15:59 - The House divided: - Ayes: 244 / Noes: 298 - Question accordingly negatived.
Mr Chuka Umunna (Streatham) (Lab)
I beg to move,
That this House notes the marked rise in the use of zero hours contracts with recent estimates that as many as a million employees are employed on them and that they are used in over a quarter of workplaces, contributing to growing insecurity for families across the UK; and therefore calls on the Government to initiate a full consultation and formal call for evidence on the use of zero hours contracts and on proposals to prevent abuses by employers of such contracts, for example, by stopping employees on zero hours contracts being required to work exclusively for one employer, stopping the use of contracts that require zero hour workers to be available on the off-chance they are needed but with no guarantee of work, banning the use of zero hours contracts where employees are in practice working regular hours and putting in place a code of practice on the use of zero hours contracts.
We are in the midst of the biggest living standards crisis in a generation, a crisis that is affecting every community in the country. We know that at its heart is the issue of pay. People are working harder than ever before but earning less: they have on average suffered a £1,500 pay cut since the Government came into office. We know that at the same time as wages have been falling, costs have been increasing, with prices rising faster than wages in 39 of the 40 months of this Government.
We also know that insecurity goes to the heart of this living standards crisis, too. Those in work now feel less secure and more pressurised at work than at any time in the past 20 years, according to the most recent UK skills and employment survey. The UK Commission for Employment and Skills, which co-funded the survey, says that what we have now is a climate of fear. Indeed, research shows that double the number of people feel insecure at work today compared with three years ago.
Mr John Redwood (Wokingham) (Con)
Does the hon. Gentleman not agree that the biggest collapse in living standards occurred from 2008 to 2010 under the Labour Government, when they bankrupted the country and drove people out of work? We are trying to recover from that position.
Mr Jim Cunningham (Coventry South) (Lab)
Does my hon. Friend agree that wages have been cut by about 5% in the three or four years since this Government came to power, and that it was the bankers who started it? More importantly, does he agree that zero-hours contracts are a throwback to the 1930s when miners and dockers had to turn up to work not knowing whether they would get a job. This is a modern veneer on an old, tried and tired system that was chucked out many years ago.
Mr Speaker
Order. Just before the shadow Secretary of State responds to that intervention, may I gently say that it is helpful if everybody is clear to whom the Member who has the floor is giving way? The hon. Member for Wrexham (Ian Lucas) is sorely pained as he thinks the intervention was supposed to be his. I know not, but the shadow Secretary should make it clear.
Ian Lucas
I am grateful to my hon. Friend for giving way. I just wanted to correct the right hon. Member for Wokingham (Mr Redwood). In my constituency, the average male wage in real terms was £530.80 in 2010. That fell to £453.50 in 2011, the first year of the Tory-Liberal Democrat Government.
Mr Umunna
I thank my hon. Friend for his intervention, and he is right to point that out. We are in the fourth year of this Government and blame is continually attributed to the Labour party. This Government ought to look at what they are doing to our country and our economy.
My hon. Friend the Member for Coventry South (Mr Cunningham) made a point about insecurity at work. That insecurity is not just born out of three wasted years of a flatlining economy following the Government’s 2010 comprehensive spending review which caused confidence to fall and demand to nosedive; it is also because the nature of work has changed in recent years. Half the rise in employment since 2010 has been in temporary work, driven primarily by people doing temporary jobs because they cannot find permanent work—more than 500,000 people fall into that category—while record numbers of people are in part-time work who would prefer to be working full time, meaning that there is huge underemployment.
But perhaps the most shocking symptom of the changing nature of work is the proliferation of the use of zero-hours contracts, under which a person is not guaranteed any work, is usually expected to be around whenever the employer wants them to be and is paid only for the work he or she gets, meaning, as my hon. Friend the Member for Coventry South said, that individuals engaged under these contracts never know when work will come and therefore whether they can sustain themselves and their families week to week.
Alison McGovern (Wirral South) (Lab)
Is it not tough to listen to the Prime Minister giving answers about rising employment, given the type of employment that that represents, as we have just heard? Should the Government not come clean about the falling claimant count and listen to what my hon. Friend is saying about the type of work people are having to go into?
Mr Umunna
This is a key point. Will any job do? We are clear that any old job will not do. We want to ensure that people have decent work that is paid a salary they can live off and which is secure too. That has to be our ambition for the country.
I do not deny that these contracts have been in use for many years—I will turn to their use in the House a bit later—but until recently they were very much the exception to the rule. The problem is that now they are becoming the norm in some sectors, with the Chartered Institute of Personnel and Development estimating that up to 1 million people are on such contracts.
Simon Hughes (Bermondsey and Old Southwark) (LD)
The hon. Gentleman will understand that across the House there is concern—or there should be—about this issue, and I am glad that we are debating it. He touched on the point I wanted to ask him about. Will he confirm, however, that the Labour Government never addressed this issue by making it illegal, so it remained possible throughout the whole period of their Administration? Neutrally, does he have any objective, accurate statistics on the number of people affected by zero-hours contracts during the last Government and the number of people affected since 2010 under this Administration?
Mr Umunna
I will come to both those points in the remainder of my speech.
Some Government Members trumpet this insecurity and talk about it as evidence of flexibility in our labour market, and it is true that some workers like these arrangements, but for most working families they mean insecurity for them and their families and leave them subject to the whim and demands of their employer to work at short notice, so the flexibility is not a two-way street; it is a one-way street in favour of the employer, and that is insecurity writ large and totally unacceptable.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
On Friday, a heavy goods vehicle driver for Royal Mail and his wife came to my surgery and told me that one week he works two nights, the next he might work three, and his wife explained what that meant for them as a family. What does that say about companies such as Royal Mail that use this practice continually?
Mr Umunna
Some argue that we should not point to bad practice in the business community because to do so is to fuel anti-business rhetoric. I think that it is important that we call out people who are systematically exploiting and abusing others under these contracts. For example, Sports Direct uses these contracts across the board, whereas others, such as Asda, acknowledge that they could use them if they wanted, but do not want to treat their people in that way, and if that means that they have to spend more time drawing up rotas and using overtime arrangements in contracts, so be it; they do not want to treat people in that way.
Helen Jones (Warrington North) (Lab)
Does my hon. Friend agree that firms that exploit people by using zero-hours contracts are undermining good employers who institute flexible working and annualised contracts, meaning that we are in danger of the bad driving out the good?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I congratulate my hon. Friend on the excellent points he is making in support of good companies that recognise, as I know from my time in business, that those with insecure jobs will never deliver for their companies the same quality of work or be as motivated as a well-paid, secure employee.
Mr Umunna
That was exactly the point I was just about to make. Of course, insecurity at work lowers a person’s standard of living and makes managing their family commitments impossible. As my hon. Friend says, insecurity is bad for business because insecure, poorly paid workers are less committed and less productive. It is also bad for the public finances, because if people are not getting the hours or earning a decent wage, that means less income tax and national insurance going to the Exchequer and more being paid out in credits, so everybody loses out.
Stephen Mosley (City of Chester) (Con)
A few weeks ago, I was talking to a constituent of mine on a zero-hours contract with the Co-operative group. Is the Co-operative group exploiting its workers?
Chris Ruane (Vale of Clwyd) (Lab)
My hon. Friend referred to the impact on families. Will he expand on that? What is the impact of zero-hours contracts on a mother’s or father’s ability to plan picking their children up from school in a week’s time, to plan family holidays or Christmas or to plan whether they can afford a mortgage?
Mr Umunna
I will come to that point shortly and tell the House the story of a zero-hours contract worker I met recently in exactly that position.
The Government and policy makers can acknowledge the problem, but the question is this: at a time when people feel more insecure than ever, will they just heap further insecurity on them, or will they act to do something about the situation? What have the Government done? First, we have their failed economic plan. Thanks to the policies they have pursued, unemployment and underemployment remain stubbornly high, with almost 2.5 million people still out of work, including, tragically, almost 1 million young people. I do not think that that is cause for celebration. It is welcome that growth has returned, but for all the talk of rebalancing, in the fourth year of the Government, that rebalancing looks as elusive as ever. We just have to look at the statistics that came out this morning. In today’s employment figures, of course it was good to see unemployment fall in parts of our country, but in many regions—London, the north-west, the east midlands and the south-west—it increased.
Mr Umunna
I will give way shortly.
Secondly, what are the Government doing to the protections for working people in the workplace? They are watering them down left, right and centre. They have increased from one to two years the length of service required before someone can enforce their right not to be treated unfairly at work and they have introduced employment tribunal fees of £1,200. The Minister for Skills and Enterprise described that as a moderate charge, but for low-income workers it is the equivalent of several weeks’ pay. The Government have also reduced the consultation period for collective redundancy. I could go on.
Thirdly, what have the Government done on zero-hours contracts? They have done little, if anything at all. Has a full consultation and call for evidence been issued? No. To date, there has been none, despite promises at the Liberal Democrat conference by the Secretary of State to do so. Has the Office for National Statistics been asked to clarify how many of these contracts might be in use, given that research suggests there are far more than in the ONS estimates?
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
indicated assent.
Mr Umunna
I don’t think so, because Ministers keep quoting statistics from the ONS to me, despite its having conceded that there is a real risk that they do not reflect reality.
Have the Government devoted the same energy and time to protecting people from the exploitative use of these contracts as they have to implementing the recommendations of the Prime Minister’s employment law adviser, Adrian Beecroft, for watering down people’s rights at work? No, they have not.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is absolutely right to talk about the insecurity that zero-hours contracts can create, which happens in three ways: by insisting on availability even when there is no work; by requiring workers to work exclusively for one business; and by using zero-hours contracts to erode and water down the basic rights in the workplace of employees who work regular hours. Is that not what we need to clamp down on?
Guy Opperman
The hon. Gentleman was talking about the unemployment figures. Does he accept that in the north-east they have fallen by 17,000 since February this year and are now lower than when we came into office in May 2010, and that youth unemployment is down since February by 7,000, from 12% to 9.2%? Is that not evidence that things are changing for the better?
Mr Umunna
I do not deny that it is welcome to see anybody who is out of work getting into work, but as my hon. Friend the Member for Wirral South (Alison McGovern) put it, the question is: what is the nature of that work?
In fairness to the Secretary of State, I think he wants to act. I know, for example, that he has hit out at people in his Government who want to slash away employment protections, describing them as “head bangers” who see liberalising the labour market as “an aphrodisiac”. Who on earth could he be referring to? I suspect that he is prevented from acting by the Minister of State, the right hon. Member for Sevenoaks (Michael Fallon)—who is sitting next to him—who has described his boss as “slipping his electronic tag” for daring to speak about the need for a more responsible capitalism, which I would argue includes companies treating their workers fairly. In any case, the Secretary of State has allowed what has happened to go on and has therefore been complicit in watering down people’s rights at work in the way I have described.
Where this Government have failed, we will act. To pick up on the point made earlier, there are few firm data on the extent of the use of zero-hours contracts, partly because many people do not realise that they are on them. However, over the summer months, the Office for National Statistics produced revised figures, putting the number at more than 250,000. That is likely to be a severe underestimate, given that others have estimated that more than 300,000 employees in the care sector alone are now on such contracts. Consequently, I, along with my hon. Friend the Member for Corby (Andy Sawford), who has campaigned hard on this issue, wrote to the chair of the UK Statistics Authority asking whether the ONS would clarify the data and publish new figures in the light of the evidence that has arisen. He said that the ONS was reviewing the way it collects the data and looking at whether it can include the data collected by organisations such as the CIPD. However, finding out how many of these contracts are in use is one thing; looking at how they are used is another.
Bob Stewart (Beckenham) (Con)
I do not like zero-hours contracts because of the insecurity they create for people, and we should have planning, but they are a fact of life. Somehow or other, this House and all of us have to find a way to reduce them. There are still six Labour-controlled councils in London using zero-hours contracts, and we have to try to stop it. It is not easy: I like to see people employed, but I also like people to have some security in their lives, and zero-hours contracts sometimes do not give that.
Steve Rotheram (Liverpool, Walton) (Lab)
My constituency has the 10th highest unemployment in the country. In the main, the people who come to my surgeries would prefer to be on full-time contracts rather than zero-hours contracts, which they are all too often forced into. Does my hon. Friend agree that we must try to stop unscrupulous employers taking advantage of those who are less able to support themselves because of their personal circumstances?
Mr Umunna
I completely agree with my hon. Friend, who, as it happens, intervenes just as I was about to talk about Merseyside. I was talking about collecting data on the number of zero-hours contracts being one thing and the evidence about their use being another. He will know that our hon. Friends the Members for Liverpool, Wavertree (Luciana Berger) and for Wirral South and our right hon. Friend the Member for Knowsley (Mr Howarth) produced an excellent report in June detailing the use of zero-hours contracts in the Liverpool area. In that report they told the story of a care worker, whom I have subsequently met and spoken to myself, as I mentioned earlier. She told me that she had to be available to visit clients at their homes at least six days a week, including evenings. Her rota could change in a flash. If visits were cancelled at late notice, she would often not be paid. If visits were added at the last minute, she would have to manage her child care commitments as she best could—a point raised by my hon. Friend the Member for Vale of Clwyd (Chris Ruane). That is the reality of life for people under these contracts.
In July, my hon. Friend the Member for Sunderland Central (Julie Elliott) held a Westminster Hall debate on this issue. Seventeen Opposition Members contributed to that debate, giving further testimony about people’s experiences on such contracts. In fact, my hon. Friend the Member for North Tyneside (Mrs Glindon)—I do not know whether she is here today—talked about how she had been employed on a zero-hours contract for two years in the retail sector. I note that not one Government Back Bencher spoke in that debate—save for the hon. Member for Mid Bedfordshire (Nadine Dorries), who was chairing it—but it is good to see a few more Government Members here today.
Lisa Nandy (Wigan) (Lab)
I was one of the Members who spoke in that debate. I raised the case of my constituent who had to leave her children locked in a car while she undertook home visits that were given to her at short notice under threat of not getting any work in future. In response to that debate, the Under-Secretary of State said that that was clearly “not right”, but since then we have seen absolutely nothing from the Government on how they will protect constituents such as mine and others, to whom my hon. Friend has referred. Does he agree that that is an absolute disgrace?
Mr Umunna
I do agree, and I read my hon. Friend’s speech from that debate. She talked about what the Government are doing. The Secretary of State said he was carrying out an informal review, but given that that consisted of just three officials spending part of their time “speaking informally” with stakeholders—as he told me in answer to a parliamentary question that I tabled on this issue—that is clearly insufficient. Therefore, in August, I and the shadow employment relations Minister, my hon. Friend the Member for Edinburgh South (Ian Murray), formally convened a summit, involving more than 20 different organisations representing employers, employees, legal experts and people employed on zero-hours contracts, to hear evidence and consider what action should be taken to clamp down on their exploitative use.
Two things arose from the evidence we heard and the consultations we have been carrying out. The consensus across all stakeholders and groups was that the exploitative use of such contracts is a problem—everybody agreed with that—particularly in the care sector. Those looking after some of the country’s most vulnerable people are themselves vulnerable under these contracts. Given that it is important for those whom they are looking after to have stable and continuous care from people with whom they are familiar, I cannot see how that state of affairs can have anything other than a detrimental effect on the quality of care received.
That state of affairs creates issues for many local authorities because of the way in which social care services are commissioned. Many of them will tell us that it is helping to drive the use of zero-hours contracts in the care sector. They say—some would say that this is not an excuse, but an explanation—that they are left with no option but to commission in that way because of the huge funding cuts they have been subjected to under this Government. I understand the challenges that local authorities face—I think we all do—but I urge them to follow the example of Southwark council, which is working with providers to eliminate the use of zero-hours contracts, particularly in the care sector.
Simon Hughes
The hon. Gentleman is being generous with his time, and I am grateful to him for giving way on that point, which is directly relevant. He said he would come back to whether there were statistics on the incidence of this form of employment before 2010. To reinforce the point he is making, to my knowledge, the care sector has used zero-hours contracts for many years, under the Labour Government and this Government, and under local authorities of all political colours contracting services. There are real abuses, and if we can reach consensus, without partisanship, that one of the sectors in which we need to address them most urgently is the care sector, that will be a great service to some of the lowest-paid people doing the most difficult face-to-face jobs.
Mr Umunna
I think the right hon. Gentleman will agree that what Southwark is doing is a good thing. I note that he is agreeing with me.
The Office for National Statistics suggests that the numbers under the previous Government were around 140,000 across all sectors, although I acknowledge that the way it has collected those data has been somewhat faulty, in part because it relies heavily on people understanding what their contractual situation is. It is fair to say, however, that there has been a significant proliferation of zero-hours contracts over the past few years. The right hon. Gentleman talked about the care sector. The use of these contracts in that sector might have been a niche arrangement before, but it is certainly now becoming the rule. That is what we need to act on.
I do not believe that there is consensus on advocating an outright ban on these arrangements. There are people who want them, and there are employers who use them responsibly, but, as I said to the hon. Member for Beckenham (Bob Stewart), the key is to outlaw them where they are exploiting people. In doing that, we need to acknowledge the people who are doing the right thing as well as draw attention to those who are doing the wrong thing.
We should also acknowledge the need for this House to get its own house in order in respect of the use of zero-hours contracts. We know that there are people who look after us here and help us to do our jobs here who are engaged on those contracts. That is unacceptable. We should be setting an example. I know that this is being looked into at the moment, but we have not yet had a clear commitment from the House authorities not to use such contracts. I think that everyone would agree that we want to see their use in the House stamped out.
Mr Redwood
I want my constituents to have well paid, decent jobs, and I have a lot of sympathy with those who do not wish to see exploitative contracts. Will the shadow Secretary of State say a little more about how he would define an exploitative contract, and whether there is more we could do by way of leadership? He is an influential and talented man. Surely there is more that he could do with Labour councils and trade unions, just as those on the Government Benches can do more with the Government.
Mr Umunna
One of my colleagues has just said to me that being praised by the right hon. Gentleman will spell the end of my career. People will point to examples of Labour-controlled local authorities, but we do not care who is using these contracts. We simply do not want them to be used exploitatively, and I will explain how we can stop that happening.
Chris Ruane
My hon. Friend has mentioned the use of zero-hours contracts in the Palace of Westminster. I have contacted the Speaker about this matter, and I commend him for his positive response. The problem also exists across the way in Lambeth palace, and I have tabled parliamentary questions to the Church Commissioners about it. The number of zero-hours contracts in Lambeth palace has gone up from five in 2008 to 34 today. Their proliferation is rampant around the country. The problem is out there, and without proper monitoring it will continue to progress. I congratulate my hon. Friend the shadow Secretary of State on securing this debate, which is shining a torch into those dark places and establishing that this is a big political issue that affects millions of poor people out there.
Mr Umunna
I completely agree with my hon. Friend.
In answer to the question of how we should deal with the problem, our motion proposes four measures that we hope the Government can support or, at least, commit to properly consult on. First, we would ban employers from insisting that zero-hours workers be available to work—be on call, effectively—even when there was no guarantee of work to give them. Secondly, we would stop zero-hours contracts that required workers to work exclusively for that employer. The Secretary of State has talked about that aspect of the matter before. Thirdly, we would prevent the misuse of such contracts when employees were, in practice, regularly working a number of hours a week. We would ensure that they became entitled to a contract that reflected the reality of their regular hours. Finally, alongside those measures, we would introduce a code of practice for the use of the contracts that would ensure, for example, that an employee recruited on a zero-hours contract would know that those were their terms of employment. We have announced the appointment of the former head of human resources at Morrisons, Norman Pickavance, to lead an independent consultation on how we could best implement those measures.
In conclusion, I want to say something about where this will fit with the future of our economy. We need to reform our economy so that it is fit for purpose, and so that it delivers better and fairer outcomes for people. We consistently hear from some people that the best way to do that is further to liberalise our labour market, which is already the third most liberal labour market in the OECD. That is why they recoil from taking action on exploitative zero-hours contracts, but that approach amounts to a global race to the bottom in which we seek to compete with China, India and the other emerging economies by screwing down the pay and terms and conditions of working people in the name of growth.
That is not the way in which we should be competing, because it will not deliver better outcomes for the people we represent. We will deliver better outcomes for them, ultimately, by growing those industries that can provide more of the better paid, secure jobs that they want. Of course that means promoting innovation and ensuring that our people have the skills to do those jobs. That is why I am always banging on about the need for an industrial strategy. We must act to protect those who continue to work in low-income, insecure jobs in the less internationally competitive sectors. Heaping insecurity on them is not the right thing to do.
Mr Umunna
No, I will wrap up now as I want to give others time to speak in the debate.
In short, we on the Labour Benches do not think that any old job will do. We aspire to full employment, and to secure and decent work that pays a wage that people can live on. That is our ambition for this country, which is why I hope that Members on both sides of the House will support our motion today.
The Secretary of State for Business, Innovation and Skills (Vince Cable)
We very much welcome this opportunity to debate this issue. It has had a lot of media coverage, and we have already had several debates on it in the House. I am happy to engage with it. I realise that the purpose of Opposition day debates is to generate opposition, but the truth is that there is quite a lot of common ground on this issue. None of us wants to see employers abusing their employees.
The thrust of the motion seems to be to ask me to do what I am already doing. I made it clear a month ago that we were going to have a consultation on this matter, and I can tell the hon. Member for Streatham (Mr Umunna) that we are aiming to clear the process through government by mid-November in order to launch the consultation formally. There is no disagreement about that.
There are elements in the motion that I could pick holes in and disagree with. There is a call for evidence, but also, slightly oddly, a series of concrete action points that have been put forward regardless of any evidence that might emerge. That seems to be making slightly odd use of evidence-based decision making. That is a quibble, but I do not have an enormous problem with the basic thrust of the motion. I guess the hon. Gentleman has to criticise the Government, however, as this is an Opposition day debate, and I will take head-on the three specific points that he has made.
First, he talked about our failure to act, but the problem has been around for many years, as my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) has pointed out. The trade unions repeatedly told the last Labour Government that there was a problem in this area. The 1998 White Paper drew attention to it and suggested possible courses of action, but no action was ever taken. I know that several of my Labour predecessors looked into the matter, because concern had been expressed, and while acknowledging that there was abuse in some areas, they broadly took the view that the benefits outweighed the costs.
The second criticism was that I did not mobilise a small army of civil servants to look at the problem earlier this summer, but what would be the point of mobilising the civil service to reinvent the wheel? A lot of sensible research has already been done. We have talked to 10 trade unions, all of which have done quite a lot of in-house work. We have also talked to several think-tanks, including the Resolution Foundation and the Work Foundation, both of which have done good work in this area. We did not need to reinvent anything; the evidence and the anecdotes are there and we are drawing on them. That is the direction in which we are proceeding.
Finally, the hon. Gentleman criticised the statistics. The problem is that we have one basic official set of statistics from the Office for National Statistics, suggesting that there are about 200,000 zero-hours contracts. That statistic is drawn from the labour force survey, and the hon. Gentleman was right to say that this is quite a narrow definition. The Chartered Institute of Personnel and Development came out with a figure of 1 million, using a different measure—in other words, what employers judge the number of zero-hours contracts to be—while the union Unite has come up with a figure of 5 million. Different people are obviously measuring this in different ways. What I have done is write to the head of the Office for National Statistics, asking him to take this problem on board. We have a very serious problem of definition and numbers, so I have asked the head to pull together the relevant people so that, from now on, we can have a proper database on the basis of which to make rational decisions.
Ian Lucas
Is not the difficulty the fact that the Government have acted by removing the rights of employees to enforce their employment rights by doubling the qualification for unfair dismissal and by introducing what appear to my constituents to be huge fees to initiate industrial tribunal or employment tribunal proceedings? The right hon. Gentleman is undermining the taking of such action by legislating to take away employees’ rights. How liberal is that?
Vince Cable
There are still significant opportunities for people who are subject to unfair dismissal. We reformed the system because we considered that it provided a very significant barrier to small and medium-sized growth companies and thus to employment opportunities with them. We think we have got the balance right.
Alison McGovern
Let me take the right hon. Gentleman back to the statistics for one minute, if the House will forgive me, because they really matter. The statistics provide the only way of finding out what is going on in our economy from the Government’s point of view. The care Minister told me that 300,000 people working in the care sector were on zero-hours contracts, so that is what the Government say; yet the Office for National Statistics—and therefore the Government again—have reported that there are 250,000 such workers in that sector. That discrepancy cannot stand. In a recent parliamentary answer in October, one of the Secretary of State’s Ministers said that his review did not seek to collect any statistics, but the Department is now reporting an inconsistency in them. Does not the right hon. Gentleman feel that his Department can do better than that?
Vince Cable
That is precisely why I am in touch with the head of the ONS, so that we can get some high-quality and consistent data. That is the whole point of the exercise.
Mr Tom Watson (West Bromwich East) (Lab)
Does the Secretary of State agree that the problem is exacerbated when zero-hours contracts are taken in combination with the decreasing value of the minimum wage? That has created conditions under which, either consciously or inadvertently, rather large companies have developed business models that rely on top-up benefits to subsidise a work force whose take-home pay is not large enough to cover their monthly bills. That means we end up with a multinational company such as McDonald’s, with up to 83,000 staff on zero-hours contracts, being subsidised by the taxpayer to the tune of about £200 million a year. We need to find a way of dealing with these contracts in order to deal with the taxpayer interest in the situation.
Vince Cable
That depends on what the hon. Gentleman means. I think he is merely saying what is obvious, although it may need restating—that we are dealing in the wake of the financial crisis with very weak labour markets, and not just in the UK. This has had impacts on wages and on the nature of contracts. The question for the Government and legislators is whether the problems around zero-hours contracts are the symptom or the cause. The hon. Gentleman is right that the problem interacts quite powerfully with the minimum wage issue. I have made it clear that I want the Low Pay Commission to look at the minimum wage in a more positive way, but it is, of course, an independent commission and it is not my job to tell or prescribe to it how the minimum wage could evolve. I want to respect the institution that the hon. Gentleman and his Government set up.
Sheila Gilmore (Edinburgh East) (Lab)
Let me take the right hon. Gentleman back to his earlier point when he was, as ever, berating Labour for not taking action. Has he not chosen his own priorities? If he thinks that the previous Government were dilatory on the issue, why has he not taken it up sooner? Other legislation, including to take away people’s employment rights, has been passed, so he has had time to do this if he wanted to.
Vince Cable
To help us move on from this point, let me say that I am the first Business Secretary out of the last seven or eight—I cannot remember exactly when the issue first came to the surface—who is actually taking action on the issue. Action will emerge from the consultation. We recognise that there is a problem and we recognise that there are some abusive situations, but we also recognise some positive things about zero-hours contracts, which I shall come to in a moment. We have determined to take action, and I am the first Secretary of State to have done so for a long time, after a whole series of Labour predecessors who, for whatever reason, decided not to.
Simon Hughes
I applaud my right hon. Friend for that. It is evident to people outside that there has been no action for many years and that now there will be. Before he completes his speech, will my right hon. Friend not only set out the timetable beyond the consultation plan, as far as he can envisage it, but say whether we can find a way of linking the discussion and review of the minimum wage with the zero-hours contracts issue? It is obvious from how the labour market works that these issues are interconnected, so it would be worth trying to bring those considerations together.
Vince Cable
Yes, and I hope that happens. I have made it clear to the Low Pay Commission that we want to look at the minimum wage in a somewhat more holistic way than has been the case in the past. Of course I cannot guarantee what the commission will conclude; that is not my job.
Before considering the advantages and disadvantages of zero-hours contracts, let me make a basic point that will probably explain why my Labour predecessors did not deal with the problem: it is intrinsically tricky. There is an issue about what zero-hours contracts actually are; they are not clearly defined. As the right hon. Member for Wokingham (Mr Redwood) said a few moments ago, we do not have a definition of exploitation, and we do not even have a definition of what a zero-hours contract is. There are a whole lot of contractual arrangements, which have two basic conditions attached to them. One is that there is no guarantee of work and no requirement under British employment law for an employer to provide a minimum number of hours. Equally, however, an individual is not required to accept an offer of work. Those are the two defining characteristics of a zero-hours contract.
A wide spectrum of practices has come out of that. At one end of the scale, we have casualisation of different forms—we have heard about the history of the docks and other similar traditions, many of which were highly undesirable. Equally, at the other end of the scale, however, there are large numbers of traditional systems of freelance-type employment—in the creative industries and education, for example. When I started thinking about this subject, I realised that my late wife spent much of her working career on a zero-hours contract working for a further education college. She taught music to sixth formers, depending on how many turned up for their classes. It was effectively a zero-hours contract. Many people in FE and adult education worked on the same basis, and this is established practice in many other industries. In these cases, it has not been viewed as a problem before.
I make that point to stress that the definition of a zero-hours contract is not precise. Hundreds of thousands of people—and if we believe the shadow Secretary of State, millions—are on these contracts, which vary enormously. Some people carry the rights attached to being a worker—[Interruption.] Well, Unite think it is 5 million people. Some people in these contracts have basic employee statutory rights attached to them as well. They are enormously varied.
Guy Opperman
To add to the list of contexts and sectors in which this type of contract is the norm and is welcome, let me cite rural Northumberland—represented by my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) as well as myself. Zero-hours contracts are in place there, and because of the nature of rural employment, neither of us has found anyone complaining about them.
Vince Cable
There are many industries of that kind, and I shall shortly enumerate them. I do not want to eulogise this system of employment because there clearly are problems in many sectors, but it has worked well in other sectors. That is why when it comes to rushing to prohibitions, we need to be careful about the unintended consequences.
Nick de Bois
The Secretary of State gives me the opportunity of raising the point that I was hoping to raise with the shadow Secretary of State. I would never have knowingly employed someone on a zero-hours contract, because I do not like such contracts and do not think them appropriate, but it is clear that many managerial, technical and education people are working on them. However, the suggestion in the Opposition motion of
“banning the use of zero hours contracts where employees are in practice working regular hours”
will catch people who are quite content to work on that basis, when, I imagine, the target is those who are abusing the system. That is why I would find it difficult to support the motion. I would welcome the Secretary of State’s comments on that.
Vince Cable
The hon. Gentleman is absolutely right, and that is why a rush to ban certain forms of general practice could have serious negative unintended consequences. That is not to say that we should not do something, but a commitment to ban without having obtained the evidence would be highly premature.
Mr Umunna
First, of course people will not want to complain about being on such contracts, because they worry whether they will get the hours of work if they do so. Secondly, the evidence suggests that such contracts were not used during our time in government to the same extent as they are being used now. That is why action was not taken. The right hon. Gentleman said he would do something about the issue back in June. Why was a consultation not started then? Why has he waited until October?
Vince Cable
After years of waiting and a long discussion about the technicalities, the idea that we are somehow failing in our duty because we did not rush to act within weeks or months is utterly absurd. We are taking action. A proper consultation will be launched, we hope, in mid-November. On the back of that, all the organisations that have not yet had an opportunity to make representations to me can do so, and we can proceed to the appropriate action.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
I welcome the tone and content of the Secretary of State’s comments. As he may be aware, the Scottish Affairs Committee has also started an inquiry into zero-hours contracts, and I hope we will have co-operation from the Government. Will he clarify the timetable, on which he was asked for information earlier, for the consultation? When will it start and finish? When does he envisage making decisions? When does he envisage bringing forward legislation?
Vince Cable
I cannot give the hon. Gentleman a concrete date. The consultation will be launched in the middle of November, and such consultations normally take several months. The level of feedback will determine how quickly the Government can respond, and that in turn will dictate how quickly we can introduce legislation, if that is what is required. I am happy to co-operate with him and his Committee, which I am sure has specific Scottish insights.
I want to enumerate some of the positive and negative aspects of zero-hours contracts that our review has revealed so far. There are some groups of people for whom such contracts provide a useful and appropriate kind of employment, regardless of sector. For many people, for example, who are at or beyond retirement age and want to keep in touch with the labour force but do not want permanent employment or even an agreed part-time employment contract, such contracts are quite an attractive proposition. There are other people, in industries that are subject to quite a lot of volatility, who want to remain connected with the labour force but do not want to be in a position where they have taken on permanent employment and are then made redundant. The car industry provides a good example. One reason the car industry is successful is that our labour market has a mix of people, some of whom are on zero-hours contracts. When I went to the United States to negotiate with people in General Motors, who were deciding whether to come to Britain or Germany, one factor that weighed heavily in favour of the UK was our flexible approach to employment, including zero-hours contracts, along with the fact that the unions, mostly Unite, had been constructive in putting those arrangements in place.
Vince Cable
I will finish my list of points.
Another group is students, some of whom are looking for work experience, and most of whom want to be in a flexible arrangement that reflects the fact that their timetable varies. Another group—a very important one—is people with family and caring responsibilities. For someone in that position, the most important attraction of a job is to be able to say no when work is offered, without facing disciplinary procedures, and to be on a contract that explicitly acknowledges that work can be declined.
Sheila Gilmore
Does the Secretary of State not realise that there is a huge difference between someone who wants to work part-time and to know what part-time hours they have, and a situation where they do not know and have no control over the hours they work? The notion that it is easy for people on such contracts to say, “I won’t take those hours because they do not suit my child care arrangements this week” is not the reality that many people are facing.
Vince Cable
I am going on to explain some of the problems and, sometimes, abuses that we encounter, some of which are of the kind that the hon. Lady describes. I am trying to set out both sides of the argument. The arguments are quite complex, and the more we dig into the evidence, the more it becomes clear that there is not a simple black-and-white approach to these problems. Let me take her challenge. Clearly, there are abusive situations, and I will go through some of the most obvious ones.
The first was mentioned by the shadow Secretary of State: exclusivity arrangements, where people are bound into a contract with one employer and are not offered any hours, but cannot take employment from someone else. At first sight, that is a very unsatisfactory arrangement. We discovered that that kind of arrangement operated, for example, with the staff at Buckingham palace. When we pursued it, we discovered that one reason is security vetting, as the arrangement prevents people from being able to pop in and out of different firms. I do not know whether that is the justification in the case of Buckingham palace; there is some complexity to the argument. In general terms, however, I would accept that exclusivity is a very, very undesirable practice.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
It is exactly that practice that happens in railway maintenance, only because certification is needed. Surely in such circumstances it should not be legal for people to be forced into a situation in which they do not get any work for weeks on end.
Vince Cable
I am sure the hon. Gentleman has given a totally genuine example. I am not a lawyer, but there is at present a common law defence against exclusivity. I can see the practical problems of bringing a legal case against big companies, but none the less some legal protection exists. I accept that in many cases exclusivity may be highly undesirable, and in our consultation we will try to establish what concrete action, if any, we can take about it.
Mr Redwood
When the Secretary of State holds his consultation shortly, will he consult on the extent to which there is a problem and try to get a definition of it, or will he consult on possible remedies to the abuses he has identified?
Vince Cable
Such abuses are highly relevant, but people may come forward and explain, as I have done, that for certain contexts, groups of workers and sectors, such a contractual arrangement is necessary and positive and it would be unhelpful to take action. We have an open mind. We are not trying to close down the debate.
Mr Watson
On remedies, the Secretary of State raises an important point. He referred to the success of the Low Pay Commission earlier. Could one outcome be a new and enduring institution—a triumvirate model that involves employers, trade unions and Government—to resolve the complex issues that will continue to face industry in years to come, after the consultation is over?
Vince Cable
It could be, but I know from my interaction with them that setting the minimum wage is a complicated enough issue in itself, but I will certainly bear the suggestion in mind.
Vince Cable
I will enumerate a few more points and then take further interventions.
Exclusivity is a serious issue. The second point, which I think one or two Labour Members have been trying to make, is that there are cases where the simple lack of predictability is damaging for families trying to manage their personal finances responsibly, especially those who are employed on a regular basis for a long period of time and are then, in the jargon, zeroed down. A problem would flow from that. Then there are people who are on zero-hours contracts for many years and for whom it becomes a way of life. There may be good sectoral reasons for it, but in some cases it is a way of keeping them out of regular employment with the various obligations that are attached to it. In our gathering of evidence, we have encountered two specific instances. There are people who sign up to a zero-hours contract in good faith, because it gives them and the employer flexibility, but they then take advantage of their right to reject work and are discarded because they are allegedly inflexible, defeating the whole purpose of the contract in the first place. We found that other people were indeed pressurised into taking zero-hours contracts against their better judgment and against their preference. All those things happen, and they must be weighed against the undoubted advantages that some individuals and some industries gain from having the option to make such arrangements.
Jim Shannon
At a time of economic squeeze, when those who tender or apply for contracts find that their prices must be lower, they are forced to apply the minimum wage and to restrict working hours, and that has an impact on those who are on zero-hours contracts. Does the Secretary of State feel that the Government have a duty to ensure that the tender process gives workers rights, whether it takes place at Government level, at council level or at regional level?
Vince Cable
The hon. Gentleman is right to view the matter in that broader context. Several Members, including the hon. Member for Streatham, have already given the example of domiciliary visits in the care sector. I have encountered cases in my constituency involving people whose working conditions are very poor, who are on zero-hours contracts, whose pay is very low, and for whom there is no chance of progression. When we dig into such cases, as I did on one occasion, we may discover that the companies concerned are not profit-making companies but charities, and that the real cause of the problem is the very poor price at which they took the contract. The origin of the problem therefore lies in local government. The zero-hours contracts and, indeed, the minimum wage issues are symptoms rather than causes.
Let me list some of the matters that we will be considering in the consultation, and explain how we will approach them. It is important for us not to close down options. First, there is the issue of exclusivity. We could do nothing, and rely on existing law; we could ban it; or we could provide effective information and guidance requiring employers to justify it. A number of legal interventions are possible.
Secondly, we must consider the cases of people who are employed on zero-hours contracts for very long periods when they do not choose to be. Should we introduce a system requiring employers to offer permanent employment at some stage?
Thirdly—and probably most important—there is the issue of transparency. We can argue in favour of fairness, and we can also argue that, for the economic purposes of a flexible labour market, if rational people know what they are doing, that is a considerable improvement. The problem that we have discovered, and to which many Members have already referred, is that when people accept a job offer they are often not clear about the obligations and limitations that are involved. Should we introduce a code of conduct requiring proper transparency and information? Should it be voluntary, should it be a Leveson-style code with statutory underpinning, or should it be controlled by a stronger sanction-based body? We have a range of options, and we will view them with an open mind and act accordingly.
Mr Donohoe
Given that many employees have recently been denied access to tribunals, what the Secretary of State has said is surely illogical.
Vince Cable
I think that the hon. Gentleman is exaggerating the problem. It is true that we have reformed the tribunal system, and access is less easy than it was. As I have explained, we are trying to create a framework within which small and medium-sized enterprises can expand and take on workers.
Sammy Wilson (East Antrim) (DUP)
Much has been made of the potentially exploitative nature of the contracts, but if an employer is up against it, is it not more likely that a zero-hours contract will become an exploitative contract? Should not the Secretary of State consider ways of squeezing and squeezing to make zero-hours contracts not the norm, but very difficult for any employer to enter into such contracts with employees?
Vince Cable
The hon. Gentleman has made, in his own way, a point that I have made several times, namely that a zero-hours contract may be a symptom rather than the cause of the problem. Many employers are indeed up against it, on the margin of survival—those in Northern Ireland probably more than most—and use such contracts in order to survive. That presents challenges of its own.
John McDonnell (Hayes and Harlington) (Lab)
I think that the overall issue of enforceability is critical. Without trade union rights, these commissions and contracts become unenforceable.
I should also like the consultation to consider a public interest issue. The example of track maintenance was given earlier, and it is a matter that I have raised on previous occasions. Network Rail, for instance, has contracted out a large amount of work to subcontractors, who have then subcontracted it themselves. Some track maintenance workers are now employed by as many as eight or a dozen employers, and are all on zero-hours contracts. That has undermined the safety regime that we introduced following the disasters at Southall, Paddington and elsewhere.
Vince Cable
I was not aware of that particular detail. I hope that the rail regulators and the Health and Safety Executive are taking it fully into account.
An issue that has not been mentioned today, but which arose several times during our discussions, is the relationship with jobseeker’s allowance. Many people feel that if they decline a zero-hours contract there will be a sanction, and they will lose their benefits. I can make it absolutely clear that that is not the case, but during the consultation we will examine the processes that are being followed just to reassure people that there is no hidden sanction.
We recognise that zero-hours contracts present a real problem. We also recognise that it is a very difficult problem, which may be why our predecessors did not engage with it. There are issues of definition, and there are enormous gaps in the database. However, I can assure the House that if, as a result of the consultation, we identify serious issues for which there are practical remedies, we will take action.
Mr Speaker
There is no formal time limit, but approximately 10 Members are seeking to catch my eye, and we have just under two hours left for Back-Bench speeches. Members can do the arithmetic for themselves.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
I will keep my comments brief, Mr. Speaker.
It is clear that the increasing number of zero-hours contracts is one of the last taboos of employment policy. The firms involved have no need to use those contracts: they know exactly how many employees they need each week. Moreover, zero-hours contracts are immoral, they exploit hard-working people, and they enable the powerful to dominate the powerless. In Halifax, unemployment levels are very high, job security is low, and youth unemployment has almost doubled in the last three years. That appears to me to be a licence for some employers to introduce zero-hours contracts.
What most people want—like the rest of us—is stability, security and reassurance in employment. What zero-hours contracts provide is exactly the opposite. Some say, “Is such a contract not better than no job at all?”, but that misses the point. Many advances in employment practices would never have been made in the last 100 years if the “status quo” option had always been taken. Only recently, the very same argument was used to warn of the dangers of the minimum wage.
This is obviously not a stable time to be in employment, especially in northern towns. They have borne the brunt of the Government’s cuts, which have affected both public and private sector jobs. There are many well-run companies and decent employers in both those sectors in the town that I represent. They include J&C Joel and Harveys. They care about their employees, they know what it is like to manage a budget and they want to keep the town on an even keel. So when I talk about zero-hours contracts, I should add that not all companies in my constituency are practising this policy, but sadly it is an increasing trend, and, quite simply, they are an unethical and unwanted means of employing people. They are an employers’ charter to make shortcuts, reduce wage bills and avoid employment rights obligations.
I know there are various contract laws that prevent an outright ban, but as the shadow Secretary of State said, they should be outlawed. Things can and should be done to water down the opportunity for them to be used. We need to look at guaranteeing hours and extending statutory employee rights to all workers, whatever contracts they are on. All workers should have trade union rights and family-friendly rights. Equality in employment should not be decided by a worker’s contract.
It is in times of economic hardship that employers exploit and those without a voice do not get listened to. This is exactly the time when we should be doing more to protect those hard-working people we constantly hear about in sound-bites, but who are actually ignored because of the lack of sound policies.
Mr Brooks Newmark (Braintree) (Con)
The hon. Lady is making some excellent points, but will she at least acknowledge that there are groups in society who do appreciate the flexibility that zero-hours contracts provide, such as young students and some single mums?
Mrs Riordan
We have had these debates about students before, and I have a stepson who is a student and has a zero-hours contract, and that is all very fine, but there is no reason why the employer’s manager cannot get together with my stepson and arrange the hours for the following week. It happens all the time.
This Government are actually on the wrong side for hard-working people. I know of a company in Halifax. A very hard-working young man came to my last surgery. He had been made redundant and had his benefits cut. He was living off family. He wanted to work and was given a zero-hours contract and told to turn up every morning at 6 am. The company has a board and if a person’s name is not on it, they are sent home and told to come back the day after—after they have spent money on travel. This young man so much wanted a job that he said, “Please don’t send me home. I’ve travelled all this way and spent money getting here. Can I sweep up today? I’ll do anything.” He was told, “No, your name’s not on that board. Come again tomorrow.” It is not rocket science to find a way to let people know the day before—or the week before, in my opinion—whether there is work for them. That is a long-established company. It has not been around for just two minutes and is on a budget. It knows exactly how many employees it wants but it keeps people dangling. These are Dickensian practices that would be out of place in Victorian England, let alone 2013.
There are thousands and thousands of people, many in my Halifax constituency, who are exploited in this way, with lower wages, fewer holidays, no sick pay and fewer rights, and who are unaware of their employment status. The employers are in a dominant position and they know it. We have come a long way in improving working conditions in this country over many years, but clearly the journey still has a long way to go.
When people look back in years to come, I think they will look at the exploitative policies of zero-hours contracts and find it hard to believe that in 2013 such practices were in place as a means of suppressing workers who need and deserve better. For my Halifax constituents, and those across the country, we need to do more to end the shabby practice of zero-hours contracts that have no place in a society that deems itself to be a progressive one.
Guy Opperman (Hexham) (Con)
It is an honour and a privilege to speak in this debate and it is right that we debate low pay and the nature of contracts. I should make a declaration: as a former barrister, I was unquestionably on a zero-hours contract in that I was an employee whose employer was not obliged to give me work, and I had to accept that. It is certainly the case that in rural Northumberland there is an acceptance that these types of contracts help to plug a gap. I am not going to attack local authorities, whether Liberal, Conservative or Labour, which have utilised them in the past and continue to do so. I suggest it is a question not of this House being for or against zero-hours contracts, but of this House being against inequitable and exploitative zero-hours contracts.
Alison McGovern
I am intrigued by what the hon. Gentleman says about his previous experience. In a report that I and two of my colleagues produced, one person told us:
“It has been very difficult as I want to move on with my life but can’t as I don’t know when and if I will be next out of work so this stops me from committing into anything financial like moving out or furthering my education”.
I hope he can identify with that experience, perhaps not in his own life, but in reality, in our economy now. He says we should not be for or against, but I really hope he is against that sort of experience, where people cannot commit to bettering themselves because of these sorts of contracts.
Guy Opperman
As a barrister, I spent two and a half years without a contract. With respect, I therefore suggest I do have some experience of that, with no contract whatsoever. I accept that it is right that this House is addressing these issues, and it is right that we are collecting and assessing evidence. I welcome the fact that the Secretary of State has put in place the consultation and that over this winter we will be obtaining evidence on this issue.
Charlie Elphicke (Dover) (Con)
One thing that strikes me is that there is a big difference between employment and self-employment. Is it not important that we are clear which of those zero-hours contracts relate to self-employment and which to contracted employment, and are therefore not being used appropriately?
Guy Opperman
My hon. Friend makes a fair point. The shadow Secretary of State said that the jobs figures are not satisfactory, but he also accepted that we in the north-east are delighted that the jobs figures are finally improving significantly. Youth unemployment has fallen by 7,000 since February and is now back to the level of May 2010. Adult unemployment in the north-east has fallen, too.
Ian Lavery (Wansbeck) (Lab)
Is it not a fact that the unemployment figures for the north-east have been the highest in the country for a number of years? The figures released recently appear to show a reduction, but a lot of that is to do with people who are on zero-hours contracts.
Guy Opperman
I accept that the north-east has higher unemployment figures than some parts of the country, but the May 2010 unemployment figure for the north-east was 80,105, a 6.4% rate, and it is now 78,525, a 6.3% rate. It is also true that successive Governments have welcomed the fact that part-time work and some types of zero-hours contracts have formed the basis of employment. That continued under the previous Government and it has continued under this Government. The question is the extent to which there is exploitation.
Ian Lavery
The figures have fallen very minimally in the north-east since 2010. Does the hon. Gentleman agree that that is largely due to people being on zero-hours contracts?
Guy Opperman
I have no evidence to suggest that a fall of 17,341 from February 2012 to September 2013 is all due to zero-hours contracts—in fact, I suggest that it is not, although clearly some of these contracts are involved, and nobody disputes that. As I said to the Secretary of State, in the north-east the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) and I have not received a specific complaint about the utilisation of these contracts in the rural environment in which we work, because such freelance contracts are generally welcomed, although not in every case, I am sure.
In welcoming the job numbers, may I make my final point—
Guy Opperman
I will not, because a number of people wish to speak.
My final point is that we need to widen the terms of the debate on zero-hours contracts to consider the minimum wage and the living wage. I welcome the work of the Archbishop of York. I should declare that I serve in the High Pay Centre with such notable right-wingers as the hon. Member for Brighton, Pavilion (Caroline Lucas), who leads the Green party in this House, and the TUC general secretary, Frances O’Grady. We have been looking at not only high pay, but low pay; we have been trying to address the problems that definitely do exist and making the case that the living wage and the minimum wage need to be addressed and embraced as we go forward. I agree with the earlier point that it is bizarre that we have a subsidy system whereby tax credits, in effect, subsidise the employment of low-paid workers. That needs to be addressed.
The final point must surely be this: the living wage has been proven not only to save the taxpayer money in the longer term, but to improve productivity and to benefit the business. One need only look at the US retail giant Costco to see that. It has broken the mould, paying its staff $11.50 an hour compared with the federal minimum wage of $7.25 an hour. Its chief executive has said:
“We know it’s…more profitable in the long term to minimise employee turnover and maximise employee productivity, commitment and loyalty”
by paying a living wage. I certainly continue to support that.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
Mr Speaker, I am glad to see that the House rota with Madam Deputy Speaker is working, so that you all know what guaranteed hours of work you have in this place.
With up to 1 million or more people subject nowadays to the sometimes pernicious insecurity of zero-hours contracts, it is timely that we return to this subject now that the House has returned. For me and for many people, not least those in the trade unions, it comes with a weary, sad sense of déjà vu. It was back in 1995, nearly 20 years ago now, when I worked at The Independent, that I remember first pursuing the issue of the abuse of zero-hours contracts, as they have come to be known. Those with long memories like mine will recall that the controversy was sparked by the case of Michael, a 17-year-old student in Glasgow who was asked to clock off and on up to four times a day at Burger King, and was sent home unpaid when there were not enough customers around. Burger King was then owned by Grand Metropolitan, part of the old-school “beerage”, and the irony was not lost at the time that its charitable arm, the Grand Met Trust, was in line to run a big, privatised careers service—of all things—in London.
Burger King eventually paid more than £100,000 in compensation to nearly 1,000 employees who had been either sent home or made to stand around, unpaid, until business picked up. Craig Bushey, Burger King’s then managing director in western Europe, said all the way back in 1995 that
“the action taken by Burger King puts this issue to rest and demonstrates our commitment to equitable employment practices.”
I do not know where Mr Bushey is now, but I wonder what he would have to say about Burger King still being right up there at the top of the list of users of these contracts, along with other high-street names ranging from Sports Direct to Wetherspoons.
However, by no means all, or the biggest or most successful, high-street names use these contracts. Tesco, Sainsbury’s and Morrisons, for example, see no need to use them; my hon. Friend the shadow Business Secretary also mentioned Asda. Responsible employers, they recognise a trade union, the Union of Shop, Distributive and Allied Workers. They negotiate with that union flexible contracts that provide workers with guaranteed hours, and other rights that most of us take for granted in a civilised society, but that also mean the work force can respond to fluctuations in consumer demand, as in other industries.
If Burger King’s Mr Bushey were still around, one might expect him and his counterparts to ask, “Why does my business need these contracts when these other great high-street names and other businesses do not?” One would certainly expect him, if only for damage limitation purposes, given the controversy now, to look at all his outlets to investigate what was happening in practice, and to see whether poorly paid, unrepresented workers were being abused these days in other ways. One would certainly expect him, having done so, to have no fear of engaging full on with the full-blown consultation and formal call for evidence over the use of these contracts which Labour’s motion calls for today.
Along with other Labour Members, I welcome the content and tone of the Secretary of State’s response to this debate and his plans for November. After all, there is a recent precedent: the last Labour Government did exactly the same in the run-up to the agency workers directive, another measure that we discussed to promote fairness in the workplace. I will say a little more about that in a moment. Following the debate in recent months, there is already ample evidence to support such a call, to look at the causes and sometimes deeply damaging effects of zero-hours contracts and short-hours working, and, indeed, how the agency workers legislation is functioning in practice.
We have mentioned examining the use of these contracts in respect of care workers and the effects on the care at home of the most elderly and vulnerable people in our society. We also need to look at their use in further and higher education, at their growing use in contracted out publicly commissioned services and the public sector, generally, and at their overall effect on the services provided. Last but not least, we need to examine their use in the private sector, on the high street and beyond, and their effect on young people and on families, on their further education and training, and, therefore, on our society and economy as a whole.
Charlie Elphicke
The hon. Gentleman is making a thoughtful and considered speech. My constituents in Dover and Deal are also deeply concerned about zero-hours contracts and that there should be fairness in the workplace. Does he agree that it is important that we understand how many of these contracts there are? The Office for National Statistics says that the number has not changed much over the past 10 years, whereas Unite gives a figure of 5 million and the Chartered Institute of Personnel and Development has another figure. Is it not really important that we nail down exactly how many of these sorts of cases there are?
Paul Farrelly
The hon. Gentleman is correct; getting the right statistics is absolutely germane to implementing proper evidence-based policy. Coming from Dover, he will appreciate the example cited by my hon. Friend the Member for Halifax (Mrs Riordan) from her constituency, which sounded tantamount to some of the practices employed at ports in years gone by.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
My hon. Friend is making an excellent speech. Like him, I have long been a trade unionist, in my case with the GMB, which shares his concerns. What he said about care workers was right, but will he also take on board the impact on their clients of the uncertainty that is created?
Paul Farrelly
My right hon. Friend is right to say that we must focus on the effects on not only the people themselves, but the services they provide. Only at the beginning of this week, on the “Today” programme, we had a vibrant discussion about what these employment practices mean on the ground for the amount of time that care workers are able to give to the people they are supposed to be looking after. That should be part and parcel of this continuing debate.
I welcome the Government’s call for consultation, but hope it is implemented properly, with a wide-ranging call for evidence. I wish to conclude with a few choice words for my own Front Benchers, too. I welcome my hon. Friend the shadow Business Secretary’s opening remarks and my right hon. Friend the Leader of the Opposition’s commitment to remove some of the insecurity and vulnerability involved in these sorts of contracts, because taking advantage of vulnerability, a relationship where power resides all on one side, lies at the root of exploitation that a civilised society should simply not tolerate in the modern age.
I remind my hon. Friend the shadow Business Secretary that fair treatment of agency workers was there in black and white in our 2005 manifesto. It was long before his time but he gets the point that I am coming on to, as he is nodding. In 2007, I and many of my hon. Friends sought to put that pledge into effect through a private Member’s Bill, the Temporary and Agency Workers (Equal Treatment) Bill. The Government, though—and it was before my hon. Friend’s time—far from welcoming that with open arms fought us, bayonets fixed, in the trenches. It took our late colleague, the former Member for Crewe and Nantwich, Gwyneth Dunwoody, at her magisterial best to press a closure motion in the Chamber against Government filibustering even to give that Bill an airing.
The Bill was followed by another private Member’s Bill in 2008, sponsored by my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) and again contested. Eventually the Prime Minister—our Prime Minister—relented, the agency workers directive was implemented but the compromise, with a 12-week qualifying period open to all sorts of abuse, was not a happy one. I am not recounting this for old time’s sake or gratuitously to open old wounds. That measure was aimed at tackling the unfairness and insecurity, the fear of substitution by cheaper agency workers, people on cheaper contracts which, for example, lay at the root of many people’s support for parties such as the British National party and their fears about immigration. Business opposed that measure, as it opposed the minimum wage.
The Government were content to go along with and, frankly, acquiesce in what I would call economic growth on the cheap, but nothing comes cheap. Nothing comes for free. There is always a price to pay and we certainly saw the political effects with the rise of the British National party, and in many areas the UK Independence party. I am glad to see that we on the Opposition Benches have now got it fully, as is clear from everything that my right hon. Friend the Leader of the Opposition has said about levelling up, not levelling down, and not engaging in a doomed race to the bottom.
To conclude, I look forward to continuing to pursue the Government to have a proper consultation on zero-hours contracts and to look at wider aspects of the issue, such as short hours working and the use of agency workers. I look forward also to safeguards being included in our manifesto and being implemented by a Labour Government after 2015.
Alison McGovern (Wirral South) (Lab)
I shall begin my contribution by continuing to quote from some of the people who kindly gave their view to the report that I and two colleagues undertook earlier this year. I pay tribute to my right hon. Friend the Member for Knowsley (Mr Howarth), whose idea it was that we do that. He was very insightful in encouraging me and my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) in our campaigning on the issue.
The people who shared their experience with us were brave to do so and I want their words to be heard in the House. The example that I gave when I intervened earlier shows the impact of zero-hours contracts on ordinary members of the work force. That person said:
“It has been very difficult as I want to move on with my life but can’t as I don’t know when and if I will be next out of work so this stops me from committing into anything financial like moving out or furthering my education more as I do not know if I will be in long term work as I am always waiting for them words that I am now a permanent employee. This has not only brought stress on myself but people that are nearest to me as it tends to be them that I vent my frustration to”.
That shows not only the economic impacts, but the social and emotional impacts of those contracts.
Somebody else told us that it was
“Awful. It’s depressing and demoralising. I feel I have no rights and constantly question ‘why am I even bothering to work?’ Some weeks it would be more beneficial for me to sign onto job seeker’s allowance”.
I am sure that is not what this Government want. It is certainly not what those of us on the Opposition Benches who believe in the dignity of work want to see, but I am guessing that it is not even what this Government want—people who feel that it might be better for them just to claim benefits.
Charlie Elphicke
The hon. Lady makes a very powerful speech. Does she welcome the fact that the Business Secretary held a review over the summer and is conducting a consultation? Does she, like the hon. Member for Newcastle-under-Lyme (Paul Farrelly), regret that more was not done in past times?
Alison McGovern
My grandfather, who was a great trade union rep, always told me: “When you go in and see the boss, never say you’ve done nothing; always say you’ve not done enough.” I think my hon. Friend has learned that lesson.
The big problem is the one that I raised earlier with the Secretary of State, which is that the Government seem to be all over the shop with the number of people affected and what is really going on. My only regret is that they did not take the opportunity of the summer to clear the matter up properly. We will engage with the Government and move forward to try to get a resolution, especially on the care sector, which is very important to me. I shall come on to that.
First, I want to say something about values. Although the economics are extremely important, so are the values. Some of the worst effects of zero-hours contracts are felt not where people have a high level of skills, but where people have little other option. In the care sector, for example, workers often have a low level of skills and are often women, possibly later in their career, who already have little power in the workplace. When zero-hours contracts are used in place of proper management, they are left in a terribly vulnerable position. It leaves them, in effect, begging for work. To me the indignity of begging is not tolerable. It is not tolerable for people to beg on the street and it is not tolerable for people to beg for work. That is what is wrong with zero-hours contracts. They risk far too much power being put on one side of the table in discussion of the contract of employment. This is an economic issue, of course, but it is a question of how we want to live together and relate to each other in society.
We are storing up some serious economic problems with zero-hours contracts. In the short term they involve a cost because people’s income is likely to be reduced as a result of their underemployment. If they are wasting time constantly trying to get more hours, as we heard in our survey, people have no time left to find another job, which might be a better job and might improve their prospects, which would, in turn, improve their and their family’s capacity to spend money and keep our economy going. Also, the insecurity that they are suffering means that in the short term they cannot commit or make spending choices that would otherwise be helpful.
By the way, we heard examples of people who were constantly told that they were going to get more hours than they did. That short-term impact of feeling that they would have money coming in and then finding that they did not has a massive knock-on effect on the rest of our economy, but it does not affect the whole economy equally or in the same way. The parts of the country with a lower skills base are much more likely to suffer from this, so zero-hours contracts feed into the imbalanced economy that we already have.
There are long-term economic effects from such insecurity. I quoted earlier from one of the people in our report speaking about their inability to invest in themselves, for example by going back to school, college or university and making a long-term choice to improve their prospects, which they felt unable to do because they did not know what was going on at work. Similarly, people were unable to get a mortgage or decide to make a long-term investment in their housing, which will have a knock-on impact. A further effect is the impact on the skills base of our country.
I am aware that in the case of students, who have been mentioned as an example, zero-hours contracts are a fair arrangement. There is no power imbalance and that is fine. I am also aware that for some people on zero-hours contracts there is an investment in their skills. But do the Government think it is more or less likely that employers in this country would invest in the skills of people who had permanent, stable contracts or those whom they had put on zero-hours contracts? I think that the skills base in particular parts of the country will inevitably diminish as a result of this so-called flexibility in the labour market.
Zero-hours contracts clearly do not affect every part of the country in the same way. The Merseyside city region has developed well over recent years—against expectations, I think—and we did much better through the recession than anyone thought we would. I am extremely proud that the Liverpool city region is doing well—no one will catch me running it down. However, the biggest barrier to Merseyside’s development is our people’s level of skills. We cannot afford to have employers who are not committed to investing in our people, not just because it is bad for our people today and they do not get the opportunity to improve themselves, but because it stores up problems. If the Government are not prepared to take this matter seriously because of concerns about the amount of money people will have in their pockets, I hope that they will take seriously the long-term impact such contracts have on the prospects for a balanced economy. I wanted to ask the Secretary of State to include the impact on skills in his review and consultation. He is no longer here, but I am sure that the Minister will pass on the request.
What is the solution? I am sure that it will come as no great shock to the House to learn that I am extremely supportive of the Labour policies outlined in the motion. I am incredibly pleased that the leader of my party has chosen to take such a stand on this issue. It is not fair to say that the previous Labour Government did not act to protect vulnerable people in the work force. One of our greatest achievements was the national minimum wage. The regulations that implement it contain all kinds of requirements to ensure that people earn a decent amount of money. That is at the heart of this debate. I think that we ought to be extremely proud of that institution that protects people in our country.
However, it is right that we should go further, and it is absolutely right that we should crack down on exclusivity and look at the people who work regular hours but whose employers are not prepared to commit and give them a proper contract. In the short term, the report that colleagues and I produced suggests a code of practice, and that has been the first stage in our discussions with employers and others. I think that we can get on with that. If there are employers who want to discuss that with us, as there are in Merseyside, we should do so.
I also want briefly to pay tribute to Unison for its work as a trade union and for its ethical care charter. It is a shame that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) did not congratulate Southwark council—I speak with a slight interest, as I am a former deputy leader of the Southwark Labour group—on adopting the stance that Unison did a good job in articulating what is needed in the care sector. We know that in that sector zero-hours contracts are wrapped up in a whole other agenda about ensuring that people have proper dignity and respect. I hope that Ministers will focus their review on what is going on in the care sector. There might be whole swathes of the economy where there are fewer problems, but there most certainly are problems in the care sector, and I hope that Ministers will pay attention to that.
Mr Newmark
I have been listening to the hon. Lady carefully but am still not clear where she is coming from. Is she objecting to the use of zero-hours contracts or simply to the abuse that can occur when they are used?
Alison McGovern
As I said earlier, there will be examples of employment—student employment is the classic example—where there is no power imbalance and where we can look at the practice in an industry and say, “This could be okay.” I have said that from the outset and all the way through this debate. However, if the hon. Gentleman would like to read the report that my colleagues and I put together, he will see quotes from people who spoke with us about their experience. If he is not concerned about the experience of those workers, I think he should be.
Alison McGovern
I hope that the hon. Gentleman is rising to tell me that he is concerned.
Mr Newmark
I totally agree with the hon. Lady that we should be stamping out abuse, but I have listened carefully to all Opposition Members who have spoken and it seems that their direction of travel is to cut zero-hours contracts completely. The Government want to stamp out the abuses, but does the hon. Lady—I will ask her once again—want to abolish zero-hours contracts completely?
Alison McGovern
I will end this here, because other Members wish to speak. That is not what I have said, and it is not what other Members have said.
In conclusion, zero-hours contracts are clearly a massive issue for our economy. We have seen the Government move from saying at the beginning of the year, “This isn’t a problem and we don’t know what the statistics are saying” to saying now that it is an issue. I only wish that they could have done more. I absolutely applaud the motion.
Gordon Birtwistle (Burnley) (LD)
Thank you, Madam Deputy Speaker—[Interruption.]
Madam Deputy Speaker
Order. First, the hon. Gentleman was here for the opening of the debate but had to pop out briefly, so I held him back in the list of speakers and have just dropped him back in. I do not want to hear Members shouting, “He hasn’t been here.” Secondly, I point out that some Members who have indicated that they wish to speak were not here for the opening speeches. They will be dropped down to the bottom of the list. While I am on my feet, I remind Members that the debate will end at 3.40 pm, so if Members do not make shorter speeches a time limit will have to be introduced, and it will be quite tight.
Gordon Birtwistle
Thank you for clearing that up, Madam Deputy Speaker. I was here at the start of the debate and approached Mr Speaker to explain that I would have to leave for a brief appointment that I could not change. He kindly said that that was fine and that I should come back, which I have done.
I will not delay the House for long, because the Secretary of State covered most of the concerns I have. I think that he covered the questions set out in the motion fully by agreeing to undertake a full consultation on the issue in November and to come back to the House in a few months with his conclusions and some proposals.
One aspect of the motion that I agree with relates to exclusivity in zero-hours contracts. A good friend of mine who works as a security operator at Burnley college approached me a few weeks ago and said that he thought that his zero-hours contract was very good because it suited his lifestyle and the way he wanted to work. His objection was that it was exclusive. He would have liked to have been able to have zero-hours contracts with numerous employers, because that would suit him down to the ground. He could work to suit his lifestyle and that of his family, because he found it difficult to work for just one company that occasionally did not give him any work for five or six days, and that could be taken away, so it would benefit him greatly if he could have various zero-hours contracts with different companies.
Zero-hours contracts have been used for years. My wife worked as a personnel officer for a number of Boots stores 20 years ago, and zero-hours contracts worked perfectly. People were called in as they were needed and they were happy with what they got. It still works like that. One of the benefits is for young people who are out of work. My new researcher in Burnley was working in a bar on a zero-hours contract because she could not get a proper job before she came to work for me. Having come straight from university, she found that getting into the habit of going to work under a zero-hours contract was absolutely brilliant, because it got her into the ethos of going to work. She found that a really good start to her working life. It is really good. Stacks of zero-hours contracts are given out in the pub and entertainment trade, and most of the people who work in those industries are very pleased about it.
One of the benefits of zero-hours contracts, as I have said, is that they get people used to getting up for work. Three years ago, Burnley was one of the top 10 unemployment blackspots in the country. Unemployment was dreadful. Since then we have dropped to 159th place on the list and unemployment has dropped from over 8% to 5.7%. I keep hearing that the north of England’s unemployment is climbing and that things are really bad. Burnley, which was an unemployment blackspot, is now a very prosperous town. A lot of people who were working on zero-hours contracts have now transferred into full-time employment and are enjoying the jobs and roles that they are carrying out.
Ian Lavery
Will the hon. Gentleman give the figures for how many people are on zero-hours contracts in Burnley?
Gordon Birtwistle
I do not have those figures. I only know that I have spoken to a lot of people who were on zero-hours contracts, were happy to be so rather than not working, and have now transferred to permanent contracts that are part-time or even full-time. The figures for Burnley show how successful they have been. That has been a boost for the town and for the people who work there.
I accept that, as the Secretary of State says, there are problems that need to be resolved. Those problems have always been with us; they have not started in the past three years. The Secretary of State is facing the issue head on, unlike Labour Members, who for 13 years did absolutely zero about it. In fact, their zero attention to zero hours was quite marked. He is asking for a full report and will come back to this House in a few months to give us his conclusions.
I hope that the problems are resolved and that zero-hours contracts continue. I would not like them to end, because that would take away the choice that working people have. They can work zero-hours, part-time or full-time, and it is really important that they have that choice. However, there are problems with companies taking advantage of these contracts, and we need to sort that out. I am delighted that the Secretary of State has taken that on and look forward to seeing his conclusions in the near future.
Madam Deputy Speaker (Dawn Primarolo)
Order. Having considered how much time is left for the debate, I am now going to set a time limit. I have accounted for every Member in the Chamber who has indicated that they want to speak, and I am setting the limit at seven minutes starting with the next speaker. Obviously, if there are lots of interventions I might have to review that in order to make sure that every Member gets at least some time during the debate.
Sammy Wilson (East Antrim) (DUP)
In the interests of other people being allowed to speak, I will not take any interventions because it would be unfair at this stage, although I am usually quite happy to do so.
Let me first say that I do not know how extensive zero-hours contracts are in Northern Ireland. Indeed, the debate so far indicates that we do not know the quantum of what we are dealing with. Anecdotally, however, I am becoming more and more aware of the problem because people come to tell me about how they find themselves being squeezed by this form of employment, whether it is parents complaining about the conditions for their children who are going into jobs for the first time or care workers on contracts in the public sector.
Government Members have said that for many people this situation is acceptable. In many cases that is only because there is no alternative. It is not that people want and welcome this with open arms; it has huge consequences for them. They do not have security of employment. They do not have what many of us have been fortunate to have during our working lives, whereby people can take on loans and mortgages, know that there are prospects of advancement in their work, and know that their employer is investing in them and is therefore prepared to enhance their skills to make them even more employable in future. All that is lost to people on zero-hours contracts.
I understand the need for flexibility in the labour market, but I am increasingly concerned that zero-hours contracts are being used as a tool by managers who are too lazy to look ahead. Sometimes it is not the case that they do not know what is ahead. For example, last Monday, I was with a constituent who told me about her care workers who are on these kinds of contracts. They are called into work in the morning until lunchtime, called in again in the afternoon until teatime, and then called in again in the evening. The employer’s contract is with a health board. I do not believe that he does not know for how many hours he is contracted to undertake work for that health board. Therefore, I do not understand why he cannot properly utilise his work force and take the opportunity to give those individuals more security of employment.
Some Members have drawn a distinction between zero-hours contracts that are normal and those that are exploitative. I do not believe that there is such a distinction, because potentially every such contract is exploitative. When an employer is really squeezed, he or she has the flexibility to say to someone, “There’s no work for you today. I took you on on certain conditions and you accepted that you were on a zero-hours contract. I could probably offer you 12 hours a week, but I’m sorry that’s not available any longer”. Then people can sit for days or weeks with no work. They may have taken on the contract only because the employer said, “Normally this will be what’s available to you” even though it was a zero-hours contract. Those contracts do become exploitative. When the Secretary of State is looking at the way forward, if there cannot be a total ban—for which, in certain circumstances, a good argument could well be made—we should at least start to look at how it can become the exception rather than, as I suspect, increasingly the norm.
Several aspects have been well highlighted in this debate. First, these contracts should not be exclusive because this should not be a one-way relationship. It has been said that it suits both partners, but very often it does not. I think of what has been said by people on zero-hours contracts who have come to see me. The contract is operated by the employer and the employee is afraid to say, “I’m not coming in tomorrow because it doesn’t suit me” because they probably accepted the contract in the first place only because they were desperate for work. At least, as suggested by the Opposition, there should be no exclusivity. That would be one way in which an employee could say, “I’ve got other options open to me.”
Secondly, where zero-hours contracts operate in the public sector—many are found in charities and employers who work on public sector contracts—there should be much more rigour about the conditions attached to those who are employed in firms that win public procurement contracts. That would squeeze out an awful lot of these contracts.
Thirdly, if it is shown that an employee has had regular work over a period of time even though they are on a zero-hours contract, the employer cannot really argue, “I need that flexibility”, because the employee has had regular hours already. That should be another area where we can start to squeeze out these contracts.
Zero-hours contracts are not only bad for employees but bad for the economy. If employers themselves thought about it, they should realise that there is no better way to have a work force that is loyal to them than by treating them right. These contracts, especially when they are used in an exploitative way, do not treat employees right and therefore have an impact on the quality of the work force. In the longer run, as the hon. Member for Wirral South (Alison McGovern) said, what employer is going to invest in their work force if they treat them as people who can be taken on and disposed of when they feel like it?
Julie Elliott (Sunderland Central) (Lab)
I am delighted that my hon. Friend the shadow Business Secretary has secured this Opposition day debate, which is about an issue that many hon. Friends and I have been campaigning on for months, if not years.
In July, as we have heard, I led a debate in Westminster Hall on zero-hours contracts. I do not intend to condense that rather longer speech today. In it, I referred to individual cases in care homes and explored the wide-ranging use of these contracts in the NHS, including for tens of thousands of nurses and midwives. Instead, I intend to take a broader approach and look at what the widespread use of these contracts says about our labour market.
I am pleased to note the presence of Conservative and Liberal Democrat colleagues, because in my Westminster Hall debate in July I was dismayed to see not a single Conservative or Liberal Democrat Back Bencher in attendance. Although the 17 Labour MPs who spoke led to an interesting and worthwhile debate, I have attended many Labour party meetings in my time and the debate was a missed opportunity for real cross-party dialogue.
It cannot be that not a single person in coalition constituencies is employed on zero-hours contracts. In fact, unlike the hon. Member for Hexham (Guy Opperman), who has said that he has not come across anybody in rural Northumberland who is unhappy with these contracts, I have met such people and they are out there.
I have spoken to many people who are on these contracts. Some are happy with them, but the vast majority are not. We should all be concerned that this country essentially has a large pool of workers living permanently on call, without guaranteed incomes, who do not know whether they will be able to pay their bills. We cannot sit by while workers on zero-hours contracts earn, according to research by the Resolution Foundation, 40% less than those on regular contracts.
A Labour Government would ban employers from insisting that zero-hours workers be available when there is no guarantee of work; stop zero-hours contracts that require workers to work exclusively for one business; and end the misuse of these contracts where employees are, in practice, working regular hours over a sustained period.
I believe that an outright ban would be neither helpful nor practical. Labour is clear on that. The hon. Member for Braintree (Mr Newmark) seemed to be under the illusion that we were calling for an outright ban, but that is not the case. A ban on zero-hours contracts could lead many less scrupulous employers simply to introduce one-hour contracts. We know that that is a realistic possibility, as the rise of zero-hours contracts seems to be linked to the closure of loopholes by the introduction of temporary and agency workers regulations.
As I have said on previous occasions, the issue is not zero-hours contracts, which have always been around, but the massive increase in what seems to be exploitation of workers, by which I do not mean employees, because the people on these contracts are not classified as such.
Paul Farrelly
My hon. Friend will remember from her time at the GMB—which, to correct the record from earlier, represents Asda employees in my constituency—that many agency workers find it hard to get mortgages, because they are not considered to be full-time employees. If someone on a short-term, zero-hours contract is asked whether they are a full-time employee and they answer honestly, does my hon. Friend agree that they, too, may find it difficult to get a mortgage at a time when mortgages are far more difficult to get hold of?
Julie Elliott
I agree. In fact, those people face difficulties in getting not just a mortgage, but a rental agreement, because they are not classified as an employee.
We need to take a more holistic approach to reforming the labour market. We need to understand that zero-hours contracts are just one of many ways that people in this country are having their rights eroded and their living standards squeezed. Energy costs, food costs, rail fares and private rental costs are hitting people’s pockets on the one hand, and unfair working practices are making them feel insecure for their incomes on the other.
The Labour party, like everyone in Britain, wants to see economic growth, but there is more than a lingering sense that sustained economic growth, when it comes, will not halt this cost of living crisis, because rail fares will still go up, the price of food will still soar and the cost of rent will continue to go through the roof. The hundreds of thousands of Britons who are on zero-hour contracts, temporary contracts or the minimum wage will not see the fruits of that growth.
Julie Elliott
No. I am going to carry on so that others have a chance to speak.
Many lost their jobs or were forced to accept stagnant wages during the downturn, but they are seeing none of the proceeds of growth during the upturn. Those in work are earning, on average, £1,500 a year less than they were in 2010, while others have no choice but to put up with zero-hours contracts. Meanwhile, those out of work have been left on the failing Work programme.
The Institute for Fiscal Studies has calculated that for every pound spent paying the living wage, the Treasury saves 50p through not needing to pay tax credits and benefits. The Resolution Foundation has calculated that if everyone 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 the leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject this analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment, but they were wrong—it simply led to higher wages.
I have welcomed the Government’s review of zero-hours contracts, but I think it is wholly insufficient. Indeed, parliamentary questions tabled by my hon. Friend the Member for Streatham (Mr Umunna) have found out that the Government have allocated all of three officials to the consultation. They are holding informal discussions with stakeholders without any formal calls for evidence or consultation. The irony that these three officials are looking into zero-hours contracts on a part-time basis should be lost on no one.
Reforming zero-hours contracts and increasing the number of people on the living wage is not just the right thing to do for hard-working people; it will also be good for the economy. Instead of shares for rights, we need to improve working conditions and boost wages. It is an injustice too far to expect people to live a life of permanent uncertainty, and I urge the Government to take a small step that will make a big difference.
George Freeman (Mid Norfolk) (Con)
We all know that a job is the building block of a decent society and a decent economy, that the creation of jobs is the most urgent imperative that this economy faces at present, and that holding a job is the key to the dignity and respect that we want everyone to experience and that we want to spread to those who, sadly, have not experienced it to date. The appalling debt crisis that we face and the crisis in youth unemployment that we inherited from the previous Government make this mission more urgent and vital than ever. The creation of new jobs is, and should be, at the heart of the mission of this Parliament.
We all agree that long-term employment with a stable employer and the investment in training that goes with it is the model to which we aspire. Indeed, in most cases that is the model that prevails. The proudest achievement of my life before coming to Parliament was helping to create six new businesses that now employ more than 500 people in the life science sector. I agree with a number of my colleagues that the creation of jobs is one of the most important things we have done.
This crisis reminds us that the private sector is the only sustainable basis for the prosperity on which we all rely. It is the private sector that creates the tax revenues that fund schools, hospitals and the public sector, which employ others. One of the lessons of the past 14 years and the previous Government’s mismanagement of the economy must be to restore that truth and remind ourselves that private sector job growth and business growth are absolutely key to our prosperity.
We need to make it easier for youngsters in particular and others to get into work, and we need to encourage flexibility for the modern work force, including women, students and part-time workers. That is why I have recently called for a new deal for new business. Having worked in the creation of small businesses, I know at first hand how often the regulations and red tape that have been designed for, and often with, big business make it harder to create new businesses and new jobs.
Nobody wants to see exploitation. It may suit Opposition Members to claim that we are living in a dark age of Victorian exploitation, but that is not the picture that resonates—we are not. I welcome the fact that the Government have launched a consultation, and the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), and his colleagues have been very clear that we want to stamp out abuse. My hon. Friend the Member for Braintree (Mr Newmark) intervened earlier to highlight the important difference between stamping out the abuse and exploitation of zero-hours contracts—which may well go on; indeed, I have no doubt it does in some cases—and saying that zero-hours contracts themselves are a bad thing and should be banned. I welcome the fact that the Minister himself is an ardent and passionate advocate of the importance of flexibility in the work force, and that he is bringing that zeal to the two Departments he represents in order to drive and support the Government’s growth agenda.
I say that for three principal reasons. We are living through a profound revolution in the world of work and in the economy. Call it the new economy or the innovation economy—the truth is that many more people in this country are now working in small businesses and are self-employed, and the projections for the next decade or two suggest that the numbers will grow. Small businesses and entrepreneurial, innovative businesses demand far greater flexibility than the bigger businesses that we have relied on in the past.
More women and students are coming into the work force. I recently visited the maths department of a university and during the break, there were 40 start-up companies in the foyer that were run not by graduates of the maths department, but by undergraduates. The students of today are entrepreneurial and are starting businesses. We need to embrace that new world. We can only trade our way out of the debt crisis. To do that, we must rediscover our buccaneering spirit of enterprise and entrepreneurship as we take on the global forces of competition. We will not succeed with a work force and a labour market that are shackled by the old ways.
My second reason for supporting the Government on this matter is that zero-hours contracts have received strong support from senior and respected voices in the worlds of business and human resources. The Chartered Institute of Personnel and Development has said that zero-hours contracts can benefit employees as well as employers. The Institute of Directors has referred to zero-hours contracts as a
“vital tool in our economic recovery”.
John Cridland has said that if we had not had zero-hours contracts,
“unemployment would have topped 3 million”.
My final reason for supporting what the Government are doing is that it is working. The Government’s labour market reforms have had a stunning impact on our rate of job creation. There are 872,000 more jobs in the economy than there were at the time of the last election. [Interruption.] Opposition Members are shaking their heads. They do not like it, but it is true. Some 1.4 million private sector jobs have been created since the last election. Three jobs have been created in the private sector for every one job that has been lost. This country is creating jobs at twice the rate of the United States of America—a market that we have traditionally looked at and envied its rate of job creation.
Let us stamp out exploitation. Let us criminalise the exploitation of zero-hours contracts where we can, but let us not shackle the flexibility that we need to create the new businesses and jobs on which we will all rely.
Lisa Nandy (Wigan) (Lab)
The hon. Member for Mid Norfolk (George Freeman) says that what the Government are doing is working and that the picture that the Opposition are painting does not resonate around the country. If he had listened to the speeches of the shadow Secretary of State and my hon. Friends in this debate and if he had heard the debate secured by my hon. Friend the Member for Sunderland Central (Julie Elliott) earlier this year, he would know that what the Government are doing is not working and that a picture of misery is unfolding in communities around the country, including in my own community in Wigan.
I do not intend to rehearse that picture, because the shadow Secretary of State described it eloquently. Suffice it to say that over the past 12 months, I have represented low-paid women who work in the care sector, which has been mentioned in this debate, countless young people, and adult men and women with families to support who are trapped on zero-hours contracts. Does it surprise the Minister that this week, the British Red Cross launched its first ever emergency appeal to feed families in the UK? The picture is unfolding, but we have a Government who will not take action to tackle the problem. Other hon. Members have spoken about the problems of low pay, insecurity in the workplace and deskilling.
I want the Minister to know that there is an anxiety that lives with people who are on zero-hours contracts, not just from week to week, but from day to day, about whether they will be able to feed their children, about whether they will be able to pick their kids up from school and about whether they will be able to arrange child care. That anxiety is corrosive and devastating. Alongside it, there is an indignity and humiliation that runs through people’s lives when they do not know whether they will be able to provide for their families, whether children or elderly relatives, or even themselves. People are being put in a situation in which they are powerless and that is wrong.
Although I welcome the Secretary of State’s tone and his promise to do something about the problem, too often in the years before I came to this place I heard consultations used as an excuse not to do something. I hope that is not the case with this consultation. In any case, there is an urgency to this problem because many families up and down the country simply cannot wait.
I will make a few brief points in the short time that I have remaining. First, there has been a lot of debate about whether zero-hours contracts should be banned outright and whether that is practical. It has been said that in some circumstances, zero-hours contracts are good for people. I do not really understand the argument about students. I do not understand why anybody would want a job in which they were guaranteed absolutely no work. I have never met anybody who wants that. I listened to the Minister carefully, but I still do not understand that point. There is clearly a difference between people who are trapped on zero-hours contracts and are desperate for more work but cannot get it, and people who value a bit of flexibility. The problem is that zero-hours contracts used to be a stepping-stone into better paid, more secure work. It is becoming increasingly clear that they are no longer a stepping-stone.
I was proud to stand alongside the Hovis workers in my constituency when they went on strike because 28 workers who had had full-time contracts were replaced by people on zero-hours contracts. They stood alongside one another and said that they would not accept two people doing the same job at different rates of pay and with different levels of security. That sort of two-tier work force is the thin end of the wedge and is bad for everyone. I was proud that Premier Foods accepted that argument, stepped in and reversed the situation. Premier Foods has gone from being a buzzword for bad employment to being a buzzword for how to take action to become a good employer. I am proud that that happened in my constituency.
Ian Lavery
Is it not the case that a number of Hovis workers were made redundant and that other people were taken on on zero-hours contracts to save the company money?
Lisa Nandy
Indeed. I am grateful to all the hon. Members who supported those workers and me. That situation reflects something that is happening in their constituencies as well.
The Hovis strike was not just about zero-hours contracts. As my hon. Friends have made clear, there is a growing casualisation of the work force in this country that is corrosive and is deeply worrying to all of us. As the shadow Secretary of State said, we have one of the most deregulated labour markets in Europe. Many more people are now in temporary work and low-paid jobs. Clamping down on zero-hours contracts and their exploitation is just one part of what we must do. I hope that the Minister understands that.
This problem affects young people disproportionately. We know from history that when young people are trapped in situations in which they cannot advance themselves or their families, it causes hopelessness, despair and anger, and the associated problems that go with those feelings. We owe young people better than that. I would like to hear what the Minister proposes to do urgently for those young people.
What we are saying is not anti-business. We have heard much about the employers who are using the flexibility that zero-hours contracts provide to exploit the work force, but there are many employers who are not doing that. The shadow Secretary of State gave the example of Asda, which is taking a stand against such treatment of the work force. It is essential that the UK leads the way in showing that things can be levelled up, not levelled down, for the benefit of everybody. Otherwise, employers such as Asda who are making decent choices, doing the right thing and investing in their communities will be at a disadvantage and we will be tilting the playing field.
Lisa Nandy
I will not, I am afraid, because many of my hon. Friends have sat through this debate and are desperate to speak.
As many hon. Members have said, this problem affects entire sectors. We should be very concerned about that because, as I have said, such contracts are not a stepping-stone. I am particularly worried about the care sector and home help. This problem affects the low-paid people—mainly women—who work in that sector. It affects their children, their parents and their whole family. It also affects us, because if we value that profession so little that we allow this practice to be used across the country, we allow people to be given no money for travel time between appointments and we allow packed rotas that mean that older people get 15 minutes to have all their care needs met, what does that mean for our parents, our grandparents and our neighbours? I hope that the Minister will listen to the voices of people around this country who are devastated by what they are seeing.
Finally, the Secretary of State spoke a lot about getting redress and taking on employers, and about a code of conduct. In truth, however, it is incredibly difficult for someone who is being threatened with no more work to take action. Have we learned nothing from the blacklisting scandals that my hon. Friend the Member for Edinburgh South (Ian Murray) has done so much to uncover and condemn? Ministers say that we want to give people the ability to take action on that issue, so why are they restricting access to legal advice and hiking up employment tribunal fees?
It strikes me that the Government are frightened of challenge, and they are standing together with their friends in the business community to stop people who have everything to lose being able to take action. Whatever the Government do, the Minister must understand that rights are no good without the means to enforce them, and we need concrete action to ensure they can be enforced.
Mr Brooks Newmark (Braintree) (Con)
I am delighted to follow the hon. Member for Wigan (Lisa Nandy) and I have a feeling we are in danger of violently agreeing with one another—I do not think there is any Government Member who does not agree that we should be stamping out abuses, and as we heard, the Government are beginning a consultation to look into that issue. However, as we heard from my hon. Friend the Member for Mid Norfolk (George Freeman), it is the responsibility of the Government to turn things around—particularly given the mess we inherited in 2010—and to create growth and jobs. As we heard from my right hon. Friend the Prime Minister during Prime Minister’s questions, we have created more than 1.5 million new private sector jobs, including 1 million net new jobs. Last week the IMF turned around its criticism of the UK from a month earlier, and said that compared with the rest of the world, the UK is doing pretty well. Growth is returning, which is good news, and jobs are being created.
I do not think any Labour Member said that they completely oppose zero-hours contracts, which is because an economy needs flexibility on both sides. As we heard from the Secretary of State, the elderly want flexibility in employment, for example, as do young students or young mothers who have child care and do not necessarily have natural fixed hours. Zero-hours contracts can suit a number of people in our economy. I listened carefully to what Opposition Members said, and it is important to have robust employment protections. As we heard from the Secretary of State, and as we will no doubt soon hear from the Minister, the Government are beginning a consultation to look into the practices raised by Labour Members. I oppose such practices as strongly as they do.
The previous Government did nothing to investigate how zero-hours contracts were used when they were in power. Is any Member aware of an investigation into that issue during Labour’s 13 years in power? In fact, according to the Office for National Statistics, in 2000 there were 225,000 people on zero-hours contracts.
Charlie Elphicke
Has my hon. Friend also noticed that the Opposition raised the issue of blacklisting, about which they also did nothing whatsoever when in government?
Mr Newmark
My hon. Friend is right, and I point the finger at several Labour-run councils in London that use zero-hours contracts: Tower Hamlets, Ealing, Merton, Hounslow and Newham. Those councils do not provide guaranteed hours or any such thing. Are Labour councils stopping the use of zero-hours contracts? Not a bit of it. The Government, however, have helped the low-paid by taking more than 2 million people out of tax altogether, and cutting taxation for another 25 million people. That is what the Government should be doing—encouraging jobs and protecting those on low pay.
As we have heard, the Government have been doing a good job trying to create jobs in the private sector, but we must protect people against the abuses to which Opposition Members referred. We heard wonderful statistics from my hon. Friend the Member for Mid Norfolk, who mentioned the number of jobs created in the private sector. I repeat: 1 million net jobs have been created, even though, as we heard in Prime Minister’s questions, Labour Members predicted 1 million job losses. The Government have been doing a good job.
As someone who is a champion of women, and the founder of Women2Win, I note there are now more women in work today than ever before in our history, which is good. As the hon. Member for Wigan said, however, we must also protect those women who need flexible hours from abuses. I believe and am confident that the Government will look into the abuses to which she referred, which we do not approve of or support.
There are, I think, about half a million job vacancies, some of which are on zero-hours contracts. That is a good thing and gives people the opportunity to get on the employment ladder. Overall, I believe the Government are doing a good job. Statistics are coming out, and in the past week alone, British manufacturers have said that they have seen the strongest growth on record, breaking the figure for every quarter since 1989. That proves that the Chancellor has been rebalancing the economy. That is the challenge we inherited from the previous Government. We over-relied on the financial services sector, and the Chancellor is rebalancing the economy.
Caroline Dinenage
I congratulate my hon. Friend on a fantastic and dynamic speech. Does he agree that manufacturers need a dynamic and flexible workplace to flourish? I speak as someone who owns a manufacturing company. Those who may not have previously been in employment also need a dynamic, flexible workplace so as to consider getting into the working world.
Mr Newmark
My hon. Friend is right, particularly about small manufacturers who cannot necessarily take on fixed costs. I was in business for 20 years and know it is tough out there. It is still tough for many manufacturers who are working with low margins. They cannot take on fixed costs, so zero-hours contracts are a good thing that suits them and people in that environment who are looking for flexible hours. The services sector, too, has had its strongest growth in 16 years.
Overall, zero-hours contracts have a role in society. I have not heard a single Opposition Member condemn absolutely zero-hours contracts, although they all mentioned the abuses. The Government are doing their bit to ensure that we remain ever vigilant against the abuse of zero-hours contracts, and I applaud their initiative to take forward that consultation to tackle those abuses as soon as possible.
Ian Lucas (Wrexham) (Lab)
I am pleased to follow the hon. Member for Braintree (Mr Newmark), because it gives me an immediate opportunity to rebut the bulk of his remarks and give him a reality check. Far from the blue skies that appear to be above his constituency and those of Government Members, yesterday a factory in Wrexham closed and 231 people lost their jobs. In 2010-11, the median gross weekly earnings for a male in my constituency fell from £530.80 to £435.50, and for a woman from £416.60 to £364.30. That was the immediate impact on the earnings of my constituents of the first year of the Conservative and Liberal Democrat Government coming to office. That is what I call a cost of living crisis.
The Conservative party also introduced a VAT increase, supported by their Liberal Democrat comrades—before the election they said they were not going to do that—which imposed an immediate financial burden on individuals in my constituency, whatever their income. That is the reality of the cost of living crisis that the Government parties are imposing.
We are debating zero-hours contracts today, rather than five years ago, because the increase in the number of those contracts is a response to the massive inequality of bargaining power that now exists between employers and employees, and the fact that employees are desperate for any type of work. The worst employers exploit them because those people are under major financial pressures.
I will not take any lectures from Government Members on running a business. I ran my own business for four years, employing 10 people, before I became an MP in 2001. I know that it is best to treat employees with respect and work with them. If employers are flexible with employees, employees will be flexible with employers. Unfortunately, with zero-hours contracts, we have the worst type of exploitation. Employers exploit the financial weakness of individuals who are desperate for work and to secure any type of employment.
A constituent came to see me—
Ian Lucas
I will not because my constituent’s story needs to be told. He told me not to use his name or the name of his employers because he is scared he will get sacked if I speak publicly. He had been employed for more than three years and was on a contract for 10 hours per week. He normally worked 36 hours per week—he worked those hours regularly, but invariably worked for more than 30 hours. However, because his employers would not give him a contract for more than 10 hours, he could not get a secure tenancy or apply for a mortgage. He had to ring up on Friday evenings to find out what hours he would be working the following week. That was the impact of a zero-hours contract on that individual.
I was pleased at the tone of the Secretary of State’s remarks—he is a reasonable man—but my parents told me that I should always judge people by their actions, not by their words. In government, the Liberal Democrats and the Tories have taken away the means for employees to protect themselves from exploitation. They have doubled the qualification period for people going to employment tribunals and introduced a £1,200 fee for going to a tribunal. That is more than twice the median weekly earnings of individuals in my constituency. That, and not the flannel, tells us all we need to know about the attitude of the Government parties. They are not about fairness for the work force or a balanced relationship; they are about the worst kind of employers exploiting employees.
I was astonished that the Secretary of State referred to our automotive sector in relation to zero-hours contracts. He seemed to suggest that zero-hours contracts in that context were analogous the exploitation of workers who do not have trade union representation. The fact is that contracts are negotiated by trade unions in the automotive and aerospace sectors to introduce flexibility, so that there is a balanced relationship between employer and employee. The key point is that those contracts are negotiated and agreed to—the employees who take them on do so voluntarily, and they are normally negotiated through their unions.
Trade unions are vilified and attacked every week by the Prime Minister at the Dispatch Box, but, as the Minister knows, they are an integral part of the Automotive Council and the Aerospace Growth Partnership. The automotive and aerospace industries are two of our most successful industries. That is the model we want—of industry and employers working together with employees.
Employees should have rights. Warm words are all right, and it is all right for the Government to say they sympathise with people who have to manage such arrangements, but if they take away their rights of redress, they can do nothing about their situation.
Let us look at the Government’s actions, not their words. I hope their actions improve, and that their inquiries and investigations lead to concrete progress. To date, they have removed rights from people in vulnerable situations. They should not be proud of that, but it tells my constituents where the Government stand.
Charlie Elphicke (Dover) (Con)
It is a pleasure to follow the hon. Member for Wrexham (Ian Lucas), if only to rebut so much of what he says. My constituents in Dover and Deal are understandably concerned about zero-hours contracts. I represent a port. Many in the ports and maritime sectors are, and have been for many years, on zero-hours contracts and have informal working arrangements with their employers. Many of my constituents work in social care and frequently raise their concerns about zero-hours contracts. I have told them that I will raise those issues in the House of Commons so that Ministers and the Government are aware of them.
There is a big difference between the Government and the Opposition. Labour Members have sat around since 1997, 2001 or whenever doing precisely nothing whatever about zero-hours contracts. Now they are in opposition, they suddenly raise the issue. Someone has raised it with them, and a few weeks later they have come to the House to say, “It is right that action is taken where things have gone wrong.” It takes a special cheek for the Opposition to come to the House and say, “We didn’t do anything about it for 13 years, but, right now, we expect immediate action.” That is not the right way to do things. They are politicising what is an important and delicate issue for many of our constituents, which is highly unhelpful.
My constituents have raised serious issues. Not every zero-hours contract is an abuse. Many people work for 30 or 40 hours a week on zero-hours contracts. As the hon. Member for Wrexham said, they have problems getting mortgages and tenancies because they do not have that baseline. I share those concerns and hope that the Government will consider carefully what can be done for people in that position. They have legitimate concerns and action ought to be taken.
Some people are preyed upon by their employers—they are given no hours, or given informal hours, and cannot plan their budgeting from week to week. That is unfair and it is right that the Government are looking at exclusivity. Frankly, those people are self-employed and should be allowed to seek work elsewhere. That would be a fair and just employer-employee relationship. The Government were right to look at that in the review in the summer. It would be right to focus on it in the consultation and to take action on so-called exclusivity clauses.
It is important that we understand our constituents’ concerns. When they come to our surgeries, they tell us that they are worried that if they raise the matter with their employer, they might not have a job by the end of the day. I have had many such cases, which I view with considerable concern. It is right that we work to rebalance the situation. The flipside, as all hon. Members know, is that, for many people, zero-hours contracts have the flexibility that works for their lives. How people live their lives and secure the flexibility they need in their employment is an important consideration.
The Government need to focus on achieving the important flexibility that many people need, but also on ensuring that people are not preyed on and exploited. I am a Conservative MP representing a constituency where there is a lot of deprivation and where many people are not well paid. An important part of the Conservative party is that it believes in protecting people. Yes, enterprise and profit are important, but there is a difference between profit and profiteering. We need to ensure that people who have unequal bargaining power can ensure they have the protection of the law they require to get a fair settlement. That is what the Government need to focus on, which they are doing. I welcome the action that the Secretary of State and the Conservative members of the departmental team are taking.
Sheila Gilmore (Edinburgh East) (Lab)
I visited a constituent who had initially presented with a problem about paying her rent. She was in arrears and was worried about what was happening. However, the reason for her problem—the kind of work she did—quickly emerged. She was a care worker on a zero-hours contract, but did not get flexibility. She had to wait for a text message—this is a new form of having to go down to the docks and standing in a queue—to see if she was going to have work. In that week, she had been given two evenings of work at very short notice—this creates substantial problems for people’s ability to plan.
We have to address the underlying issues. Why is this happening in care, which is such an important area of work? There is a knock-on effect on the quality of care. If people do not know until the last minute whether they are going to be working, the recipient of care has no idea who will be visiting them. That is important to the quality of care and to the security of those receiving care. Those who suffer from Alzheimer’s find it particularly disturbing and distressing for carers to be changed all the time. The issue is broader than the employment conditions of my constituents; it is about quality of care.
Why is this happening? It did not use to happen. It did not happen in my city when most home care was carried out by those directly employed by the council. A lot of home care was put out to tender in my city under the council run by the Liberal Democrats and the Scottish National party. It decided to save money and boasted to the local newspapers about how it had saved the council tax payer £2 million, but at what cost and whose cost? Companies put in cheap bids to show how we could all save money and they now have to make up that money in how they employ their employees.
This is not an accident, nor is it abuse by bad employers; it is a structural issue. I am concentrating on care, but I am sure there are other areas where this is happening. If we want this to change, we have to be much more honest about the cost of care and how we are going to pay for it. It is not enough to provide care on a shoestring. I emphasise that I am talking about Scotland. People sometimes think we have cracked the care problem because we have free personal care, but councils such as mine have only been able to manage that process—they were given no extra money to help them do it—by contracting out. The contractors have set up these kinds of employment arrangements to make it work. It is not good for the people who need care, it is not good for employees and it is not good for the rest of us.
The situation is getting worse. It is easy to say that there were always some of these kinds of contracts, but a large department store in my city was employing one of my constituents on a part-time basis for many years. It was part time and that suited her. What did not suit her, however, was being told, “Sorry, we cannot offer you this kind of contract anymore; we can only offer you a zero-hours contract where you may have to work in the evening, at weekends or on Sundays.” That was not going to help her with her child care. When she argued the point and said, “I can’t do this,” the response was, “Well, go and find another job. There are plenty of people who can.”
This is a changing employment pattern that has been getting worse, and I do not think it is altogether accidental. It fits the narrative of the Government’s welfare reform programme. During the passage of the Welfare Reform Bill, there was much waxing lyrical from the Government Benches about the joys of mini-jobs—small jobs that people would be able to do because of the structure of the new benefit. That fits very well with zero-hours contracts, because the state will be subsidising employers by making it easier for them to give people mini-jobs with zero-hours contracts and they will hopefully be able to survive because their income will be topped up.
In the debate there has been an illusion about the choices that people are able to make. Self-employed contractors have the freedom to choose to work when they want to, usually on a pretty good hourly rate. There is a huge difference between choosing to work in that way and it being the only choice an employee has. Having control over working hours and a working pattern is very different from being forced to work. There is no choice if it is the only work on offer and it is the employer, not the individual, who decides when to work—that is a major difference. It can be very nice for individuals to be flexible if they have a choice about their working arrangements. That is not what so many of my constituents now face.
Ian Lavery (Wansbeck) (Lab)
The statistics put forward by Government Members on the use of zero-hours contracts are amazing. It would appear that zero-hours contracts are absolutely fine, with just a few abuses that need to be ironed out—absolute nonsense. Zero-hours contracts are an outrageous abuse for tens of thousands, even up to 1 million people. One or two people think that they are okay and that it suits them. This is the difference between the two sides of the House. Opposition Members believe there is a lot of abuse; coalition Members believe the opposite. They believe that zero-hours contracts are fine, as long as they iron out one or two abuses—absolute rubbish. That is not the case. I must live on a different planet.
We have heard this afternoon about fantastic employment figures, so many private sector jobs being created and the demise of the public sector, which is apparently great news. That has not happened where I live. What we have seen in my area is a reduction in unemployment, but with more people on zero-hours and part-time contracts and a huge increase in people who cannot make ends meet. Looking at employment figures on their own is therefore unacceptable.
Flexible working is employers’ utopia: back to the bad old days of queuing up at the factory gates, the shipyard or the pit and asking to be employed for the day. As has been explained, even that does not happen anymore. Instead, people receive a text or a phone call to find out whether they will have employment. That is a little different from what the hon. Member for Hexham (Guy Opperman) said about being a barrister waiting to see where his next £10,000 an hour will come from. That is the difference between the Government and the Opposition: the barrister can make £10,000 a day or an hour, but the people we are representing are not even making the minimum wage.
I wanted to refer to a number of things, but obviously I have not got time, so I will briefly consider how people actually manage on these zero-hours contracts. I am talking about people living in the real world, struggling, perhaps not earning the minimum wage, getting up in the morning wanting the best for their families—don’t we all want the best for our families, to put food on the table and to give our kids the up-to-date clothing, like everyone else in the school yard? Let us put ourselves in the position of somebody on a zero-hours contract. Perhaps both parents are on such contracts. How on earth can they plan a month ahead, two months ahead, a year ahead? Forget that if they were in full employment with a proper contract, they would have employment protection—forget that just for a moment and look at the social side; they are running out of money on a weekly or monthly basis because they do not have the hours; they are getting into debt, borrowing money from friends or Wonga or taking out a payday loan, because that is the only way they can make ends meet.
That is what is happening with people on zero-hours contracts. They are looking for alternative sources of income, for extra employment, but many firms that employ people on zero-hours contracts state that the person must be available 24/7, so they cannot get alternative employment; they are stuck with it, even if it means an hour a week. If someone cannot make ends meet, wants to work, is not unemployed, being on a zero-hours contract, and is trying to do the best they can for their family, surely that is a cause of much anxiety. Imagine being in that situation. It causes health problems and then more problems along the line. Some on zero-hours contracts have no access to other forms of finance, not having contingency funds like other, more wealthy people further up the social ladder, so they find it very difficult. And because they have no guarantee of employment, they find it difficult to access legalised credit. This causes all sorts of social mayhem.
David Rutley (Macclesfield) (Con)
The hon. Gentleman makes his case with passion, but does he not agree that in sections of society zero-hours contracts are making an important contribution to the lives of people who value the flexibility they provide? I am keenly interested in this subject. From recent radio interviews and vox pop interviews, it seems to me that young people, in particular, really benefit from them. I understand that there are genuine concerns about instances of abuse, but for many people they provide a flexible way for them to pursue their career aspirations.
Ian Lavery
Of course, I understand that, but in reality, there are now more than 1 million people—probably a lot more—on zero-hours contracts, and the vast majority of them are being abused. It is not the other way around, as the Government seem to be suggesting. I have not met a single person—I kid you not—who wants a contract for no hours. People who want a contract want to work. That is the reality of it. Like any MP, I have met many people, listened to their complaints and had the discussion in my surgeries, and I have not met anybody who wants a contract for zero hours. Why would anyone want such a contract? It is implausible. I cannot understand it.
Obviously, zero-hours contracts suit some people on the basis that they will get employment for a week a month, but that is the few; the vast majority of people in the workplace on zero-hours contracts suffer greatly socially. These are people at the very bottom of the ladder and extremely desperate for employment. At times in my constituency, 28 people have been applying for each job. Those people would be delighted to have a zero-hours contract, if they thought they would get some employment, but zero-hours contracts take them off the unemployment register and basically massage the employment figures. There is an argument for outlawing, outright, zero-hours contracts. Government Members have said that there are some abuses, but I say we should get rid of the mass abuse and deal with the problem entirely.
Ian Murray (Edinburgh South) (Lab)
It is always a great delight to follow my good and hon. Friend the Member for Wansbeck (Ian Lavery), who I tend to follow in these debates—he always gets taken last, although I am sure that can be dealt with in another place.
This afternoon’s debate has added yet another dimension to the cost of living crisis that is engulfing the UK. It is not just the weekly shop, the energy bill or travel costs, but the hidden contributor of job insecurity. It is worth reminding ourselves that the UK had the third most flexible employment regime in the OECD even before this Government came to power and that there is a direct correlation between job insecurity, consumer confidence and economic growth. In fact, the Lib Dem Member for North Norfolk (Norman Lamb), the former employment relations Minister, said that any changes to the employment regime that undermined consumer confidence and created job insecurity would be “crazy”. He later got the employment relations ministerial brief and proceeded to do exactly what he said he would not do.
Many Members have discussed the plethora of other changes that have been made to the employment regime. It is worth reflecting on those changes, because they feed into the insecurity at work, which many hon. Members have mentioned, that is a symptom of zero-hours contracts. We have had—this is not an exclusive list, but gives an indication of why people feel more insecure at work—the qualification period increased to two years, collective redundancy cut to 45 days, fees for employment tribunals, the consequences of which were mentioned by my hon. Friend the Member for Wrexham (Ian Lucas), compensated no-fault dismissal by the back door and settlement agreements. We have also had shares for rights, compensation and employment tribunals slashed, lay people taken off employment tribunals and employment appeal tribunals, TUPE regulations diluted—that is perhaps partly why the problem of zero-hours contracts has increased—the Agricultural Wages Board abolished, national minimum wage enforcement slashed, the very existence of the Gangmasters Licensing Authority questioned, and health and safety taken back to what it was before the Boer war. That is a cocktail of job insecurity, which is highlighted by the fact that we are having this debate on zero-hours contracts.
A lot of Members have talked about whether we should have done more in government. Many hon. Members have made that criticism, but it is a false criticism, because they are missing the explosion of zero-hours contracts in recent years and the underemployment that we are seeing across everyone’s constituency.
Zero-hours contracts are not a new phenomenon—we have mentioned that already. They work for some employees—let us put that on the record; of course they do—but let us be clear, and say time and again, that the exploitative nature of such contracts has to be dealt with. That is what we need to do in the House today—and, indeed, in anything the Government bring forward. It is also not hard to see why zero-hours contracts are attractive to employers. They allow for maximum flexibility. However, in many cases, we are seeing the transfer of business risk—this is an important point—in a difficult economy from the employer to the employee. We should not hide behind the word “flexibility” so that it can mean exploitation.
Let me highlight a couple of case studies. One employee of a cinema firm—I will not mention the firm involved—said:
“I was offered part-time work with a zero-hours contract. It was all down to the whims of the managers whether or not you got work that week, which is just impossible to live with.”
He continued:
“They were very manipulative. And they employed so many people that we ended up getting about three hours a week. It seems as though zero-hours contracts are being used more and more to get as many staff as possible without any intention of using them…or giving us the hours we need to live and earn”
the income we need to survive.
Let us look at why the Government are so interested in zero-hours contracts and flexibility. Could it be because they have a flexible Cabinet? They have a part-time Chancellor. Indeed, I might even contest that the Business Secretary himself is on a zero-hours contract with the Liberal Democrats so that he can work full time for the Tories to deliver all these attacks on workers’ rights. Whether he likes it or not, that seems to be the case he is putting through. I wonder whether this issue also epitomises the kind of economy that this Government are looking to achieve—a low-wage, low-skilled, low-productivity work force that has insecure employment, to provide maximum flexibility and start a hire-and-fire culture. The Minister might come to the Dispatch Box and dispel that rumour, but it was only 24 hours ago that he suggested that small business should be exempt from any employment law whatever. If that is not creating a hire-and-fire culture, I do not know what is.
Let us reflect on the Government’s response to this issue. Although I appreciate the tone of the Secretary of State’s earlier comments—many have mentioned that—the record is: three BIS officials working part time on this issue, “speaking informally” to stakeholders, with a consultation promised some time in November. The Business Secretary said he hoped it would start some time in November, and I hope that he will bring forward strong proposals.
Many Members have spoken about issues in their constituencies and about what zero-hours contracts mean to their constituents. My hon. Friend the Member for Halifax (Mrs Riordan) made a powerful contribution. She made the critical point that most employers in Halifax look after their staff. I think that the vast majority of employers leave home every day to go to work with the intention of looking after their staff so that they can have a productive work force. I was struck by my hon. Friend’s story of the young person who was desperate for a job and paid to travel to work, only to be told that his name was not on the list. He had to travel home again at his own expense.
I am disappointed that the hon. Member for Hexham (Guy Opperman) is no longer in his place. He made a deplorable contribution, comparing people on zero-hours contracts with his zero-hours contract as a barrister. I hope that the Minister will agree that that is really not a true comparison with the problem we are looking at. If the hon. Gentleman wanted to complain about being on a zero-hours contract as a barrister—[Interruption.] Here he comes! Perhaps he was picking up his next £10,000-a-day contract while he was out of the Chamber.
My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) has always been a strong proponent of the arguments that we are putting forward today. He rightly concluded that zero-hours contracts needed to be used, but he also argued powerfully that, if major private sector employers such as Tesco, Morrisons and Sainsbury’s do not need to use them, others such as Wetherspoon’s and Burger King should not need to either. This is all about fairness in the workplace.
Ian Murray
I will not give way, because the hon. Gentleman was not in the Chamber for the start of the winding-up speeches. Anyway, before he arrived, I might have said something particularly complimentary about him.
Guy Opperman
I am grateful to the hon. Gentleman for giving way. Does he not accept that, when someone is working for free, when they are obligated to take on work and have no choice in the matter and when they are contracted to carry out that employment, that is exactly the same as a zero-hours contract? That was the situation that I was in, and I regret to say that his allegation was wrong.
Ian Murray
The hon. Gentleman might be confusing self-employment with zero-hours contracts. It is particularly unfair for a Government Member to stand up and compare people on zero-hours contracts in the retail and home care sectors with those who work as barristers. That is not particularly helpful. It just shows how out of touch the Government are. I am sure that people watching this debate at home will draw their own conclusions from that, as many people in the Chamber have done.
I want to pay particular tribute to my hon. Friend the Member for Wirral South (Alison McGovern), who, along with a number colleagues, has produced a fantastic pamphlet on this issue. I would encourage the Minister—and, indeed, the hon. Member for Hexham—to read it and to look at the case studies and the conclusions about what is happening in the labour market. She gave us a lesson today when she said that no one should tell their boss that they had done nothing, and they should instead say that they had not done enough. I am sure that that is a lesson we will all be taking to the Leader of the Opposition the next time we speak to him.
The hon. Member for Burnley (Gordon Birtwistle) has spoken in the Chamber about employment rights on a number of occasions since I have been in this post. His description of Burnley conjured up a utopian dream, and I might even move there myself. He seemed to suggest that zero-hours contracts were working wonderfully there, and that they offered the solution to all evils. His contribution on the way in which the contracts are affecting the people of Burnley was slightly strange, given that they are seen in many other constituencies as having precisely the opposite effect.
The hon. Member for East Antrim (Sammy Wilson) suggested that zero-hours contracts gave managers an excuse to be lazy about proper planning, and he was absolutely right. When I ran my own business, I spent an extraordinary amount of time creating rotas to ensure that every member of staff had the hours that they were contracted to do. That was a major part of running my own business, and if I was able to do it, I do not see why other organisations should not be able to do it too. Zero-hours contracts are bad for business. I spent a lot of time ensuring that people were paid properly, and were doing their contracted hours so that they could pay their rent or their mortgage, but premises not far from me that had 15 people on zero-hours contracts were taking on only eight or nine of them to work on any particular day. That lack of a level playing field makes the economy uncompetitive.
My hon. Friend the Member for Sunderland Central (Julie Elliott) led a marvellous debate in Westminster Hall just before the summer recess. Everybody talked in it about the devastation that these contracts can inflict on our constituencies, particularly in respect of mortgage and rental agreements. Instead of slashing employee rights and making it easier for employers to fire rather than hire, as this Government have done, we should be looking at putting together a framework to make people more secure at work, which would indeed help the economy.
I ran out of having anything to note about the speech of the hon. Member for Mid Norfolk (George Freeman). He is not in his place, so I shall not mention it any more.
My hon. Friend the Member for Wigan (Lisa Nandy) is a passionate advocate for her own constituency, and she reminded us all of the disgrace whereby the Red Cross has had to feed people through food banks—for the first time in this country in 70 years. If that is not an indictment of the current Government, showing how bad they are, I do not know what is. She posed the interesting question of why anyone would want to be in a zero-hours contract, and my hon. Friend the Member for Wansbeck said exactly the same thing. If someone has an employment contract, why would they want it to say zero hours? My hon. Friend the Member for Wigan also raised the issue of job progression—a subject we do not talk about enough. People on zero-hours contracts cannot get the skills, training and job progression up to the next level that they need.
My hon. Friend the Member for Wrexham told us about his constituents’ fear of losing their job if they raised issues about these contracts. When people in the workplace are deciding whether to bring up such issues with their employers, their fear of doing so is widespread. My hon. Friend talked, too, about the demolition of people’s rights and the critical role of the partnership between trade unions and employers in this country. He reflected on the Secretary of State’s examples from the car industry, which show where that partnership has worked exceptionally well. The recent success of the car industry is a testament to the workers, the trade unions, the Government and, indeed, the employers all working together to achieve it.
The hon. Member for Dover (Charlie Elphicke) suggested no action, but said that the recent exploitation of these contracts is the real issue. We agree. There is no dispute between us on that—it is the exploitation rather than zero-hours contracts themselves that must be dealt with.
My close neighbour, my hon. Friend the Member for Edinburgh East (Sheila Gilmore), mentioned what is happening in the care sector in Edinburgh. I think we are all going to have to deal with this issue in future if people are to get the quality of care that they deserve.
Ian Murray
I do not have time. I need to conclude to allow the Minister to reply—[Interruption.] The Minister is allowing me to give way, so I will.
Charlie Elphicke
I thank the hon. Gentleman for giving way. Unless it has escaped my attention, he has not mentioned the excellent speech of the hon. Member for Newcastle-under-Lyme (Paul Farrelly), who was authentic on this matter, having attempted to highlight it over a long period. He chided the Opposition for a lack of action when they were in government. Does the shadow Minister accept those criticisms?
Ian Murray
I do not think my hon. Friend was criticising us for lack of action. His contribution was a powerful one about what should be happening across the whole of the labour market. We will work closely together on the solutions that need to be introduced. Indeed, the Leader of the Opposition has already proposed some solutions.
I forgot to mention that my hon. Friend the Member for Edinburgh East referred to text messaging as the new form of queuing up to find out whether there was work at the docks. We need to bear that in mind. I have seen examples of people finding out on mobile phones that there is “no work for you today”—a message sometimes sent only half an hour before the work was due to start. That cannot be viewed as acceptable.
Commentators have spoken about exploitative uses of zero-hours contracts and the fact that they are a lazy option for businesses, but the Resolution Foundation also found that people on zero-hours contracts earned on average £6 an hour less, so the problem is not only lacking hours of work, but what happens when the hours are offered. Case law about the mutuality of obligation needs to be investigated further. When zero-hours contracts are exploited, there is no mutuality of obligation when people go for work and when they have been given work. We need that issue to be dealt with clearly.
Let us return to what the Leader of the Opposition announced last month, which covers some of the issues raised about banning exploitative use rather than zero-hours contracts themselves. My right hon. Friend rightly spoke about banning employers from insisting that those on zero-hours contracts are available, even when there is no guarantee of any work; stopping these contracts that require workers to work exclusively for one firm, which the Secretary of State mentioned; ending the misuse of zero-hours contracts where employees are in practice working regular hours over a sustained period; and putting in place a code of practice that will allow people to use these contracts properly.
The cost of living crisis engulfing this country is made worse by insecurity in the job market. That crisis can be tackled only by ensuring that people are secure in their employment and are paid a proper wage for a proper day’s work. I hope that Members will support our motion.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
May I thank the many Members who have spoken in this debate, which has been good natured? There have been a number of passionate speeches. Those who have contributed fall into two groups. There are clearly those who want to squeeze out flexible-hour contracts altogether: the hon. Members for Halifax (Mrs Riordan), for East Antrim (Sammy Wilson), for Sunderland Central (Julie Elliott), for Wigan (Lisa Nandy) and for Wansbeck (Ian Lavery). There are others who have taken a more nuanced approach. It was my hon. Friend the Member for Hexham (Guy Opperman) who said that we needed to be neither for nor against flexible-hours contracts, but that we needed to deal with the exploitation. The hon. Member for Newcastle-under-Lyme (Paul Farrelly) welcomed the consultation that we are planning, but asked, quite fairly, whether it would encompass the wider issues of shorter hours and agency working. I pay tribute to the hon. Member for Wirral South (Alison McGovern) for the work that she has done on this matter, and she said that she was willing to engage with the Government’s consultation. She has accepted that the sample that she has produced so far is relatively limited, but we are very happy to look at her work, and I welcome her offer to engage with the Government on it.
My hon. Friend the Member for Burnley (Gordon Birtwistle) made some strong points on the issue of exclusivity. I can absolutely give him the undertaking that that will be central to our consultation. He also made the point convincingly that we should not unduly restrict choice where that choice is being freely entered into.
My hon. Friend the Member for Mid Norfolk (George Freeman) spoke of the importance of retaining flexibility in the modern business environment and adduced powerful support for flexible-hour contracts from a range of business and personnel organisations. My hon. Friend the Member for Braintree (Mr Newmark) was the only Member who spoke in the debate to point to the latest employment and unemployment figures, and I am rather surprised that no Opposition Member today was able to recognise the continuing increase in the number of people working, whether in the north-east or the south-east. It is a shame that more Members did not give due credit for the increase in employment.
Lisa Nandy
I do not recognise anything of what the Minister has said so far. If he had listened to the debate, perhaps he would be in a better position to respond to some of the very important points made by my hon. Friends and by a few Members on the other side of the House.
Michael Fallon
I have been here throughout the debate and have listened to every speech since about a quarter to one this afternoon. I certainly listened to the hon. Lady’s speech, which was a very good one. I am simply pointing out the difference between those hon. Members who want to get rid of flexible-hours contracts altogether, and others who can see their value and want to preserve the choice so that those who are happy to choose them are able to do so.
My hon. Friend the Member for Dover (Charlie Elphicke) drew attention to the issue of eligibility for mortgages and rental tenancies for those who are on such contracts. It is important that we look at that aspect. The hon. Member for Edinburgh East (Sheila Gilmore) raised the issue of the application of flexible-hours contracts in the care industry, and spoke about the number of such services that have been contracted out. However, a great number of councils up and down the country, and not just subcontracted firms, are using flexible-hour contracts: Doncaster, Southwark and Liverpool, for example. The issue is not simply one for privatised contracted labour.
Alison McGovern
The Minister said that he was disappointed that no one had mentioned the unemployment figures. In fact, in an earlier intervention I drew attention to the relationship between zero-hours contracts and the under employment that they represent, and what is happening to the claimant count. Does the Minister feel that we need to investigate the issue, and does he feel that that under employment is serious and should be viewed alongside the falling claimant count?
Michael Fallon
I shall be happy to consider the hon. Lady’s point about under employment if she will recognise the considerable progress that the Government have made in increasing the total number of people in work since 2010.
Concerns have been expressed about the way in which these contracts work, which is why the Government have listened and decided to act. As my right hon. Friend the Secretary of State said, we will shortly launch a consultation and seek views on the issues that are causing concern—issues such as transparency in contracts and the availability of information, advice and guidance to ensure that individuals are aware of their rights and companies are aware of their obligations to provide, for instance, holiday pay, sick pay, redundancy pay and travelling time payments. As I said to my hon. Friend the Member for Burnley, we will also seek views on the issue of exclusivity in the employment contract.
However, while it is right to consider all those issues, we also need to ensure that the flexibility afforded by contracts of this kind to businesses and individuals is still available. A flexible and dynamic labour market is essential to facilitate growth in our economy, and to give businesses that want to expand the opportunity to do so.
As there is no single definition of a variable-hours contract, we must proceed with caution when considering the action that we might take to ensure that there are no unintended consequences. We must consider all the employment arrangements that could fall within the definition, such as work through agencies, which were mentioned by the hon. Member for Newcastle-under-Lyme. We must also ensure that we do not act in haste.
We cannot accept the motion, because it prejudges the consultation in calling for a ban, and calls for evidence that we have already begun to assemble. I should add, however, that some of my hon. Friends suggested that the last Labour Government had done nothing about this matter during their 13 years in office. That is not wholly true. On the contrary, the last Labour Government looked at the issue—and then did nothing. They published a White Paper entitled “Fairness at Work”, which discussed variable-hours contracts, and concluded:
“The Government wishes to retain the flexibility these contracts offer business”.
A couple of years after the White Paper, the then Business Secretary, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), said:
“The Government consider that zero hours contracts can contribute to the flexibility necessary for a modern labour market”.—[Official Report, 2 March 2000; Vol. 345, c. 344W.]
Unlike the last Labour Government, we will act. We will hold a full consultation. We will consider important issues such as restrictive exclusivity and the alleged lack of transparency.
Today we have heard Opposition Members express indignation about a flexibility that they themselves endorsed in government, and we have heard them speak of an alleged abuse about which they did nothing in government. No one wants people to be exploited; no one wants people to be tied to contracts that are unnecessarily restrictive, and in which there is no genuine transparency. This Government are acting, whereas the last Government failed to do so.
Question put.