Zero-hours Contracts

Brooks Newmark Excerpts

Wednesday 16th October 2013 Commons Chamber

[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

I will keep my comments brief, Mr. Speaker.

It is clear that the increasing number of zero-hours contracts is one of the last taboos of employment policy. The firms involved have no need to use those contracts: they know exactly how many employees they need each week. Moreover, zero-hours contracts are immoral, they exploit hard-working people, and they enable the powerful to dominate the powerless. In Halifax, unemployment levels are very high, job security is low, and youth unemployment has almost doubled in the last three years. That appears to me to be a licence for some employers to introduce zero-hours contracts.

What most people want—like the rest of us—is stability, security and reassurance in employment. What zero-hours contracts provide is exactly the opposite. Some say, “Is such a contract not better than no job at all?”, but that misses the point. Many advances in employment practices would never have been made in the last 100 years if the “status quo” option had always been taken. Only recently, the very same argument was used to warn of the dangers of the minimum wage.

This is obviously not a stable time to be in employment, especially in northern towns. They have borne the brunt of the Government’s cuts, which have affected both public and private sector jobs. There are many well-run companies and decent employers in both those sectors in the town that I represent. They include J&C Joel and Harveys. They care about their employees, they know what it is like to manage a budget and they want to keep the town on an even keel. So when I talk about zero-hours contracts, I should add that not all companies in my constituency are practising this policy, but sadly it is an increasing trend, and, quite simply, they are an unethical and unwanted means of employing people. They are an employers’ charter to make shortcuts, reduce wage bills and avoid employment rights obligations.

I know there are various contract laws that prevent an outright ban, but as the shadow Secretary of State said, they should be outlawed. Things can and should be done to water down the opportunity for them to be used. We need to look at guaranteeing hours and extending statutory employee rights to all workers, whatever contracts they are on. All workers should have trade union rights and family-friendly rights. Equality in employment should not be decided by a worker’s contract.

It is in times of economic hardship that employers exploit and those without a voice do not get listened to. This is exactly the time when we should be doing more to protect those hard-working people we constantly hear about in sound-bites, but who are actually ignored because of the lack of sound policies.

[Mr Brooks Newmark (Braintree) (Con)]

The hon. Lady is making some excellent points, but will she at least acknowledge that there are groups in society who do appreciate the flexibility that zero-hours contracts provide, such as young students and some single mums?

[Mrs Riordan]

We have had these debates about students before, and I have a stepson who is a student and has a zero-hours contract, and that is all very fine, but there is no reason why the employer’s manager cannot get together with my stepson and arrange the hours for the following week. It happens all the time.

This Government are actually on the wrong side for hard-working people. I know of a company in Halifax. A very hard-working young man came to my last surgery. He had been made redundant and had his benefits cut. He was living off family. He wanted to work and was given a zero-hours contract and told to turn up every morning at 6 am. The company has a board and if a person’s name is not on it, they are sent home and told to come back the day after—after they have spent money on travel. This young man so much wanted a job that he said, “Please don’t send me home. I’ve travelled all this way and spent money getting here. Can I sweep up today? I’ll do anything.” He was told, “No, your name’s not on that board. Come again tomorrow.” It is not rocket science to find a way to let people know the day before—or the week before, in my opinion—whether there is work for them. That is a long-established company. It has not been around for just two minutes and is on a budget. It knows exactly how many employees it wants but it keeps people dangling. These are Dickensian practices that would be out of place in Victorian England, let alone 2013.

There are thousands and thousands of people, many in my Halifax constituency, who are exploited in this way, with lower wages, fewer holidays, no sick pay and fewer rights, and who are unaware of their employment status. The employers are in a dominant position and they know it. We have come a long way in improving working conditions in this country over many years, but clearly the journey still has a long way to go.

When people look back in years to come, I think they will look at the exploitative policies of zero-hours contracts and find it hard to believe that in 2013 such practices were in place as a means of suppressing workers who need and deserve better. For my Halifax constituents, and those across the country, we need to do more to end the shabby practice of zero-hours contracts that have no place in a society that deems itself to be a progressive one.

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[Alison McGovern]

My grandfather, who was a great trade union rep, always told me: “When you go in and see the boss, never say you’ve done nothing; always say you’ve not done enough.” I think my hon. Friend has learned that lesson.

The big problem is the one that I raised earlier with the Secretary of State, which is that the Government seem to be all over the shop with the number of people affected and what is really going on. My only regret is that they did not take the opportunity of the summer to clear the matter up properly. We will engage with the Government and move forward to try to get a resolution, especially on the care sector, which is very important to me. I shall come on to that.

First, I want to say something about values. Although the economics are extremely important, so are the values. Some of the worst effects of zero-hours contracts are felt not where people have a high level of skills, but where people have little other option. In the care sector, for example, workers often have a low level of skills and are often women, possibly later in their career, who already have little power in the workplace. When zero-hours contracts are used in place of proper management, they are left in a terribly vulnerable position. It leaves them, in effect, begging for work. To me the indignity of begging is not tolerable. It is not tolerable for people to beg on the street and it is not tolerable for people to beg for work. That is what is wrong with zero-hours contracts. They risk far too much power being put on one side of the table in discussion of the contract of employment. This is an economic issue, of course, but it is a question of how we want to live together and relate to each other in society.

We are storing up some serious economic problems with zero-hours contracts. In the short term they involve a cost because people’s income is likely to be reduced as a result of their underemployment. If they are wasting time constantly trying to get more hours, as we heard in our survey, people have no time left to find another job, which might be a better job and might improve their prospects, which would, in turn, improve their and their family’s capacity to spend money and keep our economy going. Also, the insecurity that they are suffering means that in the short term they cannot commit or make spending choices that would otherwise be helpful.

By the way, we heard examples of people who were constantly told that they were going to get more hours than they did. That short-term impact of feeling that they would have money coming in and then finding that they did not has a massive knock-on effect on the rest of our economy, but it does not affect the whole economy equally or in the same way. The parts of the country with a lower skills base are much more likely to suffer from this, so zero-hours contracts feed into the imbalanced economy that we already have.

There are long-term economic effects from such insecurity. I quoted earlier from one of the people in our report speaking about their inability to invest in themselves, for example by going back to school, college or university and making a long-term choice to improve their prospects, which they felt unable to do because they did not know what was going on at work. Similarly, people were unable to get a mortgage or decide to make a long-term investment in their housing, which will have a knock-on impact. A further effect is the impact on the skills base of our country.

I am aware that in the case of students, who have been mentioned as an example, zero-hours contracts are a fair arrangement. There is no power imbalance and that is fine. I am also aware that for some people on zero-hours contracts there is an investment in their skills. But do the Government think it is more or less likely that employers in this country would invest in the skills of people who had permanent, stable contracts or those whom they had put on zero-hours contracts? I think that the skills base in particular parts of the country will inevitably diminish as a result of this so-called flexibility in the labour market.

Zero-hours contracts clearly do not affect every part of the country in the same way. The Merseyside city region has developed well over recent years—against expectations, I think—and we did much better through the recession than anyone thought we would. I am extremely proud that the Liverpool city region is doing well—no one will catch me running it down. However, the biggest barrier to Merseyside’s development is our people’s level of skills. We cannot afford to have employers who are not committed to investing in our people, not just because it is bad for our people today and they do not get the opportunity to improve themselves, but because it stores up problems. If the Government are not prepared to take this matter seriously because of concerns about the amount of money people will have in their pockets, I hope that they will take seriously the long-term impact such contracts have on the prospects for a balanced economy. I wanted to ask the Secretary of State to include the impact on skills in his review and consultation. He is no longer here, but I am sure that the Minister will pass on the request.

What is the solution? I am sure that it will come as no great shock to the House to learn that I am extremely supportive of the Labour policies outlined in the motion. I am incredibly pleased that the leader of my party has chosen to take such a stand on this issue. It is not fair to say that the previous Labour Government did not act to protect vulnerable people in the work force. One of our greatest achievements was the national minimum wage. The regulations that implement it contain all kinds of requirements to ensure that people earn a decent amount of money. That is at the heart of this debate. I think that we ought to be extremely proud of that institution that protects people in our country.

However, it is right that we should go further, and it is absolutely right that we should crack down on exclusivity and look at the people who work regular hours but whose employers are not prepared to commit and give them a proper contract. In the short term, the report that colleagues and I produced suggests a code of practice, and that has been the first stage in our discussions with employers and others. I think that we can get on with that. If there are employers who want to discuss that with us, as there are in Merseyside, we should do so.

I also want briefly to pay tribute to Unison for its work as a trade union and for its ethical care charter. It is a shame that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) did not congratulate Southwark council—I speak with a slight interest, as I am a former deputy leader of the Southwark Labour group—on adopting the stance that Unison did a good job in articulating what is needed in the care sector. We know that in that sector zero-hours contracts are wrapped up in a whole other agenda about ensuring that people have proper dignity and respect. I hope that Ministers will focus their review on what is going on in the care sector. There might be whole swathes of the economy where there are fewer problems, but there most certainly are problems in the care sector, and I hope that Ministers will pay attention to that.

[Mr Newmark]

I have been listening to the hon. Lady carefully but am still not clear where she is coming from. Is she objecting to the use of zero-hours contracts or simply to the abuse that can occur when they are used?

[Alison McGovern]

As I said earlier, there will be examples of employment—student employment is the classic example—where there is no power imbalance and where we can look at the practice in an industry and say, “This could be okay.” I have said that from the outset and all the way through this debate. However, if the hon. Gentleman would like to read the report that my colleagues and I put together, he will see quotes from people who spoke with us about their experience. If he is not concerned about the experience of those workers, I think he should be.

[Mr Newmark]

rose—

[Alison McGovern]

I hope that the hon. Gentleman is rising to tell me that he is concerned.

[Mr Newmark]

I totally agree with the hon. Lady that we should be stamping out abuse, but I have listened carefully to all Opposition Members who have spoken and it seems that their direction of travel is to cut zero-hours contracts completely. The Government want to stamp out the abuses, but does the hon. Lady—I will ask her once again—want to abolish zero-hours contracts completely?

[Alison McGovern]

I will end this here, because other Members wish to speak. That is not what I have said, and it is not what other Members have said.

In conclusion, zero-hours contracts are clearly a massive issue for our economy. We have seen the Government move from saying at the beginning of the year, “This isn’t a problem and we don’t know what the statistics are saying” to saying now that it is an issue. I only wish that they could have done more. I absolutely applaud the motion.

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[Mr Brooks Newmark (Braintree) (Con)]

I am delighted to follow the hon. Member for Wigan (Lisa Nandy) and I have a feeling we are in danger of violently agreeing with one another—I do not think there is any Government Member who does not agree that we should be stamping out abuses, and as we heard, the Government are beginning a consultation to look into that issue. However, as we heard from my hon. Friend the Member for Mid Norfolk (George Freeman), it is the responsibility of the Government to turn things around—particularly given the mess we inherited in 2010—and to create growth and jobs. As we heard from my right hon. Friend the Prime Minister during Prime Minister’s questions, we have created more than 1.5 million new private sector jobs, including 1 million net new jobs. Last week the IMF turned around its criticism of the UK from a month earlier, and said that compared with the rest of the world, the UK is doing pretty well. Growth is returning, which is good news, and jobs are being created.

I do not think any Labour Member said that they completely oppose zero-hours contracts, which is because an economy needs flexibility on both sides. As we heard from the Secretary of State, the elderly want flexibility in employment, for example, as do young students or young mothers who have child care and do not necessarily have natural fixed hours. Zero-hours contracts can suit a number of people in our economy. I listened carefully to what Opposition Members said, and it is important to have robust employment protections. As we heard from the Secretary of State, and as we will no doubt soon hear from the Minister, the Government are beginning a consultation to look into the practices raised by Labour Members. I oppose such practices as strongly as they do.

The previous Government did nothing to investigate how zero-hours contracts were used when they were in power. Is any Member aware of an investigation into that issue during Labour’s 13 years in power? In fact, according to the Office for National Statistics, in 2000 there were 225,000 people on zero-hours contracts.

[Charlie Elphicke]

Has my hon. Friend also noticed that the Opposition raised the issue of blacklisting, about which they also did nothing whatsoever when in government?

[Mr Newmark]

My hon. Friend is right, and I point the finger at several Labour-run councils in London that use zero-hours contracts: Tower Hamlets, Ealing, Merton, Hounslow and Newham. Those councils do not provide guaranteed hours or any such thing. Are Labour councils stopping the use of zero-hours contracts? Not a bit of it. The Government, however, have helped the low-paid by taking more than 2 million people out of tax altogether, and cutting taxation for another 25 million people. That is what the Government should be doing—encouraging jobs and protecting those on low pay.

As we have heard, the Government have been doing a good job trying to create jobs in the private sector, but we must protect people against the abuses to which Opposition Members referred. We heard wonderful statistics from my hon. Friend the Member for Mid Norfolk, who mentioned the number of jobs created in the private sector. I repeat: 1 million net jobs have been created, even though, as we heard in Prime Minister’s questions, Labour Members predicted 1 million job losses. The Government have been doing a good job.

As someone who is a champion of women, and the founder of Women2Win, I note there are now more women in work today than ever before in our history, which is good. As the hon. Member for Wigan said, however, we must also protect those women who need flexible hours from abuses. I believe and am confident that the Government will look into the abuses to which she referred, which we do not approve of or support.

There are, I think, about half a million job vacancies, some of which are on zero-hours contracts. That is a good thing and gives people the opportunity to get on the employment ladder. Overall, I believe the Government are doing a good job. Statistics are coming out, and in the past week alone, British manufacturers have said that they have seen the strongest growth on record, breaking the figure for every quarter since 1989. That proves that the Chancellor has been rebalancing the economy. That is the challenge we inherited from the previous Government. We over-relied on the financial services sector, and the Chancellor is rebalancing the economy.

[Caroline Dinenage]

I congratulate my hon. Friend on a fantastic and dynamic speech. Does he agree that manufacturers need a dynamic and flexible workplace to flourish? I speak as someone who owns a manufacturing company. Those who may not have previously been in employment also need a dynamic, flexible workplace so as to consider getting into the working world.

[Mr Newmark]

My hon. Friend is right, particularly about small manufacturers who cannot necessarily take on fixed costs. I was in business for 20 years and know it is tough out there. It is still tough for many manufacturers who are working with low margins. They cannot take on fixed costs, so zero-hours contracts are a good thing that suits them and people in that environment who are looking for flexible hours. The services sector, too, has had its strongest growth in 16 years.

Overall, zero-hours contracts have a role in society. I have not heard a single Opposition Member condemn absolutely zero-hours contracts, although they all mentioned the abuses. The Government are doing their bit to ensure that we remain ever vigilant against the abuse of zero-hours contracts, and I applaud their initiative to take forward that consultation to tackle those abuses as soon as possible.