tell us when we can expect this injustice to be addressed, with a provision to override or nullify a non-disclosure agreement if the victim chooses?
Lord Young of Acton (Con) (Maiden Speech)
My Lords, I would like to say how difficult my task is, because I have to follow three such excellent maiden speeches. I congratulate the noble Baronesses, Lady Berger and Lady Gray of Tottenham, and my noble friend Lady Cash. I thank my noble friend and all the noble Lords who have welcomed me with such warm words, particularly the noble Lord, Lord Burns—my fellow QPR supporter.
I asked various people for advice before thinking about what to say in my maiden speech, and I was given three quite strong pieces of advice: thank the doorkeepers, praise the people who introduced you, and keep it short. For inspiration, I looked up the maiden speech of my father, Lord Young of Dartington, who was made a life Peer by the late noble Lord, Lord Callaghan of Cardiff, in 1978, but his maiden proved not to be terribly helpful: he forgot to thank the doorkeepers, he did not praise either of the people who had introduced him, and he spoke for 18 minutes. Noble Lords will be reassured to know that, in that respect at least, I do not intend to follow in his footsteps. I thank the doorkeepers, Black Rod and her staff, the Clerk of the Parliaments and all the clerks, and all the wonderful people who work here and have gone out of their way to help me when they found me wandering lost along one of the corridors.
When I heard the expression “corridors of power”, I did not realise that there were quite so many of them. I have no sense of direction and have made various errors—schoolboy errors—trying to navigate this place. For instance, I entered the Chamber the other day, remembered to bow to the Throne, took my place with what I thought was the minimum of fuss and congratulated myself on having done it—with some élan, I thought. A moment later, I got a text message from my noble friend Lord Effingham, which read as follows: “Lord Young, on the basis that you have taken the Conservative Whip, may I please suggest that you sit on the Conservative Benches?” I then noticed I was surrounded by Labour Peers.
When my elevation was announced, I wrote an article in the Spectator in which I said that I thought I was only the second child of a life Peer to be made a life Peer—the other being the late Lord Brooke of Sutton Mandeville. In fact, it turns out I am not the only child of a life Peer in this House, and I take this opportunity to apologise to the following people: the noble Lords, Lord Maude of Horsham, Lord Palumbo of Southwark, Lord Prior of Brampton, Lord Soames of Fletching and Lord Wolfson of Aspley Guise, the noble Baronesses, Lady Bonham-Carter of Yarnbury, Lady Chisolm of Owlpen and Lady Jay of Paddington, the noble and learned Baroness, Lady Smith of Cluny, the noble Lord, Lord Pitkeathley of Camden Town, whose mother, the noble Baroness, Lady Pitkeathley, also sits in this House, and the noble Lord, Lord Vaizey of Didcot.
I really should have remembered that last one because the noble Lord’s father, the late Lord Vaizey of Greenwich, was one of the two people who introduced my father in 1978—and whom he forgot to thank. I do not want to make that mistake, so I thank my noble friend Lord Moynihan of Chelsea and the noble Baroness, Lady Fox of Buckley, whom I am also proud to call my close friends. I also thank my excellent mentors—like the noble Baroness, Lady Cash, I needed two—my noble friend Lady Evans of Bowes Park and, of course, the noble Lord, Lord Borwick.
As was disclosed, I am a keen QPR fan and season ticket holder. I am the editor-in-chief of the Daily Sceptic, a news publishing site I set up in 2020, and an associate editor of the Spectator, where I have written a weekly column for about 25 years. I am interested in education, having co-founded one of England’s first free schools, as well as three other free schools and the multi-academy trusts they now sit within, alongside five other schools. I am the founder and general secretary of the Free Speech Union, a mass membership public interest body that stands up for the speech rights of its members and campaigns for free speech more widely. In the past five years, with the help of our extremely able chairman, my noble friend Lord Biggar, the FSU has come to the defence of over 3,500 people, not all of whom share my political views.
The FSU really is a non-partisan organisation, and I often find myself defending people whose views I do not share. For instance, I have been a lifelong supporter of Israel, ever since my father sent me to a kibbutz when I was 17. My late father-in-law, Ivo Bondy, escaped from Prague in 1939 by the skin of his teeth. He was Jewish, and I was one of the co-founders of the British Friends of Israel shortly after 7 October. Yet, the FSU has come to the defence of several people who found themselves in trouble for their outspoken support of the Palestinian cause.
Before I sit down, I will say a few words about the Bill. One misunderstanding has arisen about the extension of liability for third-party harassment. The Bill does not extend employer liability for the sexual harassment by third parties of their employees. Employees are already protected from third-party sexual harassment by the Employment Rights Act 1996. Clause 20 extends employers’ liability for the non-sexual harassment of their employees by third parties, and I fear that that will have a chilling effect on free speech. How will the owners of hospitality businesses—publicans, for instance—protect their employees from being harassed by third parties, given that the employment tribunal has defined harassment as including indirect harassment, which includes overheard conversations that are not necessarily directed at them? How will publicans be expected to protect their employees from overhearing customers’ conversations that they may find offensive or upsetting by virtue of their protected characteristics?
When it was suggested in the other place that pubs might have to employ “banter bouncers” to police the conversations of customers, as one of the “reasonable steps” publicans are expected to take to protect their employees from indirect harassment, it was met with derisive, dismissive laughter from the Government Benches—as being a ludicrous strawman. But I do not think it is a strawman. Before we dismiss that concern as unduly alarmist, I draw attention to a briefing published earlier this week by the Equality and Human Rights Commission, ably chaired by the noble Baroness, Lady Falkner. The EHRC pointed out that employers will have to balance the rights of third parties to express their legally protected beliefs with the rights of their employees not to be harassed. That is an extremely complicated area of law, and I do not envy publicans trying to get their heads around that.
The EHRC briefing states:
“The interaction of the third-party’s protection from discrimination and the employee’s protection from harassment is complex and is likely to be challenging for employers to navigate”.
For challenging, read “expensive”, since publicans will have to take legal advice on how to limit their liability. I wonder how many publicans will decide, in the face of all their other difficulties, that this new duty, the cost of complying with it and the additional risks entailed mean that the game is no longer worth the candle.
According to the Campaign for Real Ale, pubs are closing at the rate of 37 a week. I hope your Lordships will think carefully before approving the clause in this Bill which I fear will accelerate the erasure of such a vital part of our history and heritage: the good old British pub.
Lord Hannan of Kingsclere (Con)
My Lords, what a privilege to follow the fourth of those four outstanding maiden speeches. I reassure the noble Baroness, Lady Hazarika, that I echo her sense that the humanity and dignity of the noble Baroness, Lady Berger, in the face of extraordinary provocation, was an inspiration not only to the many people who uphold the best and most decent tendencies in the Labour Party, but to everyone in this country who values tolerance, religious pluralism, civility in public discourse and the supremacy of parliamentary life. I hope I will not destroy her credibility when I say that of all the people in the independent group, she was the only one I was secretly rooting for during that bizarre moment in our political life.
What a pleasure, also, to follow my noble friend Lady Cash—my friend of three and a half decades. I remember seeing a picture of my noble friend in the Observer, in about 2009, with the most extraordinary array of lefty lawyers, including, if memory serves, the noble Baronesses, Lady Chakrabarti and Lady Kennedy of the Shaws. They were making this great defence of liberty, and that has been her core belief throughout her political career. It was very apt that, when she stood for another place, she fought in Westminster, the constituency of both JS Mill and of John Wilkes. If there is one precept that this country has developed and exported, and contributed thereby to the happiness of humanity, it is personal autonomy.
My real privilege, however, is in following and welcoming my noble friend Lord Young. He is a one-man advertisement for the hereditary principle. It is an unfashionable cause to be making at a time like this. He did not mention that his father was a Labour peer. You would have got it, if you were listening between the lines. His father was best known for writing a book on meritocracy, which he was against. My noble friend has had a career that tests the outer limits of what we understand by meritocracy. Right from the start, he got into Oxford on the basis of having received an acceptance letter in error. They posted it by mistake, even though he failed to make the grade. He then successfully argued that they had a moral obligation to take him anyway. He went on to have this extraordinary career, which I can only describe as cinematic—in the literal sense, in that a film was made in 2008 of my noble friend’s life; he was played by Simon Pegg. The only other person I can think of who has had a biopic before he was elected to anything is the current Vice-President of the United States. But I will not push that resemblance.
My noble friend then went on again and again to show that quirkiness, that independence of character and that courage that is, I think, one of our greatest virtues as a people. I mean no disrespect to our political system when I say that you can get to this Chamber by being careful and correct and conformist in your views. I know one or two people who have made it to the top in politics by waiting until everyone else has spoken before they express a view, by knowing how to nod sagely and talk slowly. No one would describe my noble friend in such terms.
The two particular causes with which he has been most recently associated—the Free Speech Union and the Critic, which began as an anti-lockdown campaign—showed extraordinary moral courage: not the simple courage which some people have and some do not but that readiness, that intellectual readiness, to be incredibly unpopular but to stand by a position that you know to be right. Personally, I have to say that, on the lockdown, I remember the days when people were accusing him of being a eugenicist and a mass murderer and all the rest of it, but with every day that has passed he has come to be more and more vindicated.
Turning to the Bill itself, I can be very brief. I am afraid I find that it contains absolutely no redeeming qualities whatever. I could go on at length about what is wrong with it, but I would be repeating many of the arguments that we have already heard, not least from my noble friends Lady Barran, Lady Coffey and Lady Noakes. I will focus on just one solitary provision, which is the rights from day one. I think we are in real danger in this nation of having more and more workers’ rights and fewer and fewer workers. Here is an unpopular truth that people very rarely like to admit and never really like to verbalise: the way of encouraging people to hire is to make it easier for them to fire. The way in which you encourage employers to take on more staff is to give them the reassurance that they are not going to be stuck with duds or embroiled in weeks and weeks of acrimony for the price of a second-class stamp or an email by somebody who they had then to remove from employment.
That has been the secret of our country’s success for some three decades. Whatever the world has thrown at us, including the global financial crisis and the pandemic, structural employment has always been higher here than in Europe because we have this relative flexibility in our labour market that means that we bounce back very quickly from downturns because companies are prepared to take people on. I think that is ceasing to be the case now. I speak as the father of two children who are just entering the workplace and I listen to what their friends are saying. If you speak to anyone of that age, there is a palpable freeze now, an uncertainty among employers, in anticipation of both this Bill and the related rise in national insurance. I have a fear that those 30 years of structurally low unemployment are about to come to an end.
Noble Lords will be able to look back at my words and laugh at me if I have got this wrong, but I suspect that we are at the beginning of what is going to be a sustained and secular rise in unemployment. As I say, I hope to heaven that I am mistaken about that, but, as Scotland’s national poet once said:
“An’ forward tho’ I cannot see,
I guess an’ fear!”
Lord Pitkeathley of Camden Town (Lab)
My Lords, like buses, you wait for one nepo Peer to come along—
I rise to speak in support of this Bill and refer the House to my registered interests. First, I congratulate all those who have made their first contributions today. The House is blessed with four eloquent and distinguished new Members and it is a particular joy to be joined by my noble friends Lady Berger and Lady Gray, who acquitted themselves so well, and I look forward to getting to know the noble Baroness, Lady Cash, and the noble Lord, Lord Young.
As an employer and entrepreneur, and through my work with business improvement districts and workspace provision, I have seen first-hand both the challenges and responsibilities of employing people. Good businesses do more than create jobs. They foster opportunity, stability and prosperity in our communities. For most responsible employers, the principles behind this Bill are nothing new. Anyone who has run a business knows that keeping and supporting a great team is a daily concern. Whether it is offering flexibility, ensuring fair treatment or helping staff through difficult times, most employers already do much of what is set out in this Bill—not because they have to but because a happy, motivated team is the foundation of success. Businesses thrive when their people thrive.
That said, rising employment costs are a reality. Businesses have adapted to higher minimum wages, pension auto-enrolment and other well-intentioned interventions, all of which add to the cost of employing people. While these measures bring benefits, they also create pressures, particularly for small businesses, as we have heard. The Government’s impact assessment acknowledges this, but we must be mindful that, if costs rise too far, businesses may turn to automation rather than hiring staff. This is not an argument against the Bill, but a reminder that we should support both employers and employees.
In that spirit, could we do more to improve access to insurance products to help businesses manage employment risks, such as covering statutory sick pay? Such products seem rare to me and it may be worth engaging with those such as the Association of British Insurers to explore better provision in this area. We should also consider practical support for businesses adapting to new employment obligations. Could advisory services or incentives help them implement best practices? A culture of shared responsibility between government, businesses and employees will be the key to ensuring that these measures work in practice as well as in principle.
Ultimately, this Bill strengthens workplace rights in a way that is fair and balanced. It reflects what responsible employers already do, while ensuring that bad practice is tackled, creating a level playing field for all. Businesses that uphold high standards should not be disadvantaged by those who do not and legislation such as this helps to make good employment practices the norm. It is a step forward and I support it.
Lord Monks (Lab)
My Lords, I add my congratulations to the quartet of maiden speakers. I think they have all laid down a mark and people will look forward to their future contributions in this House.
I want to pitch my remarks at some of the messages coming from across the Chamber, almost asking “Why have we got this Bill in the first place when our wonderful flexible labour market is doing so well?” For me, a key justification of the Bill is deep concern about the UK’s relative position in the world. I will give a couple of OECD figures. Of 40 major economies, we are the most affected by rising inequality. In Europe, only Bulgaria and Lithuania fare worse. The gap between top and bottom earners in this country continues to soar to some eye-watering amounts, which are not always linked to corporate success. When it comes to worker participation in management decision-making, the OECD ranks us 26 out of 28 European countries. We are propped up only by Latvia and Estonia doing worse. We are not in the Premier League on these particular measures: more like the Vanarama.
If we had been outstanding economically, as the advocates of deregulated labour markets in the 1980s hoped, and if our productivity and investment record had been better, maybe you could justify high unemployment, high inequality and poor participation in management; perhaps it would have been a price worth paying. But the result has been that we are currently 20% poorer on average than workers in France or Germany, which have very different labour markets and a much greater degree of regulation.
I could go on making these depressing and unfavourable comparisons. If some people thought trade unions were overmighty subjects in the 1970s and 1980s—many people did and still do—and that unions could do with a good regular dollop of restrictive legislation loaded on them, I hope that today they will honestly acknowledge that British workers have payday very heavy price for what has happened since: the flexible labour market and its dark sides. I acknowledge that there are some upsides for some people in certain circumstances, but there are many dark sides for others who have very little choice: lower pay, lower protection, lower skills and poor productivity. This is not a happy picture for our nation and it is one the Government are determined to do something about. Mrs Thatcher did not expect the flexible labour market to produce some of these awkward facts, but they have to be faced by her successors.
The Bill strengthens the workers’ voice in the workplace, and I hope that that will echo, too, in boardrooms across the country. It needs to, if firms are to prosper as effective communities and teams. The Bill should boost job security, and it should reduce bad behaviour in a number of areas and tackle a number of abuses in the workplace at the present time. I encourage the noble Lord, Lord Hunt—who we are happy to renew dialogue with after many years—to have another look at the biography of Stanley Baldwin to see what he did after the general strike to promote collective bargaining.
The Bill will put unions in a stronger position. I do not apologise for that: the balance tilts with this Bill if it goes through in its present form. It can help tackle inequality and improve, through that, productivity. We need the Bill, and we need it soon.
Lord Freyberg (CB)
My Lords, I would like to add my thanks and congratulate the four maiden speakers on their excellent speeches.
This Bill marks a significant milestone in the campaign to strengthen employment rights in the UK. For many workers, the measures it contains—day-one rights, enhanced sick pay, protections from unfair dismissal—represent long-overdue reforms. However, we must also ask how these reforms serve the backbone of our cultural economy: our freelancers.
In the creative industries, over a third of the workforce is freelance. I declare my interest as a freelancer in the visual arts. In sectors such as theatre, film, publishing and design, it is more than 50%. Freelancers contribute billions to our economy and underpin the UK’s global cultural reputation, yet this legislation, while welcome, still leaves too many of them in the margins.
The Bill includes small measures—such as blacklisting protections, enhanced health and safety requirements and the right to a written contract—but otherwise offers little in the way of concrete protections for freelancers. There is no guarantee of fair pay, no enforcement on late payments and no formal route to challenge exploitative contracts or to clarify issues around single-worker status. While further consultation is welcome, it must safeguard the creative autonomy and IP rights that freelancers depend on. A blanket reclassification could cause real harm.
I support calls from across the sector—by organisations such as DACS, ALCS, BECTU, Creative UK and the Cultural Policy Unit—for the creation of a freelance commissioner. A dedicated advocate is needed to ensure freelancers are included in future reforms. Too often, they are out of scope, out of protections and out of pocket.
However, we must also maintain the balance between protecting individuals and supporting the viability of the organisations that employ and commission them. That balance is increasingly fragile. Consider the Royal Society of Arts, where a polarised dispute over pay between unionised staff and leadership has spiralled into reputational damage and a breakdown in trust; or the Tate, a DCMS-sponsored body, which cut nearly 7% of its workforce to manage deficits. The Royal Academy of Arts has warned of cuts of 18% of its staff. Many cultural organisations are operating on the brink, with commercial income still in recovery and reserves depleted.
Faced with new obligations, some employers may delay hiring, turn to long-term contractors or shift work offshore. For agencies and studios, hiring freelancers may appear less risky, potentially increasing short-term opportunities, but without protection this shift may only deepen insecurity across the sector.
This underscores the need for phased, consultative implementation and enhanced public funding mechanisms. Rights must be matched by resources. Without support, organisations may reduce opportunities—or close altogether. We must act strategically. That means sector-sensitive collective bargaining, better enforcement mechanisms and targeted support for smaller and mid-sized arts bodies.
This Bill opens a long-overdue chapter in employment rights. However, for the UK’s world-leading creative industries—and the freelance workforce on which they depend—it must not be the final word. Let us ensure that these reforms support all workers, however they work, and provide the resources needed to sustain the culture that we value.
Baroness Carberry of Muswell Hill (Lab)
My Lords, we have heard four excellent maiden speeches this afternoon; I add my congratulations to my noble friends Lady Gray and Lady Berger, the noble Baroness, Lady Cash, and the noble Lord, Lord Young.
I begin by reminding the House that this big package of improvements to employment rights has been a long time coming. Governments since 2010 have made promises to upgrade employment rights. There have been some improvements but, for the most part, the promises made were watered down, delayed or abandoned. But this Labour Government are delivering on their promises. As my noble friend the Minister said in her introduction, there have already been extensive consultations on this Bill with all interested parties, including, of course, businesses of all sizes. Much of the Bill in its present form represents a balance between different points of view and different interests.
In the short time that I have, I will focus on the early sections of the Bill, which aim to end one-sided flexibility. These are the clauses that give workers a right to guaranteed hours and reasonable notice of shifts. They introduce payments where shifts are cancelled or curtailed at short notice, which frequently happens. These provisions mirror recommendations made by the Low Pay Commission in 2018 in a report that was commissioned by the then Government which, at that point, recognised the problems in the precarious parts of the labour market. These recommendations were not taken forward.
Around 2.4 million workers in the UK are on zero-hours or low-hours contracts or in agency jobs. Over the past 10 years, there has been a 65% increase in zero-hours contracts. These contracts suit some workers, as several noble Lords have said this afternoon, and of course people value flexibility in their employment. However, if you are not in control of that flexibility, a zero-hours contract can put impossible pressures on you. The reforms in this Bill aim to remove some of these pressures. They will help to solve the very real problems that I came across with increasing frequency over 10 years serving on the Low Pay Commission. Over that period, I and other commissioners spoke to very many low-paid workers and their representatives. Over the years, more and more of these workers told us about the problems that they were experiencing with their erratic hours and erratic earnings and how they made it impossible for them to plan their lives, manage finances and get credit.
These sorts of hours and volatility can happen right across the labour market, but they are more common for the low-paid, who do not speak up for themselves because they are afraid of reprisals. Of course, the majority of employers do things the right way, but many do not. The Bill’s provisions will encourage employers to provide work schedules in advance and not to cancel shifts at the last minute or part-way through.
I recognise that there is a lot of concern among employers and workers about how all this will work in practice. A lot will be sorted out in regulations, on which there will be a lot more consultation. I find that reassuring, and I hope that others with concerns will also find it reassuring that they will have a chance to express their views as this Bill progresses through its stages.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to take part in this important Second Reading debate. It is great to see so many noble Lords taking part, and I particularly welcome and congratulate the maiden speakers. I hope they will work with all of us, particularly those on the Government Benches, to constructively improve the Bill.
This is a Bill that the Green Party welcomes, and my noble friend Lady Jones of Moulsecoomb will shortly provide a listing of the many points on which we agree. I am going to focus on the big-picture context in which this Bill comes before us. In doing so, I respectfully but strongly disagree with the pleasantly colourful opening speech of the noble Lord, Lord Hunt of Wirral. This Bill modestly—we Greens would still say inadequately—seeks to rebalance the power of workers and employers.
That relationship was thrown profoundly awry under Margaret Thatcher, particularly by strangling the ability of workers to get together in unions to support each other against the power of the bosses, particularly the bosses of large companies. The imbalance was then enhanced by allowing zero-hours contracts and other insecure forms of employment to explode, and for working hours to extend, across many sectors of our economy. That is something that was not permitted to happen in many of our European neighbours, which now benefit from healthier, happier workers, who have the capacity to contribute to their communities and societies generally, as the noble Lord, Lord Monks, highlighted. We saw the wage share of workers collapse, a rise in inequality, and the inefficient and destructive financialisation of our economy, all of which can be at least in part attributed to failures to make work safe, fair and adequately remunerated.
There was a failure to recognise changing social structures, whereby the previously unpaid and unacknowledged labour of women has been brought into the paid workforce. That work has to fit around the continuing demands they still face. We are, as the right reverend Prelate the Bishop of Newcastle and the noble Lord, Lord Palmer, both highlighted, people with responsibilities and needs outside work that our working structures do not adequately acknowledge. The economy is paying the price of this too, with skills, energy and talents excluded by inadequate labour protections.
The Blair and Brown Governments failed to redress the imbalance between workers and employers created under the Thatcher Government, and so we are where we are today. They too allowed the minimum wage to drift downward in real terms, subsidising the profits of giant multinational companies in particular, at a cost to us all. As the noble Lord, Lord Barber, said, we have seen a race to the bottom in employment, and that has to stop.
I often hear those on the Government Benches say that they want to get workers into good jobs. We in the Green Party take a different view: we want every job to be a good job, and those that are unavoidably difficult and unpleasant to have conditions that reflect the conditions of work. We clapped essential workers during the pandemic, but we did not lift their pay or the respect in which they are held. This Bill has the potential to do much more than it currently does. I invite noble Lords to consider the relative position of sewer cleaners and bankers, and what would happen if we did not have the former working for us all.
A fair society and a fair working environment are particularly important in what have often been described as the green areas of the economy. On Monday, the All-Party Group on Climate Change held an interesting meeting about the just transition, and that is something I want to look at in this Bill.
I am greatly concerned about the impacts of new technology on workers—for example, on the employees and agency staff at that great parasite, Amazon, who are forced, at a cost to their health, to act like robots, working themselves into the ground. That kind of surveillance is spreading to many other areas of work. Workers need the right to breathe at work. Hospitality workers need to be able to travel home safely at night, and work is being done on that through the Get ME Home Safely campaign. Generally, health and safety at work needs much more attention, and I want to see how we can build this more strongly into the Bill.
Baroness O’Grady of Upper Holloway (Lab)
My Lords, during my time as TUC general secretary, I met many employers who value good industrial relations and agree terms far above legal minimums. I also met dedicated care workers who did not earn enough to give their own children a decent start in life; loyal P&O crew who were fired and replaced with labour paid below the minimum wage; Amazon workers whose boss is running roughshod over the basic British liberty to organise collectively and bargain for better conditions; and teenage workers at McDonald’s who faced sexual harassment, and even demands for sex for shifts. On that issue, will the Minister please update us on the Government’s approach to tackling non-disclosure agreements regarding discrimination and harassment? Frankly, it is obscene that NDAs are used to silence victims and that that silence puts workers, especially young women, at risk.
The Bill has strong public support across the political spectrum, and no wonder. The UK is now an outlier among OECD countries for labour standards. On rights for temporary workers, the Work Foundation reports that the UK is bottom of the league of 22 OECD nations, only just above the United States. Statutory sick pay is the lowest in Europe, and the lowest paid have been excluded, which means that many cannot afford to stay home when sick. As we saw during Covid, that endangers public health. Other countries—New Zealand, Italy, France, Germany and many more—banned exploitative zero-hours contracts long ago, but the UK did not.
Under the Conservative Government, rights failed to keep pace with the rise of the gig economy. In fact, the Conservatives worsened protection against unfair dismissal, some sex discrimination rights and the human right to withdraw your labour. The party opposite claims that tilting the balance back towards workers would be bad for business. Nonsense. On the contrary, there is strong evidence that fairness at work boosts both productivity and innovation. In the UK, too many people are stuck in a revolving door of low-skilled, insecure jobs and unemployment. This Bill will promote better quality jobs and positive flexibility, so that more carers and people with disabilities or poor mental health get the chance to get work and stay in work. Of course, individual rights need effective collective enforcement. That is why it is so important that the Bill strengthens rights to organise and be represented by a trade union.
Finally, I will say a word on the UK-EU trade deal—the mother of all costs to business. According to the London School of Economics, trade barriers have hit small businesses hardest, with 14% having stopped exporting to the EU altogether. One reason we ended up with a second-class trade deal is that the EU feared unfair competition and that the UK would undercut it with worse workers’ rights. The Conservative Government’s broken promise to bring forward an employment Bill and its attacks on trade unions only confirmed that suspicion. This Bill can help ease EU fears and support negotiations for a better deal. That is just one more reason why the Bill is good for jobs, good for workers and good for business too.
Baroness Browning (Con)
My Lords, I add my congratulations on the four excellent maiden speeches we have been privileged to listen to in the course of this debate.
I will focus on a small section of this very wide-ranging Bill, concerned with the establishment of an adult social care negotiating body in England and social care negotiating bodies in Scotland and Wales. A well-trained adult social care workforce, especially for those living with dementia, is both important and long overdue. I declare my interests as co-chair of the All-Party Parliamentary Group on Dementia and as an Alzheimer’s Society ambassador.
According to the Explanatory Notes accompanying the Bill, the Government hope that sectoral agreements to be negotiated by the social care negotiating bodies will help to address the ongoing recruitment and retention crisis in the social care sector, and that this will in turn support the delivery of high-quality care.
However, despite the beneficial impact on the recruitment and retention of adult social care workers, education and training are not currently specified as matters for the negotiating bodies to consider. Last year’s report by Skills for Care, The state of the adult social care sector and workforce in England, stated that access to training was among the top five factors influencing retention; turnover rates were 7.4% lower for those who received training than for those who did not. There is evidence that lack of learning and development is given as a reason to leave.
Ensuring that the adult social care workforce is able to access high-quality training is not only crucial for recruitment and retention; it is also essential in ensuring the delivery of high-quality care for those who need it. This is particularly true for the almost 1 million people living with dementia in the UK today, a high proportion of whom need social care. For example, 70% of people in residential care have dementia, and we know this figure is going to rise.
It is therefore shocking that only 29% of adult social care staff in England are recorded as having undertaken dementia training, and that no legal requirement exists for them to do so. The Alzheimer’s Society is calling for dementia training to be made mandatory for all adult social care staff. I agree.
I intend to table an amendment in Committee that would include education and training within the remit of the social care negotiating bodies. This would send a positive signal to the sector and those who draw on care about the importance the Government and this House accord to the training and education of the social care workforce. It would also bring social care negotiating bodies in line with the school support staff negotiating body, which does have training within its remit. I look forward to a more detailed discussion in Committee.
Lord Prentis of Leeds (Lab)
My Lords, like others, I congratulate all those making their maiden speeches today; they were absolutely brilliant.
I too speak in favour of this Bill. How often have we heard myths extolling the virtues of a society with a light touch, a society where markets prevail and benefits trickle down? For many, the reality is far different. Profits, yes, but made at the expense of vulnerable workers; loopholes exploited; a compliant workforce with few protections; trade union rights, stripped back. The result? Almost 7 million citizens in severely insecure work. Of those, almost 4 million workers are on universal credit.
The UK was shamed earlier this year for being the eighth most unequal economy of the 40 studied, and that is why this Bill is so important. It creates stepping stones towards building a modern workforce: new measures to tackle insecure work; scrutiny of procurement, with a two-tier workforce agreement restored; enhanced rights against unfair dismissal; contracts reflecting the hours worked. Most of all, the Bill lays the foundations of a modern system of industrial relations, with social partnership, not conflict, at its core, tackling some of the most intractable issues facing our economy. The school support staff negotiating body, restored—the key to professional recognition for a group for workers overlooked for so long.
But nothing could be more significant than the proposals to transform social care. Social care is close to breaking point, weighed down by a toxic combination of chronic underfunding and dysfunctional markets. Over 130,000 social care jobs are unfilled, and the annual turnover rate is 25%. Some 400,000 social care workers are living on the verge of poverty. Their travelling time is not paid, and they work 14-hour shifts on zero-hours contracts, with little if any career progression. Meanwhile, on average 4,000 people every day are not able to leave hospital because of the lack of care. This Bill heralds the action so desperately needed, creating the fair work agency and the first pay agreement in adult social care in England.
Today, as we speak, an employer in Knowsley, Livv Housing, is a stark reminder of why the Bill is so important. Faced with legitimate action for fair pay, Livv Housing does not engage; it does not look into the underlying causes of the dispute. Instead, it offers a pay increase only to non-union workers and to those willing to give up their union. It threatens outsourcing and brings in strike-breaking companies—Dickensian, bully-boy tactics which cannot be fair by any standard. I ask my noble friend the Minister urgently to look into what is happening with Livv Housing.
This Bill is our chance to instil fairness back into the workplace; to restore balance; to ensure that workers are treated with dignity and that their contribution is valued, especially those at Livv Housing. It is a Bill that makes a profound and positive difference to people’s lives. It is our chance to make a difference—our chance to secure a better life at work.
Lord Balfe (Con)
My Lords, I place on record my thanks to the four maiden speakers and to the three former TUC general secretaries who have joined us for this debate, not to mention the last speaker, the noble Lord, Lord Prentis, whose union was always very helpful to me when I was David Cameron’s envoy to the TU movement.
I declare an interest: I am the president of BALPA, the pilots’ union, which is a TUC-affiliated union. I do not think I would be giving many secrets away if I said that the majority of our members probably vote Conservative at most elections.
Most people do not join trade unions for political reasons; they join because they want to be looked after and to have someone to consult if times get rough. The other thing is that most of them join because you get a good discount on your car insurance and a free legal advice service. My subs to AUEW-TASS, which is now part of Unite, were covered completely by the amount of money I got off my car insurance.
Just to rub it home a little bit, the legal service was excellent. My children went to a private school. We once got into a bit of trouble with the bursar, who was trying to pull a fast one. I rang the union legal service, and a very helpful solicitor drafted me a letter. I said, “I dare say you’re not used to helping your members challenge private schools”. I always remember his reply. He said, “Sir, we are not here to judge the members; we’re here to help them”. Those two facts about unions are a great comfort to many ordinary people who have to work for their living.
I have known quite a lot of Prime Ministers. The only Conservative one that I thought was on the right track was Ted Heath. If things had turned out differently, this party might well have a somewhat different relationship. I got to know Ted quite well after he retired because he used to enjoy coming to Brussels. They are so obsessive there about political balance and I was about the only Labour Party member willing to sit next to him at dinner, so we had lots of very interesting conversations.
I welcome this Bill—I am probably the only one on this side who does—because I think it clears up a lot of anomalies that need clearing up. I served 25 years in the European Parliament and I saw European trade unionism, based on the papal encyclical Rerum Novarum, where you respect the rights of workers. It is as simple as that. But I do think that, if we are going to move forward, those in the TU movement will have to change. They have to get Conservatives into the annual congress; they have to make them come and explain what they are up to, not have them as the hate figure on the wall. The TU movement itself has to look at how it deals with the one-third of its members who vote for the Conservative Party. That is as much of a challenge as our challenge to pass this law and make things better for the workers.
Viscount Colville of Culross (CB)
My Lords, I declare an interest as a freelance TV producer. I welcome aspects of this Bill. It does much to improve the rights and status of millions of employees and workers in this country, at a time when holding down a job is increasingly precarious. In particular, I welcome the changes to zero-hours contract arrangements. I understand that this will create some extra burdens for SMEs that need flexibility, but it will give important security to many low-paid workers. However, I, like many other noble Lords, am worried that much of this Bill is reliant on Henry VIII powers. I hope the Minister will listen to these concerns.
In firming up employees’ rights, I would like the Government to look at umbrella companies, which are being used increasingly in supply chains to pay workers. They are seen by clients and recruitment agencies as useful, because the umbrella company, not the actual company for which the individual is working, is the employer and responsible for PAYE. My concern is that these umbrella companies are not regulated. Their lack of transparency means it is unclear whether they are treating workers fairly, not applying hidden charges or withholding benefits that workers are entitled to. In far too many cases, clients that use umbrella companies do not always carry out due diligence on them. I would be grateful if the Minister could tell the House whether the Fair Work Agency that is being set up will have a role in overseeing umbrella companies to ensure that they are compliant and transparent, and to ensure that non-compliant umbrella companies do not enter the work supply chain.
This is the Employment Rights Bill, so it deals with employees, but I echo my noble friend Lord Freyberg when I ask the Government to take seriously the rights of the self-employed as well. They are a growing part of the workforce. There are over 4.1 million self-employed workers in this country, over half a million of whom are self-employed mothers. They contributed £366 billion to the UK economy last year. The Labour Party policy paper Make Work Pay says:
“Labour is the party of the self-employed and recognises their significant contribution to the UK economy”.
It promises to strengthen rights for the self-employed and deal with many issues that have long dogged the freelance world, such as the right to a written contract, action on late payments and health and safety protections for the self-employed.
As they bring this Bill to Parliament, I ask the Government to be aware of the danger of widening the gap between the employed and the self-employed, and the gap between the rights enjoyed by employees and those of the self-employed who lack protection for sick leave, parental leave and protections against unfair dismissal. This needs to be a major consideration for the Government.
I understand the current definition of employment under common-law employment tax rules is vague and open to interpretation, which can lead to conflict, often ending-up in the tax tribunal. So I welcome the Deputy Prime Minister saying, in her Second Reading speech on this Bill in the other place, that there are plans to set up a single category of worker to amalgamate the employee and the worker status. However, I ask the Minister to be aware of the concerns of the self-employed in creating a single status of worker. This could disadvantage freelancers, who make up much of the workforce, especially in the creative industries. The nature of their work means that they bob in and out of all these current employment statuses. The single category must incorporate this flexibility in employment, and I too add my support for setting up a freelance commissioner who could sort through these concerns and report to government.
The final issue I will draw to noble Lords’ attention is that of unpaid internships. I made my maiden speech, some time ago, against this scourge on our employment landscape. It is particularly prevalent in the creative industries and creates a serious barrier to social mobility. Can the Minister tell the House whether there are plans to ban all unpaid internships longer than four weeks? Our economy can thrive only if it is accessible to people from all backgrounds. I hope that the Government will follow this Bill with many of the pledges in the Make Work Pay paper to ensure that the UK maximises the opportunities for our workforce and safeguards the position of workers, whatever their employment status.
Baroness Prosser (Lab)
My Lords, it gives me great pleasure to participate in this debate.
I thank my noble friend the Minister for her introductory comments. She mentioned the clauses in the Bill that relate to equal pay. I am very pleased to hear that, but I must use words of caution to remind the House that this year marks 50 years since the Equal Pay Act was put on the statute book and, as she said in her opening comments, we still have a 13% pay gap between men and women workers. It has been my true belief for many years that, while the legislation is of course hugely important and we cannot do without it, legislation on its own does not do the trick.
My experience of the introduction of positive action programmes—which I will very briefly explain to the House—is that they have made a very important difference in a number of areas. Under the previous Labour Government, we introduced a programme, following the work of the Women and Work Commission, that worked with employers in various employment sectors where we identified women who had the ability and desire to improve their situation in the workplace. Many women take up jobs that are not necessarily at the top end of their ability: jobs that fit in with their family commitments. Those commitments may decrease over the years, as the children get older, but the women are stuck with those positions. Giving those women the opportunity to upskill, to train and to retrain—and, therefore, to move further up the salary ladder—has proved extremely fruitful.
Interestingly, in that exercise, more money was put into the delivery of the programme by employers than by government. Employers loved it. In the very short time that the programme was allowed to exist, over 25,000 women benefited from it. I would like to hear from my noble friend the Minister whether the current Government would consider looking at a positive action programme to ensure that the legislation we have on the books can benefit women and make a difference.
The other side of positive action involves looking at the situation of girls and boys in school and identifying the ways that girls learn differently from boys. A programme that ran called “Computer Classes for Girls” taught girls about computers, in big detail, in ways that allowed them to feel more comfortable about assimilating that information, thereby giving them the skills to move into work that would be more highly paid. I hope that my noble friend the Minister will be able to tell the House that she is open to ideas on this front and that we can therefore see some true movement on equal pay.
Baroness Jones of Moulsecoomb (GP)
I welcome our four new colleagues after their excellent speeches, and I look forward to their future contributions.
Obviously, I agree with everything my noble friend Lady Bennett of Manor Castle said earlier. Surprisingly enough, we support this Bill in its general purpose, because we like that it is making fairness at work a priority. Well done to the trade unions for making sure this never slipped off the public agenda.
At the moment, we have a divided and very unequal society, and the Bill will help to restore a bit of balance in the workspace. Without that balance in power, we will forever have working-class people going to food banks and claiming universal credit because their paid work does not give them a living wage or job security.
We have a two-tier economy. The rich have been getting richer much faster, while the rest of us are stuck or going backwards. These two facts are obviously linked. Last year, the collective wealth of the UK’s small band of billionaires increased by about £35 million a day. Meanwhile, according to the IFS, the past 15 years have been the worst for income growth in generations.
Like many, I was appalled by the Spring Statement. It means that the situation I just described will get much worse. We will support the changes that Labour are putting forward, but it is nowhere near enough to really change things and make the majority of people better off.
In your Lordships’ House, we all have the duty to fill the gaps in the Bill to make it work for everyone in society, but especially the poorest. To do that, we have to end the rip-off by privatised services, such as the water industry and energy suppliers. We need rent controls and more social housing. We need a wealth tax and a more equal society.
One of our amendments, for example, will be to introduce a maximum 10:1 pay ratio, so that no worker will see their CEO getting paid more in a day than they do in an entire year—the point being, you can pay your CEO whatever you like, as long as the cleaner gets 10% of that. Plus, if we want more productivity in this country then staff must be valued. If we want to lower the tax burden, we must end the corruption that comes with privatised procurement contracts and services. Of course, we have to protect whistleblowers and SMEs.
A surprising amount of this Bill could have been taken straight from the Green Party election manifesto—loads of very common-sense ideas. I congratulate the Labour Party on casting an eye over what we said—for example, a fair deal for those working in adult social care, enhanced rights from day one, quality auditing, and sick pay.
The Employment Rights Bill could turn the tide on the undermining of employment rights that has taken place since the 1980s. It is time to recognise that stronger collective bargaining rights and better working conditions can be good for workers and businesses. But the Bill is not complete. The Government clearly need some help in further drafting, and this House is the perfect place to do that.
Lord Browne of Ladyton (Lab)
My Lords, it is a pleasure to speak in support of this much-needed legislation. It is also a pleasure to have an opportunity, following the noble Baroness, Lady Jones, to remind her that much of this Bill was in our manifesto. I remind the Conservative Benches that we have a strong mandate for it.
It has been a pleasure to follow so many powerful contributions, based on expertise and deep engagement on these issues. I am mindful of time and the likely duration of proceedings in Committee and on Report, so I shall focus my remarks on just a couple of headline measures in this Bill and the backdrop against which they are being introduced.
Before I do that, I congratulate my noble friend Lady Jones of Whitchurch on her introductory speech. This is a very complicated and large piece of legislation, and she did a great job of delivering an explanation of the most important parts of it in her introductory speech. I also associate myself with the congratulations to our bevy of maiden speakers, including the noble Lord, Lord Young. I apologise that I have insufficient time to go into detail on the remarks that I would like to make about all those speakers, but their speeches were excellent. I will have another opportunity to compliment them in the future.
We know that the productivity gap between the UK and France, Germany and the United States has doubled over the past 16 years. Anyone who has walked past a newspaper stand or turned on the news over the past couple of months will be aware that we have a record number of economically inactive people through ill health, and that business has reported significant labour shortages in recent years. That is quite the inheritance. However, I am confident that this legislation is a substantive step towards engaging these challenges.
Taking the productivity gap first, when we ask what has caused our anaemic rate of productivity growth compared with that of our neighbours, we are often told that the Government need to get out of the way and that a thicket of workers’ protections is dampening the spirit of capitalism. Over the past 14 years of Conservative-led Government, I long ago lost count of the ministerial promises to kindle bonfires of red tape, take an axe to red tape, or some similarly strenuous deregulatory measure. It is clear that successive Conservative-led Governments over the past 14 years have failed by their own metric or simply were acting on an entirely false premise.
To build on the words of my friend, the noble Lord, Lord Burns, according to research by Cambridge Judge Business School, there has been a consistent and growing negative gap between labour law protections in the UK and those enjoyed by workers in other OECD countries, including France and Germany, at whose productivity rates we have cast such envious eyes in recent years. According to this research, the gap in protections began significantly to widen in 2010—the year that a Conservative-led coalition took office. Key divergences appeared, including working time, wider labour protections and laws impeding legitimate industrial action. This Bill makes a substantive contribution to closing that gap.
There are more celebratory remarks that I should like to make in that context, but time debars me. I will focus on one: the provisions relating to fire and rehire. Your Lordships’ House will recall the most egregious example of this, when the P&O Ferries instituted mass redundancies in March 2022. In response, the then BEIS Minister described the practice of fire and rehire as “deceitful” and “disgraceful”, and vowed that the Government would “stand up for workers” against these “appalling” actions. What slingshot of redress did the Conservative Government choose to employ against this Goliath of inequity? It was a voluntary code of practice that impinged on employers only at the point that a case reached tribunal. The measures in this Bill are far stronger, forcing employers who engage in fire and rehire to demonstrate that they have made exhaustive efforts to find an alternative and to demonstrate that an alternative course would cause severe financial harm to the company. That sounds like a much better way of dealing with this than was offered to those people.
I shall now engage the second element of this Government’s challenging inheritance: the number of people who are currently economically inactive owing to illness. Again, there are competing theories around the causes of this. Some believe that this country has some inherent aversion to hard work. Among them is the shadow Home Secretary, who recently suggested that British people need a better “work ethic”. A deeper look at the ONS figures belies this interpretation. Alongside mental ill-health, musculoskeletal disorders are the biggest cause of long-term unemployment.
Which professions are most likely to be impacted by musculoskeletal disorders? It is manufacturing, construction, transport and storage. There is a huge and structural disparity, in some cases over three times greater, between the number of people who are long-term sick who previously occupied those professions compared with people with jobs in IT, science or public administration, or with professional jobs. These structural inequalities will need wider treatment than falls within the scope of this legislation, but measures which improve protections around sick pay, end exploitative zero-hours contracts and strengthen workers’ rights are a step in the right direction. The question of workplace culture may be a wider discussion, but one which speaks to the spirit underlying this Bill.
Lord Ashcombe (Con)
My Lords, I declare my interest as an employee of a very large American insurance broker.
This Bill is deeply concerning, especially considering the recent legislative changes, such as the £25 billion raised through national insurance contributions and the 6.7% increase in the national living wage coming into effect next week. These developments are already creating significant challenges for businesses. Together with the regulations in this Bill, they highlight a troubling anti-business and anti-growth stance that risks undermining the foundations of the business community.
While the Bill aims to support workers and create a fairer society, it comes with substantial costs for many businesses, particularly small and medium-sized enterprises. These businesses will struggle to absorb these additional expenses without negative consequences. The key question is: how can businesses continue to grow and create jobs when burdened by such regulatory costs?
One of the many provisions in this enormous Bill is the introduction of a separate legal status for probation periods, alongside the removal of the qualifying period for unfair dismissal. This means businesses could face tribunal claims even during an employee’s probationary period. Although the Government have proposed a lighter-touch approach for probation, the details are yet to be fully determined and will depend on future consultations and secondary legislation. With tribunal waiting times already long—18 to 24 months—it is crucial to ensure that weak claims are dismissed promptly to avoid further strain on businesses. Whatever happens, it is more cost.
Moreover, the Bill introduces reforms to zero-hours contracts, including the right for workers on low-hours contracts to receive a contract reflecting the hours worked in the previous 12 weeks. However, the definition of low hours remains unclear and this uncertainty adds complexity for businesses in managing their workforce. Additionally, the Bill suggests allowing businesses to offer fixed-term contracts during high-demand periods instead of permanent contracts. If regulated effectively, this could help businesses better manage fluctuating demand. However, shifting the responsibility on to businesses to track when such rights are triggered and to offer contracts adds another layer of administrative burden. The Bill’s provisions on dismissal and re-engagement could also complicate restructuring efforts, potentially limiting a business’s ability to adapt to changing market conditions, such as office relocations or adjustments to working conditions.
I will only briefly mention the “Harassment by third parties” clause, which my new noble friend Lord Young of Acton has addressed so well. I believe it puts businesses in a near impossible position in trying to protect their colleagues and staff. It is essential that we find a balance between protecting workers’ rights and ensuring that businesses remain competitive, innovative, agile and responsive to the challenges of a rapidly changing domestic economy.
These changes, combined with the risks associated with permanent contracts, reduced flexibility in workforce restructuring and higher compliance costs, create a challenging environment for businesses. The Government must ensure these policies do not stifle the growth and job creation that the country needs. The anti-business and anti- growth narrative emerging from these legislative changes requires careful scrutiny. We must ensure that businesses are not overwhelmed by unnecessary bureaucracy and red tape. A thriving business environment is not only beneficial for businesses but also essential for the broader economy and the growth that this country desperately needs.
Lord in Waiting/Government Whip (Lord Moraes) (Lab)
My Lords, I remind all noble Lords to stick to the time of four minutes. Thank you.
Baroness Bousted (Lab)
My Lords, I want to congratulate the four noble Lords who made their maiden speeches today. They were excellent.
In passing this Bill, the House will restore the UK’s reputation as a nation which supports fair treatment of ordinary people in the workplace and the right of unions to take democratically determined action where necessary to oppose bad employment practice and to repeal the most egregious aspects of the previous Government’s anti-trade union legislation, which my noble friend Lady Jones rightly called punitive in her introduction to the Bill in this House today.
In 1919, the UK was a founding member of the International Labour Organization. Despite this proud history, the previous Government severely damaged the UK’s record on employment rights, passing legislation which attempted to curb the ability of unions and union members to secure better working lives for ordinary people. The ILO’s Committee of Experts on the Application of Conventions and Recommendations repeatedly commented on the previous Government’s flouting of commitments as an ILO member.
In 2022, the committee noted with regret the then Government’s belief that the measures they had put in place to protect striking workers from employer retribution were sufficient. It urged the Government to review the legislation, in full consultation with workers’ and employers’ organisations, to strengthen the protection available to workers who staged official and lawfully organised industrial action, and to provide the committee with information on the steps they had taken in this regard. No action was taken by the then Government on this recommendation.
In 2023, the committee noted with serious concern the development and implementation of minimum service level guarantees. It made clear its expectation that, in preparing their regulations and other guidance including codes of practice, the Government would ensure that any minimum level guarantees imposed on industrial action in the transport and education sectors were indeed minimum and ensure the participation of the social partners in the determination and, where no agreement was reached, ensure that it was determined by an independent body that had the confidence of all the parties. No action was taken by the previous Government on these recommendations.
In May 2023, the Joint Committee on Human Rights found that the minimum service level legislation, which made it easier to sack striking workers and left unions at risk of million-pound fines, did not appear to be justified and needed to be reconsidered. The committee found that it would be possible to introduce minimum service levels in some sectors in a way that was more likely to be compliant with human rights law. The then Government took no action to respond to the committee’s concerns.
In May 2024, in a landmark case taken by UNISON, the Supreme Court ruled that UK trade union legislation was incompatible with the European Convention on Human Rights in failing to prohibit detriment short of dismissal for taking part in lawful industrial action.
This sorry history of blatantly anti-trade union legislation, whose clear and unlawful purpose was to take away individual and collective rights at work, shows why the Bill being debated in this House today is so necessary. That is why I support this Bill and commend it to this House.
Baroness Fox of Buckley (Non-Afl)
My Lords, in principle I welcome this Bill’s aspiration to enhance protection of workers’ rights, but I had one nagging doubt ploughing through this huge, red-tape-laden, unwieldy legislation: how does it fulfil its boast to modernise employment rights and make them fit for the modern world? To me, it seems bizarrely out of sync with shifts in modern workplace culture.
For example, we are told by government that more sick leave entitlement aims to reduce the number of
“infections in the workplace—boosting productivity and benefiting businesses”.
Really? Has the Minister not noticed the crisis created by large swathes of workers too readily not going into work, pleading sickness, stress et cetera? Also, surely, making flexible working a default position will exacerbate the modern fashion for working from home as a regressive retreat from collective workplace solidarity. It is hard to cultivate a one-for-all, all-for-one culture from the individualised isolation of your bedroom office—a privilege, by the way, accessible only to white-collar workers.
On trade unions, I am delighted to see the back of the ludicrous Strikes (Minimum Service Levels) Act, which I argued against in this Chamber. But I am also worried that modern trade unions are not fit for purpose: their ideological priorities seem often to put them at odds with their members. I thought of this listening to today’s maiden speeches. By the way, I offer a warm welcome to the noble Baronesses, Lady Cash, Lady Berger and Lady Gray—this Chamber always benefits from more feisty women. But let me focus on the noble Lord, Lord Young of Acton, the founder of the Free Speech Union, which invaluably defends workers’ rights when facing a specifically modern form of employer mistreatment: being punished or sacked merely for expressing legal, if dissident, viewpoints.
The FSU is necessary because, tragically, too many, particularly public sector, union bureaucrats seem to have been radicalised by the toxic ideology of identity politics. Trade union officials often act as the censorious enforcers of HR departments’ equality, diversity and inclusion policies—policing their members’ speech rather than protecting their rights, which is the very opposite of the role that the noble Lord, Lord Balfe, described earlier. To give one example, the UNISON conference passed a motion pledging to combat so-called “gender-critical narratives” and distributed materials that conflated sex-realist perspectives with far-right extremism.
It is no surprise that a group of nurses from County Durham—more feisty women I like—have been forced to set up their own Darlington Nurses’ Union. They are taking the NHS trust to an employment tribunal, alleging that the hospital’s HR department intimidated and harassed them when they objected to sharing their female changing room with a biological male who identifies as a trans woman. The official nursing unions were useless, simply repeating their NHS boss’s inclusion mantras.
Yesterday, Sussex University was rightly fined over £500,000 for failing to protect Professor Kathleen Stock’s free speech. Do not forget, as Professor Stock noted at the time, it was her own Sussex University union, backed by the UCU and its general secretary Jo Grady, who threw her under the bus. Things are so bad, members are taking unions to court. Two academics, Deirdre O’Neill and Michael Wayne, makers of the film “Adult Human Female”, have launched a tribunal action against the UCU for viewpoint discrimination after campus branches blocked screenings.
Meanwhile, Rick Prior, chair of the Metropolitan Police Federation, is taking legal action against his union. He was locked out of his union email and suspended after a TV interview in which he suggested that many of his 30,000 rank and file officers were increasingly nervous about challenging people from ethnic minorities. I note that the Met’s professional standards department concluded that his remarks did not amount to misconduct.
These trends reflect the modern world of trade unionism. If they remain unacknowledged and the Bill uncritically extends the bureaucrats’ powers, it might not help but hinder workers’ rights.
Lord Hendy (Lab)
My Lords, I congratulate my noble friend the Minister on her elegant exposition of the Bill in opening today’s debate. I also congratulate our four maiden speakers on their excellent contributions. Like the noble Lord, Lord Balfe, I enjoyed the contributions of no less than three former general secretaries and one former AGS of the TUC.
In this debate I appear as Oliver Twist. Although, like others, I express gratitude for the Bill in place of the starvation rations given to workers by the previous Government, I ask for more.
The Bill will confer many benefits on our 34 million-strong workforce, but it is a long way short of the full—but hardly gastronomic—menu in Labour’s Green Paper, A New Deal for Working People, drafted by a committee to which I had the honour to be legal adviser and which was chaired by Andy McDonald MP. A New Deal for Working People was adopted by the Labour Conference in 2021, reaffirmed in 2022, reiterated in Labour’s Plan to Make Work Pay: Delivering A New Deal for Working People, and referenced in both the election manifesto and the King’s Speech.
Time permits me to raise only two of the many items left off the bill of fare. Both are essential to increase pay, and hence demand, in the economy. Both are vital to substitute negotiation for litigation. The first is sectoral collective bargaining: in other words, collective bargaining between unions and multiple employers to reach a collective agreement setting minimum terms across a particular sector called a “fair pay agreement”. A New Deal for Working People committed to introduce them across the economy. Labour’s Plan to Make Work Pay promised to
“start by establishing a new Fair Pay Agreement in the adult social care sector”.
The election manifesto referred to this fair pay agreement as a “sector collective agreement”. In contrast, the Bill makes no provision for sector-wide collective bargaining in any part of the economy. Instead, it expressly provides that the School Support Staff Negotiating Body does not constitute collective bargaining, and that its outputs are not collective agreements. For the Adult Social Care Negotiating Body, the Minister has regulatory power to so rule.
In any event, ministerial control over these bodies’ membership, terms of reference and manner of working, with unfettered power to override any agreement or disagreement, completely negates the definition of free collective bargaining, both in statutory and international law.
My second issue is the right to strike. The Bill sweeps away the minimum service level Act, and most of the Trade Union Act 2016; it simplifies notice and extends ballot mandate. The Government are to be congratulated. But the Bill does not remove the anti-union legislation of the 1980s, which hamstrings unions and has led to a near collapse in collective agreement coverage. That legislation is incompatible in a number of respects with our ratified obligations under ILO Convention 87 and Article 6(4) of the European Social Charter. This is not a matter of opinion. The supervisory bodies have so held consistently since 1989, as my noble friends Lord Barber and Lady Bousted have mentioned. A new deal committed this party to bringing our law on industrial action into line with our international legal obligations. It is a rule-of-law issue. The Bill will need to be amended accordingly.
Nevertheless, the grace and eloquence of the Minister make her singularly ill-fitted to play Mr Bumble.
Baroness Penn (Con)
My Lords, I add my congratulations to the quad of maiden speakers we have had in our debate today. In four minutes, you need to cut to the chase, so that is what I will do.
I am not someone who believes that that any improvement to employment rights negatively impacts employers or the economy. But, as the Government themselves have said, it is all about balance. Too many of the provisions in this Bill have got the balance wrong—including the day one right on unfair dismissal. The Government themselves recognise this. That is why they have committed to introducing a probationary period, but we have no detail on how this would work. That is just one of many examples in this Bill where the detail is not developed and employers have serious concerns.
Not only have the Government got the balance wrong in the Bill, at the same time they have failed to address one of the biggest imbalances in employment rights: paternity leave. In the UK, we give mothers 52 weeks of maternity leave and fathers just two. This is the lowest level of paternity leave across Europe. Take-up of that two weeks is lowest among dads on low pay, as the rate of pay for that leave is so poor.
The Minister said that new action plans would help close the gender pay gap. We can be confident that they will lead to plans, but less confident that they will lead to action. Instead, more generous paternity leave has demonstrated that it can close the gender pay gap. It is also good for fathers, good for children and, importantly, good for the economy. ILO research shows that it can contribute 2% to 3% of GDP. I know that the Government intend to do a review on this, but there has already been an evaluation and a consultation—so now is not the time for another review. It is time for action.
The other imbalance I want to address is the increase in compliance costs for businesses doing the right thing, while leaving significant loopholes allowing labour market abuse. Substitution clauses have traditionally been used to give small businesses flexibility. But there is increasing evidence that they are being abused by contractors to gig economy businesses.
With its substitution clauses, Amazon tells couriers that it is their responsibility to pay their substitute at any rate agreed with them and that they must ensure that any substitute has the right to work in the UK. This is clearly not happening. During random checks two years ago, the Home Office found that two in five delivery riders who were stopped were working illegally. And, from late 2018 to early 2019, there were 14,000 fraudulent Uber journeys, according to TfL.
It is not right to pass responsibility for compliance with criminal and right-to-work checks on to workers. The introduction of a comprehensive register of all dependent contractors would help to ensure that employment rights are upheld, pay is not suppressed through illegitimate competition, and support for the enforcement of right-to-work checks. If the Minister will not listen to me, perhaps she will listen to the App Drivers and Couriers Union, which says:
“Unfortunately there is this loophole that allows some bad people to come through. They are not vetted so they could do anything”.
I hope the Minister will take action to address the balance of this Bill. At the moment, it risks damaging jobs and growth, while at the same time it fails to address some of the most significant flaws we have in our labour market today.
Baroness Lister of Burtersett (Lab)
My Lords, this Bill is very welcome, especially the provisions aimed at tackling poor job security. Recent research underlines the importance of job security to workers and the effects insecurity can have on the well-being of low-paid workers.
One way in which this Bill enhances security is through the welcome improvement to statutory sick pay. However, there is an unintended consequence: a loss for some of the lowest paid employees, especially women and disabled people, who are sick too long to be compensated by payment of SSP from day one of sickness. Although it is true, as the Minister told the Commons, that most employees will not be worse off, surely the aim of such a change should be to leave no low-paid employee worse off. I cannot believe that the Government intended this.
It is also disappointing that there is no indication of any future increase in the SSP rate. The continued payment of such a low rate, which came into sharp relief during the pandemic, will blunt the impact that the positive changes will have.
In her letter to Peers, my noble friend the Minister emphasised that the Bill places the family at its heart, by increasing the baseline set of rights for employees with parental or other caring responsibilities. As it is still largely women who bear the main burden of balancing paid work and caring responsibilities, it is women who will benefit most. However, there are some holes here that I hope it may be possible to fill—and perhaps here I stand as Olivia Twist.
The first concerns carer’s leave. Carers are now entitled to five days’ leave a year, but, as we have heard, it is unpaid, so many carers simply cannot afford to take it. The case for paid leave rests not simply on the huge difference it would make to the lives, health and well-being of carers—the social and moral case—but on the strong economic and business case made by employers, such as TSB.
The Government’s estimate of the economic cost of caring through lost production puts it at a massive £37 billion a year. Just a couple of years ago, a Front-Bench spokesman told the Commons that the next Labour Government would be committed to introducing a right to paid carer’s leave, but recently on Report the Minister could say only that, because the right to unpaid leave was enacted recently,
“we are reviewing this measure and considering whether further support is required”.—[Official Report, Commons, 11/3/25; col. 952.]
I accept that the Government have to consider how paid leave should be designed, not least because we can learn from other countries, but what is there to consider with regard to the need for further support, given that we already have ample evidence? Surely we can show our commitment to unpaid carers by writing into the Bill an in-principle provision to introduce paid leave. This would be in line with its spirit and with the Government’s missions, not least the pursuit of economic growth, while demonstrating support for a group at considerable risk of poverty.
The other main hole concerns parental and paternity leave, which was raised by the noble Baroness, Lady Penn. The Women’s Budget Group, of which I am a member, in welcoming the Bill as potentially an important contribution to a more gender-equal economy, warns that it needs to tackle the unequal distribution of unpaid care work and structural inequalities, because unpaid care is the root cause of women’s economic inequality.
I have long argued that parental leave with a period restricted to fathers on a use-it-or-lose-it basis is a key social policy lever here—good for mothers, fathers and children. Instead, the current shared parental leave scheme is a joke, with only about 4% of fathers having used it at the last count. In the Commons, the Minister confirmed the promised review of parental leave, but said that it would be separate from the Bill. Why is it separate? A firm declaration of intent in the Bill to reform parental leave, with the aim of strengthening the rights for fathers, would send a message to men and boys in the face of concern that they feel undervalued.
A final hole concerns stronger workplace rights for domestic abuse survivors. The APPG on Domestic Violence and Abuse, of which I am an officer, called for an obligation to be placed on employers to take reasonable steps to support employees affected by domestic abuse in place of the much weaker existing advisory statutory provision, which it would seem many employers ignore.
In conclusion, I strongly support this Bill, but I hope we can fill the holes I have identified, in line with the Government’s missions, without affecting its basic architecture.
Lord Whitty (Lab)
My Lords, it is a pleasure to follow my noble friend Lady Lister. I hope the Government, in this Bill or elsewhere, follow up some of those points as a matter of urgency.
I am prone to write my speeches at the last minute. When I noticed I was number 41 of the speakers, I wondered what the hell I could actually say that was original. I turned to a paper I had received but not read before: a submission to the TUC about worker conditions and trade union rights. The paper compared rights here with the average situation in the rest of the OECD. It showed systematically that the average position in other OECD countries, for both individual rights and collective trade union rights, is substantially better than it is here. This covered a whole range of areas, such as hours of work, holiday, conditions of employment, dismissals and overtime, and collective aspects such as union recognition, collective bargaining and rules covering strike action. There were differences between different countries but, on average, on every single item, bar one or two, it is better in the rest of the OECD than it is here. One exception was redundancy provision, which means that you walk away with more money in the UK, but that also makes redundancy more likely. This was systematic across a whole range of conditions.
There is one other macro feature of the difference between our workforce and those in other OECD countries. Can you guess what it is? It is that, on average, productivity has risen far faster in the other countries than it has here. There is at least some degree of causal relationship between the terms and conditions in which workers and unions operate with employers and the fact that other countries’ productivity has risen substantially faster. The Government, and all those who purport to speak for British employers and industry in a hysterical way regarding the provisions of this Bill, should address that. Improved productivity would be a serious contribution towards our growth targets and the betterment of our economy as a whole. That is a macro point which speakers opposite have failed to recognise, and need to.
I want to mention another few points. I am a little unclear—perhaps my noble friend the Minister can clarify this—on what the fair work agency will do and how far it will replace other agencies. When I was the Minister responsible for agriculture, I seized on a Private Member’s Bill to introduce the Gangmasters Licensing Authority, which, to some extent, brought some order to a feature of modern slavery. We will have a debate on modern slavery tomorrow, so I will not go too far into that. One of the difficulties of not having direct regulators and enforcement agencies having too large a responsibility for one new quango is that some of the injustices that arise, which were identified by my noble friend Lady O’Grady’s committee on modern slavery, will not be tackled. I would like more detail about what the fair work agency will do and how it relates to existing bodies.
For some reason, I was never general-secretary of the TUC, but I was general-secretary of the Labour Party, and therefore I warm to the point of the noble Lord, Lord Burns, about the political levy. I sat on his committee for part of its time, and I largely agreed that we needed to tackle the question of political funding more broadly—not only the political levy but the way in which our political parties are financed in total. That goes beyond this Bill considerably, but it needs addressing. Continuously switching from opting in and opting out of the political levy is not the way to deal with it.
Lord Udny-Lister (Con)
My Lords, I offer many congratulations on the four great maiden speeches we have heard today, which, on a long afternoon, were both impressive and, more importantly, very enjoyable.
On a more serious note, we heard yesterday in the Chancellor’s Spring Statement that the immediate economic outlook for the country is grim. For a Government who claim to champion growth, it is alarming that, in just eight months, business confidence has all but evaporated. Regulation has begun to strangle and stifle free enterprise. Before us today we have yet another example of poorly thought-out legislation which, if passed in its current form, will completely undermine the agility and responsiveness of the private sector to deliver jobs and create growth.
Turning to the Bill itself, I want to pick up just a couple of points. I share all the cross-sector concern about guaranteed hours. If this area of the Bill is left unamended, the Government will be threatening the very viability of the jobs that the Bill aims to protect. I fear that the provisions covering guaranteed hours will ultimately lead to fewer people being able to get on the employment ladder in the first place, and that this section of the Bill will ultimately disadvantage young people at the start of their working lives. Employers will respond, inevitably, by limiting many of the opportunities needed by young people to gain experience and test their interests in different roles and industries. For them to do that, employers need to have a lot of flexibility. Of course, if that is too risky, they will just not do it. Government should urgently clarify and define what is meant by low hours and bring forward mechanisms by which employees should be able to opt out of guaranteed hours, much like the individual ability to opt out of the working time directive, when they feel content with their individual working arrangements.
The Bill will have a damming effect on the British manufacturing industry. Against a backdrop of rising costs, global competition, supply chain pressure and tariffs, rigid staffing models will tie the hands of our manufacturers and ultimately undermine the UK’s global competitiveness. I therefore urge the Government to hear the concerns being raised by manufacturing industries at this time, particularly in relation to zero-hour contracts and the notice period for industrial action. As it stands, the Bill is an attack on flexibility and misses the opportunity to modernise working practices. The harsh reality of the current economic conditions means that businesses will have to adapt rapidly to meet the new burdens presented by the Bill.
With the already crippling effects of national insurance increases and the plethora of excessive regulation imposed by this Government, I can only foresee the legislation forcing the hand of employers to make redundancies, reduce employment opportunities and increase the use of automation. The application of artificial intelligence will, of course, replace people. As government makes it more and more problematic and costly to employ people, businesses will be forced to respond by limiting new job creation.
No matter how much the Government attempt to dress up the Bill as progress, the reality is that this legislation is a reckless intervention that threatens the very sectors that are vital to our economic recovery. The Bill is shutting the door on employment prospects for students, carers and parents who want and need flexibility with their employment. The Government are hell-bent on waging war against private enterprise, and I, for one, will certainly vote against it at every opportunity. But I am afraid that this Bill will come to epitomise Labour’s road to our economic ruin.
The Earl of Clancarty (CB)
My Lords, I congratulate all four maiden speakers. Like my noble friends Lord Freyberg and Lord Colville, I will concentrate my remarks on workers who are largely not covered by this Bill but are a significant part of the workforce: the freelancers, including the self-employed. I will make particular reference to the arts and creative industries, and I thank DACS, BECTU and Equity for their briefings. I also declare an interest as a self-employed artist.
There are 4.39 million self-employed workers in this country, representing just under 14% of the workforce. There was a dip during Covid, when many freelancers fell through the gaps of government support, but the reality is that this is a long-term expanding workforce for whom the Government need to ensure employment rights.
Freelancers underpin the creative industries, our second most important sector economically and one the Government have pledged to support—80% of musicians are freelancers, for example. They have an especial importance, in that what affects freelancers will affect the sector as a whole because the creative industries are an ecosystem. Consequently, freelancers have a significance within the workforce that far exceeds their numbers. Therefore, a truly modern Employment Rights Bill would have properly included the rights of freelancers and the self-employed, for many of whom that status fits the nature of their work.
I acknowledge the argument about the complexities of freelance work and tax issues, including concerns about IR35. However, there is also a concern about the comprehensiveness of rights and the “single worker status”. How will that status accommodate freelancer workers with that mix of self-employed, PAYE employees and limb (b) workers?
I nevertheless welcome this necessary Bill for employees. Most European countries have banned zero-hours contracts, and we certainly need measures in place that will help employees without restricting their opportunities to work, which is a key consideration. Guaranteed hours will benefit many in the creative industries. However, there are various groups in the creative industries—including employees on short-term contracts and casually contracted workers such as cinema workers, front-of-house and other workers in theatres—who may be pushed against their will into self-employment without the same employment rights they currently have, at least. Will the Government monitor this potential effect? How will rights be properly enforced from within the new body?
BECTU points out that, on parental rights, sick pay, pensions, equalities and other areas covered in this Bill, the rights of self-employed workers “lag far behind” those of employees. Will the Government introduce these rights for self-employed workers? What will be the timescale for doing so? Equally, what are the Government’s plans for their manifesto commitments on blacklisting protections, health and safety protection and the right to a written contract for the self-employed?
Much of the creative industries supports the appointment of a freelance commissioner. It is also a recommendation of the Culture, Media and Sport Committee. Such a commissioner ought, of course, to be responsible not just for the creative industries but the whole landscape of freelance work. That should also extend beyond the particular concerns of employment rights to include the equally urgent concerns around pay and opportunities. As many organisations have pointed out, there is very little data on the freelance workforce, the collection of which should be a major aspect of this remit. In the same way that DBT and DWP have an involvement in this Bill, DCMS should certainly have an input into the role of a freelance commissioner, if one is appointed—after all, it has a working party on this issue, as the Minister knows—and any future legislation on the self-employed, as indeed should the creative industries themselves.
Baroness Smith of Llanfaes (PC)
I congratulate all four new Members on their maiden speeches today. I also thank the many Members who have raised the importance of introducing paid leave for carers; having experienced being an unpaid carer myself, I have lived the very realities of working while caring.
I welcome the Bill as a significant step forward for workers. I will, however, be focusing my remarks on where it falls short: in addressing sexual harassment and violence in the workplace. A 2023 TUC poll revealed that three in five women have experienced sexual harassment, bullying or verbal abuse at work, with the figure rising to almost two-thirds among women aged 25 to 34. Four out of five women do not report the sexual harassment they have experienced, and many workers leave their jobs rather than report it. The End Not Defend sexual harassment campaign highlights that young women, disabled workers and those from BME backgrounds are disproportionately affected due to their overrepresentation in precarious employment. This underscores the urgent need for the measures outlined in Clauses 19 to 22.
Although amending the Employment Rights Act 1996 to protect whistleblowers and requiring employers to take reasonable steps to prevent harassment are positive moves, these measures may not go far enough. Limiting interventions to sexual harassment may leave victims and potential victims of other gender-based violence in the workplace outside the Bill’s protection. Questions also remain about how non-compliance will be enforced. By amending the Equality Act, the Equality and Human Rights Commission is understood to be the regulator here. However, as it stands, it has limited enforcement powers, and its mandate to regulate only sexual harassment limits its ability to address the health and safety implications of violence against women in the workplace.
A more effective solution would be to treat gender-based violence and harassment in the workplace as a health and safety issue. Under the Health and Safety at Work etc. Act 1974, employers already have a duty to protect employees’ health and safety. By amending that Act, we could ensure that gender-based violence is explicitly covered as an enforceable health and safety measure overseen by the Health and Safety Executive, which already has the authority to inspect, fine and prosecute employers for non-compliance. That would offer a structured and enforceable approach to safeguarding employees, particularly women, from violence in the workplace. The noble Lord, Lord de Clifford, earlier noted concerns in relation to the clauses on harassment. However, the Health and Safety Executive has a track record of providing training and guidance, so this could be an alternative way forward.
Despite years of Government promises, according to a critical report published by the National Audit Office in January the epidemic of violence against women and girls continues to worsen. To end this behaviour in the workplace, we must confront misogynist culture directly. His Majesty’s Government’s goal to halve violence against women and girls by the end of the decade demands nothing less.
I look forward to the Minister’s response. I would appreciate further clarification on the enforceability of non-compliance under Clauses 19 to 22, as well as measures to address gender-based violence at work. I also look forward to engaging with all Members on this topic in Committee, as well as on paid leave for carers, improving paternity leave and addressing the gaps in sick pay.
Baroness Chakrabarti (Lab)
My Lords, it is a pleasure, as always, to follow the noble Baroness, Lady Smith of Llanfaes. I also add my congratulations to my noble friend the Minister and today’s four maidens. May they thrive in their new place of work—if not technically employment.
As my noble friend Lady Prosser so ably reminded us, this December will mark 50 years since the implementation of the Equal Pay Act 1970. However, the gender pay gap for all employees was still 13% last year and highest in our much-celebrated and lucrative financial sector. I suggest—at grave risk of being hit by a thunderbolt—that that Act contained a fatal design flaw that has been replicated in its successor statute, the Equality Act. It is left to an individual woman worker, with or without the aid of her union—though in recent years some unions have done valiant work on this—to, first, find out what her male colleagues are being paid for the same work or work of equivalent value and, secondly, in the event of disparity, to sue her employer.
With respect, for most women that scenario is cloud-cuckoo-land. I hope that noble Lords who have heard me raise this during previous Women’s History Months will forgive the repetition but, as legislators, would we dream of providing such a paltry enforcement mechanism in any other vital area of regulation? Would we leave children to investigate and litigate school standards, consumers to individually police food standards, and citizens to do the same for environmental protection, or building or nuclear safety, with no relevant state enforcement agency, even as a backstop? Surely the time has come to right this historic and continuing wrong. Even the most zealous free marketeers cannot seriously advocate impunity for employers who routinely and exploitatively discriminate against women or other groups in the context of remuneration for work.
HMRC already has access to payroll information for tax purposes, so it cannot be beyond the wit of policymakers to extend that remit and purpose to random spot-checking for equal pay as well. Indeed, this is one area where AI tools could come to the aid of employees rather than being a threat to them. Discrepancies could then trigger closer investigation, warning notices and eventual penalties in the event of persistent non-compliance and illegality.
I know that many have focused their equal pay efforts on pay transparency duties for larger employers, but this seems to simultaneously lack both realism and ambition. Again, would we allow food or drugs manufacturers, whatever their size, to market products unfit for consumption as long as they were labelled?
I ask my noble friend the Minister what plans His Majesty’s Government have in this area. For example, might Schedule 7 to the Bill be amended, or regulations under the new Section 78A of the Equality Act be made, to add equal pay provisions for state enforcement, or are there plans for a separate statute in this Parliament? Will she meet me and some of the unions and lawyers who have been working on the problem? Is it finally time for a dream made in Dagenham in 1968 to be fulfilled in Westminster?
Baroness Morrissey (Con)
My Lords, it is an honour to follow the noble Baroness, Lady Chakrabarti, whose work I greatly admire. I add my hearty congratulations and warm welcome to the four who gave such brilliant maiden speeches earlier.
I will make two contributions to the debate, one general and one specific. There is much that I, as a business leader, welcome in the Bill. My current roles are detailed in the register. Previously, I was CEO of an investment firm for 15 years, during which time pre-tax profits grew almost eightfold, or 15% a year, including over the financial crisis. That success and resilience was thanks to a talented team who were loyal and committed to the business—largely, I believe, because they were treated well. It was not a large business but, for example, we offered enhanced maternity leave from day one and staff could request flexible working fully 12 years before that was required by law.
Of course, as a business leader, I am very conscious of the need to limit burdens on firms, but high employee commitment and engagement is also key to the bottom line. UK annual employee turnover is currently 34%, according to the CIPD. One-third of workers are so disengaged that they leave within 12 months, and the cost of replacing them is huge—up to twice the outgoing employee’s annual salary. So I do not agree with the objections, including from various business lobby groups, that the Bill will layer on costs without benefits. It requires a raising of standards in how employees are treated, especially the low-paid and vulnerable, such as pregnant women. Treating people decently is something that should be the norm on day one but, sadly, not all firms currently do that or show any inclination to do so voluntarily. If employees feel treated fairly then, in my first-hand experience, they will more than repay this in loyalty and increased productivity—things that this country badly needs.
Just one example of where a long-term vision, not a short-term spreadsheet, paid dividends is that of Aviva, which introduced six months of equal paid parental leave in 2017 for both men and women. I asked Aviva how it budgeted for this ground-breaking policy, and it said that it did not actually know what the cost would be, but knew that employees with happy family lives would be more likely to stay and develop their careers there, so it decided to do it. The policy has been a resounding success. Men take an average of five months of paternity leave and there is great talent attraction and retention. The costs to the firm have been more than off-set by benefits, including lower recruitment expenses.
My second point is specific and concerns the protection from harassment clauses, Clauses 19 to 22. Your Lordships will be familiar with the high-profile sexual harassment cases that we read about in the press. Those are the tip of the iceberg. I chair the Diversity Project, and we have a confidential safe space for people to report poor behaviours. It has been going on for about two years and more than 30 reports have been submitted, 90% from women. Their accounts show that sexual harassment remains a problem. All too often, non-disclosure agreements—or NDAs—are used to buy silence, rather than address behaviours.
At the Diversity Project’s International Women’s Day event, I asked the audience, who were women in the City, whether NDAs for sexual harassment cases should be banned. The response was split 50/50. There are situations where a victim may decide she has to leave a company after what has happened, and an NDA can provide confidentiality and finance while she looks for a new role. I then asked whether people would prefer a more nuanced approach, one that allowed NDAs for sexual harassment cases only in certain circumstances. In Irish law, NDAs are banned for sexual harassment cases, except where the victim requests one and has taken legal advice. In addition, I suggested independent investigation into serious instances and a standard template for board oversight. At present, boards do not even receive this information; they surely should. This proposal met with a vote of 85% in favour. The consensus was strong around requiring regulators to ensure that bad apples are not put back in the system, which we know happens. At our event, 100% of the audience said that the FCA and PRA should give clear examples of unacceptable behaviours.
I will propose amendments to restrict the use of NDAs for sexual harassment. There has been debate on this and support for it in the other place. Your Lordships now have the opportunity to create stronger protections from sexual harassment in the workplace. That is something that I hope all Members of the House—men and women, whatever their political affiliations—can agree on.
Lord Davies of Brixton (Lab)
I congratulate the noble Baroness, Lady Morrisey, on raising an extremely important issue which I hope we will pursue in detail during the progress of the Bill. I welcome the Bill, and I congratulate my noble friend the Minister on her introduction of this important, excellent and timely legislation. I could spend my whole four minutes pointing out the Bill’s excellent content; I hope she will forgive me for raising three issues which the Committee will need to look at closely.
First, I will go through the Bill line by line, as they say, to check that pensions are given their due place within the legislation. Secondly, on statutory sick pay, I urge all noble Members to read the excellent briefing from Mind pointing out the importance of statutory sick pay in tackling the scourge of mental ill-health, particularly the way it should be structured to facilitate return to work, removing cliff edges.
The third issue which we will need to look at carefully in Committee is Part 3, the section on collective bargaining. Although the word “negotiating” appears in the introduction to each clause, I still need to be convinced that the provisions within each one deliver the grounds for proper negotiating. It is quite clear that it does not fulfil the definition of “free collective bargaining”, and we are going to need to look at that in some detail.
I heard the comments from the noble Lord, Lord Londesborough, at the beginning of the debate. I want to contest the idea that it is only those who have been successful in business who know anything about how the economy works. I stand on this side of the Chamber surrounded by giants of the trade union movement. As a former lowly assistant at the TUC, I am staggered by the quantity of expertise and knowledge that is available to speak in support of this Bill.
Of course, it is not just the general secretaries or the senior officials but the whole layers of paid and lay officials who work on behalf of their members. That does not get the publicity that it should, but they work tirelessly on behalf of their members. It is that experience in companies, in undertaking day-to-day industrial relations, which has informed this Bill. That is why it will be a success. People suggest that it is going to be against economic growth, but economic growth depends on workers. It depends on them having good conditions of work and security—that is why the Bill is in favour of economic growth.
Baroness Kramer (LD)
My Lords, I will confine my engagement with the Bill and my remarks to whistleblowing protection and NDAs. I intend to bring forward amendments in these areas as well as to join on amendments tabled by others, especially those from the noble Lord, Lord Wills, and, I hope, from the noble Baroness, Lady Morrissey—my colleague Layla Moran brought forward the NDA sexual harassment amendment in the other place.
I have long argued that existing protection for whistleblowers under the Public Interest Disclosure Act 1998, PIDA, is wholly inadequate. The inadequacy is in part because PIDA is drafted as employment law, limiting the remedies to workers and seeking redress through an employment tribunal. It is a great injustice to the many whistleblowers that in law the term whistleblower is restricted only to those categorised as workers.
In contrast and somewhat confusing matters, this House will know that HMRC has recently relaunched a significantly improved whistleblower rewards scheme, which invites any citizen with evidence of fraud to come forward as a whistleblower. HMRC is not alone; the CMA has a long-standing incentivisation scheme for citizen whistleblowers and now the Serious Fraud Office is also looking to incentivise citizen whistleblowers. In a sense, the enforcement agencies are freelancing to try to deal with the problems in PIDA, but it gives us an opportunity to redesign the whistleblowing framework and remove the barriers that PIDA—I am sure, unintentionally—originally created.
But the problems go well beyond just who is covered by PIDA, a law that few, even lawyers, really understand, as demonstrated by the alarmingly low rate of whistleblower cases that succeed in employment tribunals —about 4%. They are brought by people who are recognised and acknowledged by everyone in the room to be whistleblowers, but they cannot carry their cases through.
The employment tribunal process is tortuous. It pits a whistleblower with limited resources, limited knowledge and little, if any, legal assistance, even when there is trade union support, against an organisation with often unlimited resources and expert legal counsel. It exhausts and impoverishes whistleblowers by allowing cases to be dragged out for years; it requires the whistleblower to provide conclusive evidence to prove that they were dismissed because of whistleblowing; and the tribunal is not concerned in any way to see that the wrongdoing identified by a whistleblower is investigated.
The entire system is set up to encourage whistleblowers to settle their case, and, more often than not, they have no choice but to sign settlements containing non-disclosure agreements, known in the UK as confidentiality clauses. The NDA acts as a tool to enforce silence and suppress evidence of harm to the public; we have heard how it plays that key role in sexual harassment cases.
Among amendments I will bring, I intend to include an office of the whistleblower, structured as a hub to work with regulators and enforcement. It will be a place where whistleblowers can confidentially and anonymously deposit information and evidence of wrongdoing without fear of retaliation. It will be in a position to identify significant patterns of wrongdoing, such as in the Post Office Horizon scandal, and it would help so much in sexual harassment cases by making sure they were pulled together and visible in one place. It will also have the power to impose remedies and compensation where whistleblowers suffer detriment. I would prefer it to sit under the Cabinet Office, but I probably have no choice but to put it under trade and industry.
I know that I am going slightly over time, so let me just say that I am also supporting the duty of candour, and the folks behind that move—which is crucial—are also supporting the office of the whistleblower.
Baroness Goudie (Lab)
My Lords, I congratulate my colleagues on their maiden speeches: my noble friends Lady Berger and Lady Gray, the noble Baroness, Lady Cash, and the noble Lord, Lord Young. It was a pleasure to hear them, and I look forward to working with them on this Bill and other issues. I also thank all those outside bodies who were kind enough to send me briefings for today’s debate and for the continuation of the Bill.
I am pleased to support the Employment Rights Bill, a long-overdue step toward modernising our labour laws, ensuring fairness in the workplace and building an economy that works for everyone—businesses, workers and communities alike. For too long, our employment laws have failed to keep pace with the realities of modern work. Between 2010 and 2024, we saw relatively little new employment legislation, despite profound economic and workforce changes. The key framework governing employment rights, the Employment Rights Act 1996, dates back nearly 30 years. While the world clock has evolved, our laws have not. This Bill is about ensuring that the UK labour market is fit for the future: a labour market that delivers security, flexibility and, of course, dignity in work.
A central pillar to the Bill is ensuring that workers can balance employment with their family responsibilities. Today, too many parents—particularly mothers—are forced to choose between their jobs and their children. A survey by the law firm Slater and Gordon found that six in 10 mothers felt sidelined from the moment they revealed they were pregnant. Additionally, a third of managers surveyed preferred—listen to this—hiring men in their 20s or 30s over women of the same age, fearing potential maternity leave. This is a disgrace. The Bill will strengthen protections for pregnant women and new mothers, ensuring the future of this country can be fairly looked after.
Additionally, making paternity leave and parental leave available from day one of employment will have a significant impact. A study examining Sweden’s 2012 parental leave reform, which allowed fathers up to 30 days of flexible leave during the child’s first year, found significant benefits for maternal health. Specifically, there was a reduction in anti-anxiety prescriptions, a decrease in hospitalisations or specialist visits, and a drop in antibiotic prescriptions among new mothers in the first six months. These improvements are attributed to the father’s increased presence, providing support and allowing mothers to rest and seek preventive care.
Bereavement leave is another crucial reform. Losing a loved one is one of the most difficult experiences anyone can endure, yet too many workers are forced to return to work before they are ready because they do not qualify for leave. This Bill ensures that bereavement leave is a universal right from day one, offering workers the time and dignity to grieve.
This Bill will also strengthen protection against workplace harassment and discrimination—issues that disproportionately affect women. A survey by the Trades Union Congress found that 52% of women had experienced sexual harassment at work—a number that rises to 63% for women aged 18 and 24. The Bill introduces new duties on employers to prevent harassment rather than simply reacting when it happens, creating a culture of accountability and safety. We need a complete ban on non-disclosure agreements in cases of sexual harassment, bullying and general discrimination against people at work. It is really important that victims are no longer silenced; we really must be fervent about this issue.
In addition, the introduction of gender and menopause action plans is a necessary step forward—right now, one in 10 women in the UK have had to stop working.
I am sorry I cannot go on longer.
Lord Moynihan of Chelsea (Con)
My Lords, I declare my interests as a businessman and investor. I welcome the excellent maiden speeches of my hereditarily noble friend Lord Young of Acton; by the poised and articulate Baroness, my noble friend Lady Cash, and by the two other noble Baroness. I also apologise that, with the Minister’s kind agreement, I may have to leave before the winding up.
Good economic policy brings prosperity, security and jobs. The Government say economic growth is their number one priority. Does this Bill promote growth, which needs a low-regulation, low-tax, small government, free market environment? No, it does not. When this Government came to power, they succumbed to the time-honoured temptation to focus on demand, not least by giving selected supporters above-inflation pay raises. Demand is an attractive policy, because it pursues the covetable votes of the UK’s over-50 million adult consumers. Supply—which a Government seeking growth should have more properly focused on—attracts just the 5 million votes or so from employers and sole proprietors.
However, demand stimulation quickly runs up against the problem of funding new spend with available tax receipts. Tax hikes are made with the hope that tax will go up above its current 36% of GDP—but it obstinately has not. Government expenditures and regulation are going up, but so too are departures from this country, including entrepreneurs, high earners and achievers, and young strivers—all those current and future wealth creators who would have stayed and grown the economy, had a supply-side approach been taken.
Even though the Chancellor U-turned yesterday, the OBR cut its 2% GDP growth projection to 1%. That is still too optimistic, yet even 1% GDP growth means about zero growth per capita. There was an unmentioned elephant yesterday: this very Bill. Here is what the OBR said about it:
“In this forecast, we have not incorporated any impact of the Government’s Plan to Make Work Pay”.
It then goes on to say that the Bill’s impact on GDP should be negative, which drops its growth projection to below 1%.
After last year’s Budget, the economy slowed to a halt, just as we had warned it would. Now every piece of this vast new Bill seems designed directly to further ruin the economy: banning zero-hours contracts; letting the union fox into the SME henhouse; giving the right to request flexible working; and introducing no waiting periods for statutory sick pay, parental and bereavement leave and unfair dismissal. Each claims virtue but, in reality, damages economic growth and jobs.
What will be the economic consequences of Labour’s decisions? They will include: higher unemployment, especially among the youth; lower general prosperity; and many individual recessions as GDP per capita declines—an alarming prospect for the country’s future fiscal stability. Yes, it may feel good to have a heart, but it is more important to have a head.
Baroness Kennedy of The Shaws (Lab)
My Lords, I, too, welcome the new colleagues into this House and wish them well in their work as Members. I also congratulate the Minister on her introduction of this important piece of legislation. The world of work has changed and the expectations of workers, especially women, have also changed.
I very strongly endorse the speech made by the noble Baroness who bears the same first name as me, Helena—the noble Baroness, Lady Morrissey. She discussed non-disclosure agreements, and I will endorse all she said about their misuse to silence complainants who have been sexually harassed or bullied, or who faced discrimination, in the workplace. It is a problem that has been expressed and exposed time after time in our press. As the chair of a number of inquiries, I have directly seen how it affects lives in the workplace.
Non-disclosure agreements undoubtedly have an important place in employment. It is a way of protecting the intellectual property of an employer; nobody should be making off with a client list or stripping a business of its suppliers or the magic ingredient in a product. There are good purposes for which an NDA can be used, but, too often, they are frequently used to preserve the reputations of the powerful inside an organisation against the interests of those at the receiving end of abusive behaviours.
This was opened up back in 2018, when a woman called Zelda Perkins publicly breached her non-disclosure agreement with Miramax over the behaviour of Harvey Weinstein many years before. She had been paid off because she had raised a complaint on behalf of another woman with whom she worked. She ran the London office of Miramax and a woman had gone, as part of her work, to the Venice film festival with Harvey Weinstein and he sexually violated her. Zelda Perkins reported this to the headquarters of Miramax in the United States and had hardly put the phone down before there was a great posse of lawyers on her doorstep wanting to see her. Immediately, she and the young woman who had been sexually abused were presented with non-disclosure agreements. Lawyers were brought in to advise them that this was a sensible thing for them to do. They signed away their rights and were given compensation and they rushed off into the world of work and were told to get on with life. The non-disclosure agreement stipulated that the two women could not discuss the allegations—not only with the general public or tabloid newspapers but with lawyers, doctors, therapists, counsellors or anybody else. This was particularly devastating for the woman who had been violated.
Zelda Perkins bravely breached that non-disclosure agreement. It was in the public interest. It was very important that she was able to tell the story of how she and her colleague were silenced. She wanted to provide corroboration and indeed did in the litigation that followed.
In the public interest, it is important that we visit this, and I would like to see it included in this legislation. Yes, there can be an exemption, as the noble Baroness, Lady Morrissey, said, because some victims do not want the exposure, and that has to be respected—but only where they have had the opportunity of good legal advice. I hope that this House, persuaded by the many feisty women and their male colleagues, will agree that the Government should include this in the Bill in the way that the noble Baroness, Lady Morrissey, described.
Baroness Bray of Coln (Con)
My Lords, it is a pleasure to follow the noble Baroness, Lady Kennedy. I congratulate our four new colleagues who made such excellent maiden speeches today: the noble Lord, Lord Young, the noble Baronesses, Lady Cash and Lady Gray, and my friend, the noble Baroness, Lady Berger.
I am delighted to participate in this important debate on the Employment Rights Bill, which proposes radical and potentially rather damaging changes to our employment laws. It was only a couple of months ago that some of us here today were engaged in a debate on the Budget proposal to raise the cost of national insurance contributions paid by employers and its likely lethal effect on employment prospects.
Today’s debate on the Employment Rights Bill allows us to consider the potential damage the Bill will also do to job availability. Essentially, when more legal duties are piled on to employers, the additional cost of carrying them out leads inevitably to fewer jobs being created. That old saying about the road being paved with good intentions springs to mind—if we can call them “good”.
I start with one of the Bill’s most controversial aspects: the increased powers for trade unions, which will make it easier for them to organise within businesses and exert more pressure on employers, and will loosen current rules for calling strikes. But, if businesses can be brought to a standstill more easily by trade union activity, productivity and investment will suffer and jobs will again be at risk.
Furthermore, the Bill opens the floodgates to more legal challenges in the workplace. While legal recourse is clearly important in cases of genuine mistreatment, this Bill encourages excessive litigation. Companies will be required to overhaul employment contracts, provide new benefits and meet new, rigid compliance standards. For some, this may be an inconvenience. For others, it could mean the difference between survival and closure.
A new fair work agency is to be set up to help enforce the new statutory rights. It will have the right to enter homes as well as offices to examine documents which it can demand to see—and, if necessary, to seize electronic devices used to store information. It will also be empowered to bring employment tribunal proceedings against an employer even if the employee is unable or unwilling to do so themselves. I would say that the big state has just got bigger.
The Bill’s proposals for flexible working contracts and zero-hour arrangements are equally unworkable. While flexible hours are essential for some workers and, where possible, should be agreed, the Bill’s proposals go too far in restricting how businesses can structure and restructure their workforce where necessary. They must have the flexibility to respond to demand, which, as we all know, can go up and down. This Bill introduces rigid rules on flexible contracts, making them an entitlement from day 1 in employment, if wanted. If an employer needs to change the contracted hours for any business reason, the onus is on them to make the case.
Finally, I am deeply concerned about Clause 20 and its potentially chilling effect on free speech. Pubs, shops and other customer-facing businesses may be forced to limit what can be said by customers on their premises to avoid offending staff working there. This includes overheard, not just direct, conversations. Issues such as religion, age, race or perhaps a woman defending women’s sex-based rights, plus myriad other subjects, could all be banned because employers will need to prove that they have taken all reasonable steps to prevent what would be seen as harassment by third parties or would otherwise be held liable. The Equality and Human Rights Commission has already expressed its misgivings. So should we all, loudly.
The final question has to be: instead of making it harder to run a business, with the consequence of fewer jobs on offer, why are the Government not working with businesses and employees to find practical solutions to balance workers’ rights with economic progress and growth?
Lord Watson of Invergowrie (Lab)
My Lords, I am very pleased to welcome the maiden speeches of four new colleagues, each of whom will clearly make powerful contributions in the years to come in your Lordships’ House.
I start off by chiding the Whips somewhat. Many speakers today have gone beyond the four-minute limit, which is perfectly understandable. This is a Bill of 300 pages, 157 clauses and 12 schedules. There is much to say. I wonder why we are finishing at 7 pm this evening when we are sitting tomorrow and those noble Lords who normally leave on a Thursday to go home do not have to do so today. It would have been better if we had a bit longer for this debate.
The noble Lord, Lord Hannan, talked perhaps a little pejoratively of those speakers who wait until the end, listening and nodding sagely. Well, I have nodded sagely to some of the contributions that I have heard—mainly of course from this side. I see that the noble Lord is now nodding—sagely, I hope. For what it is worth, I do regard him as the finest orator in the House currently. But, having said that, I agree with hardly a word that he says. To paraphrase perhaps Ella Fitzgerald or, more recently, Bananarama, “It’s not what you say, it’s the way that you say it”.
When I looked at the list, I saw the number of Tories down to speak and thought, “That’s interesting, they’ve come round to our view on unemployment rights”. Unfortunately, having heard the contributions, that is not the case for far too many. I would definitely accept the noble Baroness, Lady Morrissey, from the Benches opposite. Employment rights actually means employer rights. That is the big divide that we have heard in the debate today.
Some of the doom and gloom almost defies description. Some noble Lords who were here, as I was, 25 years ago, at the time of the national minimum wage, thought that the economy would crash, that there would be mass unemployment, that employers would never be able to pay that. Well, here we are, 25 years later, and the national minimum wage, and indeed a figure beyond it, is now widely accepted. So those sorts of comments are not justified.
Because of the spread within the Bill, we have had many briefings, as my noble friend Lady Goudie said. We have all had them: in my case from the National Education Union, through the Law Society and even UKHospitality. We cannot possibly do them justice in this debate.
One of the briefings that I found most moving was a briefing in person this week from the TUC. We heard from workers who came to tell us what they thought the Bill would do for them in their situation. I remember particularly an USDAW shop worker, Fionulla Rhodes, who told us how some of her colleagues go to work in fear. That is an intolerable situation. We heard from Ceferina Floresca and Garfield Hylton, GMB members at Amazon, about the appalling tactics of that company when the union was trying to organise a ballot to legitimise the union. They reached the threshold and just as they got beyond it, what did Amazon do? It employed 1,000 new workers to move the threshold further away. This Bill will stop these sorts of abuses and will give to people like Fionulla, Ceferina and Garfield not just protection at work but dignity at work. That is a huge step forward.
There is not much time to say anything else. I enjoyed the contributions from many colleagues. The noble Baronesses, Lady Prosser and Lady Chakrabarti, mentioned the Equal Pay Act. My university dissertation, in 1974, was on the Equal Pay Act and now, half a century later, although progress has been made, so much more still needs to be made. This Bill will undoubtedly help to redress the balance, addressing a lot of the imbalance in employment legislation over the past four decades. Next, we will be going into Committee, and I remind noble Lords that in Committee they will have up to 10 minutes to speak on amendments.
Lord Vaux of Harrowden (CB)
My Lords, I accept that the intentions behind this Bill are well meant, but I am concerned about the unintended consequences. There are some positives—the rules on fire and rehire, and bereavement leave, are just two examples—but overall I am afraid I have to conclude that the Bill will damage growth and, most importantly, the employment opportunities of the most vulnerable people. Others have mentioned omissions from the Bill. I am supportive of the comments that have been made on NDAs and on whistleblowing, and I look forward to seeing what comes up on those.
The impact assessment says that the Bill will impose costs of around £5 billion on business. Worse, it confirms that those costs
“will be proportionately higher for small and micro businesses”.
That goes directly against the Government’s drive for growth. Noble Lords need not take my word for it. The OBR said yesterday that changes would
“likely have material and probably net negative economic impacts on employment, prices and productivity”.
There is already evidence that small businesses are reducing hiring, so I hope the Government will be willing to consider constructive ways to reduce the burdens on SMEs.
Speaking of the impact assessment, the bar is not high, but this is one of the worst I have ever read. The Regulatory Policy Committee rated it not fit for purpose, stating:
“Given the number and reach of the measures, it would be proportionate to undertake labour market and broader macroeconomic analysis to understand the overall impact on employment, wages and output, and particularly the pass-through of employer costs to employees”.
It beggars belief that any Government would propose changes of this importance without carrying out such an analysis.
That problem is made worse because this is, in effect, yet another skeleton Bill, with much of the important detail to be added later by regulation. I counted 173 regulatory powers—I am glad that the noble Lord, Lord Hunt, came up with the same number—including 11 Henry VIII powers. That restricts proper analysis and scrutiny. At the very least, can the Minister confirm that all material regulations will be provided in draft before we reach Report, to allow at least some scrutiny of those important rules? It is not acceptable to continue having these endless skeleton Bills. We are seeing more and more of them.
Given the time limit, I will raise just two detailed issues. First, I agree that zero-hours contracts can be exploitative and that some tightening is required, but they can work well for people such as students, as we have heard, and we should try to retain some level of flexibility for them. More importantly, the new rules are likely to drive perverse behaviour. Basing future guaranteed hours on the previous 12 weeks is burdensome on businesses, but it may also mean that people will not be given extra shifts during those busy times. The unintended impact of the Bill might be that people get less work, not more.
Secondly, there is the introduction of day-one unfair dismissal rights. This will directly reduce opportunities for vulnerable people. That is not just my opinion, it is the Government’s opinion too. The impact assessment says:
“There is evidence that the policy could negatively impact on hiring rates. For example, employers may be slower to take on workers due to the liability and increased protections”—
I stress this last part—
“particularly for those that are seen as riskier hires”.
I am sure we all support the Government’s intention to get people off sickness benefits and into work. But, to achieve that, we need employers willing to employ them. Is this really the moment to introduce rules that will, by the Government’s own admission, make that less likely? Is there any real evidence that the two-year qualifying period is being abused? In my experience, the opposite is true. The qualifying period allows employers to give people with little experience or poor employment records the benefit of the doubt when hiring them in the first place and at the end of any initial probation period. Can the Minister please provide evidence that the two-year qualifying period is in fact a real problem? The only winners here will be employment lawyers, and the losers will be the very people the Government say they want to help.
We have heard lots of comments about this being a Bill for the workers. What it definitely is not is a Bill for those who want to work.
Baroness Rafferty (Lab)
My Lords, I refer to my interests in the register. I, too, welcome the quartet of maiden speeches, especially those from our Benches.
I welcome this Bill, one of whose aims is to repeal the pernicious Strikes (Minimum Service Levels) Act 2023. These laws imposed disproportionate constraints on the ability of working people to organise collectively and defend their interests, weakening the foundations of workplace democracy.
When I was president of the Royal College of Nursing, the college took the momentous decision to halt history and overturn a decision not to strike after more than 100 years of its history. The conditions that produced that decision were triggered by the previous Government’s record as a hostile and aggressive actor seeking to bully nurses to back down on their pay claim to remedy 14 years of pay stagflation.
When nurses go on strike, we know there is something seriously wrong with the moral order. Having been on the picket line with fellow nurses in Northern Ireland in 2019 and in London during 2022-23, I was struck by the resolve of nurses and their dogged determination to seek justice and protect patient safety, and the extraordinary support shown by the public. Throughout the strike action, the Government misjudged not only nurses’ own resolve but the public mood, banking on a cynical political calculation that public support for striking nurses would wither and wane. Evidence demonstrated that the opposite occurred: public support was not only sustained but strengthened over time.
It is also gratifying to see ways in which the Bill reflects some of the priorities of the nursing profession. The Bill’s proposed expansion of trade union access rights is particularly important for nurses in the independent sector, many of whom have little or no exposure to trade union representation at work. To be meaningful, this access must be available via both digital and physical means, and employers must be subject to a clear statutory duty to comply.
The Bill’s provisions to create an adult social care negotiating body represent, potentially, a transformative change for a sector long characterised by low pay, fragmented employment and workforce instability. Many nursing staff in this sector work under conditions that would be unacceptable in any other part of the health system. This body could help promote equality, particularly for internationally recruited nursing staff, upon whom we will increasingly rely, and workers from marginalised communities. Reports of repayment clauses, bonded labour arrangements and racialised pay disparities remain disturbingly common in adult social care and must be rooted out.
Modernising employment law for the nursing profession must address the systemic challenges faced by women in work—from pregnancy and parental leave protections to preventing workplace harassment and improving access to flexible working. This Bill presents an important opportunity to tackle long-standing inequalities and deliver on the potential for a more supportive and inclusive working environment for nursing staff. I commend it to your Lordships’ House.
Lord Katz (Lab)
My Lords, it is a pleasure to follow my noble friend Lady Rafferty and to hear the outstanding maiden speeches of my noble and very good friend Lady Berger, and indeed my noble friend Lady Gray. I also congratulate the noble Baroness, Lady Cash, and the noble Lord, Lord Young of Acton, on their maiden speeches.
It is an equal pleasure to speak in this Second Reading debate on the Government’s flagship Employment Rights Bill alongside colleagues with huge experience of the realities of day-to-day trade unionism, not the flights of fancy we have heard from some Members opposite. I am not sure what the collective noun for trade union general secretaries and assistant general secretaries should be. Perhaps we on our Benches need to invent one. I would say a “negotiation”, but we can quibble over that.
For my own part, I am someone with experience of both sides of the negotiating table. I worked as a lowly political officer at the Transport Salaried Staffs’ Association, more recently for a FTSE-listed transport operator, and for small businesses in between. When hearing some of the contributions from the Benches opposite, I recall an earlier job. I had the privilege of working for my noble friend Lady Harman when we were campaigning on the blight of low pay in 1990s Britain and the need for a national minimum wage. As my noble friends Lady Hazarika and Lord Watson of Invergowrie reminded us, shrouds were certainly waved back then by the Conservative Government and some of their business backers about the devastating impact it would have. Next week, the national minimum wage will rise again, benefiting 3 million workers. Our economy did not collapse—it will not now.
Making work fair—which the Bill does—is so important in delivering not just a better economy but a fairer, more just and cohesive society. I could dwell on many individual elements of the Bill. My niche favourite is the decision to scrap the pointless hoop-jumping of regular political fund ballots, having organised some myself, but instead I will consider the societal benefits of making work fairer for individuals and giving trade unions more rights to represent working people when they are being unfairly exploited.
Research conducted by Warwick University has found that job-related ill-health is costing UK businesses up to £41 billion a year, with 1.75 million workers suffering due to poor job quality. This study highlights how job insecurity, low pay and long hours contribute to poor health outcomes for employees and how, conversely, the academics say, job security, fair pay and a healthy work/life balance are linked to better well-being—hardly surprising.
The number of people in insecure work reached a record high of 4.1 million last year. Contrary to the assertion by the noble Lord, Lord Hunt of Wirral, those workers do not want to be in a state of insecurity. According to a TUC poll of zero-hours contract workers, some
“84% want regular hours of work—compared to just … 14% who don’t”,
and:
“Three-quarters … of those polled say they have experienced difficulty meeting living expenses due to not being offered enough hours”.
But extending workers’ rights is not just good for workers. Making work more equitable, secure and meaningful is good for communities, too. That is why, as my noble friend the Minister said, the wider population, not simply those workers impacted, support the measures in the Bill. Polling from Hope Not Hate has found that
“72% of UK voters support a ban on zero hours contracts, … 73% support … protection from unfair dismissal”
and 74% support ensuring that all workers have the right to sick pay.
Hope not Hate polling also found that over half the people felt pessimistic about the future. We know from history that, when an economy is on its knees and people feel insecure and hopeless about their own future as well as the future of the country, it weakens community cohesion, leaving space and divisions which the far right is only too willing and able to exploit.
Insecurity at work breeds insecurity in our communities and our country. These reforms will make people feel valued and restore a sense of hope to the most marginalised in our society—and that can only be a good thing. In short, we need change and the Bill is a vital part of that positive change for millions of workers, their families and their communities.
Lord Strathcarron (Con)
My Lords, I too welcome the four maiden speakers and congratulate them on their speeches. Meanwhile, like some of us here today, I was in the other place yesterday afternoon listening to the Chancellor’s Statement and her quest for growth. Yet here we are today in this Chamber, debating the Second Reading of a Bill of which certain parts are absolutely guaranteed to regulate the life out of any growth that she wants and the country needs.
Leaving aside the economic damage that those parts of the Bill will cause, we also need to consider the societal damage that will be done by Clause 20 in particular and its effect on free speech and life’s moments of enjoyment, which we currently take for granted and which are now under threat. To illustrate this, I will give an example from my own work experience.
I publish about 50 books a year and the marketing of each one requires my employees to come into contact with the general public—those whom the Bill calls “third parties”—at book launches and other sales events. To take a typical example of a book launch in a bookshop, the bookshop would host two categories of third parties: first, say, 50 of our own potential customers, and then a further 50 of its own from its mailing list. Apart from the bookshop staff, I would typically have three or four of my own employees there to help. In terms of the Bill, this detail is important: they are my employees, but even though they are working on someone else’s premises, they will still my liability.
Now, to avoid the consequences of the Bill, should I and the book shop request that our guests not talk to staff, or even to each other, in case a member of staff overhears them about any subjects relating to protected characteristics, even if what they say is perfectly legal? I ask your Lordships: after seeing such an invitation, one that discourages any form of legal sociability, would any of us go to such a cold-water event?
This might sound fantastical, but it is not fanciful. It is all right here in Clause 20. The result in this instance is that the risks are untenable and therefore the event will not happen. We will have given up another harmless pleasure to satisfy the whims of the ever-changing latest version of groupthink. Then again, in a wider context than this, would Waterstones, for example, risk arranging another in-store book signing by JK Rowling, Kathleen Stock or Helen Joyce, on the off-chance that one of the author’s fans will arrive wearing a T-shirt saying, “Woman=Adult Human Female”, knowing that their employees could sue for hurt feelings, real or vexatious.
Widening this out still further to cover all hospitality events—I am also a trustee of a national museum that stages events throughout the summer—the only practical way for any host to mitigate these dangers is to pass the potential liability on to organisers or promoters. Would either really want to take this on, bearing in mind that no one involved in staging an event has any idea who the third parties coming to the event will be? Are they up to date with the current thing—the latest protected characteristic they must not talk about? Are they courteous and even sober? Do they have English as their first language? Any encounters between so-called third parties and employees are totally beyond the employer’s control, yet, in this Alice in Wonderland world of Clause 20, the employer will be responsible for these interactions, no matter where they happen and even if they are totally legal in themselves.
I urge the Government to have a massive reality check about the foreseen and unforeseen consequences of Clause 20 as the Bill progresses.
Lord Fox (LD)
My Lords, rather than being the third party, I think I am the 59th party in this debate.
Somewhat repetitiously, I congratulate the noble Baronesses, Lady Berger, Lady Gray and Lady Cash, and the noble Lord, Lord Young, on their maiden speeches. Without being seen to pick one from the other, I was struck by the comments that the noble Baroness, Lady Gray, made about the benefits of having spent time running a pub. Straight after graduating, I became the manager of a busy bar in north London. I learned about people, and more importantly learned about employing people, because it was the first time I had started to employ people. It was a great lesson. You can learn a lot in places like that.
This has been an interesting debate. We have heard very disparate views. On the one hand, maybe the noble Lords, Lord Davies and Lord Hendy, put the pole in one place and, on the other hand, almost certainly the noble Lord, Lord Moynihan, placed the pole in another. Your Lordships’ task will be to work out where this Bill lands between those two poles. It is going to be a tough job in Committee.
This Bill undeniably sets out to meet a manifesto commitment that the Government very clearly articulated during the election. Unfortunately, one aspect of that commitment was to deliver it within 100 days. The nature of what we are discussing has suffered from the lack of rigour in preparation. That is clearly evidenced by the number of amendments that the Government themselves have had to bring—and also by the lack of detail and the number of consultations that are outstanding.
For that reason, those of us on these Benches will work closely on not just the intent but the detail of this Bill. An awful lot of detail is missing, and many of the real details are still out for consultation or are awaiting codes of conduct that will be set out in regulations that we have yet to see, so it is going to be quite a hard Committee.
However, before descending into that detail, we should reflect somewhat on the purpose of this legislation. We Liberal Democrats agree that there is absolutely a need to ensure that exploitative employment is dealt with. There is no doubt a need to do that, and we support that objective, but I hope that when this Bill leaves your Lordships’ House, it will be more widely equipped to help improve employer-employee relations and, yes, to deliver fair work, but also to create conditions for growth. If it is to do that then there is a long way to go to achieve it.
I have been a member of a trade union, and I have been part of executive management of businesses that have worked very constructively with trade unions, but that is not the only model for employer and employee. A central criticism I have of this Bill is that it seems to disregard the fact that many—I would suggest most—businesses maintain strong and beneficial relationships with their employees without the need for union involvement or intervention. As a starting point, this Bill seems to have an air of suspiciousness about the functioning relationships with which normal businesses go about their business. We have to go back and get away from the idea that one size fits all. There are a lot of different hybrids that work in business, and this legislation should facilitate them all equally. Further, there needs to be more recognition of employees as individuals rather than as members of unions. A fact of life is that, whatever the Government think, the vast majority of employees will not be in a union, at least in the private sector. We need to think about how that works.
The tone of this legislation is, perhaps unsurprisingly, very legalistic. An awful lot of lawyers have been involved in it. There will certainly be more employment tribunals if it passes as drafted. I emphasise that every time a case goes to a tribunal, both sides have already lost. We do not want to push things. In answer to the sedentary interjections from the noble Baroness, Lady Chakrabarti, the fact is that it will push things into a legal process; that is what I meant.
Given the uncharted nature of this legislation, we will rely on case law for years to come to define its boundaries. The noble Baroness, Lady Prosser, and others talked about equal rights legislation. Years and years of case law enshrined how that worked in the workplace. If the tribunals and the courts are so tied up, that case law will be very slow in coming. We have to be clear in our definitions so that we are not relying on those definitions for this Bill to function properly when it becomes an Act. We know that the tribunal system is already overloaded, with waits for rulings measured in years.
Also, ACAS will have an important role to play, not just on the policy side but with its mediation work. Will its funding be increased to reflect this extra burden? My guess is that the tribunals and ACAS will not be funded properly, which will cause administrative sclerosis, uncertainty and long waits for cases to be heard. How we are going to resource the Bill, if and when it becomes an Act, is something that needs to be taken into consideration.
I turn to some of the central points of the Bill. My first questions will be around the legal definitions of zero-hours contracts. A lot of work needs to be done to tighten definitions so that we know what we are talking about and what we seek to achieve. The addition of agency workers further complicates this point. There are fundamental decisions that we cannot wait for the legal process to deliver.
As this Bill passed through the Commons, the Liberal Democrats introduced a number of amendments that we will present to your Lordships’ House. For example, Daisy Cooper MP proposed a new clause to publish a review of the impact of Part 4 of the Bill on SMEs. Liberal Democrat MPs expressed concern about placing unreasonable burdens on SMEs. They duly called for clarity on aspects such as probation periods at an early stage due to the significant impact this will have on small businesses.
As the noble Lord, Lord Browne, noted, this is a complicated Bill. Should any small business person have had time while running his or her firm to listen to the Minister’s introduction—very able as it was—its complexity would certainly have alarmed them. It is daunting legislation for all businesses, but particularly smaller businesses. I fear that the retail, hospitality and leisure sectors stand to face some of the biggest challenges that the Bill could launch.
I caution against conflating the contents of this Bill with productivity and growth by citing international examples. There is a difference between correlation and causation, and we perhaps should not go too big on that. We should use a different measure—what is right to do, rather than the supposition that it may or may not deliver growth.
As we heard from the triumvirate opposite—the noble Lord, Lord Freyburg, the noble Viscount, Lord Colville, and the noble Earl, Lord Clancarty—there needs to be a proper understanding of the role of freelancers and the self-employed within the workplace. Where do they sit within this Bill, and what should or could their contractual rights be?
It is also clear that the Bill needs to focus more on the future of employment, and here we should look at closer alignment with EU positions—for example, on AI involvement and algorithm-directed employment. These have been discussed in the past but they are not included in the Bill. I hope that the House will debate this, and that the Minister will be forthcoming on these future issues.
Then there is the fair work agency and how it will operate. There have been alarming reports in the press, which may or may not be true, but it is clear that we need to flesh out how this agency will work. How will it supplant the work of the Treasury and, possibly, the Gangmasters and Labour Abuse Authority? Will it have access to the same data the Treasury has, bearing in mind that this is confidential tax data? Before we reach Report, the Government should publish full proposals for this agency. We cannot approve it sight unseen. Furthermore, as we have heard from a number of noble Lords, the preponderance of delegated legislation will have to be addressed either by your Lordships or, I hope, by the Government in advance of that process.
The Spring Statement saw the biggest reduction of assistance to working carers for a decade. As my noble friend Lord Palmer set out, we will seek to strengthen provisions on carer’s leave. We will also address parental issues, such as the absence of provisions on miscarriage bereavement leave. We will propose increasing the length of paternity leave and making it more flexible, which I hope will please and be supported by the noble Baroness, Lady Penn.
As my noble friend Lady Kramer set out, we will table amendments that seek to act on whistleblowers and on the misuse of non-disclosure agreements. I share the analysis of the noble Baroness, Lady O’Grady, and others on the need to protect workers from harassment.
To conclude, I am anxious that the Minister does not dismiss the negative words that she has heard today as being purely political chipping. There are genuine practical problems that we need to address in your Lordships’ House, and I hope we can take forward that practical approach as we go into Committee. Liberal Democrats believe that the lack of detail in the Bill does not facilitate certainty and stability for businesses or workers. That is what we need for growth: certainty and stability. There are huge holes in the available data and detail supporting this important Bill. Much of that detail is floating in the many consultations or as yet unpublished codes. We need to have advanced sight of the important levels of detail that will flesh out the skeleton of this Bill.
Like many, I fear the overall effect that this Bill will, or could, have on small and medium-sized businesses, particularly through the introduction of much complexity and the threat of cases being taken to many more tribunals. It is friction, and these businesses do not need yet more friction in what is already a very difficult trading environment. In the main, this Bill takes a one-size-fits-all approach to addressing genuine problems in the workplace, and it does not look far enough forward on future employee issues. That said, we look forward to discussing this issue in Committee.
Lord Sharpe of Epsom (Con)
My Lords, I join in thanking the Minister for her introduction, and, of course, in praising and commending the speeches of the four maiden speakers today: the noble Baronesses, Lady Berger and Lady Gray of Tottenham, and my noble friends Lady Cash and Lord Young of Acton. This has been a very interesting debate. Before I start, I should declare my interest as a minority shareholder in two businesses that employ people. It is a pleasure to follow the noble Lord, Lord Fox. I found myself nodding in agreement with much of what he said, and I will do my best not to repeat all of it.
Others have commented on the fact that this, overall, is a troubling Bill, and for numerous reasons—not least, as my noble friend Lord Hunt of Wirral articulated so expertly, its excessive reliance on secondary powers. I will not expand on that now, as the case has been made—and, indeed, reinforced just now by the noble Lord, Lord Fox—but I will focus my remarks on two areas where, to use a phrase coined by my noble friend Lady Penn, the balance is seriously wrong. They are the inevitable and disproportionate impact on SMEs, acknowledged in the Government’s own impact assessment, and the day-one rights and their inevitable impact on hiring.
I begin by turning to the bigger picture and quoting from the Government’s own impact assessment. It states:
“Many of the policies within the Bill could help support the Government’s Growth Mission … we conclude the direct impact on growth could be positive, but small”.
The word “could” appears 132 times in the assessment. That is the language not of confidence but of uncertainty and hesitation, and it shows a fundamental lack of conviction in the very legislation before us.
While the Government dither, businesses are suffering. Indeed, as we saw only yesterday, the OBR downgraded growth forecasts from 2% to 1%. A particularly telling phrase in the explanatory note—as already referenced by my noble friend Lord Moynihan—said
“we have not incorporated any impact of the Government’s Plan to Make Work Pay as there is not yet sufficient detail or clarity about the final policy parameters.”
It goes on to say:
“Employment regulation policies that affect the flexibility of businesses and labour markets or the quantity and quality of work will likely have material, and probably net negative, economic impacts on employment, prices, and productivity”.
That is an explicit acknowledgement of the uncertainty generated by this Bill, and an admission that implies that more downgrades are to come. Let us look at the facts. The business confidence index for the United Kingdom stood at 97.4 in December 2024, a sharp decline from the previous month and the lowest reading since July 2020. That, of course, was a time of extraordinary crisis, global shutdowns and economic freefall. Yet today, with no pandemic to blame, we find ourselves again teetering on the brink.
The Institute of Chartered Accountants in England and Wales’s Business Confidence Monitor, which is the most comprehensive measure of sentiment in our business community, plummeted from 14.4 to a mere 0.2 in Q4 2024. The Institute of Directors confirms this: its Economic Confidence Index dropped to minus 64 in February, close to the lows reached during Covid. Regarding this Bill specifically, the Institute of Directors’ survey suggests that 57% of business leaders will be less likely to hire.
ICAEW members across the UK have raised concerns about the Bill’s impact on costs, labour flexibility and business dynamism. According to a poll of its members, 73% expect the Bill to increase employment costs for new and existing employees. One said, “It is like rushing down a hill towards a lake and pressing the accelerator.” The OBR has told us how this ends: in unemployment, and it will be unemployment of the Government’s own making. On that subject, that is one statistic that noble Lords opposite failed to cite when making their international comparisons. For the record, it is currently 7.3% in France, 6.2% in Germany and only 4.4% here.
What is driving this collapse in confidence? It is the suffocating weight of excessive taxation and crippling uncertainty about the future, as many others have noted. Small and medium-sized enterprises, which concern those of us on these Benches considerably, are rightly hailed as the backbone of the British economy, and for very good reason. SMEs account for 60% of UK employment and 48% of business turnover. Their confidence has turned negative for the first time since Q4 2022, falling from 12.8 to minus 4.7. That figure is not just a dry statistic. It represents thousands of business owners lying awake at night, wondering whether they can afford to keep the lights on, let alone hire new staff or invest in their future.
We should be under no illusion: the cost of this uncertainty is devastating. The Federation of Small Businesses reported that a staggering 33% of small employers now expect to reduce staff. That number has doubled in just one quarter. Meanwhile, only 10% of small firms plan to take on new employees. The result will be a shrinking economy, a contracting workforce, reduced opportunities for young people and those seeking to move from welfare to employment, increased costs and bureaucracy, and a country that is clearly retreating from ambition rather than embracing it.
If more confirmation is needed of this picture, the Government’s own impact assessment for the recent SI, the National Minimum Wage (Amendment) Regulations 2025, confirms the difficulties facing small business. It states that
“there is some evidence of challenging business conditions for SMEs specifically. Around 42.7% and 36.8% of micro and small businesses, respectively reported having less than three months of cash reserves in September 2024 (compared to 19.2% for large businesses). Around 15.6% and 33.9% of micro and small businesses, respectively, reported the cost of labour as a challenge to business turnover in November 2024.”
It is not clear whether, by the “cost of labour”, it was talking about the workforce or the party opposite. SMEs will need many exemptions from the provisions of the Bill. Yet the picture I have just painted is about to be made worse, as the Bill chooses to add yet another burden: disastrous day one rights for unfair dismissals and statutory sick pay.
So I ask a simple question: who truly understands what a business needs to thrive and survive? Is it the entrepreneur who has built something from nothing, the employer who fights every day to keep their company afloat, or an employment tribunal that is removed from the realities of running a business yet is now empowered to make decisions that could determine its fate? As the data reported last year by His Majesty’s Courts & Tribunals Service makes clear, employment tribunals are currently not able to make any speedy judgments. The Law Society described the backlog as “spiralling” and a very well-known legal firm described the tribunals to us as
“a bit of a laughing stock”,
“creaking” and “hugely unreliable”. That firm might be expected to support the Bill out of self-interest, but it does not.
The Bill makes it harder for businesses to prove that redundancies are genuine. It creates a scenario where every decision could be second-guessed by tribunals that the legal profession thinks are a bit of a laughing stock. Every restructuring might have to be questioned and every difficult choice turned into an expensive legal battle. Why would a business fire for no reason? Businesses need motivated, skilled employees, and they need time to assess the likelihood of an employee acquiring those skills and demonstrating that motivation. The noble Lord, Lord Vaux, put this very well and comprehensively explained it. However, to quote one of his Cross-Bench colleagues—the noble Lord, Lord Moore of Etchingham—in a newspaper column the other day, this clause is,
“as if children, once admitted to a school, were immediately deemed to have passed all the ensuing exams”.
As my noble friend Lady Cash noted, this is not an us-and-them perspective. Even if there were no other reason, retention is cheaper than firing and rehiring. Yet the Bill assumes, without evidence, that businesses are acting in bad faith, that they need tribunals to intervene and that they do not already have a strong incentive to retain talent.
The cost of all this will be staggering. The impact assessment suggests £5 billion, which will inevitably prove to be optimistic and which will inevitably fall disproportionately, as the Government admit, on the very SMEs we need to power growth—SMEs that the facts say are already struggling as a result of this Government’s other misguided policies. Instead of managing their businesses and seeking new markets and customers, they will be bogged down in human resources. If they get it wrong, they will be bogged down in litigation, endless documentation and the endless hiring of legal experts to justify every strategic decision. This is not just bureaucratic overreach but an outright violation of business autonomy.
A business should be able to shape its own workforce in response to market demands, competition and innovation, yet under the Bill it seems that businesses can only make such decisions when faced with an existential crisis. What recourse would a company struggling with stagnation and trying to bring in fresh talent and stay ahead in a fiercely competitive world have? We must ask ourselves: do we want a thriving economy and businesses that grow, invest and create jobs, or do we want a system that strangles them in red tape, drags them into courtrooms and forces them into stagnation? The Bill, as it stands, will not boost our declining growth, restore business confidence or create jobs. Instead, it will leave many businesses trapped: unable to adapt, unable to compete and, ultimately, unable to survive.
So I ask the Minister: have the Government considered the likely impact of the measures in the Bill on their recently stated aim to move people off long-term welfare? Can they speculate as to the likely effect of day 1 unfair dismissal rights and statutory sick pay rights on that ambition? Can they answer why a prospective employer might take a risk on a potential employee who is recovering from a long-term medical condition? The obvious net effect of these measures will be to encourage employers to do more due diligence, be more risk averse and rely more on references and less on intuition. That will have a very damaging impact on social mobility and workforce diversity. How do society or the individuals and businesses affected benefit from that? How is that—to use the words of the noble Lord, Lord Livermore—either compassionate or fair?
Beyond the immediate damage to business confidence, we must consider the broader implications for the UK’s attractiveness as a destination for investment. Capital flow is where it is welcomed. Investment thrives where there is stability, flexibility and a regulatory framework that encourages and does not obstruct growth. The Bill sends precisely the wrong message to investors. It signals that the UK is becoming a more complex, risk-laden and bureaucratic place to do business. Why would international companies choose Britain when they can invest in economies with more business-friendly policies?
Ministers claim that employment protections will create a fairer economy, but they fail to acknowledge the reality: an economy that cannot attract investment is an economy that cannot create jobs at all, and surely that is the ultimate unfairness. Or, to put it another way, and to use the words of the noble Lord, Lord Watson, surely the greatest dignity of all is to have a job.
As we have heard, there is plenty more in the Bill that we will be addressing in Committee. My noble friend Lord Young of Acton made a brilliant maiden speech, drawing heavily on his experience with the Free Speech Union and talking to the invidious Clause 20. We will support him. As a reminder, my noble friend pointed out that employers are already liable for the sexual harassment of third parties under the worker protection Act. On flexible working, we struggle to understand the problem this is trying to fix. As my noble friend Lord Hunt said earlier, a majority of workers on these contracts seem to like them. The Recruitment and Employment Confederation states that 79% of respondents to their recent survey like flexible working because of the flexibility. The Chancellor says she wants to tear down regulation to boost growth, but this Bill introduces a new quango with perhaps alarming, to use the word of the noble Lord, Lord Fox, or even Kafkaesque powers.
We have spoken to all the major business organisations and many employers with real-world experience, and we can find none that supports the Bill. We found unanimity that it will cause considerable damage. Can the Minister give any examples, apart from those four that she has already mentioned and which have been trotted out fairly frequently over the past few months, of actual, real employers that support all the Bill? Please name just one, as we would love to talk to them to see what we have missed. We will of course also be turning to the subject of trades unions, to which a number of noble Lords have spoken. In particular, I commend the contributions of the noble Lord, Lord Burns, the noble Baroness, Lady Fox, and indeed the noble Lord, Lord Fox, from the Liberal Democrat Benches, for their thoughtful interventions on this.
We believe that the UK stands at a crossroads. We understand the intent behind the Bill, and of course there are some things in it that we can support. But we can either embrace policies that made us a global leader in investment and innovation, or we can burden ourselves and businesses with regulations that drive them elsewhere. I believe that the Government are serious about growth, but I have no choice but to conclude that the choice here is straightforward: they can have this Bill or they can have growth, but they cannot have both.
Baroness Jones of Whitchurch (Lab)
My Lords, it is a pleasure to be able to conclude this debate, which has been as insightful as it has been passionate and informed. The debate today has been very well attended and I hope that noble Lords will understand that time constraints mean that I will be unable to respond to every individual contribution, as I would normally do, but I shall do my best. Where I have not been able to respond, I am of course available to talk to noble Lords and to discuss: I am sure that we will have plenty of discussions between now and Committee, and after that. I hope that this will be an ongoing dialogue.
I know that many noble Lords have considerable expertise in running their own businesses. The noble Lords, Lord Londesborough and Lord Pitkeathley of Camden Town, and the noble Baroness, Lady Cash, spoke with these valuable insights. The Bill seeks to raise the floor for employment rights in our country and includes practices that many good employers—such, no doubt, as those operated by those noble Lords—already have, to the benefit of themselves and their workforce. I am sure that noble Lords will value the level playing field for employers that the Bill will ensure.
I dare say that the noble Lord, Lord Balfe, was preaching to the choir with his much-needed intervention from the Benches opposite on why people joint trade unions, and the range of benefits that collective bargaining brings: I hope that his Front Bench were listening to those points. I thank the noble Lords, Lord Barber of Ainsdale, Lord Pitkeathley of Camden Town, Lord Hendy, Lord Katz, Lord Watson, Lord Monks, Lord Prentis of Leeds, Lord Browne of Ladyton, and the noble Baronesses, Lady Carberry of Muswell Hill, Lady Hazarika, Lady Bousted and Lady Lister, all of whom expressed their strong support for this landmark legislation and powerfully articulated the need for it to reach the statute book.
I take this opportunity to pay tribute to those who made their excellent maiden speeches. I congratulate my noble friend Lady Berger on her marvellous maiden speech. My noble friend brings a valuable perspective to this debate, and it is great to hear how she is proudly advocating for, and championing, strong employment rights. It is warming to see her back in Parliament, and I am sure your Lordships’ House will value her wisdom and expertise, as well the courage and integrity she embodies so well. I thank my noble friend Lady Gray of Tottenham, whose extensive career in the Civil Service is greatly respected in your Lordships’ House. My noble friend brings a wealth of experience and insights to our discussions on advancing workplace rights. It was a pleasure to hear from the noble Baroness, Lady Cash, whose roles as commissioner of the Equality and Human Rights Commission and as an employer bring unique insight into many important issues regarding workplace equality. Finally, I pay tribute to the noble Lord, Lord Young of Acton. Having another strong voice in your Lordships’ House is always welcome. The perspective the noble Lord brings through his work with the Free Speech Union is important, and I have no doubt his discussions on this legislation will continue to be of great interest.
I thank the noble Lord, Lord Palmer of Childs Hill, and the noble Baronesses, Lady Lister and Lady Smith of Llanfaes, for their passionate interest in those with caring responsibilities. An important part of our plans to modernise the world of work is ensuring carers can enjoy a good job and contribute their skills alongside their valuable role as carers. The Government will examine the feasibility of introducing paid carer’s leave in the upcoming carer’s leave review. On making caring a protected characteristic, many people with caring responsibilities are already likely to be afforded protections under the Equality Act 2010, by the provisions relating to age and disability discrimination which specifically protect people from direct discrimination by association. Individuals with caring responsibilities for someone who is, for example, elderly or disabled within the meaning of the Act are likely to be protected from unlawful discrimination from their association with someone with a protected characteristic. I am sure that noble Lords will understand that this means that this intervention would be unnecessary.
I thank the noble Baroness, Lady Barran, and the right reverend Prelate the Bishop of Newcastle for raising the issue of kinship care and foster caring. We are committed to ensuring that all employed parents and carers receive the support they need to strike the appropriate balance between their work and family lives. For the first time, the Government’s Children’s Wellbeing and Schools Bill will create a legal definition of kinship care, for the purposes of specific measures in that Bill. By defining kinship care in law, the legislation will ensure that all local authorities have a clear and consistent understanding of what constitutes kinship care. I hope this assures noble Lords of the Government’s intentions in this sensitive area.
A number of noble Lords, including the noble Lords, Lord Hunt, Lord Ashcombe, Lord Vaux and Lord Sharpe, and the noble Baronesses, Lady Foster and Lady Cash, raised the issue of the financial implications of the Bill. The noble Lord, Lord Sharpe, suggested that we should listen only to business voices, but I have to say to him that our history and our economy is based on partnership. That is always what has made us thrive, and that will underlie our growth strategy going forward. This is not a case of hearing one voice over another. The noble Lord, Lord Sharpe, also raised the issue of business confidence. According to the latest Lloyds Business Barometer, which surveys 1,200 businesses every month, business confidence has increased 12 points, to 49% in February, the highest since August 2024. This shows that the Government are improving the business environment.
Of course, we recognise the concerns about the cost to business. The £5 billion figure from our impact assessment is a top-end estimate which will largely represent a direct transfer to the lowest paid in society, with the bottom end of the range close to £1 billion. The costs, therefore, are likely to be under 0.4% of our national wage bill and could even be as low as 0.1%.
A number of noble Lords also mentioned the OBR comments, but I stress that it has yet to make an assessment, so it is premature to read anything into its comments so far. Meanwhile, improving worker well-being, increasing productivity, reducing workplace conflict and creating a more level playing field for good employers will grant significant benefits worth billions of pounds per year, off-setting those costs.
The noble Lords, Lord Hunt of Wirral, Lord Palmer of Childs Hill, Lord Vaux and Lord Fox, the noble Baronesses, Lady Noakes and Lady Coffey, and the noble Viscount, Lord Colville of Culross, raised the issue of parliamentary scrutiny. I reassure your Lordships’ House that the approach we are taking to many of the delegated powers in the Bill is in line with existing precedents for use of delegated powers in employment law, and the department believes that these are necessary and justified. They will enable the Government to remain responsive to the changing needs of the modern labour market and the economy, and to ensure that the employment rights framework remains relevant to these needs. Of course, we will give the Bill full scrutiny in its stages here, and I look forward to the many conversations we will have with noble Lords about this.
Noble Lords also raised the issue of amendments made by the Government in the other place. Throughout the development and passage of the Bill, the Government have made great efforts to listen to a range of views from businesses, trade unions, representative organisations, civil society and others. The insights gained, including from the formal consultations the Government have conducted since introducing the Bill, have informed the amendments made in the other place. These have been invaluable in ensuring that the Bill works in practice both for workers and for businesses of all sizes across the country.
The noble Baroness, Lady Barran, raised concerns about the school support staff negotiating body. While an important part of reinstating the body is to improve consistency, it does not commit us to a one-size-fits-all approach. Our intention is for support staff in all state-funded schools in England to benefit from a core pay and conditions offer, while allowing the flexibility for all schools to respond to local circumstances, above minimum agreed standards. We will be consulting on this over the summer.
My noble friend Lady Whitaker asked about seafarers. My noble friend is right to point out the important role that seafarers play in our economy and the necessity of improving protections. These clauses provide powers to require operators of frequent international services to the UK to meet certain standards on board their vessels in order to continue having access to UK ports without having to pay a surcharge or risking refusal of access. We will continue to engage at consultation stage with the trade unions representing seafarers and seafarer charities to ensure that the unique needs and voices of seafarers are represented in this process.
The noble Lords, Lord Whitty and Lord Fox, the noble Viscount, Lord Colville of Culross, and the noble Baroness, Lady Coffey, raised issues concerning the fair work agency. Better enforcement against the non-compliant minority of businesses means that more workers will get their due and that businesses are on a level playing field. That is fair for business and fair for workers. We will discuss extensively with businesses and employers how to use this power most effectively, and take the view of the fair work agency’s tripartite advisory board. This will include discussing what to do when workers are unwilling to enforce their rights.
On inspecting umbrella companies, the Bill will bring umbrella companies’ activities that are not currently captured in existing frameworks within scope of state enforcement. This will allow the application to them of a bespoke regulatory framework, which will be set out in regulations and, in time, enforced by the fair work agency. We will consult on these regulations. I hope that this alleviates noble Lords’ concerns.
On the structure and actions of the fair work agency, it will subsume three existing agencies and additional functions from HMRC into one single body—so we are reducing the number of quangos, not adding to them, while increasing efficiency. The agency will take a balanced approach to enforcement. It will have strong powers that will enable it to take action against rogue employers that exploit their staff, and it will provide support to businesses to help them comply with the law.
The noble Lords, Lord Young of Acton and Lord Strathcarron, and the noble Baroness, Lady Bray, raised concerns about third-party harassment. Conduct that is merely upsetting or causes minor offence will not be sufficiently serious to meet the Equality Act 2010’s definition of harassment, which requires significantly more than that for it to be unlawful. It is not enough for the claimant to simply feel that someone’s conduct is offensive. There is an objective test in which the reasonableness and the facts of the individual situation will always be considered. The steps an employer can reasonably take in respect of third parties are clearly more limited than those for their employees. Employers will not be penalised for failing to anticipate the unforeseeable or to take other impractical steps. Likewise, any step that was disproportionate interference with a customer’s right to freedom of expression would not be reasonable. Therefore, we do not expect this Bill to have the chilling effect on free speech that the noble Lords envisage.
Several noble Lords, including my noble friends Lady Whittaker and Lady O’Grady, the noble Lord, Lord Palmer, and the noble Baronesses, Lady Morrissey and Lady Kramer, raised the issue of non-disclosure agreements. The Bill means that a provision in the NDA seeking to prevent a protected disclosure about sexual harassment will be unenforceable. An NDA entered into in respect of sexual harassment may still stand to protect confidentiality in other circumstances, such as requiring the employer to keep the identity of the worker and the details of the incident confidential. This is the case now and is not changed by this measure.
I respect noble Lords’ interest in this important topic, and we are progressing with some reforms through other legislative means. The Government are pressing ahead with plans to commence the provisions relevant to NDAs in the Victims and Prisoners Act 2024 and in the Higher Education (Freedom of Speech) Act 2023. The provisions in the Higher Education (Freedom of Speech) Act 2023 that will, when commenced, ban NDAs for staff members, visiting speakers and students in cases of bullying, harassment—including sexual harassment—and intimidation were made by an amendment from this Government when in opposition, of which we remain proud. When commenced, Section 17 of the Victims and Prisoners Act 2024 will ensure that confidentiality clauses, including those in non-disclosure agreements, cannot be legally enforced to the extent that they seek to prevent victims of crime reporting a crime, co-operating with regulators in relation to the crime, or accessing confidential advice and support.
I recognise the points raised by the noble Baroness, Lady Browning, and my noble friend Lady Rafferty about the adult social care negotiating body, to be introduced by the Bill. The Government’s immediate work to support the social care sector will help to professionalise the workforce by expanding the national career structure, identifying and funding quality learning and development, and ensuring that there are progression and development opportunities so that people can build their careers in care.
To reassure noble Lords on the scope of the negotiating bodies, the bodies will be established through regulations, which will have the option to include more details on their remit and could include specifying that training and career progression are included. These regulations will follow further engagement and consultation with the sector.
I will address the comments made by the noble Lord, Lord Burns, the noble Baroness, Lady Coffey, and others on the political funds and the supposed contradiction between subscription traps and the reminder to opt out of a political fund. Subscription traps often occur when consumers are misled into signing a contract that they do not want through a free or reduced-price offer, or face unnecessary barriers to exit a contract. This is absolutely not akin to how trade union political funds work. The situations are not comparable.
A union is a collective of workers, and its political fund should be considered in that light. A union member should be aware of what their monthly fees will be, and that will include the political fund levy. The rate payable stays the same from day one; therefore, the member should know what they are paying and are free to opt out. There is no deadline after which their contribution rate will rise significantly. For opt-outs, the Bill will simply restore the position as it was before the passage of the Trade Union Act 2016. This has been the position for 70 years, and I am sure that noble Lords will understand that it is fair and definitely not the same as a subscription trap.
My noble friend Lord Prentis of Leeds raised the dispute involving Livv Housing in Knowsley. I hope that I can give him some reassurance on this issue. The Government are looking into how the pre-existing range of protections are currently operating and if and where the law may fall short. We are also conscious that this particular case has not been tested in the courts to see whether the existing law offers sufficient protection. The law on inducements and detriments is complex and needs to be carefully considered. I will continue to liaise with my noble friend on that issue.
This Bill is but the first part of the much wider make work pay agenda that this Government are endeavouring to implement. Many noble Lords have made vital contributions to this debate, suggesting reforms that go further than this Bill does now. The noble Lord, Lord Freyberg, and the noble Viscount, Lord Colville of Culross, proposed the creation of a commissioner for freelancers. My noble friend Lady Prosser proposed further action to tackle gender equality. The noble Baroness, Lady Penn, and my noble friend Lady Lister both raised the importance of reforms to parental leave. I respect these contributions and the desire to go further, but we must strike the right balance, while continuing to ensure that this remains a pro-worker, pro-business Bill. I stress that this is part of our bigger reforms under the ongoing make work pay agenda.
To conclude, this Bill is a crucial step towards the Government’s manifesto commitment to enhance workers’ rights and improve the lives of millions. Alongside our new industrial strategy, it will increase productivity and create the right conditions for long-term, sustainable and secure economic growth. This Bill is a testament to the Government’s resolve to improve workers’ rights, while levelling the playing field between good employers and less scrupulous ones. I urge all noble Lords to support the Bill.
Baroness Jones of Whitchurch
That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee of the Whole House that they consider the Bill in the following order: Clauses 1 to 4, Schedule 1, Clauses 5 and 6, Schedule 2, Clauses 7 to 23, Schedule 3, Clauses 24 to 35, Schedule 4, Clauses 36 to 53, Schedule 5, Clauses 54 to 57, Schedule 6, Clauses 58 to 87, Schedule 7, Clauses 88 to 128, Schedule 8, Clauses 129 to 132, Schedule 9, Clauses 133 to 146, Schedules 10 and 11, Clauses 147 to 149, Schedule 12, Clauses 150 to 157, Title.