Employment Rights Bill

Lord Leong Excerpts

Report stage
Wednesday 23rd July 2025 Lords Chamber

[Lord Hunt of Wirral (Con)]

My Lords, I listened carefully to the noble Lord, Lord Hendy, and the noble Baroness, Lady O’Grady of Upper Holloway, but I think that the argument fell rightly to my noble friend Lord Jackson of Peterborough, because he explained why we could not possibly accept this amendment. Therefore, I rise briefly to speak to Amendments 150B, 151 and 152.

With this Bill, the Government have chosen to make it easier to strike, lowering thresholds, relaxing long-standing restraints on picketing and removing vital safeguards. It is inevitable then that businesses, especially small ones, will find themselves bearing even greater burdens as a result of what is anticipated will be a new wave of industrial action. Amendment 150B would give employers a narrow and reasonable defence: where a decision taken during or immediately after lawful industrial action was strictly necessary to keep the business afloat, it should not be automatically treated as unlawful detriment. Without this amendment, we risk a situation where businesses face paralysis, exposed to litigation on one side and operational collapse on the other.

I believe that Amendment 151 is essential. It makes it clear that intimidation, harassment, damage to property and other coercive actions dressed up as industrial activity will not be protected under the law. Workers have the right to strike, yes, but they do not have the right to bully, vandalise or threaten.

To turn to Amendment 152, the Government may now claim that the Strikes (Minimum Service Levels) Act has proved ineffective, but we do not agree, not because we are ideologically wedded to it, but because it is simply far too early to make such a sweeping judgment. The Act has barely had time to be tested properly. Therefore, if the Government abandon the principle of minimum service, we look forward to hearing the Minister explain what the Government stand for instead.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to the noble Lord, Lord Jackson of Peterborough, and my noble friend Lady O’Grady of Upper Holloway, for contributing to this debate, and to the noble Lord, Lord Goddard, for setting out the Lib Dems’ position. I will now speak to Amendment 150, tabled by my noble friend Lord Hendy, and Amendments 150AA, 150B, 151 and 152 in the name of the noble Lord, Lord Sharpe of Epsom.

On Amendment 150, we are clear that industrial action should take place only where there is a dispute between a group of workers and their direct employer and we will not change this position. Secondary or solidarity action has been prohibited for several decades and the Government will not change this. Permitting secondary action would enable parties with no direct stake in a dispute to take co-ordinated action, increasing the risk of disruption to employers and the public, and would allow industrial disputes to escalate beyond the original context and across different employers. The Government are clear that we are compliant with our international obligations under ILO Convention 87, Article 11 of the ECHR and Article 6 of the European Social Charter, all of which protect the right to strike but also permit restrictions on industrial action necessary in a democratic society.

As noted by the European Court of Human Rights in the RMT case in 2014, there is a democratic consensus in the UK in support of the prohibition of secondary action and a broad acceptance of the public interest reasons for it, spanning the gamut of political opinion.

Furthermore, the UK is not an outlier. Similar countries such as Australia, Canada, Austria, France and the USA also prohibit or do not protect secondary action. The UK’s model reflects our unique industrial relations framework and economic context, and protects the ability to strike, while also protecting the rights of others. The Government have no intention of changing this.

On Amendment 150AA, 150B and 151, in the name of the noble Lord, Lord Sharpe of Epsom, Clause 73 of the Bill is required because the Supreme Court ruled in April 2024 that Section 146 of the 1992 Act is incompatible with Article 11 of the European Convention on Human Rights. That is because it fails to provide any protection against detriments—that is, sanctions short of dismissal—intended to deter trade union members from taking part in lawful strike action organised by their union or penalise them for doing so. I have no doubt that many Members of your Lordships’ House agree that the UK cannot continue to be in breach of our international obligations. The Bill will correct this by inserting new Section 236A into the 1992 Act, to provide that:

“A worker has the right not to be subjected … to detriment of a prescribed description by any act, or any deliberate failure to act, by the worker’s employer, if the act or failure takes place for the sole or main purpose of preventing or deterring the worker from taking protected industrial action, or penalising the worker for doing so”.


The prescribed detriments will be set out in secondary legislation following a consultation.

These amendments seek to prejudge a full and open consultation on this issue by setting out the circumstances in which the detriment protection—whatever the prescribed detriments may ultimately be—will not apply. Indeed, as part of the consultation, we look forward to hearing the perspective of employers on why they may consider detriments could be appropriate in certain circumstances.

I must also add that, importantly, the protection from prescribed detriment applies only where the sole or main purpose of subjecting the worker to detriment is to prevent, deter or penalise the worker from taking protected industrial action. For example, if a worker is subject to a detriment solely or mainly because they have damaged property, this protection will not apply. Moreover, the criminal law still applies to pickets and others taking part in industrial action, just as it applies to everyone else.

Finally, on Amendment 152, also in the name of the noble Lord, Lord Sharpe of Epsom, Clause 75 seeks to repeal the Strikes (Minimum Service Levels) Act 2023. The repeal of the strikes Act is a manifesto commitment that this Government have a mandate to deliver. Minimum service levels unduly restrict the right to withdraw labour and undermine good industrial relations, and our plan to make work pay pledged to repeal the Act. No work notice has ever been issued by an employer to seek to meet a minimum service level during strike action, and the legislation has never prevented a single day of strike action. Evidence suggests that this is due to employer concerns around worsening industrial relations and the complexity of implementing a minimum service level under the legislation. This demonstrates the futility of that Act and why we intend to repeal it upon Royal Assent.

We believe that negotiation and co-operation are better ways to ensure essential services continue during any industrial action, while respecting workers’ rights. Evidence given at the time the strikes Act was being introduced, including from employers, was that existing voluntary arrangements worked and ensured that vital services were able to continue during periods of industrial action. We are simply returning to this situation. We want to reset the relationship with both employers and trade unions to resolve disputes through meaningful negotiations. Repealing the rights of the strikes Act will help us to achieve that. I therefore respectfully ask my noble friend Lord Hendy to withdraw Amendment 150.

[Lord Hendy (Lab)]

My Lords, I am very grateful to all noble Lords who spoke in the debate on my amendment. I have a couple of words by way of reply.

I point out to the noble Lord, Lord Jackson, that the P&O Ferries scandal was not the basis of the argument that I advanced to the House but simply an egregious example of the absence of the right to take secondary action. Noble Lords will recall that that case involved some 800 seafarers who were sacked instantaneously and replaced immediately with agency crews recruited in third-world countries. In doing so, P&O Ferries knowingly and intentionally broke the law. It could do so because it knew exactly how much compensation it was liable for, and it paid it. The unions, on the other hand, were unable to call on fellow workers in the Port of Dover and other cross-channel ports to support them in an industrial dispute to reverse that decision. The seafarers themselves, of course, were on the stones; they were unemployed. A strike by the direct workforce would have been completely pointless. I mentioned it because that is the last example of the ILO commenting on the UK ban on secondary action. It said that the Government and social partners should sit down together and endeavour to negotiate some form of permissible secondary action. The ILO has been consistent on the position since 1989, repeatedly saying that the 1990 law to which my noble friend Lady O’Grady referred was incompatible with Convention 87.

The noble Lord, Lord Jackson, pointed out various circumstances, which I will not debate with him now, that would make the return of secondary action in this country unacceptable. The point is that special circumstances are not a legitimate justification for a state not to comply with its international obligations. That point was made clear by the noble and learned Lord the Attorney-General in a speech that he made about a month ago, but it is a fundamental principle of international law.

Finally, I say to the noble Lord, Lord Jackson, who commented on the suggestion that the phrase “connected with” ought to be brought back, that phrase is the one that was deployed in the original drafting of the Trade Disputes Act 1906.

I thank my noble friend Lady O’Grady for her support and for reminding the House of the fragmentation in employing enterprises, often precisely to achieve and exploit the bar on secondary action, to weaken workers. I thank the noble Lords, Lord Goddard and Lord Hunt, for their comments.

To the Minister, my noble friend Lord Leong, I make three quick points. First, I am afraid I do not agree with his comparative law analysis. I have done some work on this over the years, and it is not the case that the countries that he mentioned bar secondary action—at least, not all of them do, although the United States does. Secondly, I accept, as I did in Committee, that we are not in breach of Article 11 of the European convention, but I simply cannot see how it can be argued that we are not in violation of ILO Convention 87 and the European Social Charter’s Article 6.4. The supervisory bodies have said so over and over again. Thirdly, of course I recognise the Government’s position, and my noble friend will not be surprised to hear that I do not intend to test the opinion of the House. I respectfully ask to withdraw my amendment.

Employment Rights Bill

Lord Leong Excerpts

Report stage
Monday 21st July 2025 Lords Chamber

[Baroness Bennett of Manor Castle (GP)]

My Lords, Amendment 127A in my name is a milder attempt to deal with the pressing issue of pay inequality and soaring executive pay in our society than the amendment I tabled in Committee, which was to provide for a 10:1 maximum pay ratio for enterprises. I hope this one has a slightly less inflationary impact on the blood pressure of the noble Lord, Lord Hunt of Wirral, while dealing with the excessive boardroom remuneration referred to by the noble Lord, Lord Monks, two groups ago.

The amendment simply seeks to put in the Bill a review of the impact of pay inequality in large enterprises, as defined by the Companies Act 2006—those with net turnover of more than £54 million, assets of £27 million and more than 250 employees. I hope that the Government will seriously consider this approach. It is not my intention to put this to a vote, but I want to be helpful to the Government here and offer them some constructive ways forward.

The noble Lord, Lord Katz, in part made the argument for this amendment for me in Committee when he said that:

“It is right that companies should be sensitive to wider workforce pay when setting pay for those in the boardroom and other senior leadership positions”.—[Official Report, 24/6/25; col. 201.]


However, suggesting that companies be sensitive is not really going to do it. That seems to be the Government’s position. I noted that the Water Minister, Emma Hardy, on LBC this morning, urged water company bosses to “read the room” and refuse huge wage hikes. Well, the room has been sending a very clear message about water company bosses’ pay for a long time and the voluntary approach has simply not worked.

We are talking here about the right of lower-paid workers not to be disrespected—insulted—by the soaring pay in the boardroom while they struggle to meet their basic needs, pay their bills and put food on the table. This is action that clearly needs to be taken, not just words of gentle encouragement.

As I said in Committee, the security and catering company Mitie, with a 575:1 ratio between its top-paid employee and the median employee, and a large number of low-paid workers, tops the High Pay Centre’s FTSE 350 companies hall of shame. I note that this month, the Labour Party postponed a London drinks reception for north-west MPs sponsored by Mitie after a backlash over the company’s employment practices. Unison had planned to picket the event. You have to question why it was ever planned in the first place.

A review such as the one proposed in the amendment could be a start towards the Labour Government generating policies such as those recommended by the High Pay Centre in its useful list of proposals—I recommend it to Ministers as a crib sheet, since the current Government were elected with so few policies of their own in place—such as all-employee profit-sharing or share ownership schemes. As the centre notes:

“One of the reasons why … the pay ratios between workers and CEOs are so wide is that CEOs receive large share-based payments in addition to their regular salary while workers do not … In France all companies are required to share an element of profits exceeding a set amount calculated using factors including taxable profits, net equity, wages and added value with their workforce”.


This has actually reduced inequality.

Another timely proposal from the centre, which again a review might throw up, is a cap on CEO-to-worker pay gaps for public service providers, such as water companies—here we have another way forward—or social care providers. The claim made by the noble Lord, Lord Katz, in Committee, that high pay means

“companies can compete for the best business talent in the UK and globally”,—[Official Report, 24/6/25; col. 202.]

certainly does not stack up in the water sector, if one looks at its outcomes. Fat cat pay has delivered only underinvestment, pollution and ill health for those unfortunate enough to have to rely on the services of the privatised companies.

Finally, I note that, responding to the call for even higher executive pay from the UK capital markets task force—drawn from the City of London and big business—a letter written by 20 leading academics specialising in executive pay, corporate governance and economic inequality made a number of points, including that there is a very “questionable” link between

“higher executive pay and better business performance”,

that any claim that there is a

“shortage of capable candidates for executive roles should … prompt scrutiny of companies’ leadership training and development processes”,

and that the “opportunity costs” of high top pay have impacts

“in terms of … pay for low and middle income workers or investment in the business”.

It is interesting that polling by the High Pay Centre suggests that the overwhelming majority of the public think that CEOs should not be paid more than 20 times more than their typical employee. If the Government want to consider the politics of this, I point to the conclusions in the report, The Spirit Level at 15, by Professors Kate Pickett and Richard Wilkinson, which articulates many of the ways in which inequality strengthens far-right politics. Executive pay is only part of that story, but it is a very visible part. This amendment offers the Government a way forward to start to tackle that political problem, as well as the economic and social issues. I beg to move.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 127A. Although it rightly raises the important issue of pay inequality, it effectively duplicates a review process that we are already undertaking.

It is undeniable that average salaries have stagnated. In fact, they have barely increased from where they were 15 years ago. Had wages continued to grow at the rate seen prior to the 2008 financial crisis, the average worker would now be over 40% better off. This is not just about stagnant wages; it is about persistent and deep-rooted inequalities.

The UK’s income inequality remains above both the OECD and G7 averages. In the financial year 2022-23, the richest 20% of the population received 44% of the UK’s gross income, while the poorest 20% received just 7%. The OECD has noted that higher inequality can lead to underinvestment in human capital and slower adoption of new technologies. It estimates that rising inequality between 1990 and 2010 resulted in UK output being nearly nine percentage points lower than it might otherwise have been.

As I said on day 2 on Report, in one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom and motivation is vanishing. The noble Baroness is right: executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times more than the median UK worker, up from 50 times in the late 1990s. This is not sustainable or fair.

The UK exhibits greater regional disparities in productivity, pay, educational attainment and health than many other developed nations. This Bill, by benefiting lower-paid employees most, will help reduce these disparities, not only in terms of income but in the quality of work experienced. Supporting this, analysis published in 2019 by the World Bank found that employment protections can play a significant role in reducing income inequality.

As I have previously outlined, we already have robust monitoring and evaluation mechanisms in place. By reinforcing the framework that supports our workforce, we are making work more secure and predictable. We are also putting more money into the pockets of working people by making wages fairer. I therefore respectfully ask the noble Baroness, Lady Bennett of Manor Castle, to withdraw Amendment 127A.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I thank the Minister for his answer, although I have to express disappointment that none of the other Front Benches wanted to engage with the issue of high pay. The Minister very much acknowledged the issues around low pay and talked about robust monitoring and evaluation of high pay, but he did not speak about any action on it nor even about any plans for action on it. We have a real problem with the inequality that has seen those executives’ salaries—those fat cat salaries—rise and rise. As I said in my introductory remarks, there is an opportunity cost where those resources are going to that, as well as, of course, the sense in society that there is a deep unfairness and the Government are not doing anything about it.

I remain disappointed. This is certainly an issue that I and the Green Party will continue to work on but, in the meantime, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Goddard of Stockport (LD)]

My Lords, I have to say that this is probably the most difficult summing up from our group of all the amendments throughout Committee and Report, because I can see the merits of both sides of this argument.

On the one hand, the noble Lord, Lord Hunt, is quite right. We are naturally suspicious of any new amendments on Report, as they have not had consultation or examination. Having said that, as a group, we have to be consistent, and our approach is that SMEs need the most support. They are the people who are the most insecure and who email me more than anyone else, and so you might think that I would be minded to support these amendments.

However, on the other hand, these amendments, in our view, would create the two-tier employment situation which we have consistently opposed throughout the legislation. I have stood here night after night saying that I cannot agree with amendments because we want one set of legislation for the entire SME sector. A two-tier arrangement would throw more upheaval and uncertainty on small SME businesses, leading them to wonder whether or not they qualify and whether they are in or out.

On balance, and probably for the first and only time in this Chamber, if this issue is pushed to a vote, our group will, unusually, abstain. That does not mean that I am not supportive of the thought behind the amendments, but we feel very strongly that there could be unintended consequences. The legislation should be clear, concise and uniform. This would cloud it a little, as it is looking for a two-tier arrangement. On balance, we are unable to give this group of amendments our full support tonight.

[Lord Leong (Lab)]

My Lords, I am grateful to all noble Lords who have spoken. I may not agree with some of the sentiments of some noble Lords, but I have listened to all the arguments in the last few years, such as when minimum wage was debated. The scaremongering that businesses will go bust does not hold water with me.

We are not anti-business; you cannot find someone more pro-business than me. I have started businesses and been a small business person myself. I strongly believe that this Bill works for workers and for business.

Before I address the amendments in the names of the noble Lord, Lord Sharpe and Lord Moynihan of Chelsea, let me say this: the Government are committed to supporting SMEs. We accept that they have been subject to a challenging operating environment and global uncertainty. That is why the Government have set up the new business growth service, to streamline access to support, and why the new strategy will span key areas, including access to finance, market expansion, business capability development, entrepreneurship, and the creation of a strong and stable business environment. In combination with our industrial strategy, trade strategy and, I hope, our SME strategy, which will be published shortly, it is a key part of this Government’s plan for change to encourage growth and put more money in people’s pockets.

Let me turn first to Amendments 132, 133, and 134. We introduced a streamlined route through the Central Arbitration Committee, which was established in 1975. It is a decision-making process for model access proposals to ensure that genuine and reasonable requests for access are not subject to unnecessary delay, while maintaining appropriate safeguards where complexity or dispute remains.

Regarding Amendments 129, 131 and 145, we believe that strong trade unions are central to tackling issues of insecurity, inequality, discrimination, enforcement and low pay across the economy. Right of access is key to this. The access framework allows for flexibility for SMEs. Unions and employers can negotiate an access agreement and employers may challenge proposals they consider unsuitable. Where an access agreement cannot be agreed, the CAC determines whether access should be granted, and this decision will be guided by matters prescribed by the Secretary of State.

On Amendment 128, the intention behind this measure is to ensure that all workers are informed of their legal rights at work without imposing undue burden on employers. Making it a requirement for employers to inform workers of their right to join a trade union is about fundamental fairness and transparency. Too many people, especially in low-paid or insecure jobs, do not know that they have this right. We are not telling anyone to join a union; we are simply making sure that they know it is an option. Just as employers are expected to inform staff about health and safety rules or their right to paid leave, they should also be clear about the right to union representation.

[Baroness Lawlor (Con)]

Will the Minister agree that it is a bit heavy-handed to require an employer to furnish a new employee, at the same time as giving them the agreed terms and conditions of employment letter, with a statement on their right to join a trade union? I cannot see that that is proportionate.

[Lord Leong (Lab)]

It is just like any other right that employees expect, such as health and safety, annual leave and all that. The right to join a union does not mean that they have to join a union; it is still their choice. It is a small step that empowers workers and supports a fairer and more balanced workplace.

The statement of trade union rights will be provided at the start of employment, alongside an existing written statement of particulars already required under Section 1 of the Employment Rights Act 1996 and at other prescribed times. Given that it builds on an established process, we believe that this measure places minimal burden on employers, including many small businesses. We will consult on the practical details of Clause 55 before this is set out in secondary legislation.

On Amendment 130, the right to access is a complex policy and will involve detailed practical consideration. We will therefore provide for the operational details of a responsible and regulated access framework in secondary legislation. Ahead of doing so, we will publicly consult on the operational details this autumn, including on model access terms that the CAC must consider reasonable for both employers and unions to comply with, and the appropriate amount of notice a union must give before access takes place. Consulting before setting out these operational details will ensure that we cater for a variety of scenarios and workplaces and will ensure that these measures are fair and workable in practice. We believe that providing for this operational detail now, ahead of consultation, would be premature. I therefore respectfully ask the noble Lord, Lord Hunt, to withdraw Amendment 128.

[Lord Hunt of Wirral (Con)]

My Lords, I say with great regret that the response we have received today is totally unconvincing. At no point throughout the progress of the Bill have Ministers offered a satisfactory explanation as to why sweeping changes to trade union access rights, including digital access, were introduced on Report in the other place, with no consultation, no impact assessment and no regard for the realities facing small and medium-sized businesses. There has been no clarity whatever regarding how these measures will work in practice.

How right the noble Lord, Lord Londesborough, is to stress that there has been no recognition of the burden they will place on the thousands of small and medium-sized employers across the country. There has been no proper answer to my noble friend Lord Moynihan of Chelsea, who was supported by my noble friends Lady Lawlor and Lord Leigh of Hurley. I have no need to reply to the noble Baroness, Lady O’Grady of Upper Holloway, as she was shot out of the water by my noble friend Lord Hannan of Kingsclere. All I will say is that there has equally been no proper consideration of the broader impact these changes could have on the labour market, particularly on hiring, retention and business confidence, at a time of economic uncertainty.

I regard the noble Lord, Lord Goddard of Stockport, as consistent, but I disagree with him fundamentally. I hope he will issue a detailed explanation to the Federation of Small Businesses as to why he has felt unable to follow its guidance that there has to be a recognition of the special needs of small and medium-sized enterprises. I can well understand that the arguments that the noble Lord, Lord Londesborough, introduced in support of Amendment 129, together with Amendments 131 and 145, provide a simple and proportionate safeguard. Given the seriousness of these issues and the complete lack of justification for how this has been handled, I shall seek to test the opinion of the House on Amendment 129, but, in the meantime, I beg leave to withdraw Amendment 128.

Employment Rights Bill

Lord Leong Excerpts

Report stage
Wednesday 16th July 2025 Lords Chamber

[Lord Sharpe of Epsom (Con)]

My Lords, I shall speak to Amendments 105, 107 and 159 in my name. On Amendment 105, the Government are well aware that this Bill, in particular Part 1, will have a detrimental effect on seasonal work and seasonal industries, but they have failed to provide any clear definition of what seasonal work is. We therefore think it is essential that the Bill includes a precise definition to protect those vital sectors to ensure that the law reflects their unique and fluctuating nature. We are discussing the lives and livelihoods of thousands who work not in rigid year-round roles but in the beating heart of seasonal industries, such as agriculture, hospitality, tourism and the performing arts. Their work ebbs and flows with seasons, festivals, harvests and holidays, not according to neat quarterly reporting periods. Yet, under the present draft, a 12-week reference period is being proposed as a basis for determining what constitutes an established pattern of work.

Let us pause on that. Twelve weeks—barely three months or, one might observe, the precise duration of just one of the four seasons—is being treated as a sufficient measure for sectors whose very nature is defined by unpredictability and periodic intensity. That is not only an inadequate metric but, in many cases, an actively misleading one. A fruit farm may employ hundreds in May and none by August. A theatre technician might work flat out during festival season and then have no engagements for months, or be working elsewhere. A seaside hotel may be bustling in July but deserted in November. To take a short-term temporary rise in demand and then draw long-term legal assumptions from it about continuity of work is not merely a flawed approach but deeply unfair to both employers and workers.

Businesses cannot predict with such precision. They cannot bind themselves to a rhythm that the market does not keep. If they are forced to do so, they will, understandably, become more cautious. They will hire fewer people, reduce opportunity and retreat from flexibility altogether. Flexibility is not a sin, nor is it bad for an economy. In many cases it is the only practical means by which people—students, carers, parents and artists—can participate in the labour market. We must not make mistake irregularity for instability, nor seasonal work for insecure work.

This amendment does something elegant and essential: it defines seasonal work in clear, practical terms; it captures its recurring yet temporary character, grounded in the real operational rhythms of key sectors; and, crucially, it instructs the Secretary of State to have regard to this definition when drafting regulations. That is not an escape clause; it is a safeguard against blunt policy-making. We are not asking for a loophole; we are asking for recognition that not all labour is uniform and not all employment patterns can or should be squeezed into the same regulatory mould. If we pass this Bill without such a safeguard, we risk chilling seasonal hiring altogether—not protecting workers, just denying them opportunities.

I am grateful to my noble friend Lord Roborough for signing Amendment 107 and I look forward to hearing the answers to the questions that he asked, particularly on the suicide statistics. I hope the Minister is able to address those. Before turning to the matter at hand, I must begin with an unequivocal condemnation of the Government’s recent family farms tax policy. This disastrous measure has placed an unbearable strain on family farms, which are the very foundation of our rural communities and the heart of our national food security. Instead of supporting these hard-working families, the Government have chosen to punish them with policies that threaten their very existence. I urge the Government to commit today to reversing this tax immediately for the sake of our farmers, our countryside and our country.

Having said that, I turn with equal concern to the Employment Rights Bill. Although this Bill’s goal is to enhance worker protections, which is commendable, it tragically fails to take into account the unique realities of farm businesses and seasonal work. As we have heard, farming is unlike any other industry. It is defined by seasonal peaks and troughs, by work that is dictated by the weather and the cycles of nature, and by labour demands that can change from one week to the next. To impose inflexible employment rights designed for stable year-round jobs on these seasonal industries is to misunderstand them fundamentally.

Take, for example, the proposal to extend unfair dismissal rights from day one of employment, which we have just discussed, or the Bill’s restrictions on zero-hours contracts, which would further exacerbate some of these issues. Zero-hours contracts in agriculture are not a tool of exploitation but a necessary mechanism for managing the ebb and flow of seasonal labour. Moreover, the proposal to require compensation for cancelled shifts fails to consider farming’s intrinsic unpredictability. Decisions about work can hinge on weather conditions that change with little notice. To expect farmers to pay for cancelled hours when fields are unworkable is simply unrealistic and unfair.

Even the Bill’s provisions on the right to request flexible working place an undue burden on farmers. Agricultural work is highly seasonal and task driven, as my noble friend Lord Roborough explained. That makes flexible working requests difficult to accommodate in practice. Raising the threshold for employers to refuse these requests will hamper farms’ ability to plan and respond to fluctuating labour needs.

That is why Amendment 107 is not merely desirable but essential. By introducing a clear baseline definition of seasonal work, the Bill can be tailored to reflect the cyclical, temporary and weather-dependent nature of agricultural labour. This amendment recognises the reality of these industries, allowing for the necessary flexibility that the Bill currently denies.

Without this amendment, the Government risk imposing a one-size-fits-all regime that will force many farms to cease hiring, increase costs or even close altogether, yet again devastating rural communities and endangering our food security. I urge people around the House to support this amendment and send a clear message that the law must work with and not against the realities of seasonal work. Yes, we must protect workers, but let us also protect the farms and farmers who feed this nation.

I am grateful to the noble Lord, Lord Londesborough, for supporting Amendment 159. A few years ago, in a remarkable TV interview, a one-time Labour shadow Chancellor could only suggest “Bill somebody” when asked to name a business leader who supported Labour’s policies. Sadly, this Government’s Employment Rights Bill risks the same fate. Ministers cannot name a single small business that supports all the measures contained within it—if any exist at all. This Bill is being rushed through with little regard for the very businesses that form the backbone of our economy. The Government’s own impact assessment hints at a looming disaster but fails to fully capture its devastating effects.

The Federation of Small Businesses warned that this Bill is weighing heavily on the minds of small business owners, already forcing them to put investment and job creation on hold at precisely the moment when they are most needed. The noble Lord, Lord Londesborough, cited the ICAEW, and the Institute of Directors recently revealed that 72% of businesses believe this Bill will harm growth with 49%, so nearly half, saying they intend to hire fewer staff as a direct result.

Yet the Government insist that businesses will simply absorb these costs—a statement that is not only unrealistic but dismissive of the precarious financial position many small enterprises face. Larger firms may weather the storm but small businesses often survive on razor-thin margins, and their survival will come at the cost of lower wages, reduced opportunities, or a reluctance to hire new staff at all. The Office for Budget Responsibility has warned that these sweeping new regulations will likely have

“material, and probably net negative, economic impacts on employment, prices, and productivity”.

That, I fear, is masterly understatement.

Crucially, the Government have missed one vital fact—competition between employers, not simply regulation, best protects workers’ rights. Employers who want the most productive, loyal and committed workers must offer better pay and conditions to attract and then keep them. This natural market dynamic encourages fairness and opportunity far more effectively than heavy-handed mandates. This Bill would distort competition by imposing complex rules and costs that distract businesses from focusing on growth and innovation. Instead, they will divert precious resources into managing compliance and legal risk, and into erecting barriers rather than enabling opportunity. Ironically, this will lead to fewer businesses competing for talent and therefore fewer jobs being created.

The Government claim that these rules will improve job security and working conditions, but the reality is that the increased costs and risks will force many small businesses to rethink their hiring plans altogether. The FSB says so. They will either hold back on creating new jobs or cut existing ones, and some will reduce wages or cut hours to survive. The intended protections risk backfiring, making work less secure and less rewarding. Ultimately, the costs imposed by the Bill amount to a stealth tax that will fall directly on the workers themselves—an opportunity tax. Employers faced with higher compliance costs, the risk of costly tribunals and the restrictions on flexibility will have little choice but to pass these expenses down the chain. This means lower wages, fewer hours and fewer job opportunities, ensuring, paradoxically, that work simply does not pay.

I will say a quick word on my noble friend Lord Leigh’s Amendment 106. This Government like a consultation, but they have been unable to name any business they have consulted in relation to Part 1. My noble friend’s amendment is therefore elegant in its simplicity. It channels the Government’s enthusiasm and corrects their omission. I will support it if he chooses to divide. Finally, I remind the noble Lord, who I think is answering, that the noble Lord, Lord Howard, asked a very good question. Lest he has forgotten it, I would like to re-ask it.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to all noble Lords who have spoken in this debate. Amendment 94 from the noble Baroness, Lady Noakes, would exempt specific groups from all or some of the provisions within Part 1. Since the 1980s, UK reforms have stripped back workers’ employment rights and turned the country into an outlier among advanced economies. The UK’s productivity has stalled more sharply than in other economies, with millions trapped in low-paid, insecure and poor-quality jobs. What is the result? Less money in working people’s pockets.

We are now paying the price. Millions of working people cannot afford basic living costs. In one of the world’s wealthiest nations, workers are still turning to food banks. Many cannot afford rent, let alone a mortgage. Morale is at rock bottom; motivation is vanishing. Average salaries have barely increased from where they were 14 years ago. The average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crash, yet executive pay keeps climbing. In 2023 the average FTSE 100 CEO earned 118 times the pay of the median UK worker, up from 50 times in the late 1990s. This is not sustainable, not fair and no way to build a healthy, productive economy. The UK must stop treating worker protections as a drag on growth. They are the foundations of it.

More than 2 million people could benefit from guaranteed hours and rights to payment on zero-hours contracts. More than 9 million people would benefit from protections against unfair dismissal from day one. Up to 1.3 million employees will get a new entitlement to statutory sick pay. These new rights, entitlements and protections provide a baseline minimum standard for security and dignity at work. They should not be something the Government of the day can freely take away. Furthermore, exempting any category of person that the Secretary of State deems fit will ultimately create a two-tier system of employment rights based on the politics of the day. While I understand the noble Baroness’s intentions, I reiterate that these provisions were manifesto commitments.

Business confidence is at a nine-year high, according to the Lloyds Business Barometer—

[Noble Lords]

Oh!

[Lord Leong (Lab)]

Noble Lords opposite may laugh but this is the Lloyds Business Barometer, which I am sure many noble Lords across the aisle will know—with a second consecutive rise in workforce projections for the coming year. Deloitte recently ranked the UK as the joint top destination for investment.

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[Lord Leong (Lab)]

My Lords, if the noble Lord starts throwing statistics around, I can throw statistics at him as well. As I said earlier, the Deloitte survey shows that the UK is the top destination for businesses. In fact, the Chancellor’s speech at Mansion House yesterday was very much welcomed by the City of London. All the financial services say that London will be the destination for fintech investment. Furthermore, KPMG’s recent consumer index says that people are feeling that they have more money in their pocket and are starting to plan holidays for the summer—good for them.

[Lord Leigh of Hurley (Con)]

I am sure the Minister will want to be very clear on this. I think the Deloitte survey he refers to was in respect of inward investment only, probably because the UK is regarded as a cheap place, given what has happened to us in the last month, whereas the chartered accountant survey is specifically on business confidence, which has fallen every quarter for the last four quarters. One wonders what happened four quarters ago to prompt that.

[Lord Leong (Lab)]

We got into government one year ago, after 14 years. Business confidence was very low then, and at the same time unemployment was on the rise. At the end of the day, we are making progress. The figures will take time to change, but I am confident that confidence will grow. Inward investment is coming in, which means more investment in business and growth. Furthermore, the FTSE index reached the 9,000 mark yesterday. What does that say? People have confidence to invest in British companies, so let us not talk down the economy.

[Lord Sharpe of Epsom (Con)]

My Lords, I cannot let that pass. The noble Lord will know that the FTSE represents mostly foreign earnings. It is not a domestic index.

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[Lord Hunt of Wirral (Con)]

My Lords, we are very grateful to my noble friend Lord Moynihan of Chelsea for his amendments. I thank the Minister and her team for the way in which they have entertained and thought through some of the key points made by my noble friend. As he rightly pointed out, collective redundancies are, sadly, not uncommon in cases of employer insolvency. In such circumstances, the role of the insolvency practitioner, which my noble friend has outlined so clearly, is both time-critical and highly constrained. The legal duties placed upon practitioners can come into direct tension with the obligation to consult collectively with employees, a tension that is not merely theoretical but is borne out time and again in practice.

I say to the noble Lord, Lord Goddard of Stockport, that the amendment does not seek gratuitously to diminish the rights of employees. My noble friend has drawn the Government’s attention to a genuine gap in the law, one that has become more acute in the light of the changes that the Bill introduces. As it stands, the duty to consult can place insolvency practitioners in an impossible position, bound by law to take urgent decisions to preserve value or manage a collapse while also facing legal jeopardy for failing to comply with collective consultation obligations that were not, and never were, designed with insolvency in mind.

We have to be realistic. Where a company is collapsing, consultation—however desirable—cannot always be carried out in the prescribed way. It is in nobody’s interests, least of all that of employees, to put insolvency practitioners in a position where they are forced to choose between compliance with employment law and their fiduciary responsibilities.

I believe that the Government should take my noble friend’s arguments seriously. This is not a theoretical concern; it is a matter of practical urgency. I therefore urge the Minister to reflect carefully on the implications of the clause and to engage with my noble friend’s proposal in the constructive spirit in which it is offered.

[Lord Leong (Lab)]

My Lords, I am grateful to all noble Lords who have spoken. Amendments 108 and 109, tabled by the noble Lord, Lord Moynihan of Chelsea, would amend Clause 27. I thank the noble Lord, as well as the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for their engagement in this matter when we met.

On Amendment 108, the clause as drafted does not alter how collective redundancy obligations apply to insolvent employers. It is right that, when employers know that their business is in trouble and redundancies will be necessary, they should be required to do as much as possible to collectively consult on those redundancies. That was the case before and it will be the case after this legislation comes into force, so nothing has changed.

Employers should consult when they propose to make a qualifying number of redundancies, and they will face penalties if they do not. However, crucially, as my officials and I have discussed with noble Lords, those penalties are set by a tribunal, which will take into consideration the seriousness of the employer’s default, as well as any mitigating factors. The amount set out in legislation is a maximum award, but tribunals may award less where the employer or insolvency practitioner has taken all reasonable steps to consult for as long as possible in the circumstances.

Section 188(7) of the Trade Union and Labour Relations (Consolidation) Act 1992 already affords flexibility for employers who cannot fulfil their collective consultation obligations. It allows employment tribunals to assess on a case-by-case basis whether there are special circumstances which make it not reasonably practicable for an employer to comply with their collective consultation obligations.

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[Lord Moynihan of Chelsea (Con)]

I apologise for intervening, but is the Minister saying that R3 stated that it was against this amendment?

[Lord Leong (Lab)]

The R3 website said that it was concerned about the amendment because it may devalue a company’s valuation on an ongoing basis because of the day-one rights accorded to employees. That is what it said on the website.

[Lord Moynihan of Chelsea (Con)]

I do not want to detain the House, but I am in ongoing discussions with R3, and it has never said this. Is the Minister quite sure that it is not saying that it is concerned about the clause, rather than the amendment?

[Lord Leong (Lab)]

I may be wrong. Sorry: it is not the noble Lord’s amendment; it is the clause. I apologise for that. But it is the same thing: if it is against the clause, it is because it is concerned about the valuation of the business. My point is, why should the employees suffer because of the taking into account of day-one rights?

On Amendment 109, I inform the noble Lord that the notification period in the current law aligns with the consultation period. This means in practice that whenever an employer begins a collective consultation, they must also notify the Secretary of State at that point. Setting these periods at different times could cause confusion for employers and increase the risk of non-compliance. The objective of the notification provision is that such notifications may be distributed to appropriate government departments and agencies that are best placed to support affected employees. This amendment would mean that those agencies would be less prepared to support large volumes of individuals who have been made redundant. We have had extensive engagement with employers throughout the passage of the Bill, and the notification timeline has not been raised as a concern. Therefore, this amendment is unnecessary.

I take this opportunity to say to the noble Lord that we will engage with the Insolvency Practitioners Association, raise and discuss the issues that noble Lords have raised, and listen to what it has to say. With that in mind, I ask the noble Lord to withdraw Amendment 108.

[Lord Moynihan of Chelsea (Con)]

I thank noble Lords for their patience in enduring at this late hour this somewhat arcane discussion. The noble Lord, Lord Goddard, emphasised the importance of consultation and, indeed, the essential nature of it, and said how vulnerable employees are. But they are not vulnerable in this particular circumstance; they have priority as creditors above all other creditors. If there is money, they will get it. If there is no money, they will get it from the Redundancy Payments Service. But why, having got their full amount of redundancy money, should they then scoop the pot and get three times as much because of a flaw in the law that will leave, for example, small trade creditors not receiving anything and possibly facing bankruptcy? That is not to mention the fact that a lot of this money will usually come from the taxpayer—ultimately, the source of funds for these penalty payments—via HMRC, where the Redundancy Payments Service is, thus increasing the deficit. It would create a mini black hole, if I could be so foolish as to mention that.

My noble friend Lord Hunt of Wirral ably reinforced the need for this amendment. The Minister emphasised the importance of consultation. I understand that, but I believe Hansard will show that I have already dealt with most of the items in his response. I will not delay noble Lords any longer by going over that ground again, except to say once again that when he asks why employees should suffer, the answer is that they will not suffer. I hoped I had explained that. I am chagrined to understand that I have not. They have total priority above all other creditors in receiving their full redundancy payments.

All I ask is, why should they, as a result of a glitch in the law, receive in total three times that much as a so-called penalty payment? They will not be paid by the employer because the employer will be long gone. They will not be paid by the insolvency practitioner, in facing the impossible task of obeying both laws at the same time. They will be paid mostly by us, first through HMRC and through it the taxpayer.

The hour is late and so, if only on compassionate grounds, I beg leave to withdraw my amendment.

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[Lord Hunt of Wirral (Con)]

My Lords, I thank the noble Lord, Lord Goddard of Stockport, for his important words when he talks about the impact of the Bill on small and medium-sized enterprises. The fact is that while the Government recognise the impact, they have not really taken enough time and trouble to identify the extent of that impact. The Government may argue that they cannot predict the future. We are not asking them to, but we are asking for greater effort in understanding the likely incentives that their policies will create and for a thorough, transparent review of the impact on small businesses. Only then can this House exercise proper scrutiny and ensure accountability.

I will now deal primarily with Amendment 166 in the names of my noble friend Lord Sharpe of Epsom and the noble Lord, Lord Londesborough. The Regulatory Policy Committee has given the Government’s existing impact assessment a red rating. We have referred to this before, and the Government have never denied that rating. The rating means that they have failed to provide an adequate analysis of most of the Bill’s provisions. The Government talk about the Bill representing the biggest upgrade to workers’ rights in decades, and one that is long overdue. If that is indeed the case, we should expect a comprehensive, evidence-based analysis of its effect, in particular on small businesses, which make up 99% of all businesses in the UK.

Amendment 194 is not a wrecking amendment. The fact is that the Government have provided no evidence of any tangible benefit from their proposed trade union reforms—we will deal with those in much more detail on our next day on Report. The Government optimistically suggest that the changes might improve industrial relations, but no one seriously believes that—I doubt that even the trade unions do. We have seen the chaos that these types of measures have caused in the public sector. Our worry is that the Government now want to import that chaos into the private sector. Even if strike days are reduced, it will come at a high price: unaffordable pay rises and extreme regulatory burdens designed to placate union demands. That will ultimately harm hiring, weaken competitiveness and make the UK a far less attractive place in which to invest.

As for Part 5 of the Bill, the Government are proposing to hand sweeping powers to the new fair work agency without any meaningful safeguards. Will a minor accounting error mean that family-run businesses face raids from civil servants and property seizures? Will everyday employees with small workplace grievances, who simply want to resolve them informally, find themselves sidelined as the Secretary of State pushes their case to a tribunal, without their knowledge or consent?

Let us be clear: when the Conservative Party wins the next general election, we will repeal these sections and restore a labour market rooted in growth and prosperity.

[Lord Leong (Lab)]

My Lords, I am grateful to the noble Lord, Lord Hunt of Wirral, for his contribution and to the noble Lord, Lord Goddard, for speaking to his amendment.

Amendment 194, tabled by the noble Lord, Lord Sharpe of Epsom, seeks to repeal Parts 4 and 5 of this Bill, as well as Sections 149 and 150 at the end of this Parliament. In Committee, we debated at length the merits of Part 4 and 5 of the Bill, as I am sure we will again next week, as the noble Lord, Lord Hunt, mentioned. Parts 4 and 5 are key to delivering the biggest upgrade in workers’ rights in a generation, so I do not wish to repeat myself to your Lordships’ House tonight.

Amendment 166, also tabled by the noble Lord, Lord Sharpe of Epsom, proposes a review process that effectively duplicates what we are already doing. As I have outlined previously, the Government already have robust monitoring and evaluation plans in place. The Government’s impact assessment sets out how we will review the Bill and any secondary legislation that follows, including effects on small businesses, which we know are vital to the economy. The recently published road map shows that implementing this Bill will take several years and its full effects will not be realised until long after Royal Assent. Significantly advancing a post-implementation review would not allow for an effective assessment of its impact, including on small businesses.

On Amendment 111, moved by the noble Lord, Lord Goddard of Stockport, this Government know the importance of making sure that employers of all sizes are supported in preparing for employment rights reforms. As set out in our road map, the Government are committed to ensuring there is sufficient support and guidance for employers of all sizes. As set out in paragraph 24 on page 8 of the road map, we will be working closely with ACAS and others to develop codes of practice and guidance on measures where these are needed. We have committed to ensuring time is built into our implementation plans to allow stakeholders, including many small businesses, to familiarise themselves with changes in law, codes of practice and guidance. Many of the measures in the Bill build on existing legislative provisions which already have guidance and codes of practice. When we make changes to regulations, we will also work to update relevant guidance and codes of practice as a result.

We know one of the main places that people turn to for reliable, accurate information on legal requirements is GOV.UK. Work is currently under way to ensure that our digital content is usable, easy to navigate and accessible for all stakeholders. In addition, we have engaged, and will continue to do so, with stakeholders of all sizes to understand what support will be useful for them in implementing these changes.

The noble Lord’s amendment is unnecessary and duplicative. An additional code of practice on top of the guidance and support that the Government have already planned risks causing confusion among stakeholders as to where they should turn for clarity and certainty. I therefore respectfully ask the noble Lord, Lord Goddard, to withdraw Amendment 111.

[Lord Goddard of Stockport (LD)]

I thank the Minister and the other speakers in this small group. Although it is three minor amendments and it is 11 o’clock at night, for us, and, I think, for the Conservatives, small businesses are the heartbeat of the economy in this country. We will keep nagging about small businesses, and we want clarity and certainty.

Yes, codes of practice are great. I have read the road map; it is very interesting. I understand the direction of travel with the road map. It requires patience, trust and a little bit of honesty about what is deliverable in time periods. The road map is a good thing, and I recommend people to read that road map.

Small businesses need to know now the impact of this proposed legislation. Asking for reviews of that, after a period of time, does not seem unreasonable to this group. We are not being awkward for the sake of being awkward, we are just trying to protect small businesses and small companies that are, quite frankly, bewildered. They do not have a political view on the Employment Rights Bill. They are bewildered as to how someone can come in and affect how they try to make a small profit and a small living.

We will continue to probe, not forcing votes for the sake of votes. I speak to Ministers regularly, probably more with these Ministers than on any other Bill—apart from the football Bill, perhaps, with the Minister who is sat next to the noble Lord. The Ministers have been really helpful and supportive, and I appreciate that. I think they understand where we are coming from on this—we are not trying to be obstructive, but we are just trying to tease out a little bit more detail and promise of certainty for people. At the moment, life is difficult, and to put more uncertainty in front of people who are trying to do the things the Government want them to do—grow their business, employ more people and create GVA—those things have to be compatible with the things they are trying to do for the employees. On that basis, I will stop wittering on, and I withdraw my amendment.

Companies House: Filing of Annual Accounts by Small Companies

Lord Leong Excerpts

Tuesday 8th July 2025 Lords Chamber

[Lord Sikka]

To ask His Majesty’s Government what plans they have for implementing, modifying, or repealing any part of the Economic Crime and Corporate Transparency Act 2023 dealing with the filing of the annual accounts by small companies at Companies House.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, this Government are committed to implementing the Economic Crime and Corporate Transparency Act 2023. The reforms in the Act aim to improve the accuracy of Companies House data, strengthening the UK’s reputation as a place where legitimate businesses can thrive while driving out dirty money. These changes aim to improve transparency and combat economic crime. The Government are engaging with stakeholders and Companies House to ensure effective implementation while minimising burdens on small businesses.

[Lord Sikka (Lab)]

My Lords, the secrecy afforded to small companies has incubated financial crime. Just last month, HMRC said that 40% of corporation tax due from small businesses is not being paid. Numerous money laundering, sanctions-busting and employment scams are fronted by small companies; therefore, we need far more information publicly filed by small companies at Companies House. So, further to his reply just now, can the Minister say that the Government will fully implement all the public filing requirements which apply to small companies under the Economic Crime and Corporate Transparency Act 2023?

[Lord Leong (Lab)]

My Lords, the reforms under the Economic Crime and Corporate Transparency Act 2023 represent the largest changes to the UK’s financial framework for registering companies in over 180 years. With the help of new powers, Companies House has already prevented some 14,600 suspicious filings and queried and removed false, misleading or incorrect information impacting some 106,000 companies. Furthermore, since the introduction of new data-sharing powers in March 2024, Companies House has shared approximately 800 intelligence reports with partners, who can use this to complement their own intelligence picture or take immediate action to disrupt illicit activities. We recognise recent concerns and will set up next steps to address specific concerns raised.

[Lord Popat (Con)]

My Lords, we as a country are heavily legislated for small companies. We see a large number of UK companies leaving the London Stock Exchange for New York, and a large number of people leaving the country for good. We do not celebrate wealth creation any more. To further burden small companies that create wealth and jobs for our country will be a bit too much. Can we look at watering down some legislation and encouraging small companies to grow?

[Lord Leong (Lab)]

I thank the noble Lord for that. I hope that he has read our industrial strategy. We aim to reduce something like 25% of regulation on businesses. Currently, as it stands, as the noble Lord will know, most companies have to file abbreviated accounts with Companies House. So what we are asking is nothing more than what they are already doing, so we are not adding additional burdens on small businesses.

[Lord Vaux of Harrowden (CB)]

My Lords, thanks to the efforts of this House, the Economic Crime and Corporate Transparency Act introduced a new power for the Government to regulate in order to find out about people holding shares as nominees for other people, which is one of the easiest and most common ways by which beneficial ownership of companies can be hidden. A whole industry has built up to facilitate this. What assessments have the Government made of the misuse of nominee shareholders, and what plans do they have to use those regulations?

[Lord Leong (Lab)]

The noble Lord makes a very interesting point. Let me just give your Lordships an insight into what Companies House has done since the Act came into force. We have been cleaning up the Companies House database, and we have a five-year timeframe to really clean it up. The first thing we will do is to verify those individual directors. There are something like 7 million directors at Companies House and, currently, some 250,000 directors have voluntarily verified themselves. Towards the autumn of this year, through the GOV.UK One Login, we hope to have close to all the 7 million verify who they are, so that we can get to the bottom of whether who they say they are is exactly who they are.

[Viscount Hanworth (Lab)]

My Lords, the registration is wholly inadequate. Independent research suggests that numerous UK-registered companies have no UK resident director. Such companies are 17 times more likely to commit fraud, as the Government are in no position to impose UK law on directors living abroad. How will the Minister curb the frauds of such companies?

[Lord Leong (Lab)]

The noble Viscount is absolutely right. We obviously do not have jurisdiction on foreign companies or companies registered outside the UK. Let me share some facts with the noble Viscount. Since 4 March 2024, Companies House has made significant progress in tackling false and misleading information on the register, using the new powers under the Act. Companies House has removed some 220,000 false and inappropriate addresses, some 52,000 people named on incorporations without their consent, and over 13,000 documents from the register, including something like 800 false mortgage satisfaction filings that previously required a court order. So we have come some way, but there is still a lot more to do, and Companies House is getting on with it.

[Baroness Kramer (LD)]

My Lords, perhaps the Minister can help me, because I have become very confused. Like the noble Lord, Lord Sikka, I understand from the Financial Times and others that the Government have decided to shelve the reforms in filing for small companies, even though most of those companies have upgraded their software already in order to meet the requirements of Making Tax Digital, so there is very little additional cost to a proper filing. Could he explain that, and also pick up on the pt made by the noble Lord, Lord Sikka, which is that there is broad evidence now that organised crime is increasingly using tools such as AI so that it can front various scams and sanctions-busting by using small companies?

[Lord Leong (Lab)]

The noble Baroness has obviously read various newspaper reports. I suggest to her, “Don’t believe everything you read from the papers”. As it stands now, most companies have to file abbreviated accounts, which, as the noble Baroness will know, is just a balance sheet. We are asking under this Act for them to file accounts. As I said earlier, we recognise the concerns raised by various stakeholders and we will set up next steps to address those recent concerns. When this happens, a statutory instrument will be placed and noble Lords can debate it.

[Lord Sharpe of Epsom (Con)]

My Lords, obviously, we welcome sensible steps to reduce unnecessary burdens on small business, but, given the alleged decision to reverse the reforms to small business account filing, have His Majesty’s Government done the necessary work to ensure that reduced financial transparency does not damage creditor confidence, does not hinder investor due diligence and does not restrict access to finance for small companies?

[Lord Leong (Lab)]

The noble Lord is absolutely right. It is important that people must be able to rely on the data that is on file with Companies House, whether they are doing business with a particular company or to determine whether the company’s financial statements are accurate. Most companies file their accounts on time and accurately. A small minority of companies do not file their accounts on time or, perhaps, properly. This Act hopefully will go after those small companies. We are not imposing burdens on small businesses. We just want to tackle economic crime.

[Lord Hain (Lab)]

My Lords, on the Economic Crime Act 2023, can my noble friend explain what the Government are doing to block the £90 billion that is laundered through the United Kingdom annually, often by kleptocrats buying properties or via “onshore London” as a means of tax avoidance in UK Overseas Territories or Crown dependencies, labelled “Britain’s second Empire”, such as the Cayman Islands, the British Virgin Islands especially, the Bahamas, Gibraltar, Bermuda and the former UK colonies of Singapore and Hong Kong?

[Lord Leong (Lab)]

My noble friend makes a very important point. The cost of economic crime and financial opacity is staggering. It costs something like £350 billion a year to this country. Tackling illicit finance has been a top priority for this Government from day 1. We welcome the progress that has been made by many overseas territories in improving access to beneficial ownership registers to boost transparency. For those that have yet to deliver, we have made clear the importance of meeting their agreed-upon commitments and have offered technical help. However, our position is firm. Rapid and robust action is expected. The UK will not tolerate any part of its network being used to conceal dirty money or hinder law enforcement.

UK Modern Industrial Strategy

Lord Leong Excerpts

Monday 30th June 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, we on these Benches remember how powerfully business welcomed the industrial strategy produced by Vince Cable during the coalition years, and the shock and dismay with which it greeted the Conservative decision, when that party was in government alone, first to weaken it and eventually to scrap it. Such a strategy is vital to drive business investment, good jobs and prosperity.

It was notable that the Conservatives not only scrapped the industrial strategy but sold off the Green Investment Bank. How different our energy position could have been today, had that not happened. They also readied the British Business Bank for sale; I remember direct conversations with Sajid Javid and his relief that it was to be done away with. It survived only because Covid struck and it was needed to distribute Covid loans.

Those constructive moves were pure ideology: in essence, it was private good, public bad. So I listened with interest to the Conservative Front Bench today and there is a change of tone but—my goodness—this country would have benefited had that change started a few years ago.

We find some common ground in one area. The Conservatives did not exactly name it, but we have talked about it in the past. Raising employers’ NICs, especially SME employers, was the wrong way to start the revival of business and enterprise.

We support core elements of the strategy, but we still have questions. My noble friend Lord Russell, if he has the opportunity to speak on this Statement, will talk much more about energy prices, because we welcome the help of a wider range of energy-intensive industries. But why would we wait another two years to find out who will qualify? What about the burden of electricity prices on service industries such as hospitality?

If the Government want to see a quantum growth in exports, the answer is surely to negotiate to rejoin the EU customs union. By comparison, everything else is small beer. Have the Government noticed today’s FT article charting the decline in productivity—especially in London, which is key to the economy—since Brexit? It played such a significant role, with its impact on business investment and the opportunity to participate in supply chains. This Government are keen on U-turns, so why not make a U-turn that would actually bring money into the country and the Treasury and work to find our way back into the EU customs union?

A business in rural England involved in agribusiness and farming would be asking, “Why does this strategy have so little for me?”, especially in an era of food insecurity, climate change and tariffs. Can the Minister elaborate and provide some reassurance? A business looking for skilled staff would welcome the funding boost for skills but ask, “Why not the fundamental reform of apprenticeships that we need, and where is lifelong learning?” Today’s report of a sharp drop in entry-level jobs surely underscores that need. Can they have a place in the strategy?

A creative reading the importance of data as an asset—in fact, the industrial strategy is quite good on the creative sector, but not on the importance of data as an asset—would ask why the Government have refused to strengthen copyright transparency rules to prevent the US mega-techs scraping intellectual property without recompense. Where is the logic and the justice, particularly when data is identified as critical?

An innovative small business would welcome the Government’s intention to use procurement to drive enterprise, but why do the rules still mean that the Government can then take the intellectual property of that small business and, on the grounds of transparency, give it to its competitors free of charge? This is an issue that my noble friend Lady Bowles raises often, and it still needs an answer.

One issue in particular grates with me. The Government have simply not grasped the need for access to finance for the whole breadth of small businesses, not just priority sectors such as high tech. To build our communities and make sure that good jobs and prospects are available everywhere, we cannot be in a position where small businesses grow from retained earnings only. We need a genuine community banking sector. The high street banks and most alternative finance is not interested in meeting the need. The British Business Bank has a small £150 million pot over the next two years to support community banking, but it is minimal compared, for example, to the $300 billion in community bank financing that is the backbone of small business finance and growth in the United States. Does the Minister understand that this is a missed opportunity?

In many ways, we see this industrial strategy as a positive and strong step forward, but we will not be in a full position to judge it until we see practical support and solutions. Implementation and delivery are key. I hope that, by the time we have such clarity, my noble friend Lord Fox, whose knowledge in this area is so much greater than mine, is back on these Benches. I can tell your Lordships that he will expect answers.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to the noble Lord, Lord Sharpe, and the noble Baroness, Lady Kramer, for their contributions, but I am bitterly disappointed by the noble Lord’s remarks about the industrial strategy. He said that we should listen to business; I can safely say that we have.

Let me quote some of the comments from businesses. The Institute of Directors said:

“The Industrial Strategy is an important step towards the development of a positive and coherent plan to drive growth, and will enable businesses to see a sense of direction for the UK economy. For businesses to be able to plan for investment, it is crucial to have a stable policy environment. This whole-of-government approach is encouraging, not least as it draws together new and existing strands of activity into one cohesive strategy”.


Make UK, whose chairman is the noble Lord, Lord Harrington—a colleague of the noble Lord, Lord Sharpe—says:

“The Government has listened and the Secretary of State has acted decisively with a joined up strategy which reflects a wider commitment from the Prime Minister and Cabinet alike. The strategy announced today sets out comprehensive and well funded plans to address all three of these structural failings. Clearly there is much to do as we move towards implementation but, this will send a message across the Country and around the world that Britain is back in business”.


Furthermore, the leaders of the British Chambers of Commerce, the CBI and the Federation of Small Businesses said that:

“The Industrial Strategy … marks a significant step forward and a valuable opportunity for the business community to rally behind a new vision for the UK—boosting confidence, sentiment, and enthusiasm for investment. From start-ups and small businesses to large corporates, businesses need a more attractive, stable environment that enables faster, easier, and more certain investment decisions. We welcome the Government’s engagement with businesses across the UK. Much of what we’ve shared has been heard and reflected in this strategy. While there’s more to do, we are ready to support the next steps. We encourage businesses nationwide to get behind this strategy and champion the UK as the best place to live, work, invest, and do business”.


The UK is a thriving global economy, founded on stability, fairness and the rule of law, and propelled by world-leading sectors and companies. We have a record of extraordinary research and innovation. We are champions of openness and free trade, and we continue to be a magnet for international talent and capital. But, in recent decades, the pace and magnitude of global change have escalated, and the UK has been short of the dynamism it takes to stay ahead. The global trading environment has become more unpredictable, the fragility of the global supply chains more apparent, and our economic competitors have been more assertive and destructive in promoting their national industries. British workers and families have paid the price through the cost of living crisis.

Now more than ever, businesses are seeking out countries that can provide them with the confidence to invest and grow. As we set out in the plan for change, the Government’s priority mission is to deliver strong, secure and sustainable economic growth. The modern industrial strategy is a 10-year plan to kick-start an era of economic prosperity—the central mission in our plan for change—by investing in our comparative advantage and forging a new relationship between business and government.

It is a new economic approach that brings together every bit of government to drive investment. It will create a more connected, high-skilled and resilient economy where every person, place and business has the chance to flourish. Our plan will make it quicker and easier for businesses to invest, provide them certainty and stability to make long-term decisions and ensure they benefit from the UK’s openness to the world.

In order to do this, we are backing eight growth-driving sectors where the UK is already strong and has potential for faster growth: advanced manufacturing; clean energy industries; creative industries; defence; digital and technologies; financial services; life sciences; and professional and business services. With those globally competitive industries spread across the nation, there is potential to make the whole country more prosperous as they grow and become more successful. The deep partnerships developed with mayors and the devolved Administrations, support for city regions and clusters and investment in local transport networks will enable the delivery of real growth to local communities.

Our formal Invest 2035 consultation, published last year, identified a list of inputs from foundational industries—including electricity networks, ports, construction, steel, critical minerals, composites, materials and chemicals—that are important to unlocking growth in the key growth sectors. The industrial strategy will support the whole economy, including businesses outside the eight growth-driving sectors through an improved operating environment, long-term stability and greater dynamism for entrants to emerge.

Supporting growth sectors will also have spillover benefits for the rest of the economy, from innovation pull-through to technology diffusion. For example, gains from AI innovation alone could add up to some £47 billion a year for the UK in productivity gains over the next decade.

Regional growth is a core objective of the industrial strategy. Higher national growth and the success of the IS eight will come only from unleashing the potential of places across the whole of the United Kingdom. The industrial strategy and our sector plans include interventions that will grow our city regions and clusters and help them attract private investment. This includes: bringing together more investable sites with over £600 million for the strategic sites accelerator; helping places to land game-changing private investments with support from the Office for Investment, the National Wealth Fund and the Business British Bank; growing high-potential innovation clusters for the £500 million local innovation partnership fund; making a new £500 million mayoral recyclable growth fund available to invest in growth projects; and much more.

On access to finance, we are unlocking billions in finance to innovative businesses, especially for start-ups and scale-ups, by increasing the British Business Bank’s capacity to £25.6 billion. That includes an additional £4 billion for growth capital for industrial strategy sectors, crowding in billions more in private capital. By investing largely through venture funds, the BBB will back the UK’s most potential growth.

To conclude, I reiterate the words of my noble friend, the Secretary of State:

“We are creating a prosperous, proud and outward-facing but self-reliant, independent and high-skilled nation; a country where opportunity, skills and wealth are spread fairly, and where every person and every business have the chance to flourish. That is what our modern industrial strategy will deliver. Our future, in our hands, built in Britain: that is what the strategy will achieve”.

[The Earl of Effingham (Con)]

My Lords, if this Government are pro-business, as the Statement says, why has £143 billion-worth of initial public offerings gone to New York? Why are Revolut, Unilever ice cream and many others jumping ship?

[Lord Leong (Lab)]

My Lords, since we got into government 11 months ago, we have secured £100 billion of inward investment in this country. People are coming to invest in this country because they have confidence in the Government. We have set out the infrastructure strategy, the industrial strategy, the trade strategy and will, hopefully very soon, set out the small business strategy. This Government are getting on with growing the economy, and we will attract more and more investment.

[Earl Russell (LD)]

My Lords, we on these Benches very much welcome this the first industrial strategy since 2017. We particularly welcome the concentration on our energy resilience and energy security. It is absolutely right that clean energy is included as one of the eight sectors. The green economy grew by 10.3% last year, so we must work to strengthen it in its broadest sense. On the plans to reduce the cost of energy to business, we welcome the reduction of levies in this area. But I reiterate my noble friend’s point about why this cannot be done before 2027. What more can be done to help our hospitality and leisure sectors specifically? Do the Government also recognise the need to remove levies from domestic energy bills too?

[Lord Leong (Lab)]

I thank the noble Earl for that and for his support for the energy schemes. We recognise that high electricity costs are a key challenge for the United Kingdom’s businesses, and we as a Government want to provide the support necessary for energy-intensive industries to improve their competitiveness. We hear this from businesses every day. That is why we have announced, as the noble Earl mentioned, the British industrial competitiveness scheme, which will slash industrial electricity prices by somewhere between 20% and 25%.

We will conduct a consultation to find out about some of these high-intensity businesses. Some 7,000 manufacturing businesses, including car makers and defence manufacturers, employ some 300,000 skilled people. This is where we need to support. In addition to that, we have the network charging compensation scheme, under which some businesses will get an uplift from 60% to 90%. We are putting in place support for high-intensity electricity users to help them manage their business more effectively and more competitively.

[Lord Cryer (Lab)]

My Lords, since the noble Lord, Lord Sharpe, talked about energy policy at such great length, can my noble friend confirm that there are two crucial elements in the operation of energy policy, which are diversity and security? Both those elements, which were undermined over 14 years under the previous Government, are at the heart of the Great British Energy Act, which includes £8.3 billion of investment that the board is free to put into any kind of energy generation it sees fit. That will not be Ministers’ decisions; the board will be operationally free to make that decision.

[Lord Leong (Lab)]

I thank my noble friend for that. It is absolutely right. Let us try to recap. When was the last industrial strategy published? It was some eight years ago, in 2017. Since then, we have had several Conservative Administrations, several Prime Ministers, several Secretaries of State for Business and all that. This industrial strategy is needed now because we are in a pretty unstable global trading environment. Businesses want certainty and stability, and this is what this Government are offering them. They also want a long-term plan and for us, the Government, to stick to our guns. The UK’s world-leading capabilities, pragmatism and clear policy direction make us a prime destination for international businesses. We are attracting investment to this country. Amazon announcing a £40 billion investment last week shows that it has confidence in this Government and in our industrial strategy.

[Lord Lamont of Lerwick (Con)]

My Lords, over the years, Governments have introduced their industrial strategies—I remember the industrial strategy of the Callaghan Government—but I think sometimes they think that they have found a policy when they have simply found a phrase. Industrial strategies in the past have tended to lead to a lot of different funding pots and opportunity for lobbyists. The Minister used the phrase “crowding in”. Crowding in sounds wonderful, but are the Government or the agencies that administer the industrial policy going to avoid two dangers: first, that by combining public money with private money, they are merely subsidising investment that would have happened anyway, and, secondly, if they are subsidising that investment, that it is not a poor investment and that the risk is being taken out of it? How are they going to be able to avoid those two dangers that have plagued industrial strategy in the past?

[Lord Leong (Lab)]

I thank the Lord for that question. He makes several very interesting observations. The reason we have published this industrial strategy is what I mentioned earlier about the global trading environment, but we also have a very clear goal. We want to drive growth. I know many noble Lords have mentioned it, but it is still the number one mission of this Government, and we can achieve that only by better and increased investment. The noble Lord is right. Previous Governments have published investment strategies, but why is this investment strategy different? Past growth plans have often been felt by businesses as being done for them, so it looks as though government knows better and this is what the industrial strategy is for, whereas with this industrial strategy, we work with businesses every step of the way. We have meetings with business representative organisations—in fact, I have learned a new word, “BROs”; we work with trade unions and investors so that this strategy is not only a government strategy but a whole-of-business strategy. That is the first difference. The second difference is that we have listened to the needs of businesses, the need for long-term certainty. Every business that I have spoken to wants three things: certainty, stability and less regulation. That is what the Government are trying to solve through their strategy to reduce regulation by 25%. This is still very much a work in progress, but it is what we are aiming for. We hope that this strategy is different from previous strategies.

[Baroness Neville-Rolfe (Con)]

My Lords, I want to ask the Minister about the apparently “Cinderella” areas of retail, hospitality and tourism, which have all been hit terribly hard by the Chancellor’s NICs hikes, especially the reduction in the NICs threshold to £5,000, which has led to shop and cafe closures in my home area of Wiltshire. There is barely a reference to their contribution in the industrial strategy, yet in the Conservative and Blair years there was an understanding of the innovation, growth and jobs for which retail, hospitality and tourism were responsible, with minimal cost to the Exchequer. Can the Minister explain why they have been abandoned?

[Lord Leong (Lab)]

We are not abandoning any industry or sector. This strategy identifies the top-growing sectors, the IS-8 as we call them, which make up 30% of the total business sector in this country but contribute some 60% of the national economy. Obviously, it is the Government’s position to support them. As for retail, hospitality and others, we have other support plans in place; for example, the business rates scheme.

Let us not beat around the bush: the high street is changing and people’s shopping habits have changed but, at the same time, we need to revitalise the high street. Hopefully, when we publish the small business strategy in due course, it will cover how we will revitalise the high street. In other parts of the hospitality sector, be it cafés, restaurants or pubs, it is a very mixed picture. Some pubs are closing down, but not because we have come into government; they were closing down way before then. In the case of the pub in my village—a very small village pub—a year ago it seemed only a matter of time before it closed down. It was sold to a young couple, they changed it and now it is flourishing; you cannot even get a table there. So, pubs need to change.

[Lord Sharpe of Epsom (Con)]

Wait until the Employment Rights Bill passes—then you will get a table.

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[Lord Leong (Lab)]

The noble Lord may say that about the Employment Rights Bill, but I speak to many businesses and many of them do more than what that Bill does; but that is a conversation for another day.

The whole landscape is changing. We have to be responsive to that, and we are not leaving any sectors behind.

[Baroness Bennett of Manor Castle (GP)]

My Lords, in its introduction, the industrial strategy says that

“we live in a world dominated by the rise of superstar firms, whose success spills over to the wider economy”.

It seems that the Government are adopting a trickle-down theory of business, but is this not assuming a future that looks like the past two decades? It has been an era of cheap, abundant financing for firms that have often burned through enormous sums of money—money used to force competitors out of business and to buy out genuine innovators and swallow them up, or squash them, not to deliver genuinely productive, useful, substantive products and services.

This is the idea of the unicorn: a biased picture of entrepreneurship that favours valuation over value creation. This is the model that has given us the massively unequal, deeply unstable society we have today. Surely, we cannot keep going the way we are. It has got us to the disastrous point we are now at.

[Lord Leong (Lab)]

I do not quite agree with the noble Baroness. At the end of the day, the Government have to make a choice. We have identified the top eight sectors that we will support with this strategy going forward. At the same time, other industries will also benefit from the support because of its roll-on effect. Yes, ideally, we would like to support every sector, but we need to pick and choose. It is just like running your own business: you pick and choose who your customers are and you work with them, but you still serve everybody.

The industrial strategy focuses on eight sectors, but other foundational sectors will also be supported through the various plans set out in the strategy.

[Baroness O'Grady of Upper Holloway (Lab)]

My Lords, I strongly welcome this industrial strategy, alongside the TUC and the CBI. It is about a mission for fair growth and delivering secure, skilled jobs in the parts of the country that need them most. I am also very conscious of the history of industrial policy. I remember when noble Lords opposite, as members of a Conservative Government, were responsible for temporarily nationalising Rolls-Royce because they saw the company as key to the defence sector and manufacturing. Making more things here in Britain matters.

I also welcome the focus on vocational training. Can the Minister say more about the role of higher education, which in successful countries has traditionally had a key role in supporting clusters such as R&D and innovation, with a view, obviously, to better productivity in the country?

[Lord Leong (Lab)]

As usual, my noble friend makes a brilliant observation; she is spot-on. We have to focus on skills. This is another thing that is brought to my attention every time I meet with businesses in the UK, and with international businesses. They say, “You need to close the skills gap”. Skills are missing in certain places, and this strategy addresses that.

We are investing in technical excellence colleges through the further education scheme. As far as higher education goes, noble Lords know that four of the top universities are in this country. Businesses work with them and fund their research as well. We attract international business because of the higher education expertise and professionalism in this country.

Let me say more about skills. We have just announced £275 million of skills investment over three years, which forms a wider skills package made up of £75 million of government resource investment and £200 million of capital funding, made available from our new skills mission fund.

We committed in the industrial strategy to investing over £100 million to boost engineering skills. That is made up of £75 million of resource funding and £25 million of capital funding from the skills mission board. The Department for Business and Trade and the Department for Education have contributed funding for these engineering skills. We are also investing a further £187 million to support the digital skills package, which the Prime Minister announced at London Tech Week a few weeks ago. More details on defence skills will be set out in the forthcoming defence industrial strategy.

[Lord Lucas (Con)]

I will follow my noble friend and ask about Cinderella geographies. Coastal East Sussex is included in south-east England, but the examples given of the south-east are the Solent and Oxford, which are both four hours away. How does a bit of England that is not currently mentioned in or connected to the industrial strategy find purchase with this policy and document? What would the Minister recommend as a strategy for coastal East Sussex in trying to become part of the industrial strategy? Will he draw to his colleagues’ attention the virtues of the British Council initiative Alumni UK as a way of building international networks for industrial strategy businesses?

[Lord Leong (Lab)]

I thank the noble Lord for that. I will mention the British Council’s Alumni UK to my noble friend—she is sitting on the Front Bench and I am sure she heard the noble Lord’s point. On coastal towns and rural areas, the industrial strategy covers everything. This industrial strategy is not place specific; it is based on sectors. For example, rural areas will benefit from it, with clean energy in Cornwall, advanced manufacturing and agritech in Lincolnshire, financial services in Norwich and east Norfolk, and life sciences in Coleraine. So we are right across the country. It is not rural or coastal; it applies right across the country based on the sector. For example, computer games are very much up in the north, so that covers some of the rural areas as well.

The Government believe strongly that rural and coastal areas offer significant potential for growth and are central to our economy. We are committed to improving the quality of life for people living and working in these areas. The Government have already committed £2.7 billion to support sustainable farming and nature’s recovery. This Government have also confirmed investment of over £1.9 billion over four years into broadband and 4G connectivity. It is shameful that we still cannot get wifi across every part of this country. We are doing something about that, and the Government are putting money into these sectors.

[Baroness Young of Old Scone (Lab)]

My Lords, I welcome the industrial strategy. It is absolutely about stability and a sense of direction, which is what British business and, indeed, international investors have been calling for. I will press the Minister on the task of increasing private investment funding. In 2000, 50% of UK pension funds were invested in the UK. That has reduced to single figures now. If the pension and other institutional investment funds do not act on the Mansion House agreement voluntarily, will the Government consider mandating that?

[Lord Leong (Lab)]

My noble friend makes an interesting observation. As I said, we are putting more money into the British Business Bank and are encouraging private funds into the sectors. We have to work with the private investment money in this country. So plans will be in place to attract private investment and, at the same time, we want to work jointly with private investment in some of our key sectors so that we can help to grow the economy, as my noble friend mentioned.

Employment Rights Bill

Lord Leong Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I am grateful to every noble Lord for their contribution, and I have listened intently to each and every one of them. I thank noble Lords for their kind words about my previous business career.

We return to the important issue of impact assessments. I appreciate the continued efforts of the noble Lords, Lord Sharpe and Lord Hunt of Wirral, here. It will be no surprise to your Lordships’ House, given the number of separate debates—I think there have been about eight now—we have had on this topic, that the Government view these amendments as unnecessary. Let me recap. We have already published 27 impact assessments, available on GOV.UK, which have been updated where needed as policy has been added to the Bill during passage.

Academics at Warwick University, Oxford University, MIT and UCL all find a positive relationship between job satisfaction and productivity in their research. For example, Simon Deakin, professor of law at the University of Cambridge, said:

“The consensus on the economic impacts of labour laws is that, far from being harmful to growth, they contribute positively to productivity. Labour laws also help ensure that growth is more inclusive and that gains are distributed more widely across society”.


All this evidence is laid out in our impact assessment, which was developed in consultation with external experts. Business supports the view that this will be good for productivity. In a survey undertaken by the Institute of Public Policy, seven in 10 employers said that strengthened employment rights will boost productivity, compared to just 7% who disagreed, and six in 10 employers thought stronger employment rights would have a positive impact on business profitability, while fewer than two in 10 disagreed.

We have worked hand in hand with businesses, trade unions and civil society to understand the impacts of this Bill—

[Baroness Fox of Buckley (Non-Afl)]

There is no doubt that people who are happy at work are likely to contribute positively to the workplace. Nobody, I think, is arguing against that and wants miserable workers with no rights. However, what we are trying to explore is not whether people will have job satisfaction but whether they will have jobs. It is about the unintended consequences of the Bill that might mean that people are not employed; or, indeed, that new jobs are not created because productivity will not go up; or that it becomes too risky to employ, for example, young workers, and so on.

With all due respect to Warwick University’s academics—I went there and I know some of the people who wrote that research, and I am sure that they are happy in their workplace—the truth is that if some piece of legislation ended up unintentionally closing down Warwick University, they would not be happy and productivity would not go up. That is what we are concerned with. It is not a theoretical academic argument about how being happy at work makes you work harder—I know that. But if there is no work, then you are not going to be happy, you are not going to do any work and productivity will go down.

[Lord Leong (Lab)]

I thank the noble Baroness for that contribution. If she can be a bit patient, I have some more positive news for her.

We have worked hand in hand with businesses and trade unions, as I said earlier, to understand the impacts of the Bill on industry and will produce further analysis as required under the Better Regulation Framework. It is worth noting that more doors are opening than closing. In the first quarter of 2025, the UK saw 90,000 businesses created, up 2.8% on last year, while business closures fell by 4.4%. This Government are backing British businesses and British workers, and our Modern Industrial Strategy, published yesterday, is making that real. To give one example, we have boosted the British Business Bank’s capacity to £25.6 billion, unlocking billions for innovative firms, especially SMEs. For the first time, the British Business Bank will be able to take equity in fast-growing tech companies. This has never happened before. That is helping crowd in tens of billions of pounds more in private capital, fuelling growth, creating jobs and driving long-term prosperity. I hope that gives comfort to the noble Lord, Lord Deben.

[Lord Deben (Con)]

I am very pleased with all the research that was done before the Bill and all the research that has been done with it. The only question is: when the Bill goes through, why do not we do the research to make sure that we were right? I cannot understand why we draw the line the moment the Bill is passed, except in the generalities of better regulation. Will the Minister, whose business knowledge is considerable, please accept that businesspeople normally measure by results? Why cannot we measure the results?

[Lord Leong (Lab)]

I thank the noble Lord. I ask him to bear with me—patience here. We are already seeing the results. Just this morning, Amazon announced a £40 billion investment. This means that it has resounding confidence in the UK Government.

[Baroness Verma (Con)]

We are talking about small and medium-sized businesses too, and they are not all going to be tech companies; they are not all going to be Amazons. They are small or medium-sized companies that keep most cities and towns going.

[Lord Leong (Lab)]

I thank the noble Baroness for that. I, together with my ministerial colleagues, speak to businesses every day, whether they are tech companies, other businesses or whatever. Yesterday, I had a conversation with Small Business Britain, and we talked about this Bill and most of its members have confidence in this Government. We talk to all businesses.

I come back to Amazon: basically, what it means is £40 billion. It is creating 4,000 new jobs across the UK, which is a major boost to our tech and logistics sector. The latest Lloyds Business Barometer survey shows that business confidence is at a nine-month high, with a rise in hiring expectations among businesses. This is proof that our plan for change is working. Britain is open for business, and the world is taking notice. There is simply nothing more I can add to the noble Lord’s argument. This analysis—and we will continue to do impact assessments—will be done, and I therefore ask the noble Lord to withdraw Amendment 310.

[Baroness Lawlor (Con)]

My Lords, before the Minister sits down, may I just clarify whether he said that 90,000 jobs were created in the first quarter of 2025, or was it 290,000? I missed the exact figure. It is my understanding that, in the first quarter of last year, with which the comparison has been made by the Minister, there were 248,000 new entrants. The Minister spoke of new jobs, but our impact assessment is on new entrants to the market and there were 248,000 in the first quarter of last year. If the 90,000 refers to new jobs as opposed to new entrants into the workforce, that is a different comparison.

[Lord Leong (Lab)]

I thank the noble Baroness for giving me the opportunity to say this again. In the first quarter of 2025, the UK saw 90,000 businesses created. Business creation was up by 2.8% over last year, while business closures fell by 4.4%.

[Lord Hunt of Wirral (Con)]

My Lords, this has been such an important debate. We have been throwing statistics around the Chamber as if they had just been invented. The very latest statistic that I have in front of me, published in Business Matters, is that:

“Britain has recorded its highest number of company closures for two decades, with the final quarter of 2024 seeing 198,046 businesses struck off the official register”.


That is hot from the press. We have really been debating—

[Lord Leong (Lab)]

My Lords, I must challenge the noble Lord. There are many reasons for business closures. Companies get struck off for all kinds of reasons. Unless we drill deep down into what that figure is comprised of and whether the reasons are insolvency or companies being dormant, it will be difficult just throwing figures around.

[Lord Hunt of Wirral (Con)]

Is that not exactly why we need to measure the impact? That is what this debate has been all about. The Minister has done my job for me, but he has not accepted any of the amendments.

I thank my noble friend Lady Lawlor very much indeed, not only for the facts and figures that she gave us but for how she stressed that there has been, is perceived to be and is taking place an increase in the regulatory burden. Looking ahead, there are more compliance costs to come. Why does the Minister not accept that there is a need for an independent impartial measure? That is what these amendments seek. My noble friend Lord Deben, with all his unrivalled experience in building up businesses, is arguing that we need to check, to look ahead and to ensure that we can measure the impact of this legislation. Who is going to be right? The Government are saying, “Trust us, we’re right, we know what’s best, this will increase growth”. Yet their own impact assessment says that it will not.

Therefore, when you analyse all the facts and statistics that are coming forward, surely there is a very strong argument that we need an independent impact assessment. I agree with my noble friend Lady Verma that, if our roles were reversed and the Minister, with all his experience, was sitting on this side of the House, these are the amendments that he would be pressing for, because he knows how important it is to measure the impact of legislation and regulation. The noble Baroness, Lady Fox of Buckley, spoke of measuring what is happening now against what the Prime Minister promised in cutting the amount of regulatory burden and reversing the managed decline. It was good that she reminded us of those key words. Yet, as she said, this legislation is jam-packed with regulation. Her warning that this legislation is a recipe for lawfare is a warning to us all.

I agree with my noble friend Lord Swire that there is a need for a low regulatory framework at a time when our competitors are embracing artificial intelligence and all the new techniques while we are increasing the regulatory burden. I do not think that the noble Lord, Lord Palmer, got the answer that he was looking for from the Minister. Although he may not agree specifically with each individual amendment, he does believe that there is a clear message here that we must take on board.

--- Later in debate ---

[Baroness Cash (Con)]

My Lords, I support the amendment tabled by the noble Lord, Lord Sharpe, and the comments made by the noble Baroness, Lady Fox, who covered quite a few of the points I planned to make. I want to speak specifically about young people.

Speaking very recently in front of a committee, Employment Minister Alison McGovern said that

“the situation for young people is a big worry for me at the moment”

and that:

“A lot of our young people—nearly 1 million—are effectively on the scrap heap”.


Those are not words I would have chosen myself; they are her words to a cross-party committee.

We have heard a lot of statistics during today’s debates. I will just add a few more. There are 1 million people not in education, employment or training, which includes a lot of young people. In addition, we have massive numbers of people receiving sickness benefits. All these young people will be a risk for employers.

The Minister is quite right that there has been an uptick in new businesses starting, but there is a serious downturn in the number of jobs created; unemployment is rising year on year, month on month since this Government took power; and the tax rises in the Autumn Budget are beginning to really kick in. We have seen that in the written submissions by numerous business organisations to the Government, other groups and Peers in this Chamber, begging—pleading—with us all to make their case about the significant costs they are already facing due to the national insurance rises. We can see it in real time. This amendment is a request to monitor the situation and come back with an impact assessment on perhaps the most vulnerable people in our society.

To show that these young people really want to succeed and want to have an opportunity, I will read the Committee a couple more numbers that the Minister is probably already well aware of. Some 60% of young people under the age of 30 would love to start a business, 9% of them have done so and 18% more of them would like to do so this year. These are the most vulnerable young people in our society. They are our future, as our demographics are getting older, and we are going to become more and more reliant on the economy that they generate. I have said it before, and I will say it again and again in this Chamber: Governments do not create growth; businesses create growth. We are now looking to these young people to start businesses and take risks on employing others. I urge the Government to, at the very least, come back having monitored that there is no impact on them and no further impact on the loss of employment that could ensue.

[Lord Leong (Lab)]

My Lords, I am grateful to all noble Lords who have spoken. I refer to the point made by the noble Lord, Lord Jackson, about letters. I assure him that it is no coincidence that when we make a commitment and say that we will write, we write. I make sure that my officials write to everyone to whom I have promised a letter within 10 working days. If the noble Lord has not received letters from us, I welcome the challenge of being put on the spot to ask why the letters are not there.

I have a couple of points. I am a firm believer in social mobility. When I exited my business, some 20 years ago, I was very much involved in a social enterprise that went into state schools to ensure that state pupils were able to get out of their shell, be better and make something out of their lives. I am a firm believer in social mobility, and this Government take social mobility seriously. We do not just talk about it; we action it.

To support our commitment to ensuring that everyone, no matter their background, can thrive, we will commence Section 1 of the Equality Act 2010 in England:

“Public sector duty regarding socio-economic inequalities”.


As an example, the socioeconomic duty will require specific public bodies to actively consider how their strategic decisions might help to reduce the inequalities of outcomes associated with socioeconomic disadvantage. We are also now taking forward work to make sure that commencement of the duty in England is as effective as possible in driving efforts across the country to break down barriers to opportunity and making sure that there is no glass ceiling on people’s ambition.

I refer to the point made by the noble Lord, Lord Sharpe. We debated unfair dismissal and probation periods on day five of Committee, which was 21 May. We debated sick pay on days two and three of Committee, which were 8 and 13 May. We have debated some of these points at length.

I refer to the point made by the noble Baroness, Lady Cash, about some of the 1 million young people who are not in employment, training or education. We recognise that, and we are doing something about it. Since the general election, 500,000 more people are in work. At same time, we are improving access to NHS appointments; some 3 million people have been seen by medics in NHS appointments.

[Baroness Cash (Con)]

I would like some clarity regarding the employment numbers, because unemployment has been rising and is higher. We know from a number of City firms that graduates are struggling to get jobs, even in supermarkets. We have 33% fewer jobs for graduates. I just want the Minister to clarify the increase that he referred to and where that is coming from.

[Lord Leong (Lab)]

I thank the noble Baroness for that remark. I will get officials to write, setting out the detailed analysis of where this unemployment is and where new jobs are being created. I want to make absolutely sure that we get this right. We have already improved the NHS waiting list, and something like 3 million people have already accessed their appointments.

On the point about the impact assessment, which I will not labour, this analysis, as I have set up in many preceding groups, will be done. That includes social mobility. There is no point me standing here and repeating what I have just said. All this will be done. I therefore ask the noble Lord, Lord Sharpe, to withdraw Amendment 313.

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The noble Lord also mentioned the Attorney-General’s much-praised Bingham lecture last November. In many ways, it is sad that the Attorney-General—who was in the Chamber earlier—is not here to give us his view of whether this conforms with the very high standard he set in that lecture. This amendment would do exactly what I would have thought the Attorney-General would like to see. It would give Parliament time to scrutinise changes, give businesses time to prepare and, probably most important of all for us as legislators, give us the opportunity to understand fully the real-world consequences, intended or otherwise, of these regulatory shifts. I strongly support these three amendments.

[Lord Leong (Lab)]

I am grateful to all noble Lords who have spoken. I thank the noble Lords, Lord Carter of Haslemere and Lord Fox, for Amendments 317, 326 and 329, and the noble Lord, Lord Palmer, for moving the amendment in the name of the noble Lord, Lord Fox.

Amendment 317 in the name of the noble Lord, Lord Fox, is on guidance for small businesses. Ensuring that businesses are supported to implement these reforms is fundamental to the successful delivery of the plan to make work pay. We have committed to providing guidance to ensure that all stakeholders have the information required to make necessary adjustments. We are engaging closely with employers of all types from a range of sectors to understand how the Government can best support them in their preparations.

Support may look different for different sectors, sizes of company, regions and so on. We want to make sure that we properly consider the needs of different employers and respond in the most effective way. This could include a variety of tailored guidance and support. The amendment risks preventing the Government taking the type of tailored approach that we hope will be most effective. Our forthcoming implementation road map will set out our plans for consultation and implementation of the Bill’s measures.

Our Employment Rights Bill delivers the most significant upgrade in employment rights in a generation, creating a modern, fairer labour market. We will continue to consult and engage to make sure we get delivery right. We will produce guidance, provide support, allow time to prepare, and ensure the enforcement landscape works. I make it clear that I agree with the noble Lord that it is in everyone’s interest that small businesses are properly supported to implement the Bill, and the Government are committed to doing so.

Amendment 329 from the noble Lord, Lord Fox, would make commencement of all the Bill’s measures contingent on the approval and publication of statutory guidance. This would unnecessarily delay commencement of measures that can be delivered more quickly. We are committed to supporting small businesses and will ensure that timely and targeted guidance is delivered where relevant.

I turn to Amendment 326 from the noble Lord, Lord Carter. I have read the entire Bingham lecture from my noble and learned friend the Attorney-General. Nowhere in his speech did he say that statutory instruments should not be used. As most noble Lords know, employment legislation uses true statutory instruments because they save parliamentary time, as mentioned in the Attorney-General’s speech, so that we can get more of this on the statute book.

I reassure the noble Lord that the Government have sought to limit the use of the Henry VIII powers within the Bill and believe our approach to their use is proportionate. I can also reassure the Committee that the Government already have robust plans in place to assess and review the impacts of this Bill. The noble Lord’s amendment would add unnecessary bureaucracy to this and other necessary powers in the Bill. It would also, in effect, duplicate work that the Government are already committed to undertaking.

Take, for example, the power in Clause 132(6). This allows the Secretary of State to update, expand or otherwise modify the list of bodies specified in Schedule 9 to the Bill with which information may be shared by the fair work agency. It is a Henry VIII power, subject to the affirmative procedure. The Government believe this is an entirely appropriate use of such power and the DPRRC also raised no concerns.

Specifically on the power in Clause 151, I reassure the noble Lord that, where possible, amendments to other pieces primary legislation that are required as a result of the Bill’s provisions have been made in the Bill itself. This includes amendments in Schedule 1 that are consequential on the provisions regarding zero hours in Clauses 1 to 5; those in paragraphs 5 to 19 of Schedule 3 that are consequential on the changes regarding unfair dismissal; and the provisions in Schedule 10 that are consequential on the provisions in Part 5. However, it is possible that further provisions will be identified that require consequential amendments. Allowing these to be made by regulations will mean they can be made without delay and with appropriate levels of parliamentary scrutiny. The power is constrained as it will allow amendments only where they are consequential on the provisions already made in this Bill.

Supporting employers to understand the requirements of the Bill is key to achieving the objectives of the plan to make work pay. I hope noble Lords are assured of the Government’s firm commitment to effectively and appropriately support stakeholders in preparing for employment rights reform.

This will be my last time speaking in Committee on this Bill, so—

[Lord Hunt of Wirral (Con)]

If this is the last time the Minister is going to speak, I should point out that he started off by telling us about the road map, which his noble friend promised we would see shortly. In his closing remarks, would he like to tell us when we will see it? Will it be tomorrow, or next week? We would like to see it as soon as possible; indeed, we would love it if he could publish it now, before he finishes his closing speech.

[Lord Leong (Lab)]

It is tempting, but I can assure the noble Lord that it will be published very, very, very soon. How is that?

Like I said, this is the last time I will speak in this Committee. I want to take the opportunity to express my gratitude to all noble Lords for their extensive engagement and the robust way in which we have debated this stage of the Bill’s passage. I pay particular tribute to the noble Lords, Lord Sharpe, Lord Hunt and Lord Fox, and to the noble Lords, Lord Goddard and Lord Palmer, for standing in so ably for him. Like the noble Lord, Lord Hunt, I wish the noble Lord, Lord Fox, well in his recovery and look forward to welcoming him back.

Let me be clear: this Government welcome scrutiny—that is the purpose of this House—but scrutiny must be grounded in the present and focus on the issues at hand, not lost in the echoes of decades-old political arguments. Some contributions, regretfully, seem to have been more intent on reviving grievances from the 1970s than addressing the needs of today’s Britain.

This Bill delivers on a clear manifesto promise. It is part of our plan for change, built not on rhetoric but on the practical need to provide security for working people and long-term renewal for the country. This is where our focus lies—not on refighting the past but on fixing the future. We continue to welcome serious challenge, and we expect debates to be robust, but we also expect them to be proportionate, honest and forward-looking.

As we approach the end of Committee this evening, we on this side look forward to constructive and collaborative meetings and engagement with all noble Lords ahead of Report. With that said, I respectfully ask the noble Lord to withdraw Amendment 317.

[Lord Palmer of Childs Hill (LD)]

On behalf of my noble friend Lord Fox, I thank the noble Lord, Lord Hunt, for his support, which was so eloquently put. I also thank the Minister for his detailed reply.

When the Minister started speaking, I thought he would use his valedictory remarks to say that he was actually going to agree with something. There was great promise that he would agree to the amendments—these reasonable amendments—as all they would do is give guidance to small businesses to show them what the legislation is. Then, I lost: he will step down without going out on a positive note, which is very sad. His argument was that all the amendment would do is delay things. Sometimes, delay is good. Delay can be good if you get it right. Too often things are done precipitately, and delay is the better alternative.

What is the answer from the Minister? We shall have more statutory instruments. I have dealt with statutory instruments in the 15 years I have been in this House. Quite honestly, we discuss them, but we never vote. There has been no vote that I can remember, and statutory instruments are a means for the Government to tell us what they are going to do, and we have to nod in agreement.

Where do small businesses stand in all this, without any real guidance? They are left in a morass. The Minister has gone off in a cloud of glory, but I still do not have an answer as to whether anything will be implemented. Sadly, I beg leave to withdraw the amendment of my noble friend Lord Fox.

Employment Rights Bill

Lord Leong Excerpts

Committee stage
Monday 16th June 2025 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I speak to Amendment 251C through to Amendment 252, in the name of the noble Lord, Lord Sharpe. These amendments would introduce a wide range of limitations to the new right not to suffer detriment for participating in protected industrial action. The amendments seek to define and restrict the scope of protection, introducing exclusions based on business continuity, public safety, union membership status and compliance with employer instructions. They propose new requirements around compensation, such as proof of financial loss, statutory severity bans and caps on awards.

Although I understand the desire to ensure clarity and prevent misuse of these protections, I am concerned that, taken together, these amendments risk hollowing out the underlying right. They would place significant hurdles in the way of workers seeking redress and could undermine confidence in the fairness and accessibility of the system. I would be grateful if the Minister could clarify whether the Government support this overall direction of travel and how they intend to ensure that the core principle of protection from unfair treatment during lawful industrial action is preserved in practice.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank the noble Baroness for her contribution, and I thank the noble Lord, Lord Sharpe of Epsom, for tabling these amendments. I ask noble Lords to bear with me as I respond to each of them.

I want to be clear about why this clause is required. Clause 73 inserts new Sections 236A to 236D into the Trade Union and Labour Relations (Consolidation) Act 1992. New Section 236A is required because the Supreme Court ruled in April 2024 that Section 146 of the 1992 Act is incompatible with Article 11 of the European Convention of Human Rights.

Amendments 251C, 251F, 251H and 251J are unnecessary as their purpose is already covered in existing legislation. In the case of Amendment 251C, Clause 73 already requires a ballot compliant with Section 226, as specified in Section 219(4) of the 1992 Act, and makes it clear that protection is limited to cases where the action is compliant. Furthermore, in the case of Amendment 251J, secondary action is already prohibited under Section 224 of the 1992 Act, and the new protection of Section 236A will not apply where the industrial action was unlawful secondary action.

With regard to Amendments 251F and 251H, Section 240 of the 1992 Act allows for criminal prosecution of those who intentionally and maliciously endanger life or cause serious injury to a person by going on strike. Furthermore, if an act of an employer is motivated primarily by health and safety concerns, not for the sole or main purpose of preventing or deterring the employee from taking protected industrial action or penalising them, they have a defence from detriment claims, and the tribunals will consider whether the employer’s act or failure to act constitutes detriment.

Amendments 251D and 252 seek to prejudge a full and open consultation on this issue by setting out circumstances in which the detriment protection will not apply. We will prescribe detriments in secondary legislation only once we have conducted a comprehensive consultation seeking views across the public, including those of workers, employers, trade unions and all other stakeholders.

With reference to Amendment 252, that protection from prescribed detriment applies only where the sole or main purpose of subjecting the worker to detriment is to prevent, deter or penalise the worker from taking protected industrial action; for example, if a worker is subjected to detriment solely or mainly because they have harassed or bullied non-striking workers, the protection will not apply. I can be clear that criminal law will continue to apply to pickets.

Amendment 251E would be an unnecessary limitation on the protections from detriment. The prohibitions that new Section 236A places on an employer are clear: the sole or main purpose of the action must be to deter or penalise industrial action, which would not apply in the case of genuine maintenance of critical operations. Amendment 251G would be an unreasonable restriction to apply to detriment protections. Non-union members have the right to participate in official protected industrial action and, where that is the case, must be afforded the same protections from detriment as union members.

Amendments 251L and 251N would place a burden on individuals to prove that they had suffered financial or economic loss as a result of detriment, and would limit the circumstances where they were eligible for compensation. These hurdles and limits would potentially deter them from engaging in industrial action, limiting compliance with the Supreme Court ruling and Article 11.

Amendments 251M and 251P seek to restrict compensation with regard to business deeds. I want to be clear that an employer’s action or failure to act in relation to prescribed detriments will be a legal obligation that cannot be breached proportionately, and there is no legitimate business interest defence for seeking to deter or penalise an employee for taking protected industrial action.

Amendment 251K seeks to establish bands of detriment severity of “minor”, “serious” and “extreme”, and would require the Secretary of State to specify maximum compensation limits for each, which tribunals would have to comply with. New Section 236D is already clear that employment tribunals must have regard to any loss sustained by a claimant that is attributable to the actions of, or failures to take action by, an employer. Therefore, tribunals will award compensation based on what the tribunal considers to be just and equitable and will be able to proportionately determine the amount of compensation, taking into account all the relevant circumstances. I hope I have reassured the noble Lord. I therefore ask him to withdraw Amendment 251C.

[Lord Sharpe of Epsom (Con)]

I am very grateful to the Minister for his very comprehensive answer, and also to the noble Baroness, Lady Kramer, for her comments. I will have to read Hansard very carefully, because there is quite a lot of detail in the Minister’s answer, but I will say that for months we have listened to Ministers speak at considerable length about the urgent need to address bad actors in our workplaces. On a number of occasions, they have painted fairly vivid pictures of unscrupulous employers who exploit workers, flout employment law and engage in practices that undermine good industrial relations. However, having been presented with clear evidence of equally concerning bad actors within the trade union movement, the Government’s response has been, in effect, to stay silent. I repeated those Unite comments, and I will repeat them again here, that

“the employer is routinely treated as a target to be defeated not a friend to be convinced”.

To use a word that came up in the last group, that is not “constructive” or collaborative; that is very hostile in intent.

Without going into enormous detail, Amendment 251L, for example, would require proof of actual financial loss, which is a basic principle that would prevent speculative claims. I do not see how that would deter anyone with a legitimate claim from engaging in industrial relations, so how would their Article 11 rights be infringed, as I believe the Minister outlined?

We will have to come back to these amendments because, as I say, there was a good deal of detail in there. Once again, the Minister is relying on the mythical consultation; I would like to know when that consultation on these aspects of these amendments will take place. Of course, that also calls into question when he expects all this to be implemented—a subject to which I am quite sure we will return on a number of occasions this evening. But for now, I beg leave to withdraw.

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[Lord Hunt of Wirral (Con)]

My Lords, I thank the noble Lord, Lord Prentis of Leeds, for describing this amendment to us. It is simple and easy to understand but founded on a very difficult and testing industrial dispute. Looking back over my time as a parliamentarian, I often found that facts get distorted, beliefs underpinned and positions entrenched. The last thing that should ever happen is an overt change in the law. I do not believe that is necessary. Let me explain why.

The Minister should not support this amendment, which, as the noble Lord, Lord Prentis, explained, seeks to extend Section 145A of the Trade Union and Labour Relations (Consolidation) Act 1992 to cover the exclusion or omission of a worker from an offer on grounds related to trade union membership or activity. While the noble Lord presented this amendment as a measure to strengthen workers’ rights and reinforce freedom of association, in reality, on reflection, as he virtually admitted when he introduced it, it is poorly drafted, conceptually flawed, legally confusing and potentially deeply damaging to the legitimate and practical functioning of workplace relations.

At its core, the amendment misunderstands the balance that needs to be struck between protecting the rights of trade union members and preserving the autonomy of employers to make operational decisions in good faith. The current law already provides robust protections against unlawful inducements that seek to undermine collective bargaining. I recall, because I was in government at the time, that Sections 145A and 145B were carefully crafted to target deliberate attempts by employers to bypass or undermine collective agreements. This amendment goes significantly beyond that, seeking to introduce for the first time in statute a wholly ambiguous and legally unstable concept—exclusion from an offer—without providing any meaningful guidance or definition as to what such exclusion means, how it is to be assessed and in what contexts it is to be deemed unlawful.

An offer, by its very nature, is made on the basis of specific criteria—sometimes economic, sometimes strategic and sometimes tied to an individual’s performance or to business need. To say that a worker has a right not to be omitted from any offer and to link any such omission to trade union membership or activity would place an intolerable burden on employers. It would open the door to speculative claims and second-guessing of decisions that may have been made for entirely legitimate and neutral reasons, relying on an inference of motive in the absence of solid evidence. Effectively, it demands that employers should treat all workers identically in every instance of any offer—whether it is financial, procedural or preferential—or face litigation and the reversal of the burden of proof. Let me explain.

The amendment proposes that in any case brought under the new Section 145A(1A), it will fall to the employer to demonstrate the grounds upon which the worker was excluded. That is a fundamental reversal of the ordinary legal principle that a claimant must prove their case. It turns routine management discretion into presumed unlawful conduct unless proven otherwise. Such a reversal may be appropriate in narrow cases where discrimination is clearly alleged and supported by a pattern of conduct, but to write it into statute so broadly and in such general terms is not only disproportionate, it is potentially destructive to employer-employee trust and clarity. No employer, however well intentioned, will be able to manage negotiations or individual agreements with confidence under such a regime.

Furthermore, the amendment also risks creating legal confusion by overlapping with other provisions already in place to protect against victimisation or unfair treatment. Section 146 already protects against detriment related to trade union activities. Section 145A already prohibits inducements that would bypass collective bargaining. If the goal is to ensure fair treatment of trade union members, the proper route is through targeted enforcement of those provisions, not through the introduction of vague and speculative new rights that overlap and conflict with existing law.

The amendment is also unbalanced in its approach. It fails to consider that there are many reasons why an individual might not be included in an offer that are entirely unconnected to trade union status. It might be on account of their role, their location, the timing of their employment or performance-based factors. Yet under the proposed amendment, a worker could simply allege that their omission was because of trade union membership or activity, and the burden would shift entirely to the employer to justify its actions. That is not just an invitation to abuse; it is a structural distortion of fairness in employment law.

It must also be acknowledged that this amendment could have chilling effects on legitimate collective bargaining. Employers may feel compelled to make across-the-board offers rather than engaging in more flexible, targeted negotiations that take into account differences in role, responsibility or need. That could undermine not only business efficiency but also the ability of unions themselves to secure advantageous outcomes for specific groups of members. The very act of negotiating special terms for one group might now trigger complaints from others, citing this amendment as grounds for a claim of exclusion.

In conclusion, let me be absolutely clear: freedom of association is a vital right and must be protected. I do not believe, however, it would be served by new laws that are unclear, that burden employers without cause or that generate more confusion than clarity. This amendment—despite its rhetorical appeal to equality and fairness—will in practice be a blunt and imprecise instrument, increasing litigation, reducing operational flexibility and contributing little, if anything, to the genuine promotion of union rights. I hope the Minister will agree with that.

[Lord Leong (Lab)]

I thank the noble Lord, Lord Hunt, for his lengthy contribution. All he had to say was, “I do not support the amendment”. I thank and appreciate my noble friend Lord Prentis of Leeds for tabling Amendment 253A, which sets out that workers have a right not to be omitted from an offer by their employer because, among other reasons, they are trade union members. This amendment has been laid in response to a particular matter regarding the housing association Livv Housing Group, which last year reportedly made a pay offer to only those members of its workforce who confirmed that they were not trade union members. I am pleased that this matter has now been positively resolved in the workplace, as set out by noble friend.

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[Lord Leong (Lab)]

My Lords, I thank the noble Baroness, Lady Coffey, for her contribution and I will endeavour to respond to her amendments. However, I will not respond to Amendment 256, because it is not in this group; it is in group 6.

I respectfully disagree with the noble Baroness, Lady Lawlor. Trade unions do not cause chaos in this country. They are fighting for the better pay of their members. This Bill will update the UK’s outdated employment laws and turn the page on an economy blighted by insecurity, poor productivity and low pay. We will raise the floor on workplace rights to deliver a stronger, fairer and brighter future for the world of work in the UK.

I agree with the noble Baroness, Lady Noakes, that we must be conscious of how the reforms will impact SMEs, and I will come back to that later.

I thank the noble Lord, Lord Sharpe of Epsom, for tabling Amendments 254 and 255, and the noble Lord, Lord Fox, for Amendment 258, moved by the noble Baroness, Lady Kramer. On Amendments 254 and 255, our impact assessment of the repeal of the strikes Act was published on 21 October 2024 and is available for all to read. I remind all noble Lords that repealing the Strikes (Minimum Service Levels) Act 2023 is a manifesto commitment. The Act received Royal Assent in July 2023, but, since then, 2.7 million working days were lost to strikes in 2023—up from 2.5 million in 2022. Therefore, the Act has not proved to be effective, even though it has had a short lifespan. It has not prevented a single day of industrial action but has contributed to industrial unrest. Before the Strikes (Minimum Service Levels) Act 2023, most industrial action was consulted on, and voluntary agreements were put in place for minimum service levels in the interests of security. The system worked perfectly, so I do not see why this Act should be in place. There is nothing new to add to that assessment.

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[Lord Sharpe of Epsom (Con)]

My Lords, I thank my noble friend Lady Coffey for her amendments; they are measured, necessary and principled amendments to Clause 85, which rightly restore a degree of parliamentary scrutiny that had been quietly eroded in the original draft of the Bill. As we stated at Second Reading, there are 173 delegated powers in the Bill, which is unacceptable—not just to those the legislation will impact, but to the House.

In the Minister’s contributions on similar legislation in the past, she expressed her strong reservations about the use of delegated powers. I recall well her interventions, which were made with clarity and conviction, as she tabled amendments recommended by the Delegated Powers and Regulatory Reform Committee. But we now find ourselves considering a clause that does precisely what she once warned against because it carves out certain sensitive and constitutionally significant areas and exposes them only to selective scrutiny.

The original version of Clause 85 created a two-tier system. Some regulations would require affirmative approval from this House, while others—no less consequential—would not. This piecemeal approach to oversight is not only undesirable but unnecessary. Regulations made under Section 293 of the Trade Union and Labour Relations (Consolidation) Act are not merely technical: they pertain to fundamental matters, such as the rights of trade unions, the balance of power between employers and employees, and the protections afforded to those who take lawful industrial action. It is therefore only right and proper that all regulations made under this section should be subject to the affirmative resolution procedure: they should be laid before and approved by both Houses of Parliament.

My noble friend’s amendment achieves this. It does so with economy of language, but with significant constitutional consequence. It removes the artificial distinction introduced by subsection (5), and instead applies a uniform standard of scrutiny to the entirety of Section 293.

Since the Government took office, many of us across these Benches have expressed concern about the growing use of skeleton Bills, Henry VIII clauses and broad enabling powers that allow Ministers to legislate without adequate consultation or scrutiny. This amendment is a quiet but firm step in the other direction back towards balance, principle and the proper functioning of Parliament.

Again, I thank my noble friend for tabling her amendment, and I hope the Government will not merely accept it but embrace it to show their commitment to transparency and to the constitutional propriety of this House.

[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Sharpe, for his contribution. I remember standing before him during the PRaM Bill and we discussed this very matter. Some of this negative resolution is required because not only does it save parliamentary time but it is technical. Anyway, I thank the noble Baroness, Lady Coffey, for tabling Amendments 257B and 257C, which would make all the powers under Clause 56 subject to the affirmative procedure, as well as existing regulation-making powers that are currently covered by the negative procedure, by virtue of current Section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992.

It is worth noting that most of the access regulations are already subject to the affirmative procedure. Indeed, as the noble Lord, Lord Sharpe, mentioned, only four of the 12 delegated powers are subject to the negative procedure. Given the technical nature of those delegated powers, and to save parliamentary time, the Government are of the position that making them subject to the affirmative procedure would not be appropriate.

Further to this, as mentioned in previous debates, all regulations under Clause 57 will be consulted on via public consultation, the outcome of which will be published for all to see. This is an important process, which will help ensure that our policy development is informed by the practical experience and needs of trade unions, businesses and stakeholders.

The noble Baroness, Lady Coffey, and the noble Lord, Lord Sharpe, will have noted in previous debates in this place that the Delegated Powers and Regulatory Reform Committee said that

“it is heartening that in a Bill with so many delegated powers”—

the noble Lord, Lord Sharpe, mentioned 173—it had

“only found four on which to raise concerns”.

Clause 56 was not one of those. Therefore, I ask that the noble Baroness, Lady Coffey, to withdraw Amendment 257B.

[Baroness Coffey (Con)]

My Lords, I thank my noble friend for his comments. Undoubtedly, in the last decade, this House has started to move to have far more under the affirmative procedure, so it gets a level of scrutiny, although I appreciate your Lordships’ House does not vote against them. That is how to make sure legislation is properly considered, recognising it will be put to debate, which is certainly not the case with many regulations considered in the negative way. With that, I beg to withdraw.

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[Baroness Lawlor (Con)]

My Lords, I support my noble friend Lord Sharpe’s amendment to ask for an impact assessment that details the number of days lost to strikes in the 12 months since the Act was passed and in the previous 12 months. He spoke about the repeal of elements of the 2016 Act and about the ONS statistics.

Part of the reason why we need an impact assessment on the number of days lost to strikes is because, as my noble friend said, we have no evidence. This Bill, in particular aspects of Part 4, is likely to increase the number of strike days. I say that because the main problem with many of these clauses is that they undermine the balance between the employer and the employee, which my noble friend Lord Fuller spoke about as both a public sector and private sector employer. They remove the arrangements on a number of accounts which allow for a balance to be struck between the interests of employer and employee, and for agreement to be reached.

The clauses also remove the inducements and encouragements to avoid industrial action. We spoke earlier about Clause 73, on protection against detriment for taking industrial action: new Section 236A gives workers the right not to be subject to detriment as a result of official and protected industrial action and stipulates that an employer may not take action, and may not refrain from an action, to prevent the employee engaging in legitimate industrial or protected action. Yet excluding the employer’s ability to give inducements to workers for not taking protected industrial action where others do, is in fact prohibiting actions by the employer to hold back or to encourage workers not to take such action. One example might be to offer a bonus or withhold some extra benefit.

There are very good reasons to avoid strikes, not least for the good of the whole economy and the good of this country. Employers and employees should be given a level playing field, and many of the measures taken by the previous Government since 2016 and before then, all of which are in the 1992 Act, allow for that level balance to be struck between both parties. But many of these measures will encourage industrial action, which is not to the good of workers, employers or to the country at large. An impact assessment would at least provide the evidence that the country so badly needs if we are to start putting pressure on the Government to restore the balance in this delicate arrangement between both parties.

[Lord Leong (Lab)]

My Lords, I thank the noble Lord, Lord Fuller, and the noble Baroness, Lady Lawlor, for their contributions. I will be brief; I do not want to stand between noble Lords and their dinner break.

I thank the noble Lord, Lord Sharpe of Epsom, for his Amendment 262. We have already debated impact assessments at great length and I will not repeat the same arguments. Any industrial action is regrettable and all parties have a duty to seek a resolution to such disputes. Failure to do so is basically a lack of management and leadership by all. We have also debated the repeal of the 2016 Act in previous debates. I will not mention that either. Furthermore, it is a manifesto commitment.

Despite its good intentions, the amendment would impose a review procedure that in effect repeats what the Government already intend to do. We recognise the importance of ensuring that the impacts of these policies on workers, business and the economy are considered, and that analysis assessing these impacts is published. Our impact assessment also outlines a plan for monitoring and evaluating the impact of the Bill and subsequent secondary legislation.

As noble Lords will see from the impact assessment, our Employment Rights Bill could have a positive direct impact on economic growth, helping to support the Government’s mission for growth and ensuring that we raise living standards across the country and create opportunities for all. The Bill is expected to benefit people in some of the most deprived areas of the country by saving them up to £600 in lost income from the hidden costs of insecure work.

To conclude, I reassure your Lordships that we already have robust plans in place to assess and review the Bill’s impacts, including on industrial action. My commitment in an earlier debate to meet noble Lords to discuss the impact assessment further still stands. I therefore ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 262.

[Lord Sharpe of Epsom (Con)]

My Lords, I thank the noble Lord, Lord Leong, for his answer, but I am, of course, disappointed. I must say to him that of course he could not repeat the argument about the impact assessment because it is manifestly inadequate and overreliant on the word “could”, which he just used again.

So it is with a sense of frustration that I close this debate on Amendment 262 because, let us be blunt, the Regulatory Policy Committee has already deemed the Government’s own analysis inadequate. It found that the assessment underpinning this Bill failed to consider important variables, lacked robust modelling of strike-related costs and omitted any real evaluation of how the repeal of the 2016 Act provisions might drive up the number of working days lost to industrial action. That is criticism born not of political bias but of technical expert judgment, but the Government persist in asserting that an independent stocktake of actual strike days would be superfluous.

During the Bill’s passage, no fewer than 160 government amendments were tabled on Report, some of the most consequential of which would fundamentally alter the trade union landscape: changes to ballot thresholds, as my noble friend Lord Fuller explained; adjustments to picketing rules; and alterations to facility time arrangements. Many came late, with scant time for meaningful consultation and no accompanying update to the impact assessment. In effect, we are being asked to sign off on a statute the final shape of which was revealed only in piecemeal fashion and for which no comprehensive evaluation has ever been produced. There is more flesh on the skeleton now, but it still makes for a pretty unsavoury sight.

The consequences of this are already evident. Businesses stand in limbo. They are unsure how to prepare—again, the lack of an implementation plan. HR directors, legal advisers and finance teams are all left guessing which rules will apply. If the Government can point to a single one who is not, could they please say so, because we have spoken to very many and cannot find a single one who is not left guessing? They require clarity, not uncertainty. They need to know, for instance, whether a union ballot will again require a 50% turnout, or whether the conduct of pickets will be governed by new or old prescriptions. In their absence, investment decisions are deferred, retention and, especially, recruitment strategies are on hold and the workforce, unsure of its rights and obligations, faces unnecessary anxiety.

To deny acceptance of this amendment is to deny the very notion that policy should be tested against outcomes and treats legislation as unchallengeable, rather than a living instrument whose impacts must be monitored, and it tells employers, workers and the public alike that we legislate in the dark. So I regret deeply that the Government have chosen to reject the amendment. Doing so signals a reluctance to subject themselves to the discipline of evidence, shirks the responsibility to measure the real-world consequences of their own handiwork, and turns a blind eye to the limbo in which businesses and the public languish. That is not acceptable. If the Government’s reforms truly will deliver better industrial relations, they should welcome the chance to prove it. If Ministers are as confident as they claim to be, let them fast-track the assessment. Let them demonstrate that strike days are falling, that workplaces are more harmonious and that public services are protected. For now, I beg leave to withdraw the amendment.

Corporate Liquidations

Lord Leong Excerpts

Tuesday 10th June 2025 Lords Chamber

[Lord Leigh of Hurley]

To ask His Majesty’s Government what assessment they have made of the reasons for the reported rise in corporate liquidations in the year to 31 March 2025.

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, in the year to 31 March 2025, total corporate liquidations rose by 8%. This increase was driven by a 36% jump in solvent liquidations, while insolvent liquidations fell by 3%. The current corporation insolvency rate remains less than half what it was during the 2008-09 recession. Businesses go into liquidation for various reasons—tight cash flow, falling sales and loss of market share to online rivals—but no single factor dominates. Compulsory liquidations have increased mainly due to the increase in winding-up petitions from creditors, mainly from HMRC.

[Lord Leigh of Hurley (Con)]

The Minister is right: in fact, more than 2,000 businesses have faced winding-up petitions this year, the highest rate since 2012. Today, we learn that the number of payrolled employees has fallen by 274,000 over the past year, and most worryingly by 109,000 just this month past. The Institute of Chartered Accountants has predicted that eye-watering costs to business, particularly tax costs, will lead to more job losses. Does the Minister agree with me that as every single Labour Government have left office with unemployment higher than when—

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[Lord Leong (Lab)]

My Lords, of course these are disappointing figures, but six months after launching Get Britain Working we are seeing real results, with economic activity at a record high, half a million more people in jobs since we took office and real wages having grown more since July than at any other time in the last decade. It is also worth noting that the latest GDP figures tell a very different story, up 7% in Q1 of this year, showing the UK economy’s resilience and potential. These indicators suggest a labour market that remains robust and responsive, not one that is being held back.

[Baroness Kramer (LD)]

My Lords, does the Minister agree that what was worrying about the liquidation numbers in 2024 was the increase in compulsory liquidations? That came ahead of the NICs increases, so it is a real red flag. The businesses that I speak to are desperately depending on the industrial strategy to restore their prospects. Can the Minister assure the House that the IS will include a focus on small businesses, including opportunities for government procurement? Will the Government reverse their policy of demanding that SMEs cede ownership of their intellectual property if they enter into even a small government contract?

[Lord Leong (Lab)]

My Lords, I assure the noble Baroness that we will publish our industrial strategy very soon, and it will definitely cover SMEs. As I mentioned earlier, compulsory liquidation is not something new. Companies go bust. We have seen big companies fail. Failure is a reality of business. Even major firms such as Ted Baker, The Body Shop and Wilko have collapsed. We should be thinking about how to support these corporate failures. We must have a more robust system, whether it is the credit system that needs reforming or even British banks. We must incorporate the American culture. Yes, we have to address failures, but more important is how we get up, dust ourselves down and get on to the business market again.

[Lord Londesborough (CB)]

My Lords, does the Minister accept that some of these business closures, particularly for SMEs—where payroll is their largest expense—were triggered not only by the scheduled increase in NICs but by the steep hikes in the national minimum wage? As the noble Lord pointed out, this was demonstrated by the very disturbing falls in payrolled staff and vacancies reported by the ONS. The resulting squeeze on their cash flow may cause a further spike in the rate of liquidations through Q2 and Q3. How does this sit with the Government’s claim to have “restored economic stability”?

[Lord Leong (Lab)]

The noble Lord makes an interesting observation that I do not share. First, there is no empirical evidence to suggest that NICs or business rates changes are primary reasons for any of these closures in the UK. I can give examples of businesses that are doing very well. Let us look at the hospitality business. I just looked at the latest results for JD Wetherspoon, which had revenue of £2.2 billion and EBITDA of £19.28 million. Stonegate, one of the largest pub companies in the UK, had revenue of £1.75 billion and EBITDA of £394 million. These are not companies that are in trouble. The picture is mixed. Yes, we have some contraction in the business sector, but businesses are thriving. Do not listen to me. Listen to people such as the president of Blackstone, who this week said:

“I would give the UK Government a lot of credit for embracing business”.

[Lord Watts (Lab)]

My Lords, is it not the case that under the last Government we nearly had bankruptcy in the economy, we had very low levels of growth and we had poverty wages? Is it not time for them to have a period of silence?

[Lord Leong (Lab)]

I thank the noble Lord for that question. All I can say is that in my long years of business I have learned one thing. Turnover is vanity; profit is sanity. If companies keep chasing turnover without the support of working capital, they will be on the first and pretty fast step to failure.

[Lord Sharpe of Epsom (Con)]

My Lords, first, does the Minister accept that the spike in voluntary closures is directly linked to the Government’s decision to hike the entrepreneurs’ exit tax from 10% to 14%—soon to go up to 18%—as well as increases in capital gains tax, which are prompting many owners to race for the exit?

Separately, in answering a question earlier he relied heavily on GDP figures, which will be small comfort to those people who have lost their jobs, but I think I heard him say 7% growth. I do not think that is right—would he care to correct the record?

[Lord Leong (Lab)]

Apologies; it is 0.7% growth. I thank the noble Lord for that. At the end of the day, what is really important is that we have to support businesses, and the Government are supporting businesses. Capital gains tax is still the lowest in Europe. In the G7, only the US and Japan are lower than us. Frankly, most employers go into business to create businesses. Sometimes they exit business, and some of our tax reliefs are still better than those of many other countries in Europe.

[Baroness Bennett of Manor Castle (GP)]

My Lords, several of the corporate collapses that the Minister referred to earlier were associated with private equity ownership and high levels of debt. Moody’s reports that default rates have been twice as high for private equity-owned firms as for others. The Financial Times leading article on 6 June noted that, with exit activity from private equity funds slumping to a historically low level, some private equity firms

“are resorting to … risky … methods of generating liquidity”.

Are the Government concerned about private equity’s impact through these means on both the real economy and financial stability?

[Lord Leong (Lab)]

My Lords, private equity plays an important role in business support in this country. We have seen private equity companies that have acquired businesses and actually grown them as well. Yes, their track record is not great, but there is definitely a role for private equity in business in this country. Do not listen to the Government. Listen to people in the private equity business. Jamie Dimon said:

“I’ve always been a believer in the UK’s … strengths as a place to do business and there’s much to like about the new government’s pro-growth agenda”.


Yesterday, Nvidia CEO Jensen Huang argued that the UK was in the “Goldilocks” zone with great universities, a good start-up culture and the third-largest amount of investment in AI companies globally outside the US and China.

[Lord Browne of Ladyton (Lab)]

My Lords, is my noble friend aware that in the 2024-25 financial year, the Insolvency Service disqualified more than 1,000 company directors? Of those, a significant proportion—736—were banned for abusing the Covid-19 Bounce Back Loan Scheme. Additionally, there were 131 individuals subject to bankruptcy restriction orders, with 87 of them also linked to the misuse of Covid-19 loans. How many businesses had to wind up because of those facts?

[Lord Leong (Lab)]

I thank the noble Lord for that. Yes, those figures are quite high. It is right that the full force of the law should come down on company directors who are found to be trading insolvently. Basically, there are different forms of liquidation, from creditors’ voluntary liquidation to compulsory liquidation, which I mentioned earlier, which has increased mainly because of HMRC prosecution. HMRC, Companies House and insolvency practices target abuses such as tax evasion and this whole area of phoenixism with tougher enforcement, personal liability for directors and upfront tax demand. That should be the way.

Employment Rights Bill

Lord Leong Excerpts

Committee stage
Tuesday 3rd June 2025 Lords Chamber

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank all noble Lords who have spoken. Before I turn to the amendments, may I wish the noble Lord, Lord Fox, a speedy recovery? I am just sorry that he was not cast in the next “Mission: Impossible”. I wish him a speedy recovery and return to the Committee, as we miss him here as well.

I turn to Amendments 132 and 137. Amendment 132, tabled by my noble friend Lord Pitkeathley of Camden Town, seeks to expand the scope of independent advisers who can advise individuals entering into settlement agreements. Settlement agreements in this context are a way in which employers and workers can settle potential claims. I am delighted that the noble Lord, Lord Jackson of Peterborough, had such a great experience with his trade union rep and got a really fair settlement. I hope he was pleased with that experience.

However, it is important that individuals understand the terms and effect of the proposed agreement and its effect on their ability to pursue claims in an employment tribunal. That is why legislation requires individuals to receive advice from a relevant independent adviser. Legislation outlines a range of advisers that can be used, including qualified lawyers and authorised officers of an independent trade union.

My noble friend’s amendment would expand the list of relevant independent advisers to include a certified member of the Chartered Institute of Personnel Development, an association of human resources professionals. This amendment would also give the Secretary of State the power to make regulations to include other professional bodies whose members would also be capable of giving advice.

While I understand that my noble friend has put forward this amendment on behalf of the CIPD, we believe current arrangements are working well and strike the right balance. I appreciate my noble friend’s passion and thank him for his contribution to this debate. We are happy to engage further on this issue at another time, but we do not think this amendment is required.

I now turn to Amendment 137, tabled by the noble Lord, Lord Palmer of Childs Hill, which seeks to expand the right to be accompanied by a certified companion at disciplinary and grievance hearings, as supported by the noble Lord, Lord Ashcombe. The law already provides that, when workers are invited to attend a disciplinary or grievance hearing, they are entitled to bring a companion who is either a fellow worker, an official employed by a trade union or a workplace trade union representative that the union has reasonably certified as having received training in acting as a worker’s companion in disciplinary or grievance hearings. Employers can now allow workers to be accompanied by a companion who does not fall within the above categories. Some workers have a contractual right to be accompanied by persons other than those listed earlier —for instance, a professional support body, a partner, a spouse or a legal representative.

The current law seeks to keep disciplinary and grievance procedures internal to workplaces, given that they are one of the initial steps in resolving tensions in a worker-employer relationship. Expanding the types of organisations that could be involved in representing workers at disciplinary and grievance meetings could lead to these hearings requiring legal representation for both the worker and the employer. This would therefore increase the costs of these hearings and reduce the chances of an amicable outcome. In addition to introducing legal expertise at these hearings, it could also reduce the likelihood of ACAS conciliation or mediation as the next step to resolve a dispute, as legal arguments will have already been made during an internal hearing. This could increase the likelihood of a tribunal claim being made. An amicable solution is, therefore, the fastest way to justice, as set out by my noble friend Lord Barber.

It is unclear where the demand for expanding this right is coming from and which workplaces would benefit. There are, of course, certain organisations, such as those that provide casework and legal services, that would benefit. But, as I have already set out, should an employer wish to nominate an organisation to accompany their workers, they can set this out in the terms and conditions of their workplace.

I therefore ask my noble friend to withdraw Amendment 132.

[Lord Pitkeathley of Camden Town (Lab)]

My Lords, I thank all noble Lords who have taken part in this short but important debate. I appreciate that my amendment may seem controversial to some, not to mention unfeasibly long, but I believe it is vital that the voices of all in the workplace are heard. I am pleased that they have been today. I emphasise that small employers are just as committed to their workforce as larger firms, and they want to attract and retain the best people too. This Bill is, in my view, both pro-worker and pro-business, and we should keep all sides in mind when we shape its final form.

I particularly appreciate the concerns raised by my noble friend Lord Barber of Ainsdale. I reassure him that I do not raise this amendment in the spirit of confrontation, as I am sure he knows, and I am sure these are conversations that we will continue. I know that we both want to achieve the best for all workers. None the less, I beg leave to withdraw the amendment.

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The debate we just had was demoralising because I thought this Bill was an employment Bill. Clearly, for the Government, it is an employment Bill as long as it is done their way. People who are not in trade unions should have representation, and this Government should be big enough to acknowledge that. We shall support this amendment. I hope that the Government will at least commit to giving us a measurement, a review, so that we can see just what is going on.

[Lord Leong (Lab)]

My Lords, I thank all noble Lords who have spoken. I have listened to every noble Lord’s concerns. To be fair to the Secretary of State for Defra and my fellow ministerial colleagues at Defra, I should say that they are in regular contact with the farming community and farmers. The Secretary of State has recently spoken at the National Farmers’ Union conference. My noble friend Lady Hayman comes from a farming community and understands the problems that noble Lords have raised.

I turn to Amendment 133, tabled by the noble Lord, Lord Sharpe of Epsom. As I have repeated multiple times throughout the debate in this place, we have already published a comprehensive set of impact assessments, based on the best available evidence, on the workers likely to be affected by these measures. This includes an assessment of the economic impacts of the Bill, including impacts on workers, businesses, sectors and regions. We intend to publish further analysis in the form of an enactment impact assessment when the Bill secures Royal Assent and, as I have said previously, further assessments when we consult on proposed regulations to meet Better Regulation requirements. The 23 amendments on impact assessments tabled by the Opposition would pre-empt work that the Government are already planning to undertake.

It should also be mentioned that this Government are steadfast in our commitment to Britain’s farming industry. It is why we will invest £5 billion into farming over the next two years, the largest amount ever directed to sustainable food production in our country.

It is with immense sadness that we hear about suicides in the farming community, and I agree with noble Lords that we need to have accurate and timely data. I promise noble Lords that I will speak to my ministerial colleagues at Defra and the ONS as far as their request is concerned.

It will be no surprise to the noble Lord that we oppose Amendment 133 and ask him to withdraw it.

[Lord Sharpe of Epsom (Con)]

I thank the Minister for his response and all noble Lords for their contributions to this important debate. I particularly thank my noble friends Lord Deben and Lord Roborough for their expertise, which I think noble Lords around the Committee will agree shed great light on this tricky subject. I also greatly appreciate the support of the noble Lord, Lord Goddard, for what is a very modest amendment, and I am therefore disappointed with the Minister’s response, although pleased that he will consult Defra further.

On the subject of inheritance tax, the noble Lord asserted that Defra has been steadfast in its support for the farming community, but it is not clear that the farming community has recognised that steadfastness, because over a dozen leading farming organisations, including the National Farmers’ Union and the Country Land and Business Association, have condemned the Government for a lack of transparency. Those groups have written directly to the Treasury demanding the release of modelling and evidence behind the policy.

When pressed to explain why they rejected the fairer clawback option for inheritance tax reforms, Treasury Ministers offered nothing more than vague assertions—no consultation, no published impact assessment—and when challenged under freedom of information laws, the Treasury responded by saying that it was

“not in the public interest”

to disclose this analysis. How can the Government possibly claim this is not in the public interest? Are they really arguing that the means of food production and all that pertains to it are not in the public interest? We are talking about reforms that could rip through the foundations of multigenerational farms, force land sales and strip the viability from small rural businesses.

If this Government’s approach so far was not reckless enough, a fresh report from the Environment, Food and Rural Affairs Committee has added yet more weight to the call for caution and transparency. The cross-party group of MPs has urged the Government to delay its proposed reforms to agricultural property relief and business property relief for two years, pushing back the implementation date from April 2026 to April 2027, with any final decisions postponed until October 2026. That is because the reforms are intended to tighten inheritance tax reliefs on farms and agricultural businesses and were introduced without adequate consultation or any formal impact assessment. The committee highlighted that rushing ahead without proper analysis risks serious consequences, including impacts on land values, tenant farmers, family farms and food production, and it warned that this could disrupt the food supply chain, potentially driving up supermarket prices and hitting consumers across the UK. Noble Lords should take seriously my noble friend Lord Deben’s warning about food shortages and what it does to government popularity.

What is particularly striking is the committee’s citation of a March 2025 survey which found that 70% of farmers were optimistic about their rural businesses before the Autumn Budget, but that figure plummeted to just 12% afterwards. That collapse in confidence speaks volumes about the uncertainty and fear that these policies have created within rural communities, and the same attitude is now evident in this Employment Rights Bill. Once again, we are seeing major legislative changes with profound economic impacts pushed through without proper consultation, without proper published impact assessments and without any serious recognition of the realities facing British farmers, and that is precisely why this modest amendment is so important.

At the bare minimum, before further damage is done, we should demand an independent, published assessment of how these employment law changes will affect UK farm businesses—not months after the fact and not hidden behind opaque Treasury memos. It is in the public interest, so it should be within 12 months of this Act passing. That is a modest, proportionate and entirely reasonable request. I will withdraw the amendment on this occasion but reserve the right to return to it. Again, I refer to my noble friend Lord Deben’s suggestion, or perhaps warning: 9 million people are watching.

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[Lord Hunt of Wirral (Con)]

My Lords, we are very grateful indeed to the noble Baroness, Lady Jones of Moulsecoomb, for introducing us to a fascinating debate. The noble Lord, Lord Goddard of Stockport, put us in touch with the real world, and then my noble friends Lady Coffey and Lord Ashcombe reminded us about what happens in real life. I suppose I have immediately to declare my interest as a practising solicitor. My phrase, which I always used to share with Albert Blighton, was that I was available 168/52. The number 168 is 24 times seven. So you quickly appreciate that, as a solicitor, you have to be available all the time.

When I won the contract to represent cricket with the England and Wales Cricket Board, they wanted to know whether I would be available on a Sunday evening when there was an incident at a Sunday league match, and I said, “Yes, of course I would”. So it is very much up to the individual to make themselves available.

When I was asked to join the Front Bench in the House of Commons in 1977, I do not think anybody expected that I would refuse to answer an Adjournment debate, even though it might have been at 3 am, which it was on one occasion. Therefore, you set your working parameter in the way in which you develop your own workaholic tendencies, but you should not expect it of everyone, and I think that is what the amendment is all about.

Do you have the right to disconnect? Although I am sympathetic to the idea that you should be able to switch off, which the noble Lord, Lord Goddard, put in context, when the Bill is already introducing considerable uncertainty for employers around shift notice periods, payment for cancelled shifts and wider questions of how flexible working is to be managed in practice, we have to be very cautious about layering on yet another rigid and potentially burdensome obligation.

The noble Baroness may have put forward what appears to be a straightforward proposal, giving workers a right not to respond to emails or calls outside their contracted hours, but in reality, as the Government have quickly realised, despite what they may have said in advance of the election, this whole proposal raises serious practical and legal questions. What does “working hours” mean in a world of flexible, hybrid and self-managed work? How do we define an emergency? What happens in small teams, in customer-facing sectors, which my noble friend Lord Ashcombe highlighted, and in businesses operating across time zones?

Employers, especially small businesses, already face growing compliance costs. This would add yet another administrative requirement. There would have to be a written policy on the right to disconnect, a consultation process, enforcement procedures and, of course, exposure to tribunal claims. So, we must ask: is this really the right moment to introduce such sweeping regulation?

The Bill already creates new rights and obligations that will take time to bed in. There is uncertainty around shift scheduling, compensation for cancellations and the cumulative compliance burden. I have to say to the noble Baroness that I believe the effect of this amendment would be to increase that uncertainty further and risk undermining flexibility for both sides. Most workers and employers already navigate these boundaries reasonably and sensibly. A blanket legislative approach risks making day-to-day communications feel legally fraught, especially in smaller organisations where roles are not so rigidly defined.

[Lord Leong (Lab)]

My Lords, I thank the noble Baroness, Lady Bennett of Manor Castle, for tabling Amendment 141B, which was moved by the noble Baroness, Lady Jones of Moulsecoomb.

We firmly recognise the vital importance of achieving a healthy work/life balance. The noble Baroness and the noble Lord, Lord Goddard, can be confident that we will indeed introduce a right to switch off. We understand that, in today’s fast-paced world, it is more important than ever to ensure that individuals and families are able to manage the demands of their work alongside their responsibilities and needs at home.

Our close consultation with businesses and civil society since the election has shown how important it is that we develop this policy in collaboration with those who will be affected: workers and the firms who employ them. The right to switch off must account for the full diversity in types of employment and sectors that exist in our modern economy. It represents a substantial shift in the way some businesses operate. This amendment does not account for that diversity and the need for collaboration. That is why we have decided to take a careful and considered approach to introducing the right to switch off, as was alluded to by the noble Baroness, Lady Coffey, and the noble Lord, Lord Ashcombe.

The focus for now is the Employment Rights Bill, which contains decisive and immediate action, such as reforms to flexible working that will make it easier to strike a better work/life balance. These reforms are not just policies; they are practical steps to support everyday lives and help people to draw clearer boundaries between their work and personal lives.

To add this amendment to the Bill would not do the right to switch off any justice. As drafted, it could create unnecessary burdens on businesses, particularly small businesses, as stated by the noble Lord, Lord Hunt. Significant new requirements in proposed new subsection (3)(a) to (d) would force all employers, no matter their size, to produce written disconnection policies and specify new technological and organisational measures and protocols, while also establishing reporting systems for any violations. These new rules would be onerous and inflexible.

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[Baroness Coffey (Con)]

My Lords, I rise to speak on this really quite interesting clause. I have carefully read Hansard from the other place in trying to understand what it is really putting in place. I am concerned by aspects of the comments made by the Minister at the other end, Justin Madders. He said that it really means only that businesses have to consult on their location and only with trade union representatives, and that, “By the way, these things get sorted in legal debate in the courts, and we hope the courts will understand”. That is not good enough when we are writing primary legislation.

In thinking this through, it is important for the Committee to consider what is happening here. Why is this needed? It has apparently been done to reduce the pressure on people with a vulnerability. Let us take the example of a pub chain, which has quite a big estate and has decided that it is going to reduce its number of hours. That could be a consequence of some of the other measures being brought in by the Government or just a trend that is happening. So it starts to think about what it is prepared to do in terms of how many people it employs in its pubs. It may not want to do that straight away; it may want to think about it in different sections and to leave that discretion to local managers. The man or woman in the street would think that that is perfectly sensible.

However, the businesses that gave oral and written evidence to the Bill Committee are worried—which the Minister recognised in saying that they should not worry—because that is exactly what the legislation is saying they will have to do. They could be undertaking consultation at huge expense, right across the country, while recognising that some of those situations could be very localised.

We already have sensible measures in place. When there are going to be significant redundancies across the country, it is already a legal requirement for them to go before Ministers, whether from the Department for Business and Trade or the Department for Work and Pensions, who can then mobilise local jobcentres and the like to prepare for those redundancies. Imagine going back to the business considering the impact of that on what can be quite localised operations. The Explanatory Notes are silent, frankly, which is why I took to reading Hansard from the Commons.

I am concerned and would be grateful to hear from the Minister why this is the right approach and how, despite the uncertainty still left in this legislation, the Government want this to be in place. Instead, they should accept the amendments tabled by my noble friend Lord Hunt to make sure that these situations are well considered and that we do not end up in a situation where, despite the primary legislation, we have to go to an employment tribunal again and again. For that reason, I hope the Minister accepts my noble friend’s amendments.

[Lord Leong (Lab)]

My Lords, I thank the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for tabling these amendments. We have been listening to feedback from businesses on the clause as introduced. It requires collective consultation whenever 20 or more redundancies are proposed to be made across an employer’s organisation. Businesses told us that this would put them in a constant state of consultation. That is why we have made amendments in Clause 27 to the Trade Union and Labour Relations (Consolidation) Act 1992; they aim to limit the burdens on employers while still expanding protections for employees, by ensuring that collective consultation is triggered when a threshold number of employees are proposed to be made redundant across an entire organisation.

The purpose of Clause 27 is to strengthen collective redundancy rights. The Government worked with stakeholders, including businesses, to address their concerns, which include not counting employees who are already being consulted on redundancy. We will set an appropriate threshold number in due course, via secondary legislation, following further engagement with stakeholders and a public consultation. We will look to balance the interests of both employers and employees when setting this threshold. Business stake- holders have welcomed the Government’s engagement on this clause and the opportunity to input to the threshold number via a public consultation.

Amendment 141BA seeks to exclude employers going through insolvency proceedings from the scope of a new trigger for collective consultation. I refer to the point made by the noble Lord, Lord Moynihan of Chelsea, about how one expects an employer which is going insolvent to consult employees across the entire organisation. The Government believe that collective consultations are an important part of ensuring fairness and transparency between employers and employees. The benefits of consultations are felt by both. I heard what the noble Lord said, and I must say that employees are an important part of the organisation, as are the suppliers and the whole supply chain. Whatever is due to them should be paid, as is the same for other creditors.

The law already recognises that consultation may not always be fully practical in insolvency situations. That is why Section 188(7) of the Trade Union and Labour Relations (Consolidation) Act 1992 includes a special circumstances defence for employers to depart from the collective redundancy obligations where it is genuinely justified and they have shown that they have taken all practical steps to comply. That flexibility should be applied on a case-by-case basis, not by removing that duty altogether.

Amendment 141C seeks to ensure that obligations are triggered only where redundancies are linked to a connected reason. We recognise that collective consultation will be most productive when workers and employers are focused on a common issue. However, employers and unions have told us that they believe it is not possible to define what is connected or “common reasons” in a suitable, clear way and that this could lead to more litigation. They tell us that attempting to restrict these new rights to connected redundancies in this way would create further burdens, rather than relieving them.

Amendment 141D seeks to exclude seasonal workers or those on fixed-term contracts from the scope of collective redundancy measures in the Bill. First, it may reassure the noble Lord to know that the expiry of a fixed-term contract at the end of its term does not trigger collective consultation obligations. Therefore, any fixed-term contract expiring at the end of its term will not add to the running total for the new threshold introduced for collective redundancies. We will consider further how employees on fixed-term contracts should be counted for the purposes of calculating an employer’s overall workforce that might be needed for the purposes of a national trigger for collective redundancies.

Amendment 141E aims to avoid an obligation to combine consultation by inserting two new subsections into Section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992, but new subsection (2A) already strikes the right balance here. Employers will be well placed to determine how to divide consultations appropriately where the national threshold has been met. We agree that each group should receive meaningful collective consultation and intend to set up guidance on this point in a new code of practice.

On Amendment 141F, it is already the case that where collective consultation on redundancies has already begun those redundancies will not be counted when determining whether subsequent new redundancies reach the threshold for collective consultation. We do not believe that this should be extended to exclude employees who have been individually consulted, as individual redundancy consultations have a different character and purpose from collective consultations.

On Amendment 142, we agree with the noble Lord that the threshold number that will trigger collective consultation should be proportionate and not overly and unnecessarily burdensome on employers. However, this amendment is unnecessary and disproportionate to address this issue.

On Amendment 142A, the term “establishment” has already been settled and is well understood in employment law. It works well in practice, so we consider that attempts to change the definition here would create confusion and lead to more litigation with very few clear benefits in return.

Finally, Amendment 142B would undo the Government’s extension of the protective award period to 180 days. This change was made following a full public consultation in October 2024 and has been carefully considered. It makes it harder for unscrupulous employers to price in non-compliance with their collective consultation obligations, as we saw in the case of P&O Ferries. The Government are committed to strengthening employment rights in this landmark legislation. I therefore ask the noble Lord to withdraw Amendment 141BA.

[Lord Hunt of Wirral (Con)]

The Minister started off by referring to government amendments. I just wonder which amendments he is referring to, because I am not aware that any other government amendments to Clause 57 are planned.

[Lord Leong (Lab)]

I apologise. I can be much clearer. I said the amendments tabled in the other place which are now under Clause 27.

[Lord Hunt of Wirral (Con)]

This has been a very valuable debate on a very important clause, Clause 27. I am very grateful to my noble friends Lord Moynihan of Chelsea, Lady Lawlor and Lady Coffey, who gave some practical examples, particularly of the unintended consequences of previous legislation. A lot of questions have been raised by the Minister. I do not want to prolong this debate now, so I summarise by saying that there are many questions that we still want to ask and we will be returning to this on Report. In the meantime, I beg leave to withdraw the amendment.

Employment Rights Bill

Lord Leong Excerpts

Committee stage
Tuesday 3rd June 2025 Lords Chamber

[Lord in Waiting/Government Whip (Lord Leong) (Lab)]

My Lords, I thank the noble Lord, Lord Hendy, for tabling Amendment 143.

The Government agree that employers should not be able to deliberately ignore their obligations, and it should never be financially beneficial to do so. However, this amendment would offer a disproportionate response to address the issue. First, employment tribunals have jurisdiction over the majority of employment matters, including the enforcement of protective awards in cases of collective redundancy. It would not be appropriate to amend this jurisdiction solely for collective redundancy cases and it would lead to a disparity within the legal structure governing employment rights and their enforcement.

Furthermore, Section 15 of the Employment Tribunals Act 1996 already offers routes for affected individuals to pursue unpaid employment tribunal awards via the county courts, for England and Wales, and the sheriff courts, for Scotland. Finally, the amendment may have the unintended consequence of an increase in scenarios where employers are forced to become insolvent in response to both paying a protective award and requiring the reinstatement of affected employees.

Responsible employers across the country already go further than the current obligations to consult collectively. They agree with the Government that collective consultation with their workforce is a valuable tool in finding solutions to some of the challenging situations that employers find themselves in. Clause 29 closes a loophole in our collective redundancy legislation which meant that P&O Ferries could not be prosecuted when it dismissed people without warning, including because they worked abroad on foreign-registered ships. This goes some way to addressing the ILO’s concerns about the lack of an effective remedy. Our measure to confer powers on Ministers to create a mandatory seafarers’ charter will also help to create a level playing field in the sector and prevent such events happening again. A couple of amendments in subsequent groups will address that issue.

Doubling the protected period means that employees who were not afforded any consultation when being made redundant will now be awarded up to 180 days’ pay. Employment tribunals can award a further uplift of up to 25% where an employer unreasonably fails to comply with the code of practice on dismissal and re-engagement. Taken together, these measures increase the potential statutory payout per person far beyond that which P&O Ferries offered to dismissed employees. This clause will provide a balanced approach that gives certainty to employers, employees and tribunals, and will provide an increased deterrence against deliberate breaches of the collective redundancy requirements, without disproportionately penalising employers which attempt to comply with their obligations.

I hope that this provides some assurance to my noble friend, and I therefore ask that his amendment be withdrawn.

[Lord Hendy (Lab)]

My Lords, I am grateful to my noble friend Lord Davies for his support. I am also grateful to the noble Lord, Lord Sharpe, for his contribution. In response to him, I note that the proposal is not that employment tribunals should make a declaration that a dismissal was void and of no effect. Instead, the idea is that the High Court will make a declaration based on another declaration already made by the employment tribunal that the employer has breached the law by failing to consult—or by failing to consult properly.

The remedy I am proposing, since it is going to be in the hands of a High Court judge, will not be granted for technical or administrative errors; it will be for only the most egregious breaches.

On the point that an injunction might be granted months later, that cannot be so because delay will always defeat an injunction. Injunctions are only ever granted if the application is brought in a timely fashion, and whatever the court orders can be fulfilled.

I am grateful for the Minister’s very full response. I am not sure that the measure I propose is disproportionate —it is intended only for the most egregious breaches of the duty to consult—or that it distorts the remedies available for employment matters. As my noble friend pointed out, employment tribunal awards already have to be enforced in the civil courts and not by tribunals themselves. I am not sure about the unintended consequences. I know everything he says about The Seafarers’ Charter; my concern is with those on land. I have heard everything he says with sympathy, and on that basis, I beg leave to withdraw my amendment.