Employment Rights Bill

Baroness Warwick of Undercliffe Excerpts

Committee stage
Tuesday 3rd June 2025 Lords Chamber

Moved by

[Baroness Warwick of Undercliffe]

143B: Clause 30, page 53, line 7, at end insert—
“(f) a higher education provider as defined by—(i) section 3(10) of the Higher Education Research Act 2017;(ii) section 91 of the Further and Higher Education Act 1992;(iii) section 56 of the Further and Higher Education (Scotland) Act 1992;(iv) Article 30 of the Education and Libraries (Northern Ireland) Order 1993.”

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I rise to speak to Amendment 143B standing in my name, regarding outsourcing measures and their applicability to higher education providers across England, Wales, Scotland and Northern Ireland. Universities, like other employers, are preparing for the enactment of the Bill and will be adapting to the new legislative expectations around workers’ rights. I want to stress from the outset that universities wholeheartedly support the Bill’s objectives to ensure fair employment practices for workers. They do, however, have some technical concerns about Clause 30. I hope that, through Amendment 143B, my noble friend can provide helpful reassurances to the higher education sector—so this is a probing amendment.

As noble Lords will be aware, Clause 30 outlines expectations that contracting authorities must treat any employee transferred from a contracted body no less favourably in the terms offered than core employees. Many universities consider themselves to fall within the definition of “contracting authority”, meaning they may inadvertently be caught by this clause. This is of great concern to the higher education sector and, so far as I am aware, does not appear to have been scrutinised in the Bill so far.

The enormous financial challenges facing universities are well documented, and I know are of grave concern to many Members of this House. The potential imposition of further costs for universities from Clause 30 should therefore be of concern. For the many universities that constitute as contracting authorities, there are likely to be significant cost implications, as well as increased difficulty in finding contractors as a result of this clause. Crucially, unlike with public bodies, these additional costs for universities will not be met by the Government.

In addition to the financial implications, there is also the potential for policy divergence across the UK. Given that Scotland and Wales will be able to set their own regulations and code of practice, there may be inconsistency in arrangements, which could discourage agreements with suppliers. This would have a particular impact in the complex environment that the higher education sector operates in and could have a significant impact on its moves towards greater efficiency.

I would appreciate assurances from my noble friend on three questions. The first is whether, and in what circumstances, universities will be considered to be contracting authorities for the purposes of this legislation. Has my noble friend’s department or the Department for Education made an assessment of the likely impact of Clause 30 on the university sector? Secondly, are the outsourcing measures defined in Clause 30 applicable to pension provision? Where employees are transferred to another organisation, will their pension arrangements form part of the requirement that they be treated no less favourably? Thirdly, what consideration will be given to the impact on shared services where many providers, including across UK nations, will work with the same body as a key driver of efficiency efforts? If my noble friend is unable to provide assurances from the Dispatch Box today, a letter would be very warmly received.

I urge my noble friend and her department to engage closely with the higher education sector to ensure that the implementation of Clause 30 does not inadvertently undermine the financial sustainability and operational flexibility of our universities. While of course we have to remain steadfast in our commitment to fair employment practices, we must also ensure that the legislation takes full account of the distinct nature of the higher education sector and supports our universities to continue their vital work.

[Lord Watson of Invergowrie (Lab)]

My Lords, I am pleased to speak in support of my noble friend Lady Warwick on an issue that, as far as I am aware, has not appeared anywhere else but is of some importance. There is growing unease in the higher education sector about the potential implications of Clause 30. Universities UK has said it is frustrated that its letters to both officials and Ministers—they would be the same thing, I imagine—remain unanswered. UUK is probably being a bit polite in saying that it is frustrated; I suggest that it is unacceptable for a letter from any UK-wide organisation not to receive a response. If nothing else, I hope my noble friend will be able to give an assurance in her reply that she will ensure that Universities UK receives a considered response to its very legitimate concerns.

As my noble friend said, the higher education sector is concerned at the potential impact of measures proposed in Clause 30, which relate to outsourcing, on current arrangements within the sector and on the viability of steps that universities have taken or are planning to take in order to stabilise their financial position. Many universities consider themselves as falling within the definition of contracting authorities and may therefore be inadvertently caught in this clause of the legislation.

As originally introduced, the public sector outsourcing provisions applied to contracting authorities in England only. However, Ministers introduced an amendment in Committee in another place, and provisions now apply to contracting authorities in England, Scotland and Wales. Again as my noble friend said, the major point on which clarification is essential is whether and in what circumstances universities will be considered to be contracting authorities for the purposes of this legislation.

There is also the question of whether the planned separate outsourcing rules for different UK nations will or even might create complex and prohibitive arrangements for universities. As an example, if an institution is working across the UK nations—a good example would be the Open University—that could mean it is subject to two or more sets of outsourcing rules, potentially providing a conflicting legislative framework for its operational practice. I hope my noble friend will be able to clarify how the Government envisage such separate outsourcing rules will operate, and that in doing so she will provide reassurance to many in the higher education sector who, as my noble friend Lady Warwick said, are very supportive of the Bill in general but fear that universities could become victims of unintended consequences.

--- Later in debate ---

[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, I thank my noble friend Lady Warwick for her thoughtful contribution to this debate on Amendment 143B. We fully recognise the need not to impose disproportionate burdens on smaller procuring organisations such as universities. However, it is important that we consider fairness and equality of treatment for all workers providing key outsourced services to higher education providers—for example, cleaning and catering services—so that they receive fair and equitable employment conditions comparable to both those transferred from the public sector and those working for local authorities or departments that provide the same services. As a result, there would need to be compelling arguments to exempt higher education providers.

Secondly, it is essential that we first consult with key stakeholders and seek their views before deciding on the ultimate content of the reinstated code and the extent to which certain public authorities, including higher education providers, are required to follow its provisions. I can assure my noble friend Lady Warwick that we will carefully consider the particular issues relating to higher education providers and the difficulties they might experience during this process. However, our view is that to carve out higher education providers completely on the face of this Bill at this stage would not be right.

My noble friend highlighted the particular financial challenges currently being experienced by universities. We are committed to creating a secure future for our world-leading universities so that they can deliver for students, taxpayers, workers and the economy. The Office for Students will continue dedicating significant resources to ensuring the sector’s financial sustainability. The DfE has appointed Professor Edward Peck as the substantive chair of the OfS, where he will play a key role in strengthening this commitment while also expanding opportunities in higher education. We have also made the tough decision to increase tuition fee limits in line with inflation. As a result, the maximum fee for a standard full-time undergraduate course in the 2025-26 academic year will increase by 3.1% from £9,250 to £9,535.

Finally, I stress that the code is being designed to be flexible so that it does not impose undue burdens. There are a range of options available here that could be pursued, for example by specifying to which bodies the code should apply or applying the code only to higher-value contracts, which could exempt low-value procurement activities such as those often carried out by educational establishments that may have fewer procurement resources. These are the sorts of issues that the consultation will examine in detail.

I am very conscious that my noble friends Lady Warwick and Lord Watson asked very specific questions. Given the lateness of the hour and the very specific nature of them, I think it would be helpful if we could write and put that on the record to provide, I hope, the reassurance that the higher education sector seeks. It is for that reason that I ask my noble friend to withdraw her amendment.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I thank my noble friend for her reply and her attempt to reassure me and other Members of the Committee. I am grateful to my noble friend Lord Watson of Invergowrie for his staunch support for what I am trying to do here. I also thank the noble Lord, Lord Sharpe of Epsom, for his support; it was thoughtfully put, and I appreciate it.

I understand that the Minister is seeking to reassure me that she is very aware of the need to support the future of our universities. I do not think she really addressed, though, the issues around the impact on the different nations and the way in which that could affect the competitive advantage of the universities and the way in which they are seeking to increase efficiencies. I hope that, in writing to me, she will also undertake to meet the higher education sector once it has digested the detail of her response—I appreciate that my questions are technical. I hope she will undertake to do that because I think that would be enormously helpful and the most reassuring thing that she could do. Having said that, I beg leave to withdraw my amendment.

Amendment 143B withdrawn.