Employment Rights Bill

Debate between Lord Hunt of Wirral and Baroness Coffey

Committee stage
Thursday 5th June 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I am quite concerned about this amendment, although I rarely disagree with my noble friend Lord Holmes of Richmond. I am just concerned about the number of agencies or government bodies that keep being created. We already have considerable regulation in this country; I am not convinced that this will add value. Although I recognise the reasons why my noble friend put this forward, I hope he might reconsider tabling it again on Report, if he was so minded.

[Lord Hunt of Wirral (Con)]

My Lords, I start by saying how pleased we are to see my noble friend Lord Holmes of Richmond in his place. I had the privilege of moving his previous amendments in his absence, but we are delighted to see him back with us and I thank him for proposing this important amendment.

The way my noble friend did it was very welcome because, at the heart of his speech, was a recognition that the labour market—especially the supply of temporary and agency workers—has to be fair and transparent. He used those particular words and stressed their importance. I agree with him that it is essential that all companies involved in these arrangements operate under the same clear set of rules. Too often, we see instances where umbrella companies or certain intermediaries do not meet the standards expected of traditional employment agencies, whether on pay, workers’ rights or transparency. This inconsistency undermines the integrity of the labour market and can put vulnerable workers at risk. Licensing could, in theory, help address this by ensuring that any business participating in employment arrangements meets minimum standards and is subject to proper oversight.

However, as my noble friend Lady Coffey stressed, the amendment raises some other important questions. Clause 34 broadens the definition of “employment business” to encompass a range of activities connected to supplying workers who are employed by one party but work under the control of another. This means that the regulatory net will be set much wider than before, potentially to cover businesses beyond traditional recruitment agencies.

Moreover, it is worth considering whether the same objectives could be achieved through improved enforcement of existing regulations rather than by introducing a new licensing framework. In this Chamber, we have to weigh carefully the costs and benefits, particularly to smaller businesses that may struggle with additional compliance burdens. We must also consider the impact on businesses and the wider economy. Many employment businesses operate with tight margins; for them, licensing means added costs, added paperwork and longer lead times to launch new services or respond to labour demand.

This is not an argument against regulation per se; it is simply a recognition that badly designed or poorly phased licensing can create barriers to entry, reduce competition and even push some providers underground, where abuses are harder to detect. In sectors that are already experiencing labour shortages, such as social care, hospitality and logistics, the cumulative impact could be significant.

As my noble friend Lady Coffey pointed out, there is also the risk of regulatory duplication or conflict. Some sectors already have licensing or registration schemes; others are subject to sector-specific standards set by Ofsted, the Care Quality Commission or the Financial Conduct Authority. Without co-ordination, we risk creating overlapping regimes, with businesses subject to multiple audits, rival codes of conduct and inconsistent enforcement. Workers too may be confused about their rights and the mechanisms available for redress.

I also note that the amendment does not contain any provisions for parliamentary oversight or consultation. The power it seeks to create is broad and, while it is subject to the discretion of the Secretary of State, it is not constrained by any statutory duty to consult stakeholders. In a sector as economically important and socially sensitive as this, there must be consultation. Against that background, I look forward to hearing the Minister’s response.