Zero-hours contracts

Tuesday 9th July 2013 Westminster Hall

[Nadine Dorries in the Chair]

14:29

[Nadine Dorries (in the Chair)]

Gentlemen, it is very warm outside and this is a one and a half hour debate, so if anyone wishes to remove their jacket, I am happy for them to do so. Also, because this is obviously a popular debate and we are assuming 15 minutes for the opening speech and 30 minutes for the wind-ups, I ask for speeches to be kept to 15 minutes as I suspect there will be a number of interventions.

[Julie Elliott (Sunderland Central) (Lab)]

It is a great pleasure to serve under your chairmanship, Ms Dorries. I am grateful to have secured this debate on an issue on which I and many other hon. Members have been working for some time.

Zero-hours contracts are contracts whereby a worker is guaranteed no minimum hours and no minimum pay. In this country, we essentially have a large pool of workers, and employers have no legal obligation to pay them when they are not needed.

Zero-hours contracts have a widespread and deeply damaging effect on workers, and I call them “workers” advisedly. People employed on zero-hours contracts are treated differently to employees, and as such they are second-class staff. People employed on zero-hours contracts earn 40% less than those in fixed-hours employment. A study by the Resolution Foundation shows that, before tax, people on zero-hours contracts earn an average wage of just £9 an hour, juxtaposed with £15 an hour for people with set contract hours. Among graduates, the difference is £10 an hour versus £20 an hour. Firms that use zero-hours contracts have a higher ratio of low-paid staff than firms that do not use such contracts. Zero-hours contracts have traditionally been employed in the hospitality and leisure sectors, but they are increasingly being used in the health, social care and further education sectors.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that being undervalued not only has a cost to the individual? Not having pension contributions, for example, could lead to a much higher burden on the state in the long term than if those people were properly remunerated and were joining proper pension schemes.

[Julie Elliott]

I totally agree with my hon. Friend. In fact, there are other areas in which having such contracts costs the state money, and I will address that later.

According to the Government’s own estimates, nearly a quarter of major British employers use zero-hours contracts. The 2011 workplace employment relations study found that the number of firms with workers on zero-hours contracts increased from 11% in 2004 to 23% in 2011. The recession and the lack of recovery are hitting Britain’s lowest paid workers hardest.

Zero-hours contracts are not new, and they were not borne out of the financial crisis or the recession. The figure of 200,000 people employed on zero-hours contracts in 2012 is almost certainly an underestimate, as many people will not realise that they are on such contracts.

[Jessica Morden (Newport East) (Lab)]

Although I know from my constituency work that the use of zero-hours contracts is increasing, it is difficult to assess what the exact figure is for places such as Wales—I think Wales would be particularly hard to assess. That in itself is a problem, because it is difficult to assess the impact if we do not know the scale of the issue.

[Julie Elliott]

That is absolutely correct. In fact, a number of Departments have responded to parliamentary questions by saying, “We don’t know.”

Many people will not realise that they are on zero-hours contracts. If, as it seems, zero-hours contracts are part of the new labour market, and not simply a reaction to the recession, we need to show our willingness to combat their worst excesses. Zero-hours contracts affect only approximately 1% of the work force, but that is 1% of a very large number and cannot be ignored.

Although they are on the increase in the public sector, zero-hours contracts are still more prevalent in the private sector, which is responsible for 85% of all such contracts in the UK. It is clear why zero-hours contracts appeal to employers, as they reduce risk by conferring greater flexibility to enable them to weather fluctuating demand. We want to do what we can to make it easier and more attractive for employers to hire new people, but all too often zero-hours contracts are the answer. Staff who have worked for their employer for less than a year make up more than a third of all zero-hours contracts. Young workers, newer workers and women are shouldering the burden while employers enjoy the benefits.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I congratulate my hon. Friend on securing this debate. Is not one of the fundamental issues that zero-hours contracts are about transferring the burden and the difficulty of dealing with a contract from the employer to the most vulnerable and the lowest paid? How can it be in any way fair to transfer that burden from the employer to someone right at the bottom of the pile?

[Julie Elliott]

It simply is not fair, and it simply is not acceptable in most cases.

Having a high number of employees on zero-hours contracts is also potentially damaging to employers as it can lead to inadequate staffing levels, the loss of training and skills development and an inability to attract and hold on to the highest quality staff. Too many people are living a life on call, and I hope this debate will move the conversation forward from discussing the existence of such contracts to evaluating solutions to the problem.

Zero-hours contracts can have a devastating impact on people’s lives. Workers employed on such contracts have little certainty of their expected weekly earnings and therefore cannot plan their family finances. People with employee status have several legal rights that workers do not, such as the right not to be unfairly dismissed, maternity rights and redundancy rights. The inherent variability of earnings throws into doubt an individual’s eligibility to claim various forms of benefits. The disruption to family life that results from frequent short-notice requirements to work makes so many things, from child care to the weekly shop, nearly impossible to plan.

[Mrs Mary Glindon (North Tyneside) (Lab)]

I also congratulate my hon. Friend on securing this debate. I worked for nearly two years on a zero-hours contract in retail. Will she confirm that it is often women who are in this situation? To add to what she said about people not knowing what they are going to earn from week to week, does she agree that it is also about their well-being and their sense of value in the workplace? People on such contracts do not necessarily feel that they belong to a company.

[Julie Elliott]

I totally agree. As I said earlier, people on zero-hours contracts are second-class employees—they are not employees but workers, which is a big difference.

People employed on such contracts cannot take advantage of the Government’s child care help, because they do not know when they will need child care. And they cannot take advantage of housing schemes, because without a regular income, they cannot get a mortgage. Without a guaranteed income, many cannot even enter the rental market. Some people on zero-hours contracts are having to rely on payday lenders because they have not received enough hours in a given week, which pushes them further into debt.

On average, people employed on zero-hours contracts tend to work 10 fewer hours a week than those on more conventional contracts—21 hours versus 31 hours. That is a significant factor in the level of underemployment in the UK. Some 18% of those on a zero-hours contract are seeking more hours or a different job, compared with 7% of those on a regular contract.

[Mr David Anderson (Blaydon) (Lab)]

I congratulate my hon. Friend on this worthy debate. What she has just said proves the fallacy of what we hear every day from the Government on the great job they are doing in increasing employment in this country. What they are really doing is taking people from secure, well-paid jobs, particularly in the public sector, and putting them into jobs where absolutely no respect is shown for their life or for anything else.

[Julie Elliott]

That is absolutely correct, and I will talk about it later.

The growing use of zero-hours contracts may go a long way towards explaining why such a weak economy has managed to maintain a relatively low unemployment rate. The Prime Minister often refers to the 1 million or so private sector jobs he seems to have personally created since 2010. Given the conveyor belt of awful numbers emanating from the Office for National Statistics since the election, one can hardly blame him, but it is imperative to delve deeper into that claim, because as we all know, not all jobs are created equal.

My hon. Friend the Member for Dumfries and Galloway (Mr Brown) asked some parliamentary questions on the kind of jobs that are being created, and the Government have been unable to provide clear answers.It is imperative to ascertain how many of those 1 million-plus jobs are minimum wage, how many are zero or small-hours contracts, how many are agency contracts and how many are outside London.

[Katy Clark (North Ayrshire and Arran) (Lab)]

Is my hon. Friend aware that as a result of the Postal Services Act 2011, it is now possible for other providers such as TNT to enter the mail delivery market? In London, TNT workers on zero-hours contracts now deliver our mail. Many are sent away every day because there is no work for them. Does she think that this is the direction that the Government have in mind for our economy?

[Julie Elliott]

At the moment, it seems to be where this Government are heading. Regulation is lacking where perhaps a little more regulation is needed.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing this debate. This is a problem not just in the private but in the public sector. The Financial Times found that in the last two years, the number of zero-hours contracts increased by 24%. Does that not show that this Government have the wrong priorities?

[Julie Elliott]

Absolutely. I will move on to the public sector shortly, and particularly to some of the alarming figures on the health service that we have received through freedom of information requests.

After receiving an unsatisfactory answer from the Secretary of State for Health to my written question asking how many people in the national health service were employed on zero-hours contracts, I submitted a freedom of information request to each NHS trust in the country asking how many people had been employed by the trust on zero-hours contracts only over the past five years: that is, those without a substantive contract in addition to the zero-hours contract. I also asked for a breakdown of what positions those people held, including any bank staff. Of the 88 trusts for which I have data, 77 employed at least one person on a zero-hours contract and one third employed at least 500. Together, the top 10 trusts employed a staggering 10,800 people on zero-hours contracts. Perhaps more remarkably, thousands of NHS nurses and midwives were on zero-hours contracts.

It is imperative to point out that those figures are for workers on zero-hours contracts only. They do not include employees who hold a substantive post with their trust and choose to have a zero-hours contract in addition to their primary employment, which allows them to take advantage of extra shifts, such as nurses who work on the bank as well as doing their normal shifts. The figures reflect the number of people who hold only a zero-hours contract.

As I said, there are clearly some people for whom a zero-hours contract is an added bonus, but the majority are not in that position. For some people in some circumstances, zero-hours contracts provide the flexibility and extra work that they want, but they leave far too many people without financial security.

Zero-hours contracts in health care are by no means restricted to trusts and hospitals. The Centre for Employment Studies Research has produced a study touching on the use of zero-hours contracts in social care in five councils in south-west England. In 2011-12, more than half of all domiciliary care workers were employed on zero-hours contracts. Figures uncovered by the shadow health team have found that nationally, more than 300,000 social care workers are employed on such contracts.

[Derek Twigg (Halton) (Lab)]

I thank my hon. Friend and congratulate her on an excellent speech. The Department of Health wrote to me in an answer today that there were 4,200 adult social care workers on zero-hours contracts. Is she concerned about the impact on social care and the security of the people who work in that field?

[Julie Elliott]

Absolutely. People who work in social care work with vulnerable people, often on their own, and turnover and movement of staff in that field are not good. Stability and continuity are needed to give people the best possible care. I fail to see how calling people in—often with very little notice, so that different people attend the same person—is the best way to provide social care in this country. According to the figures that I have, 20% of all people working in social care are on zero-hours contracts, rising to 60% for domiciliary care.

[Mr Anderson]

This morning we met a Unison group and had discussions with home care workers who work in this city. Not only are they on zero-hours contracts, they do not get paid for time spent travelling between houses, they have no pension rights, their travel costs are not paid, they must pay for the phone calls when they ring in to say each client is okay and they must do training in their own time. Does that not show a huge lack of respect for some of the most valuable people in this country, who do tremendous work? Does it not show how the Government’s deregulation mania is driving such people into a serious position?

[Julie Elliott]

I could not agree more with my hon. Friend. I will come to this later, but I question whether the people working in that field on zero-hours contracts are actually being paid the minimum wage, after all the costs that they must pay themselves are deducted. If they were employed, they would not have to do so.

The numbers simply are not conducive to the world-class care that patients deserve. Reflecting on the corrosive nature of zero-hours contracts, one care worker interviewed for the CESR’s study said:

“I can’t plan my life, not knowing when exactly I am going to be working, I can’t plan things…I have gappy rotas, periods when I am not working, odd half-hours. I take a book with me. I know that I am not getting paid, sometimes it’s really depressing. One of my colleagues said she was going out from 3 pm to about 7 pm, and actually there was only two payable hours in that whole period”.

That confirms what my hon. Friend just said.

How can we expect care workers or NHS nurses to have total commitment to an organisation or company that has none toward them and puts them on zero-hours contracts? They leave nurses and carers worried and looking for other jobs instead of focusing on patient care, leading to worse care for patients.

Not incidentally, we must also look at ourselves—at the House of Commons. We should be setting an example of good employer practice. According to the House of Commons Commission, as of 31 January 2013, nearly 9% of House of Commons staff are employed on a zero-hours contract.

In their responses to my FOI request, many trusts were at pains to explain that workers on zero-hours contracts were not obliged to accept any work offered. That is absolutely right; such an obligation would be illegal. It would be servitude. That is not much of a defence. There is also growing evidence to suggest that the choice to turn down work is illusory. Often, employers will cut the hours of any worker who turns down work, a practice known as zeroing down. The Resolution Foundation interviewed a domiciliary care worker in Newcastle who said:

“When I started out at my current job, I did nine weeks without a single day off and I was regularly working anything up to 55-60 hours a week. Since putting my foot down and refusing to work every other weekend…my hours have dried up.”

For many workers, the flexibility of zero-hours contracts is a one-way street that benefits only the employer. There is even evidence that some employers zero down workers’ hours simply to avoid the costs of redundancy or as punishment for reporting unfair treatment.

What needs to be done? We need to discuss concrete solutions to the zero-hours contracts crisis. Suggestions include regulations that state that if a worker’s average normal working hours are in excess of their contracted hours, they have the right to have their real-world hours written into their contract. We also need to raise awareness of zero-hours contracts first and foremost among people employed on them. Job adverts offering positions on zero-hours contracts should say so explicitly.

My right hon. Friend the Leader of the Opposition has proposed living wage zones and tax breaks to persuade companies to pay their employees a living wage, in order to boost productivity and cut the welfare bill.

[Fiona O'Donnell (East Lothian) (Lab)]

I am grateful to my hon. Friend for securing this debate and giving me the opportunity to contribute. Does she agree that it is essential that any training that staff require should be paid by the employer?

[Julie Elliott]

Of course it should. Not paying is a complete lack of obligation by employers to the people who work for them, whether they are workers or employees. Their businesses prosper because those people work for them, and people should be looked after properly.

Paying employees a living wage would boost productivity and the welfare bill. The Institute for Fiscal Studies has calculated that for every £1 spent paying a living wage, the Treasury saves 50p on tax credits and benefits. The Resolution Foundation has calculated that if everyone now receiving the minimum wage received the living wage, there would be a £2.2 billion net saving, comprised of higher income tax and national insurance receipts. There is growing evidence that living wages boost productivity, motivation and performance, and reduce leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject that analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment. They were wrong; it simply led to higher wages.

Progress has been made in the past two decades to protect those on zero-hours contracts and agency workers, who are often the same people. The working time regulations, the national minimum wage and the agency workers regulations have done much to improve the rights of such workers, but zero-hours contracts have reached a tipping point where further regulation is now required, because more needs to be done to tackle the inequalities and unfair treatment inherent in such contracts of employment. We must strengthen efforts to ensure that employers who abuse zero-hours contracts are brought to order. The tax and benefits system should be updated to reflect the changes in the labour market and to support people on zero or small-hours contracts. The contracts are merely the latest in a long line of ingenious tactics by the less scrupulous employers to keep costs down at all costs, all to the cost of their employees. Once we have addressed some of the worst excesses of zero-hours contracts, I do not want to see equivalents pop up and for us to take years to respond to those as well, with the lowest paid suffering all the while at the sharp end of the employment market.

When I asked the Minister present what the Government were going to do about zero-hours contracts, she stated that they would crack down on any abuse of such contracts. I am pleased that the Secretary of State for Business, Innovation and Skills announced last month that he was undertaking a fact-finding review of zero-hours contracts. He says that only anecdotal evidence of abuse is available, but I think that we are well past the stage of anecdotal evidence.

Many people on zero-hours contracts work fairly regular and often long hours. In such cases, zero-hours contracts are not about flexibility for the employer but about control over the employee. We could call it exploitation. Many workers start early in the morning and are expected to stay at work until late in the evening, with multiple unpaid breaks in between. That is a life lived on call. I welcome contributions from colleagues and the response from the Minister. People on zero-hours contracts, whether they treat our sick, look after our elderly or serve our food, need a commitment from the Government. I look forward to hearing it.

14:52

[Lisa Nandy (Wigan) (Lab)]

I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. We can see how important it is, because there are literally no seats left on the Opposition Back Benches, although I am sorry to see that concern does not seem to be the same among Government Members.

I am grateful, nevertheless, to the Minister for taking the time to be in the Chamber, because I want to talk a little about the astonishing rise of zero-hours contracts in my constituency, reflecting the national picture mentioned by my hon. Friend the Member for Sunderland Central. The number of such contracts has more than doubled since 2005, and the level of human misery that they are causing has become more and more apparent to me over the past three years. I want to give the Minister the human flavour of what that means. I have real concern about what zero-hours contracts are doing to young people, who are desperate to get into the labour market at the moment, but are seeing their opportunities closed off at every turn.

A young man in my constituency works on a zero-hours contract as a security officer. This young man, as well as being incredibly ambitious for himself and his life, has a difficult background; he came out of the care system, and he needs a level of stability that his job and his employer simply do not provide, which is a concern. Zero-hours contracts are a problem for many of the people on them, but for this young man, working in a difficult job and not knowing when or how he will be called or what his income will be from one week to the next, the contract is a particular problem.

When I was preparing for the debate, I looked quickly on the internet at a few of the jobs advertised in Wigan. Similar jobs were advertised: a security officer at Robin retail park, at £6.50 per hour. The advert stated that the job was on a zero-hours contract and that the employee must work as and when required. At least the advert specified that the job was on a zero-hours contract. Many people in my constituency over the past few years simply did not know that they were signing up to a zero-hours or small-hours contract; they were astonished to learn that not only had they got themselves into such a situation, but they could not get out. As my hon. Friend the Member for Sunderland Central said, they were suddenly not eligible for any of the other forms of support available. People feel trapped, and they are desperately in need of a Government who will do something to help them.

[Nia Griffith]

Has my hon. Friend been approached by constituents who have been forcibly moved from one type of contract to another type? They find that, on the new contracts, all their rights seem to have evaporated. Basically, they have been forced to sign up, perhaps because of some small issue such as wanting flexible hours or some slight change, or because the whole work force is being shifted, and that move is really damaging.

[Lisa Nandy]

My hon. Friend is absolutely right. I was about to talk about the situation of some care home workers in my constituency, and that is certainly one of the things that happened to them. Furthermore—the point that I want to impress on the Minister—employers who abuse zero-hours contracts are likely to be poor employers; their employment practices on a whole host of issues affect the entire work force. I welcome my hon. Friend’s intervention.

Unison recently produced research which showed that around 40% of people working in care homes or providing social care are on zero-hours contracts. We should all be deeply concerned about the rise of the practice, even if uninterested in the employment rights of the people affected or their families, because the truth is that it must be having an impact on the level of care that we afford to the old, the sick and the vulnerable in our society.

A group of care home workers, all women, recently came to see me. They had been under contract with the council, and they moved from one firm to another as the council changed the contract. They came to see me about a whole range of problems, including zero-hours contracts for some and small-hours contracts for others. They were given extremely short notice of the hours that they were supposed to work, so—as my hon. Friend the Member for Sunderland Central said—they had no opportunity to plan, which was a real problem for those with child care responsibilities, or with other caring responsibilities for elderly relatives or friends.

One woman told me an absolutely astonishing story about a co-worker, who had been told that if she did not take a series of jobs put on to the rota at short notice, she would not be offered hours next time. She had two children, so she had to take them with her on a series of shifts lasting for more than eight hours. The young children had to sit locked in the car for most of that time. The firm did not even factor in a lunch break for the worker, which apparently is standard practice. On top of that, she had the children with her, although they were unable to go outside and play; they did not eat and were locked into the car for several hours, which she was absolutely distraught about, but she was left between a rock and a hard place—she has to feed her children somehow, and that was the job she had been offered.

[Robert Flello]

I am enjoying my hon. Friend’s speech, because it is a good speech, but the things that she is saying are absolutely horrifying. Local authorities up and down the country are in a dire financial situation, but does she agree that they simply should not be touching such companies even with the longest of bargepoles?

[Lisa Nandy]

I completely agree, and I was about to say that I have been astonished by the slow response of my own local authority. I have tried and tried to get it to take the issue seriously, but the response has simply not been good enough. We should not be spending public money on enabling such employment practices to continue, whether nationally or locally. We all have a responsibility to stop them.

The women also told me about the serious problems that they are having budgeting. They work for the minimum wage, so they do not earn a lot to start with; we all know that the minimum wage is not enough to meet essential needs, so they are already earning poverty pay. On top of that, they do not know what they will be bringing in from one week to the next. As my hon. Friend the Member for Sunderland Central said, that is pushing people into the hands of legal loan sharks. Payday lenders have sprung up throughout Wigan—walking down the high street now, more payday lenders can be seen than practically any other sort of shop. We are collectively colluding in pushing people into the hands of those appalling lenders who cause such misery in people’s lives.

As well as zero-hours contracts, I have come across women with small-hours contracts. They are supposed to be guaranteed a certain amount of work but are not given that work, even though that is specified in their contracts. I have seen several examples of contracts not being upheld at all.

The point I want to impress on the Minister is that when employers treat people on zero-hours contracts in that way and where their use is widespread, it is likely that they are poor employers across the board. One firm in my constituency, Cherish, provides care to elderly people in their own homes. It breaches the minimum wage requirements because its employees are not paid for travel time, which is often hugely variable in my large constituency. Most of those women do not have transport because they cannot afford it as they are not paid enough, so they must travel long distances on several bus routes, which takes a long time, but they are not paid a penny for that. Lunch is not factored in and their payslips are confusing and incomplete. A whole host of problems have been brought to me about Cherish, and when I wrote to the firm I received what can only be described as a sarcastic letter thanking me for my interest in the company. I was astonished at the lack of response from the CQC and the local authority.

I echo what my hon. Friend the Member for Sunderland Central said. It cannot be beyond our wit to devise a statutory framework to crack down on those unscrupulous employers, but that must go with a culture of valuing our workers. I have been dismayed by the coalition Government’s attack on the trade union movement in the last few days, which can only hinder the situation of those women and not help it.

[Nadine Dorries (in the Chair)]

Mr Sawford, may I remind you that the time limit on speeches is six minutes?

15:01

[Andy Sawford (Corby) (Lab/Co-op)]

Thank you, Ms Dorries. It is a pleasure to serve under your chairmanship and to follow my hon. Friends. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this debate. She feels strongly about these issues and is a real champion for people in her constituency and throughout the country who are being exploited by zero-hours contracts. I will echo some of the points that my hon. Friend the Member for Wigan (Lisa Nandy) made and relate them to the experience of my constituents in Corby and east Northamptonshire.

In this Session, I have presented two private Members’ Bills to offer greater protection to the lowest paid and most vulnerable workers in Britain. The Gangmasters Licensing Authority (Extension of Powers) Bill will extend the powers of the Gangmasters Licensing Authority to enable it to regulate employment agencies in all sectors of the economy. That is combined with my Zero Hours Contracts Bill, which will prohibit the use of zero-hours employment contracts and end the scandal of employers requiring workers to be available for work when there is no guarantee of available work. I will go further than other contributors to this debate and say that zero-hours contracts should be banned. A contract of employment clearly implies that there is some employment. All too often the problem with zero-hours contracts is that people are not given any employment, yet they are required to attend for work.

I hope the Bill will become law, but whether that is now or later depends on Parliament. I want to generate a debate about how we can better protect the lowest paid and most vulnerable workers from being kept in a permanently fragile and uncertain state of zero-hours employment. That is why I am pleased to contribute to the debate today.

The Office for National Statistics estimates that at least 200,000 people are employed on zero-hours contracts in the UK, of which 75,000 are aged 16 to 24. We know that that figure is a huge underestimate, and I have begun to challenge it to reveal the true situation. Just last week, a written answer from the Minister of State, Department of Health, who is responsible for care and support, revealed that 307,000 people work in social care alone on zero-hours contracts. If the labour force survey claims that 20% of people on zero-hours contracts are working in the care sector, I am confident in saying that the true number of people in this country on zero-hours contracts could be approaching 1 million.

[Mr Gregory Campbell (East Londonderry) (DUP)]

Does the hon. Gentleman agree that what should flow from the review by the Secretary of State for Business, Innovation and Skills is exactly what he is homing in on: a much more accurate estimate of how many people are affected? When we try to determine what needs to be done to help those people, we need to know how many are affected.

[Andy Sawford]

The hon. Gentleman is absolutely right and, if he will forgive me, I will come to that shortly.

It is well known that zero-hours contracts started in specific sectors of the economy, but are now widespread in all sectors, including in my constituency. Hundreds of constituents have contacted me about them. People tell me about waiting for a call or turning up at the workplace day after day, only to find that there is no work, yet their contracts make it difficult to find alternative employment or to claim jobseeker’s allowance. Like my hon. Friend the Member for Wigan, I have heard examples of people making child care arrangements or paying for transport to work and then waiting hours before being told they are not needed. Others have told me that because of zero-hours contracts they are unable to get a bank overdraft, a mortgage or car finance.

Of those on zero-hours contracts, 70% are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want that employment to be fair and secure.

A few weeks ago, the Resolution Foundation published an excellent report stating that those employed on zero-hours contracts receive lower gross weekly pay, and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency, zero-hours contracts and agency workers create a two-tier work force with permanent employees being paid better and having security of employment, but many others are paid incredibly low wages and are exploited from week to week.

The argument is that zero-hours contracts offer flexibility, but I would argue that if those contracts are justifiable, that flexibility should be beneficial to both employers and employees. In most cases, that is simply not so, particularly in low-wage sectors. Workers on those contracts have no control over the hours they work, the amount of money they earn each week or even the breaks they take. Reports show that care workers on zero-hours contracts are not paid for travel time or gaps between appointments. Unison published some excellent research on the impact on social care. I have a personal concern about that and I urge the Minister to look at it in detail. I would have said more about it if I had had more time.

Zero-hours contracts are just the tip of the iceberg. My hon. Friends have called for a review of the whole culture of work in this country, particularly as it has developed during the recession and in recent years as our economy has flatlined. Under-employment is generally too high in all its forms. Self-employment has been rising and bogus self-employment is a big issue. We have particular issues with Swedish derogation contracts that guarantee minimum hours of pay between agency assignments to exempt people from minimum pay.

I am pleased that the Minister met me and a delegation from Corby earlier this year to look at these issues. I am also pleased—I thank her for this—that she supported an initiative by the Employment Agency Standards inspectorate and Her Majesty’s Revenue and Customs to look at the issues in detail in Corby. The initiative was taken in my area, and I was not surprised to see the level of exploitation. When visiting agencies, they found more than 70 breaches of employment law, and HMRC put a figure of £100,000 on the money owed to local workers in my constituency. I urge the Minister to provide proper resources to HMRC’s minimum wage department and to support the vital role of the Employment Agency Standards inspectorate. It protects the most vulnerable people in my constituency and around the country. It should be better resourced, it should do more, and we should support it.

What do I want? I want more than an informal review. I want a proper formal review by the Government to look at the scale of zero-hours contracts, and a jobs market that identifies good practice. I want to explore the possibility of a ban. Zero-hours contracts have been banned in Luxembourg, Belgium and Lithuania. There are opportunities to develop new forms of flexible employment contracts and I urge the Minister to look at the work of the Union of Shop, Distributive and Allied Workers in this area.

15:09

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure, Ms Dorries, to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. It seems that austerity has sparked some employers to introduce zero-hours contracts, which they see as the ultimate flexible employment option.

Zero-hours contracts offer no guaranteed work. They form part of the general disregard for decent terms and conditions. Unfortunately, employers have increasingly turned to such contracts. Typically, as we have heard, an individual undertakes to be available for work, but the employer does not undertake to provide any guaranteed hours and pays only for the hours worked.

Zero-hours contracts have been widely used in various employment sectors, and a survey by the Industrial Relations Service suggests that 23% of employers now include zero-hours contracts as one of their employment options. The Office for National Statistics found a major surge in zero-hours contracts in 2012, with the number of people on such contracts peaking at 200,000. As we have heard, the private care sector has been particularly vulnerable to this practice, and a recent survey of home care workers found that more than 40% were on zero-hours contracts.

Zero-hours contracts undermine employment rights and hit young workers and women hardest. For staff, they entail huge drawbacks by comparison with permanent, regular work. There are no guaranteed, regular earnings to provide certainty over meeting bills or planning for the future. The variability of earnings also throws into doubt individuals’ eligibility for various benefits, creating even greater uncertainty over income.

Zero-hours contracts have shown themselves to be more open to abuse than regular permanent contracts. For example, some scheduling of work hours in the home care sector allowed no time for travel between home visits, leading to staff working considerably beyond their paid hours in some cases.

What will be crucial for workers is whether zero-hours contracts constitute an employment relationship. If there is an employment relationship, an employee on a zero-hours contract will acquire the same comparative rights as other employees. If there is a pattern of regular work that is regularly accepted, it should be deemed that the contract is one of employment.

Employers should take heed because zero-hours contracts can work against them. They damage the employer’s ability to attract and hold on to high-quality staff. They also damage their ability to provide continuity and quality of services. Zero-hours contracts are simply not compatible with developing a professional work force and delivering quality services.

Let me give a few examples. The G4S security fiasco just before the start of the London 2012 Olympics, when the firm was unable to meet its contracted staffing requirements, is an example of how zero-hours contracts can be a disaster. In my constituency, Amazon outsources hiring at peak times of the business year to private employment agencies that offer zero-hours contracts. The result is that many subcontracted employers end up in employment disputes that hit the headlines and ultimately reflect on Amazon and its business. I call on Amazon to distance itself from such contracts, even if it is associated with them only at arm’s length, and to give clear direction to its subcontractors. Amazon does not want zero-hours contracts offered to its temporary staff.

It would be far less damaging for employees and employers if permanent contracts were offered specifying a minimum number of hours per week. For thousands of workers across Scotland and the rest of the UK, life on a zero-hours contract means they are living their life permanently on call, uncertain whether they can secure enough working hours each week to pay the bills.

The forward march of zero-hours contracts is likely to have profound implications for the UK economy, as well as for the individuals on those contracts and for the services that those people provide.

[Nia Griffith]

Does my hon. Friend think there is scope for using procurement to force those who supply public sector—Government and local authority—projects to ensure that the workers they employ are not on zero-hours contracts?

[Mr McKenzie]

Absolutely. My hon. Friend makes an important point: procurement can be used to stipulate terms and conditions. We should stipulate that zero-hours contracts are not welcome in any procurement contract.

As I said, the erratic income stream that often comes with zero-hours contracts can make it difficult to manage household budgets, to juggle family and caring commitments and to access tax credits and other benefits. It is clear that the supposed flexibility that these contracts provide comes at far too high a price for the overwhelming majority of those who are employed on them.

[Robert Flello]

As well as the damage and exploitation experienced by the individuals concerned, is not the taxpayer, through working tax credit and the like, effectively subsidising the profits of these private companies?

[Mr McKenzie]

Absolutely. My hon. Friend makes a good point: the taxpayer is subsidising these companies. Increasingly, there is a race to the bottom in terms and conditions in services.

I am led to believe that the Government have acknowledged the need for reform, and a review will report in the autumn. However, I fear that it is unlikely to lead to an outright ban on zero-hours contracts and that it will not be the precursor of a much-needed agenda for promoting fair and full employment. None the less, thousands of people across the UK hope that the Government will, at a minimum, recognise the indisputable case for introducing more stringent safeguards to provide greater certainty and security for the growing numbers who work on these contracts. It is almost as though we have gone back in time to a scene from “On the Waterfront”. I have witnessed people turning up at factory gates and being chosen for a shift, while others are turned away and told to come back the next day. Those are simply not the employment contracts or practices that we need for the 21st century.

15:16

[Ian Lavery (Wansbeck) (Lab)]

It is a pleasure, as always, to serve under your chairmanship, Ms Dorries. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on bringing this subject to the Chamber. It is essential that such debates take place, because many of the people we are discussing do not have a voice in society.

I am overwhelmed by the absence of Government Members. I am really disappointed, to say the least, that not even one Conservative MP is in the Chamber to listen to some of biggest concerns that affect some of the least well-off people in society. The zero-hours contract is the scourge of the working poor. It has trapped many people in an employers’ paradise; it is a charter for legal abuse, as we have heard in many fine contributions today; and it needs to be stamped out.

Some 8% of workplaces now use zero-hours contracts. Interestingly, 85% of the people employed on those contracts work in the private sector. The Government tell us almost hourly, “We’ve disposed of many jobs in the public sector, but look how many we’ve created in the private sector.” Well, if this is the type of job they are proud of, they really need to look at this, because these are not jobs in reality. What is happening to many people on zero-hours contracts is an absolute scandal.

People on zero-hours contracts receive lower gross weekly wages—an average of £236 a week, compared with £482 for those who are not on zero-hours contracts. On average, therefore, those who are on zero-hours contracts receive less than half the pay of those who are not. Workplaces that utilise zero-hours contracts have a higher proportion of staff on low pay—between the national minimum wage and £7.50 an hour—than those that do not. Those employed on zero-hours contracts also work fewer hours—an average of 21 hours per week—than those who are not, who work an average of 31 hours per week.

Frances O’Grady, the general secretary of the TUC has said:

“Employers know they can get away with advertising zero hours jobs because there are so many jobseekers hunting too few vacancies.

With the tough times set to continue, now is the perfect time for the government to be reviewing— and hopefully regulating—the increasing use of these exploitative contracts.”

In my constituency, 26 people are applying for every job at the jobcentre. That is an absolute outrage. A lot of those jobs involve zero-hours contracts. People are really excited if they get the opportunity to work one or two hours a week, yet in the statistics that is counted as employment. That is outrageous.

Lord Oakeshott, the Liberal Democrat peer, said:

“A zero hours Britain is a zero-rights Britain in the workplace—Beecroft by the back door. Being at the boss’s beck and call is no way to build a skilled, committed, loyal labour force.”

I do not agree with the Liberal Democrats that much—hardly ever—but I agree with that comment. It spells out neatly and concisely exactly what zero-hours contracts are all about. As my hon. Friends have said, they give no guarantee of regular earnings, which leads to huge problems in meeting energy, food and clothing bills, and people have no way to plan their future. The need to respond to calls, frequently at short notice, to obtain work absolutely disrupts any type of social or family life. It causes problems with the kids and with everyone involved, because people on those contracts cannot plan anything at any time, yet they are paid nothing for the privilege. We need to look at that situation.

There is much more that I would like to say. Just before I came in I met someone from Nacro, who explained that there are probation officers who work on a proper, 37-hour contract, and who at night time are given zero-hours contracts. They work two separate contracts, which is causing chaos, but the probation service does not need to pay overtime and extra payments. That practice will spread through society, and it is unacceptable.

I agree with my hon. Friends who have said that the practice of giving zero-hours contracts should be outlawed. Okay, there is a review, but it must outlaw them. Let us be fair to people, respect people, look at how they want to work and give them working opportunities that they can be proud of and plan their lives around, so that they can secure their future. Zero-hours contracts are the sort of thing that should not be allowed in civil society; but perhaps we do not live in a civil society.

15:22

[Alex Cunningham (Stockton North) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I congratulate my fellow north-east England MP, my hon. Friend the Member for Sunderland Central (Julie Elliott), on securing this long overdue debate.

At a time when unemployment is persistently high—and nowhere more so than in north-east England—the Government still refuse to listen to Opposition calls for a compulsory jobs guarantee. The same Government are content to massage the unemployment and employment figures in whatever way possible, to give a very different impression of the challenges facing countless people. It is therefore all the more fitting that we are here today to discuss contracts that must be contributing in a substantial way to in-work poverty.

We all know that the bulk of jobs created under the Tory-Lib Dem Government are part-time and low paid, leaving families and individuals struggling to cope, while the Prime Minister boasts of the opportunities he has created for them. I am not too surprised that there is not a Conservative in the Chamber, and that the Conservatives have left a Liberal Democrat Minister and Parliamentary Private Secretary to answer today. However, the Prime Minister cannot throw a veil over the reality of worklessness and minimal or zero-hours contracts, whose numbers are growing daily, and which are often used as a mechanism to screw down wages, screw down people and screw down our country.

We need to take action to make sure that unscrupulous employers cannot take advantage of workers in what is already a tough jobs market, and to ensure fairness in the workplace and promote real job creation—of jobs that pay well while assuring security in the workplace and shared prosperity. There is no doubt that employers seek increasingly flexible staffing structures and many are adopting zero-hours contract arrangements to avoid agency fees and to sidestep the Agency Workers Regulations 2010.

The use of zero-hours contracts is, as many hon. Members have said, widespread across both public and private sectors. A survey by the Industrial Relations Service suggests that 23% of employers now include zero hours as an employment option. In public services, the care sector has been particularly vulnerable, with more and more such contracts. The situation is likely to worsen further under the NHS’s new commissioning arrangements, which do not guarantee providers with work, so that they in turn do not guarantee work to staff. That alarming trend has even spread into areas such as cardiac services and psychiatric therapy.

Some may say the employers cannot be blamed, but I do not care who is blamed: no one should have to suffer the indignity of a contract under which it is possible for no work at all to be provided. In figures from the national minimum dataset for social care, it is estimated that 150,000 domiciliary care workers alone are employed on zero-hours contracts. Statistics released last week by the Minister of State, Department of Health, the hon. Member for North Norfolk (Norman Lamb) suggest that 307,000 people in the social care sector, or 20% of the work force, are employed in that way. Within the North Tees and Hartlepool NHS foundation trust alone—that is the one that serves my area—there were 786 zero- hours or casual contracts in operation in April 2013, 682 of which were for clinical positions. I acknowledge that some of those may cover people with other roles, elsewhere and within the trust, but I still think it is a scandal that we are trying to provide care on that basis—even if it does afford the employer flexibility to fill gaps.

Elsewhere, in the worst scenarios, zero-hours contracts can result in some of the most vulnerable people—who care for other vulnerable people—being unfairly treated owing to a lack of proper protections. Recent work by the Resolution Foundation indicates that those who are employed on zero-hours contracts work fewer hours than those who are not, averaging 21 hours per week compared to 32 hours per week; and there is a gap of about £6 an hour, on average, between those who are on zero-hours contracts and those who are not. Not only does that put employees completely at the mercy of employers, presenting the opportunity for rogue employers to exploit workers; it also removes any semblance of the stability and certainty that must be central to rebuilding our economy and people’s lives.

[Robert Flello]

I want to pick my hon. Friend up on a fact. He mentioned the difference in the number of hours, but I suggest there is not a difference. It is just that the people who are not on zero hours are getting those hours paid.

[Alex Cunningham]

Indeed. That is very much the case. It just worries me that although the average working week for people on those contracts may be 21 hours, for many people they mean zero.

Power imbalances operate in many workplaces, and workers who need a minimum number of hours a week to remain financially secure often find the uncertainty of working fluctuating numbers of hours tremendously tough. Similarly, some find their contractual situation becomes a device through which loyalty is used to determine future work load. In essence, the allocation of a favourable number of hours becomes reliant on such factors as previous flexibility and a willingness to accept all hours offered, as well as fickle aspects such as cordial relationships with line managers. Regardless of how good a worker someone is, if their face does not fit, their zero-based contract may mean just that—zero. The repercussions that are used to sanction employees who are deemed to have stepped out of line should be better regulated to ensure fairness in the workplace. It is time that safeguards against exploitation were re-examined and bolstered to achieve a balance of power.

Before the Working Time Regulations 1998 and the National Minimum Wage Regulations 1999, zero-hours contracts were often exploited to clock off workers during quiet periods, while retaining them on site to allow for a rapid return to work. That down time was largely unpaid, and was grossly unfair to employees. Under the previous Labour Government, action was taken to protect the interests of workers and stop that abuse. We cannot and must not go backwards on these issues. We need a Government who will take more action now. If we must have such things as zero-hours contracts, we need to ensure that they are properly regulated to maintain an individual’s freedom to contract on favourable terms, with some form of guarantee that they have a job worthy of the name.

15:28

[Emma Reynolds (Wolverhampton North East) (Lab)]

It is a pleasure to serve under your chairmanship, Ms Dorries, for the first time but not, I am sure, the last. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing the debate, and on her excellent opening speech. I should like to say that we are having a debate this afternoon, but it seems only the Labour party really cares about the issue. There is not a single Conservative MP in Westminster Hall this afternoon. I am glad to see the Minister, and am also happy that the Government will undertake a review of the worrying rise in zero-hours contracts.

I wish to associate myself with many points that have already been made—it is always difficult going last in such debates—but I want, in particular, to agree with the comments made by my hon. Friend the Member for Sunderland Central about the flexibility of such contracts being a one-way street. The flexibility is all to the advantage of the employer and to the detriment of the employee. The worker is left waiting for a call and is on call, not knowing from one day to the next, or from one week to the next, whether they will get any hours at all. These contracts do not even provide a guarantee of any hours, and therefore, they have been named zero-hours contracts. In many cases, workers are desperate to increase the number of hours they work, and many of them are on very low incomes. These contracts seem extremely exploitative and make the lives of some of the poorest in society even harder.

I am particularly concerned about three groups of workers who the contracts seem increasingly to affect: the first is young people; the second is care workers, as some of my colleagues have discussed; and the third is public sector workers, which is worrying, because even though the majority of such workers are in the private sector, the use in the public sector seems to be increasing. It must be in the Government’s power to do something about that.

Research suggests that one in three people employed on zero-hours contracts is aged between 16 and 24. It is absolutely devastating to be unemployed at such a young age and to be only able to get a contract of work that does not guarantee any hours at all. The fact that this exploitative arrangement is the first experience that a young person could have of work seems totally unacceptable and unfair.

[Andy Sawford]

My hon. Friend makes a really important point about the particular impact on young people. I hear from young people who feel that they have had no training and no investment from their employer, because there is no incentive to do so when they are in such fragile, short-term employment.

[Emma Reynolds]

The Government need to look at the issue even more closely and consider whether the practice should be banned, for young people, in particular, but for all workers.

I turn to the issue of care workers. As has been mentioned, a report by Unison found that 40% of home care workers are employed on zero-hours contracts, and that number is thought to be on the rise. Home care workers play an incredibly important role in our society, especially given that we have an ever-increasing ageing population. They are saving the state money by ensuring that elderly people can stay in their homes and live there, rather than in a care home, and they are ensuring that elderly people are not in hospital. I am particularly concerned about reports suggesting that those workers are not being paid for travel time between visits. It seems that that must be, in some way, illegal—how can it be legal? In winding up, if the Minister has time, I would like her to comment on that point. If they have not been guaranteed a minimum wage for the real hours that they are working, have their minimum wage rights been breached? Is the employer, in such cases, in breach of the European working time directive?

Finally, let me say something about the public sector, because the contract is not unique to carers. We are seeing the increasing use of such contracts in all parts of the public sector, whether in the health service or elsewhere. In the health service alone, workplaces using zero-hours contracts rose from 7% in 2004 to 13% in 2011. Central Government have also been found to be using zero-hours contracts. As has been suggested, local government contracts seem to be driving the rise of these exploitative contracts. My hon. Friend the Member for Sunderland Central suggested that it is going on here in the House of Commons, too, and I would like the Minister to address that issue specifically.

Will the Minister reassure Labour Members, who are concerned about this injustice, that the review that the Government are conducting will look at exploitative practices by employers? Will the review consider how many of the workers who have had those contracts are low paid, and will it consider banning the contracts? Will she say whether central Government will take a leading role in getting rid of the contracts from their own payroll and do something to discourage, dissuade or even sanction local government if, when contracts are issued, conditions are not in place in the contracts to stop this kind of exploitative practice?

Our debate is timely, because the use of zero-hours contracts can be seen in a wider context of rising inequalities. Regrettably, inequalities in income are increasing, and the gap between rich and poor is widening. The Government are only exacerbating that. Living standards have been frozen, or in some cases, have declined for many lower and middle-income workers. The mean family income in 2015 will have the same worth as in 2002. For the first time in generations, parents are concerned and expect that their children will be worse off than them. The increasing use of zero-hours contracts in the private and public sectors is only exacerbating those inequalities, and I would like the Government to do something about it.

15:35

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to serve under your chairmanship for the first time, Ms Dorries—no doubt there will be many more times to come. I pass on my congratulations to my hon. Friend the Member for Sunderland Central (Julie Elliott), whose speech was fantastic. Not only today, but every day that she has been in Parliament she has been championing the rights of people on zero-hours contracts, and it is important for her to have led today’s debate.

Although a small number of people use and like the contracts, we have heard, from all Opposition Members, about people who have gone to their constituency surgeries with examples of where the contracts are not appropriate. It is a shame that we cannot take a vote today, because we might win it, given who is here this afternoon. Of course, the aim of a zero-hours contract is to deflect from giving anyone pay; it is not just about hours. When an employer is looking at putting together a zero-hours contract, it cannot only be about the work available. It must be about reducing the wage bill and ensuring that there is no pay.

[Nia Griffith]

Does my hon. Friend agree that there is sometimes an irony in the use of agency workers, whereby the workers get paid very little and are second-class citizens, compared with the permanent employees, but, in fact, the firm gets ripped off because of the agency fees?

[Ian Murray]

That is a good point. We should have another Westminster Hall debate on the agency issue, in terms of how that all fits together. It is not only about zero-hours contracts, as there is a tapestry of problems in the employment industry that are worth looking at.

Many hon. Members—including my hon. Friend the Member for Wansbeck (Ian Lavery), who always speaks very passionately about such issues—have said that people get no pay and no hours. People sometimes go to great expense to turn up at work. They arrange child care and sometimes they do not even get a call to say they have got hours—actually, sometimes they do not even get a call. I have a screen grab here from someone’s iPhone, where a message says, “You’re not needed today.” That is all it says. It was sent at 12.40 in the afternoon, so they sometimes do not even get a call from their employer to say they are not required.

Many Members have spoken about the increasing numbers of contracts, so I will not run over that again. However, I would like to concentrate on the law behind the issue. A body of law sets out what someone is classified as when they are at work. They are either an employee, a worker, or self-employed. We shall set aside the fourth, new category of someone who is an employee shareholder, as that is a different debate altogether. If we look at those three categories, it is clear what someone who is self-employed is. There is a whole body of case law about what the definitions of an employee and a worker are. Many would argue that someone on a zero-hours contract is, in fact, a worker, but that worker needs to have some kind of mutuality of obligation, and there cannot be a mutuality of obligation if the worker has to turn up for work at their expense, but the employer has no need to give them any hours. That does not seem to me to be any sort of mutuality.

[Andy Sawford]

I agree that the important point about an employment contract is that there must be a mutuality of obligation, but the contract also must impose an obligation on a person to provide work. Therefore, I cannot understand why it is not unlawful as it stands, in the current body of law.

[Ian Murray]

There is an argument about whether zero-hours contracts are currently unlawful, but mutuality of obligation is case-law terminology and is therefore not written in statute. That is how, over many years, the case law has built up about the definition of employment tribunals, in terms of whether someone is in work or, indeed, whether they are a worker, an employee or self-employed. So there is a definition. My hon. Friend the Member for Wansbeck has said that what we are talking about is not a job. It perhaps is not a job. It cannot be right for people to be in this situation and not end up with any hours.

Let us consider some of the damaging effects. For staff, zero-hours contracts have huge drawbacks compared with permanent regular work. There is no guaranteed level of regular earnings that provides any certainty with regard to meeting bills, meeting rent or planning for the future. The need to respond to calls to attend work, frequently at short notice, disrupts life outside work and places a particular strain on families in terms of arranging care for dependants. The Government have put a heavy emphasis on being family-friendly, but we have yet to see any evidence of that. Zero-hours contracts fly in the face of the flexible working legislation that the Minister, to be fair to her, has pushed through and championed in government. They slightly contradict that aspect of employment.

There is a detriment to business as well. That is why I cannot see why business wants to use zero-hours contracts, particularly in some of the areas that have been spoken about. There must be reputational damage to employers who use these contracts. There must be an inability to attract and to retain high-quality staff. There is undoubtedly a direct correlation between continuity and the quality of the services involved. Some hon. Members have spoken clearly about health and social care and how continuity and quality of services are significantly affected. A loss of training and skills development tends to accompany zero-hours contracts, particularly if people have to pay for their own training, which is a huge issue with these contracts.

There is an overarching ethos and ideology. The Government have a one-track mind on this issue. They look at regulation and employment law as a burden on business. We have seen that with the Beecroft report. I am delighted that my hon. Friend the Member for Wansbeck used the phrase “Beecroft by the back door”—we have copyrighted that now. This is Beecroft by the back door. There are all these ideological moves, in terms of the legislative programme that the Government are pushing through at the moment, that are simply an attack on workers’ rights and the ability of people to earn a living. Their central argument about removing workers’ rights in order to encourage businesses to grow surely cannot be right. It flies in the face of the evidence. Let us say that we accept that the Government have created 750,000 private sector jobs in the past two years as a fact, whether it is challengeable or not. Those jobs have been created under the current framework of employment rights, so that flies in the face of what they are saying.

[Alison McGovern (Wirral South) (Lab)]

I apologise to fellow hon. Members for not being able to be here at the start of the debate. Does my hon. Friend agree that good regulation could protect employers who do not want to see this sort of practice? It could prevent a race to the bottom, which is what I think we are seeing in the care sector.

[Ian Murray]

That is a valuable intervention because that is what many employers are telling us and what many business organisations are saying: when we undermine workers’ rights, we are undermining as well the businesses that are looking after their staff. I ran my own business before coming into this place. Any business person—any person running a good business—gets up every morning of every day and wants to look after their staff; they know that their staff are their greatest asset. There is a danger here for the Government, and the hon. Member for North Norfolk (Norman Lamb), the Minister’s predecessor, said this quite clearly in a newspaper. Admittedly, it was six weeks before he got the job as the Minister responsible for employee relations, but he said that there was a real danger of undermining job security, which undermines consumer confidence, which sets us up in a spiral of economic decline.

Let me pick up some of the issues that my hon. Friend the Member for Sunderland Central raised. She referred to the disproportionate effect on women. Clearly, we have to look at that. The explosion in the number of zero-hours contracts has had a disproportionate effect on women, and that is probably because of some of the sectors in which we have seen this, such as the care sector and the hospitality sector. These are industries with high percentages of female employees. It is difficult to know whether it is a response to demand for flexible hours, better enabling female professionals to return to work after maternity leave, but it cannot be viewed as a positive trend at a time when equality in the work force is becoming more vital than ever. The Government have to consider whether what is happening is consistent with some of the other policies that I have mentioned in relation to flexible working.

There is also the issue of tax credits. The Government have been very clear about resolving some of the issues in relation to welfare. Their view was that the tax credits bill was too high, but the tax credits system was put in place to ensure that work paid, so again the reality flies in the face of some of the rhetoric and ideology. How exactly does the working tax credit issue interact with some of these zero-hours contracts? How often should HMRC update its system for someone who is on a zero-hours contract? Must they be on a zero-hours contract for a certain number of months? What happens when they get an injection of hours at the last minute? How is all that put together? There are also issues in relation to Jobcentre Plus. If someone is on a zero-hours contract and by law they are neither an employee nor a worker, are they actually in employment; can they claim jobseeker’s allowance? All those issues must be dealt with.

We have heard about the number of staff in this place who are on zero-hours contracts. A press release was issued this morning by my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan). He said that 155 staff in this place were on zero-hours contracts. There are a number of case studies. This issue does not just involve the hospitality or care sectors. Edinburgh university, in my own constituency, has recently done an analysis that shows that 47% of lecturers in the college of humanities and social science are on zero-hours contracts, so there is a real problem there. I know that the University and College Union is taking it up with the university of Edinburgh.

Many hon. Members have spoken about the NHS, so I will not cause delay by making further comments on that, but may I turn to the Government’s recently announced review of zero-hours contracts? The announcement that the Secretary of State and the Minister were to look at this issue was very much welcomed. We must congratulate the Minister on at least going that far, but we need to know whether the Government will issue a call for evidence. Many trade unions have done so much work on this issue. My hon. Friend the Member for Corby (Andy Sawford) mentioned USDAW. It has done a tremendous amount of work on pushing this issue forward. The Government really have to issue a call for evidence. I believe that their review involves only three officials in the Department for Business, Innovation and Skills, so it would be good to issue a call for evidence.

Will the review consider the issues in relation to tax credits? Will it consider specifically the interaction of zero-hours contracts with young people and women in particular? The Minister may not be aware, but there was unanimous agreement from panellists at the Work Foundation’s recent conference on this topic that the review, in its current form, was too lightweight and would not provide the Government with the hard data that they needed to reform the system. I would be interested to hear the Minister’s response.

You have heard from Labour Members, Ms Dorries, the real concerns about zero-hours contracts and the impacts that they have on family life, on income and on people’s ability to plan their daily lives. This is simply an issue of fairness. It cannot be right to demand that someone travels to their place of work and then tell them that they do not have any work. I will be very interested to see whether the Minister will put together a body of work that looks at the mutuality of obligation and whether this is a case in which someone is not an employee, a worker or self-employed and therefore is deemed to be unemployed.

15:47

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

It is a pleasure to serve under your chairmanship, Ms Dorries, and to respond to what has been a lively and good debate. I congratulate the hon. Member for Sunderland Central (Julie Elliott) not only on securing it, but on putting the arguments in a straightforward but well researched way. Over a period certainly of months and quite possibly longer, she has been a real campaigner for and champion of these issues. It is a credit to her that she has persevered in raising them. I very much welcome the time and effort that she has already put into this issue and her bringing it to the House today to give us all the opportunity to discuss it and highlight some of the problems.

The turnout reflects the concern that many people feel about this issue. I will discuss later how the Government are looking at it, but such a debate can be incredibly helpful to bring forward Members’ contributions, which of course can feed into that information that the Government are collecting from other sources.

In basic terms, of course we understand that zero-hours contracts can work well for some people, giving them flexibility in the hours that they work. Equally, we are well aware that they do not provide the certainty that many people feel that they need. Those people need to know what they are going to earn, so that they can manage their finances and, indeed, their lives. Hon. Members have given many examples this afternoon, and the Department has received a number of letters that reflect some of the concerns. Hon. Members will also be aware of the media commentary and stories, some of which have been quoted today as well.

It is important to be clear: zero-hours contracts will suit some individuals, but not everyone. A range of problems has been raised today, such as people accepting a job under such a contract when it did not suit them because they felt that they did not have a choice.

[Andy Sawford]

Will the Minister give way?

[Jo Swinson]

I will give way, but I am keen to make progress, so that I can respond to the points raised in the debate; I hope that hon. Members will let me.

[Andy Sawford]

I thank the hon. Lady for being generous in giving way. Zero-hours contracts are welcomed by some only because they afford flexibility; it is the flexibility they want, not the zero-hours contract. We ought to make that distinction.

[Jo Swinson]

I take the hon. Gentleman’s point, but for some people that flexibility is very much tied to the zero-hours contract, because they can work a significant number of hours some weeks and perhaps not at all other weeks. I shall give examples of people who that arrangement might suit. I appreciate that there are different ways to achieve flexibility, but zero-hours contracts are one such way, and if used properly, they do not need to be a problem. The hon. Member for Sunderland Central mentioned flexibility being a one-way street, which is a good way to put it. If there is only a one-way street, that suggests that the contract is not equal on both sides. Genuine two-way flexibility can work very well for employees and employers.

I was touching on some of the problems and areas where zero-hours contracts do not work well. Perhaps an individual took on such a contract but, because they had other work commitments, such as a part-time job or other responsibilities, had to turn down work fairly regularly, which leads to them not being offered work because they were seen as inflexible. That situation is a two-way street not working as a two-way street, which is not right. The hon. Member for Wigan (Lisa Nandy) raised the case of a lady who had been told that if she did not work a particular set of hours, she would not get work in future. The hon. Lady mentioned the rather horrendous suggestion that the lady had to leave her children in a car park, and my heart goes out to someone in that situation. That scenario—an implied threat hanging over someone, if they do not take on particular work—is not right. On a zero-hours contract, the employee should be genuinely free to turn down work.

As has been mentioned, people rely on income to prove that they can take out a mortgage, for example, or to prove that they are able to make regular rental payments to rent a flat, so zero-hours contracts can be problematic, if people cannot prove that regular income. For those reasons, officials in the Department for Business, Innovation and Skills are looking into such contracts, to gather further information over the summer to better understand how they work and the issues involved. It is important that we establish what the problems are before we change policy.

Lots of figures have been mentioned today, particularly on the recent sharp increase in zero-hours contracts since 2004. Those figures are accurate, but it is important for context to point out that zero-hours contracts are not new. Hon. Members have talked about them today as if they are an evil invention of the current Government, but they have been around for many years. According to the graphs from the 2000 labour force survey, the overall number of people and the percentage of the work force using such contracts was slightly higher in 2000 than for the same quarter in 2012. I know Hansard does not allow graphs, but the graph shows that the use of zero-hours contracts was high in 2000, gradually reduced towards 2004 and has risen since then, with a couple of blips along the way where the graph is slightly spiky. That is the pattern, so, although the recent increase has brought some problems into sharp relief, these contracts are not a recent issue.

The Labour Government looked at zero-hours contracts. Their White Paper said:

“The Government wishes to retain the flexibility these contracts offer business and believes that the National Minimum Wage and Working Time Directive will provide important basic protections against some of the potential abuses.”

Some of those abuses have been outlined today, and I will shortly come to the points raised, but it is important to challenge the assumption that such contracts are always a bad thing. They can be helpful if an individual and an employer genuinely want to come to an agreement about a contract. For students, who might not be able to commit to a fixed work pattern due to their timetables, zero-hours contracts may be helpful in giving them good work experience. They can also be useful for semi-retired people who want to work occasionally, but not on a fixed weekly basis. Zero-hours contracts are useful in some situations, but it is important that they are not abused.

The Government want to ensure that people on jobseeker’s allowance are in no way forced to apply for zero-hours contracts. I want to stress that that is not happening. It is not the case. There is no sanctioning of benefit if people do not apply for such jobs, because decision officers at the Department for Work and Pensions cannot mandate claimants to apply for them. If jobseekers wish to take one, they are free to apply, but the decision-maker guidance sets out clearly that

“if a claimant refuses or fails to apply for or accept employment that is for less than 24 hours a week, the claimant will have good cause”,

if that is the reason for not applying.

I shall turn to some specific points that Members raised. We will obviously work alongside the DWP in the Government review, to address the eligibility for support issues. Universal credit should make it easier for people to get Government support based on the number of hours they work, without, for example, the cliff edge of 16 hours, but we need to work closely with other Departments on that. The hon. Members for North Tyneside (Mrs Glindon) and for Sunderland Central and for Edinburgh South (Ian Murray) raised the impact of zero-hours contracts on women. Resolution Foundation research shows that the use of such contracts is fairly evenly distributed between men and women: women have about 53% of the contracts and men have 47%, so the figures are perhaps not quite as skewed as suggested.

[Alison McGovern]

Will the Minister give way?

[Jo Swinson]

I am sorry, but I want to respond to the points raised.

The hon. Member for Sunderland Central mentioned living life on call. If an employee is on call at their place of work, they should be paid; the legislation is clear. Some of the cases raised today are breaches of legislation. I will come on to the pay and work rights helpline. The provisions in the working time regulations on breaks proportionate to the time spent working give some protection to workers. Although lunch breaks are not paid in zero-hours contracts, that does not mean that people should not get time to take a break at work, and the working time regulations set that out clearly.

Care workers not being paid for the time spent travelling between houses was raised. If care workers have wages deducted for that time or have to pay for photographs, uniforms and so on, they might be working for less than the minimum wage, particularly if they are not on a high wage. It obviously depends on the case. Employers of people who are very well paid may not be in breach of national minimum wage guidance and legislation, but where employers are in breach, I urge people to contact the pay and work rights helpline on 0800 917 2368 or search for “pay and work rights helpline” online. HMRC can enforce the legislation, and it takes breaches of national minimum wage guidance and legislation seriously. It is important that such cases are reported, because employers need to be taken to task if they are exploiting workers.

Four out of five people on zero-hours contracts are not looking for another job, which suggests that not everyone on such contracts is unhappy. There are clearly cases where that is the case, but the figures suggest that it is not true that people are trapped on the contracts. They can terminate the contract in the usual way. I agree with the hon. Member for Wigan that employers who abuse zero-hours contracts are likely to be poor employers, but “employers who abuse” is not the same as employers who use zero-hours contracts. There is a difference.

Various hon. Members mentioned a ban on zero-hours contracts. Although we need to look at the evidence, there are immediate challenges to that proposal. The hon. Member for Wigan mentioned small-hours contracts. If we ban zero-hours contracts, what would be the minimum—one hour, two hours, four hours, eight hours? If someone genuinely wanted to work for a small number of hours, should we stop them from being able to do so? When we look at the suggestion, it begins to unravel. It is useful to look at international examples, and the hon. Member for Corby (Andy Sawford) cited some.

Business, Innovation and Skills officials are speaking to a variety of stakeholders, including industry bodies that represent sectors where such contracts are used and trade unions, which, as was mentioned, have a lot of information, to examine the extent of the use and the abuse of zero-hours contracts. We will work with other Departments. There is no call for evidence at this stage, but we do not rule it out for the future. Research shows that doing our homework before issuing a call for evidence is useful. I welcome the interest the debate has sparked, and I am sure that we will return to the topic when we have the further information from the BIS fact-finding review.