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The Parliamentary Under-Secretary of State for Business and Trade (Kate Dearden)
It is an absolute pleasure to serve under your chairmanship, Dr Murrison, in what I am proud to say is my first time responding for the Department in a Westminster Hall debate. I thank the shadow Minister and all other Members for their kind words and welcome. I am grateful for all the thoughtful and considered contributions from both sides of the Chamber.
Business impact rightly remains a recurring theme in discussions on the Employment Rights Bill. I pay tribute to the SMEs and businesses that all Members have mentioned today, and particularly to those in my constituency that I have had the pleasure to meet over the past year, as their Member of Parliament. I am delighted to have the opportunity to reiterate this Bill’s positive impact on employers, workers and the wider economy.
I also pay tribute to the work done by those before us, not least that of my predecessor, my hon. Friend the Member for Ellesmere Port and Bromborough (Justin Madders)—
Dame Harriett Baldwin
On a point of order, Dr Murrison. I appreciate that this is the Minister’s first time responding to a debate in Westminster Hall. My point of order is simply that she may wish to consider putting her entry in the Register of Members’ Financial Interests on the record.
Kate Dearden
I was just about to get to that point. I thank the shadow Minister for the reminder.
I pay tribute to my predecessor for all his work and to the officials and colleagues who worked with him. Many Members of this House and the other place engaged constructively with the team, and their insight has materially shaped the Bill. I thank them for their valuable insights. Likewise, the Bill has been shaped by extensive engagement from external stakeholders, businesses, trade unions and civil society alike. I thank them all for their engagement to date, and I reassure them that this Government remain committed to full and proper consultation on the Bill’s implementation.
I declare my interest as a proud trade union member. I look forward to working with trade unions, businesses and all stakeholders, and to continuing the positive engagement that many stakeholders have had with the Department and with this Government so far.
The Government were elected on a manifesto that committed to implementing “Labour’s Plan to Make Work Pay” in full and to putting more money in working people’s pockets. The Employment Rights Bill is the legislative backbone of that promise. We will deliver the single biggest upgrade of workers’ rights in a generation. That is good for workers and good for business, because we believe that a strong package of workers’ rights and protections go hand in hand with a strong economy. Many good employers already know that. When staff feel secure, they stay longer, are more productive and help the business to succeed. The Bill will help to make that the norm across the economy.
Our first mission as a Government is to deliver economic growth in every single part of the country. The Employment Rights Bill is a vital step. It represents a cornerstone of our mission to grow the economy, and it is designed to modernise the UK labour market, raise living standards and support long-term growth.
Securing that growth is worth doing only if working people actually feel the benefits of it in their pay, in their security and in their daily lives. Too many people face practices that undermine both their security and our economy, from fire and rehire to zero-hours contracts and last-minute shift cancellations. Those practices breed insecurity, and insecurity stifles productivity.
That is why the Bill is at the centre of the Government’s plans and is so significant. It will benefit at least 15 million workers, or half of all UK workers, protecting them from those practices and providing economic safety for the lowest paid in our labour market.
Let us consider a few of the changes that the Bill will bring. Some 9 million employees will gain protection from unfair dismissal, not after two years, but from day one. Workers in some of the most deprived parts of the country will keep hundreds of pounds a year in their pockets instead of losing them to the hidden costs of insecure work, and nearly 1 million more people each year will benefit from bereavement leave when they lose a loved one.
I thank the hon. Member for York Central (Rachael Maskell) for her comments in support of the Bill and of the Government’s work in this area, and for her work on the impact of bullying in the workplace over a number of years. I would be happy to meet her to discuss those matters further.
Economic impacts were a key part of the contribution of the hon. Member for Spelthorne. Some still argue that stronger rights are a cost, but I reject that. Stronger rights are an investment in people, in stability and in long-term growth. As set out in the Government’s published impact assessments for the Bill—I will respond in detail to his points on that—there are clear, evidence-based benefits to tackling issues holding back the UK labour market, which will have a positive impact on economic growth and will help to raise living standards across the country.
Steve Barclay
I join colleagues in welcoming the Minister to her place. She said in her reply to my hon. Friend the Member for Spelthorne (Lincoln Jopp) that there would not be an additional cost, but the Association of Directors of Adult Social Services has raised concerns about the additional costs and the funding gap, given that it will fall on local authorities and will therefore, in turn, require Government support. Could she clarify what she expects to be the extra cost of the Bill in terms of social care?
Kate Dearden
I am happy to come back to the right hon. Member on the particular social care interests and concerns that he might have.
Improving worker wellbeing, supporting productivity, reducing workplace conflict and creating a more level playing field for good employers would grant significant benefits, worth billions of pounds per year. That is why delivering the benefits of the Bill would offset the costs. That assessment is shared by organisations such as the Resolution Foundation. The £5 billion figure from our impact assessment, which the hon. Member for Spelthorne mentioned, is a top-end estimate of that cost, and will largely represent a direct transfer to the lowest paid in society, with the central estimate close to £1 billion. Even if we take that high-end estimate, the costs are therefore likely to be less than 0.4% of our national wage bill, and could even be as low as 0.1%. That is our best estimate at this stage.
Andy McDonald
If workers are in good, well-paid work, they can go on to lead good, flourishing lives, and they will return that as a dividend through their collaboration with their employer. They will also be in a position to be more active in the economy. We know that when working people have money, they are able to spend it and generate activity in the economy. Does the Minister agree?
Kate Dearden
I absolutely agree that all workers will benefit in some way from the Bill and be able to give back to the economy, whether by spending in the local economy or by contributing to other local businesses.
Lincoln Jopp
I think I am right in saying that the impact assessment’s estimate of a cost of £5 billion was at the higher end, but I read out quite an extensive set of quotations from the RPC saying that it was an inadequate impact assessment and that it completely under-gunned the financial impact of the measures. Does she just think that the RPC is wrong?
Kate Dearden
I will come back to the hon. Member’s point in a moment. A number of the measures already have strong support from businesses. An Institute for Public Policy Research survey of businesses found that the majority—at least 75%—supported the measures in our Bill, including nearly seven in 10 small businesses.
The hon. Member also mentioned the Regulatory Policy Committee’s opinion. I want to make it clear that that refers to the evidence and analysis presented in the impact assessment, not the policy itself. Our impact assessments provide initial analysis of the impacts that could follow, and we will be updating and refining them as we further develop the policy and continue our consultation and engagement. I reiterate just how important that is in our next steps with the Bill. I am keen that we continue to work with businesses as part of that consultation and engagement.
All in all, with this legislative framework, we need to ensure that we can make work pay, by addressing the challenges that Britain faces today and by including up-to-date employment protections in areas that have cost Britain’s workers and businesses so dearly over a number of years and that are desperate need of updating. For that reason, the package is pro-growth, pro-business and pro-worker. It supports our Government’s objective to boost growth and improve living standards for all.
The scale of the impacts will, of course, depend on further policies, which are ready for secondary legislation. I have already said that we will continue to engage and consult—[Interruption.]
Kate Dearden
Thank you, Dr Murrison. The hon. Member for Spelthorne also mentioned particular groups of workers who will benefit. I am glad he did so, because younger workers, women, people with disabilities and people from ethnic minority groups make up a higher than average share of those workers who will benefit from the package. Flexibility and the rebalancing of security are very important for that section of the workforce, so I am proud that the Bill will help those people to stay in work and that it will make their work more family-friendly, improve their living standards and put more money in their pockets.
Euan Stainbank
I welcome the Minister to her place. She is making an excellent point, but I refer her to specific sectors in which some Opposition parties have called for carve-outs. Does she agree that it is important that we do not carve out, for any particular sector, the strong provisions in the Bill, and that it is both morally and economically wrong to say to a young worker that if they work behind a bar, they should have fewer rights than if they worked behind a desk?
Kate Dearden
I want every single worker, no matter where they work, to have a good standard of rights in their workplace and to know their rights. The Bill will ensure that we can provide that opportunity for so many people, including young workers, and that they benefit from the legislation.
Kate Dearden
I want to make a bit of progress and respond to the hon. Member for Strangford (Jim Shannon). I thank him for his warm welcome and his contributions to the debate. Our small businesses are absolutely crucial for our economy, and I pay credit to the businesses in his constituency that he mentioned.
The hon. Member also mentioned sick pay and cost. Our legislation is so important because 1.3 million employees will now be entitled to statutory sick pay. The Health and Safety Executive found that stress, depression or anxiety accounted for 17.1 million working days lost in 2022-23. That is the equivalent of more than £5 billion of lost output annually. That is why it is important that sick pay is extended to so many workers in our economy; it will ultimately benefit businesses, because we can keep people in work, but people do not have to make that decision. The pandemic shone a light on the terrible situation that many workers face; I am proud that we will be extending sick pay to so many people, so they will not have to make that decision. Ultimately, that will help businesses, because we can keep people in work and support them when they need it.
We have listened carefully to concerns raised by business groups, trade associations and individual employers. I have already mentioned my predecessor, my hon. Friend the Member for Ellesmere Port and Bromborough, who was tireless in his efforts to engage with stakeholders, and spoken of my intention to do the same.
The Bill brings an opportunity to modernise outdated practices and reduce exploitation. It aims to create a level playing field for responsible employers to start to operate and build their businesses. We are also, of course, mindful of the needs of small and medium-sized enterprises. I speak as someone with personal experience: I come from a family of small business owners, and I know at first hand the pressures that they face.
That is why many provisions will be phased in, giving time to adapt, and the Department will give clear guidance and consultation. We are committed to ongoing engagement with businesses. The implementation road map, which we published on 1 July, has received high levels of praise from businesses for the clarity that it has provided. I hope that that reassures the hon. Member for Richmond Park (Sarah Olney), as she also mentioned it in her remarks.
Decent employers stand to gain when the rules are fair. The shadow Minister mentioned her concerns about the impact of the Bill on growth. In the three months to July, GDP grew by 0.2%, meaning that cumulative growth this year has already exceeded the Office for Budget Responsibility’s forecast for the whole of 2025. I am absolutely confident in this Government’s growth agenda. We want to be bolder and more creative, and to ensure that every single area of this country feels the benefit of this Government and our growth priority. This Bill is absolutely key to that, as I have already outlined.
Our new Secretary of State for Business and Trade, my right hon. Friend the Member for Hove and Portslade (Peter Kyle) has already spoken with more than 100 business leaders. He made putting that partnership at the heart of our growth mission a priority on coming into office. That laser focus on implementation, with his priority to double down on growth, is an absolute cornerstone of building powerful partnerships with business. We have shown we are listening; he touched on that a lot in the debate yesterday, so I will not repeat the arguments that he made very eloquently in the House.
To conclude, I reiterate that this Bill is about raising standards. It is about fairness, unlocking growth and future-proofing our economy. Fairness can drive growth. Businesses that treat their workers well can innovate more and grow faster. Stronger employment relations are absolutely essential to that.
As is typical with employment legislation, the technical details of many of the policies in this Bill will be provided through regulations, and in some cases codes of practice, following Royal Assent. We will be consulting extensively, because this Employment Rights Bill is a positive step forward for workers, for employers and for the economy. I look forward to working closely with all hon. Members of this House, and people outside it, to deliver on this landmark reform and make a real difference to workers, employers and our British economy.