Lords statement on the Good Work Plan - Dec 18

My Lords, I am grateful to the Minister for repeating the Statement made yesterday by his right honourable friend the Secretary of State.

Taken together, the Good Work Plan and the response to the first full strategy from the Director of Labour Market Enforcement make a very good start to putting flesh on the bones of the aspiration in the industrial strategy to put good work and developing better jobs at the centre of the vision for a full employment Britain. There is a lot to welcome in these documents. However, I venture to suggest that the most important decision announced yesterday was to accept the Taylor recommendation that the Secretary of State should take responsibility for promoting the quality of work. That should transform policy in the department, and we will be keeping a close eye as things go forward.

Indeed, Matthew Taylor should be very pleased that the Government have accepted the vast majority of his recommendations, and Sir David Metcalf ought to be similarly delighted that most of his 37 recommendations have also been accepted. Something must be happening in the water that they are drinking at 1 Victoria Street—or maybe that is the result of all this good news.

It is worth remembering, however, that nearly 4 million people are in insecure work in this country and 1.1 million work in the gig economy. At a time of low wages, stagnating productivity and growing insecurity because of Brexit, families across the country need reassurance and action so that our workforce feels valued and secure.

Some of the decisions announced yesterday—the introduction of labour market enforcement, abolishing Swedish derogation and ensuring that workers keep their tips—were originally Labour Party policies, but we welcome them without quibbling. We still have concerns about a number of points, which I hope that the Minister will be able to deal with when he responds.

First, although there has been some movement, can the Minister confirm that the question of abolishing the absurd difference between workers and employees in their employment status has been kicked into the long grass? If so, why? On zero-hours contracts, the Government will apparently legislate to allow workers to request a more predictable and stable contract, but the ability to request more stable hours exists already. Will the Government commit to placing an obligation on the employer to meet this request and, again, if not, why not? The agreement to the labour market enforcement recommendations is very welcome, but there is very little detail. Can the Minister confirm that the enforcement agency has the necessary powers and resources?

Finally, we welcome the increased penalties for successful employment tribunal claims, but these will make no difference if the current system for enforcing awards is not also strengthened. Some 35% of successful claimants currently do not receive their compensation. What additional action are the Government going to take to address the efficacy of tribunal award enforcement?

The Statement contains a very large number of instances of proposals for primary legislation to bring these announcements into being. I would be grateful if the noble Lord will confirm that, welcome though that is, realistic time will be made available for this in the near future. If so, can he give a recognised timetable?

My Lords, I join the noble Lord, Lord Stevenson, in thanking the Minister for repeating the Secretary of State’s Statement. There is perhaps an inverse law here. We are at the end of a long day in a long Session and very few noble Lords are left in the Chamber. Despite that fact, this stands to affect more people than anything else the House has debated this week. It is important and it will genuinely help to improve the lives of millions of UK citizens. For that reason, we welcome the Government’s response to the Taylor review. We welcomed the review when it came out and the Statement sets in motion a number of important steps in the right direction. This has been a long time coming and it is unfortunate that the Minister’s department, along with every other part of government, has a lot of things to do around Brexit, meaning that important work such as this takes too long and is slow to come out.

The Government are right to reject open hostility to flexibility in the job market. Many people want and need the right sort of flexible job environment. Hopefully, these steps will move that forward. Flexibility should not be open to abuse. Workers need real control and choice over the work they take, which means giving them new rights and enforcing existing ones more stringently. The Government’s response has been a bit underwhelming in some cases. If the Minister will excuse me, I will go over a few areas where we think more work should be done.

The Government have said that they will bring forward legislation clarifying employment status and aligning tax and rights, but there is scant detail. Will the Minister fill out the detail or, if not, the process by which it will be forthcoming? The Government have also failed to genuinely address the need for a “dependent contractor”, set out as an employment status for people within the gig economy. The existing status of “worker” needs to be updated and redefined for the sort of 21st-century work that the noble Lord, Lord Stevenson, referred to. We need that status to guarantee gig economy workers minimum earnings, sick pay and holidays. The Government have ruled out a higher minimum wage for hours not guaranteed as part of a contract, and are now going through lengthy consultation. We welcome consultation and, in other environments, the Minister has been criticised for not consulting sufficiently—but it needs to be quick and direct and it needs to get to the point. Action to stamp out abuse of zero-hours contracts must be swift rather than convoluted and kicked into the long grass.

Ministers have refused to rule out reintroducing fees for employment tribunals after the Supreme Court ruled them illegal. They should take that step immediately and rule out reinstating those charges. The Government must show how they will help gig economy workers access occupational pensions. That does not seem to have been addressed and I will come back to it in a moment in relation to sexual equality.

To close, I have three other questions. The Taylor review said that those working in self-employment should receive the same state benefits as those in employment. Why, then, are self-employed workers with fluctuating incomes punished by universal credit? In a good month, their benefit is cut, but in a bad month, their benefit does not rise as much because the minimum-income floor kicks in. Therefore, will the Business Minister undertake to work with the Work and Pensions Secretary to ensure that universal credit is responsive to this kind of fluctuating income, perhaps by measuring incomes over a rolling 12-month period rather than on a month-by-month basis? This unfairness needs to be addressed.

Secondly, around 55% of workers on zero-hours contracts are female. The trade unions warn that the gender pensions gap now stands at about 40%. That means that disadvantages to pensions for zero-hours employees disproportionately affect female workers. Therefore, to avoid further disadvantaging women, the Government must act on Taylor’s recommendation to improve pension provision among the self-employed. What will the Government do to ensure that women in less stable forms of employment will be able to enjoy a secure retirement?

Finally, the University of Greenwich study from 2016 found that disabled workers on zero-hours contracts were often unable to get their bosses to make reasonable adjustments required by the law. They were often afraid to raise the issue because they felt that it might endanger their employment prospects and put them back on to benefits. What are the Government doing to protect disabled people in insecure forms of employment? How will they ensure that the 21st-century economy works for disabled people and not against them? I look forward to the Minister’s response to those questions.

My Lords, I thank the noble Lords, Lord Stevenson and Lord Fox, for their general welcome of this Statement. The noble Lord, Lord Stevenson, said it was a good start and that he was particularly grateful for the stress on quality; my right honourable friend takes pride in being the first Secretary of State to address that issue of quality. I also thank the noble Lord, Lord Fox, for his comments, particularly his opening remark about being rather sad about inverse laws meaning that, although a great many people were being affected by these policies, not many people—sadly, because of the timing and other business—are present for this debate. It reminds me of the remark that people used to make about discussions about money in certain local councils: namely, that the smaller the amount of money that was being discussed, the longer the item took. I will attempt to answer a number of the points, some of which obviously overlap.

First, both noble Lords were concerned about employment status and how we deal with the distinction between workers and employees. I can assure them that we are committed to legislation to improve the clarity of employment status to reflect the reality of modern working relationships. Obviously, more work needs to be done; we will bring forward detailed proposals on how the frameworks for employment and tax statuses could be aligned. It is, as has been made clear by many, very difficult, and I am not sure that we can ever get them completely aligned—but we will do our best. We are one of the first countries in the world to address the challenges in this area. As Matthew Taylor said, there are three levels of status. He believed that that was right and appropriate, but we want to bring a degree of greater clarity in this area.

Secondly, there were concerns from the noble Lord, Lord Stevenson, about the powers and resources available for enforcement in this area. We are increasing the resources available for enforcement: the budget for enforcing the national minimum wage was increased from £20 million in 2016-17 to some £25.3 million in 2017-18. The Employment Agency Standards Inspectorate has also received a 50% increase to hire more inspectors. But again, as my right honourable friend has made clear on a number of occasions, we want to make sure that it can do that job and bring to book those who are not performing adequately. We believe it is right that successful claimants get what they are due fully, which is why yesterday we launched a new naming scheme for employers who do not pay the employment tribunal awards. Again, I believe that a naming and shaming policy is exactly the right approach.

On the question of employment tribunal fees, raised by the noble Lord, Lord Fox, obviously I am aware of the case in the Supreme Court to which he referred. We are reviewing the fees strategy and looking at the balance between charging direct users and using taxpayer subsidy. The fee remission scheme—help with fees—is a crucial element of this strategy, and, again, we are considering whether the scheme needs to be adapted to facilitate better access to the courts and tribunals in the light of that judgment.

Lastly, on the question of zero-hours contracts, the noble Lord, Lord Fox, in particular referred to the position of some women with regard to zero-hours contracts. However, zero-hours contracts can affect all people, of whatever age and gender. I point out to him that, as he will be aware, Taylor noted that banning zero-hours contracts altogether would negatively impact far more people than it would help.

My Lords, I think there is a slight misunderstanding. I mentioned at the very beginning that people welcome flexible working contracts, so I ask the Minister please not to put those words in my mouth. My point was that because more women work on flexible contracts, under which pensions are harder to sort out, naturally more women than men will suffer from a pension point of view because more women are on flexible contracts.

I accept the noble Lord’s point. He will be aware that we made a number of changes to pension arrangements, which one of the noble Lord’s right honourable friends was responsible for as a Minister in the coalition Government, and that will have benefited a great many women and helped them to meet their pension contribution record. I just wanted to make the point that Taylor noted that banning zero-hours contracts would negatively impact more people than it would help. I apologise if I put words in the noble Lord’s mouth, but he accepted that that flexibility in employment is important to a great many people, and I do not think that many of us would like to deny that.

I also note what the noble Lord had to say about disabled workers and the 2016 Greenwich study. I would certainly like to look at that more carefully and if possible write to him. If we go back as far as 1996 and the disability legislation of that year, and amendments and improvements such as the Equality Act 2010, we see that we have made great leaps forward. I hope that what we have set out here, which will be of benefit to all workers, will also be of benefit to disabled workers and to others in due course.

My Lords, I too welcome the Government’s Statement on how it will implement the recommendations from the Taylor review as it opens up the agenda on much-needed reforms to the labour market, particularly on the issue of one-sided flexibility where too much risk has been shifted on to the individual worker from the employer. The Government’s own Good Work Plan says:

“We will take firm action to tackle … where some businesses have transferred too much business risk to the individual, sometimes at the detriment of their financial security and personal wellbeing”.

I hope the Government will hold to that promise; people will watch closely how they honour it. There is strong evidence from both public and private sources on the levels of financial resilience that many workers lack, particularly in the face of income shocks. This lack of resilience is driven in part by a decline in the quality of the employment contract, whether that is revealed through variability in earnings, poor sick-pay provisions or ambiguous employment status. To begin to address financial resilience, one has to look at precisely what the Government have identified: the shift of risk on to the individual and the decline in the quality of the employment contract.

There are many questions I would like to ask but time does not allow. I refer to the part of the Statement that references Matthew Taylor’s call on the Government to improve access to justice, and I refer back again to the issue of tribunals. In their stated steps to improve the effectiveness of employment tribunals, have the Government decided to reintroduce fees for access to employment tribunals and employment appeal tribunals, so that the only matter being considered is how to reintroduce these fees, or are they still undecided on the reintroduction of fees? One has to bear in mind that, if workers cannot enforce their rights, these are rendered meaningless. We saw a staggering fall of 70% in claims brought to employment tribunals and a disproportionate impact of that fell on women, particularly low-paid and pregnant women.

The Statement also refers to the Government’s considering,

“the case for creating a new, single labour market enforcement agency”.

How would the remit of such an agency impact on the remit of ACAS and, in particular, on the ACAS role in conciliating on employment tribunal claims? When one reads what is intended for a new body, one can see an overlap with ACAS, so it would be useful to have some clarification. I reiterate what the noble Lord, Lord Fox, says that, notwithstanding the lateness of the hour, the reforms that could come out of this Statement from the Government, and the reach of those reforms, could be considerable, affecting many millions of people. When we get into the detail of the legislation, one can be sure that the numbers attending will be far higher than at this late hour.

My Lords—

My Lords, I will respond to the noble Baroness and I look forward then to responding to the noble Lord. That is the order in which we normally do these things. I welcome the positive approach that the noble Baroness took in her comments on the Statement by my right honourable friend, about where it is going and how it might develop. I am not sure that I can answer her questions in much more detail than I have already set out to the two speakers for the Opposition Front Benches. A lot of this is ongoing work. There is much to be done and there will be further consultation. I appreciate that at times noble Lords feel that there is almost too much consultation but this is the right way forward on this process, having had the Taylor review and consulted on it, and having taken certain things forward.

The noble Baroness started off by talking about the one-sided nature of some contracts. She and I probably come from a very different position in terms of how we think a Government should act. I am sure that she believes that the Government should act a great deal more than is the case with my rather hands-off approach. However, I agree with her that, particularly with employment contracts—although one has also seen it in the past with landlord and tenant contracts—there can be occasions for Governments to intervene to bring in a degree of equality between the two parties. This is the approach that my right honourable friend sets out in his Statement and in the general approach that he has taken to contracts.

The noble Baroness then asked about fees. I do not think that I can go much further than I did in what I said earlier to her noble friend. We are reviewing the fee strategy following the UNISON judgment and are looking at the balance between charging direct users and using taxpayer subsidy. There will be further thoughts in due course on how that will develop and I am sure that we will bring them to her attention.

Lastly, the noble Baroness commented on the new enforcement agency proposals and on the impact that they were likely to have on ACAS. If I could say anything more at the moment, I would, or I will write to the noble Baroness, but, again, I think that that will be ongoing work. I hope that she will be patient and look forward to the completion of that work. I will now sit down and wait for the noble Lord, Lord Lea, to make his intervention.

My Lords, I thank the Minister for his overview. I would like to pick up the point made by my noble friend Lady Drake about the quality of employment contracts. My last few years at the TUC were dominated by an attempt to put flesh and bones on to the quality of the employment contract. This is an important study but there is a very shallow focus, and perhaps I may explain what I mean by that.

If you talk to anybody about the economy—indeed, if you talk to anybody in the Treasury—and you compare our economy with other leading economies across the channel, you will find that our productivity performance is a major source of deep concern. Of course, this is also a matter of statistics. A higher level of employment with a rate of economic growth of, say, 2%, will probably mean lower growth in productivity. The problem of low productivity is a statistical inversion.

The big question facing the country on this front is: what are we going to do about the rate of growth of productivity? Productivity is the basis of living standards. To say that there is a lack of productivity is another way of saying that there is a growth of inequality of outcomes in the British labour force and a growing disenchantment among young people. This might go back to a growing inequality of opportunity in education. It is no criticism of this report and the Government’s response to it to ask the Minister to reflect on the fact that there are some huge problems that are not within the scope of this report, and it is the productivity puzzle.

One of the recommendations—number 14, I think—is about an adjustment to the information and consultation regulations. This interests me, as many continental countries have much more statutory regulation in this field than we do. When the trade unions in this country had double or treble the membership they have now—which is partly to do with the new types of employment relationship—it was very difficult. Does the Minister recognise that although this report ticks a lot of the boxes set up by Taylor, and is a step forward—whether on recognition, zero-hours contract issues, recognition of the IC regulations and so on—it is not as if this country looks as if it has a happy future economically?

There is nothing here about works councils or anything remotely like that; that is a key example. A friend of mine went to Gothenburg in Sweden to visit the company he was going to take over, and was invited to a buffet lunch with the works council, whose leader said, “We have one question, Mr Struthers. If you take over our company, how will that improve our world market share?” He got home to Peterborough or wherever it was and reported this and people were astonished that, at a works council, a workers’ representative had asked that. It is almost inconceivable because the world market share is not brought within the purview of our workers or their representatives—that is true to this day. It is a million light years away. We are looking through the other end of the telescope when it comes to these sorts of questions—the fundamental questions facing Britain, its social inequalities, its morale and so on. That should be the wider template upon which this discussion goes forward.

I thank the noble Lord for his intervention about the quality of employment contracts, the work he did 20 years ago when he was last at the TUC and his concerns about productivity, which he feels the Statement does not address. He connected those concerns about productivity with high employment, and I am grateful to him for stressing that we have high employment. I think there are now 32.48 million people in work, and that is something one can be very proud of. He is right to address productivity, but this Statement is not about productivity. I refer him back to the industrial strategy, which we published a year ago. He will remember our debate on it just under a year ago, on 6 or 7 January; I think that it was the first one we had when we came back from our Christmas Recess—let this year’s roll on. One of the things that my right honourable friend wanted to point to was the general problem that we have with productivity—to the extent that we can measure it, because it is a very difficult thing to measure. We accept that our productivity is not what it should be. In that industrial strategy we laid out a whole array of policies to address that point.

The noble Lord asked whether I would reflect on the problems of productivity. I give him an assurance and a guarantee that both myself and my right honourable friend—in fact the whole department and the whole Government, because that industrial strategy goes beyond the department and belongs to the Government —have concerns about productivity, and those concerns are addressed in that industrial strategy.