Arrangement of Business
The Deputy Chairman of Committees (Lord Haskel) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Public Authorities (Fraud, Error and Recovery) Bill
(1 day, 4 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Sikka
“(6) P is liable for all errors arising from the information provided.”Member's explanatory statement
This amendment seeks to clarify which party is liable for the consequences of providing incorrect information.
Lord Sikka (Lab)
My Lords, there are four amendments in this group. Three are mine; the fourth belongs to the noble Lord, Lord Vaux, and is of a different kind altogether, so I shall let him address that one. I shall just speak to Amendments 76, 78 and 79.
Amendments 76 and 78 seek a statement from Ministers about liability for errors. The Government will be demanding information from banks about the transactions, income and wealth of individuals who have never committed any crime or misdemeanour. Such individuals should have the right to know that they have been targeted and treated as second-class citizens. They would be denied financial privacy simply because they are poor, old, sick, disabled and unfortunate. They may wish to lobby their Member of Parliament against what they might regard as unjust law.
Amendment 79 asks that all the parties affected by the information notice must receive a copy of that notice. If the measure about curbing fraud on the public purse is really appropriate, because the Government are really concerned about how the public purse is being depleted, perhaps it should have been applied first to Members of this House and the other House. After all, who can forget the expenses scandal? Yet this idea of surveillance of bank accounts is applied not to Members of this House or the other House but only to those who receive benefits. Again, that indicates that something is not appropriate.
Throughout the passage of this Bill, Ministers have said little about who will be liable for the consequences arising from any errors in the information notices issued by DWP or in the information supplied by banks to DWP or about the erroneous assessments and decisions that might be made by DWP’s reliance on that information. Who would be liable for this new flood of errors? Unlike in the past, this time millions of people would be subject to surveillance; it is not on a case-by-case basis but en masse. If erroneous assessments are made, what compensation would they be entitled to, especially as those affected will not be able to afford legal advice? The Bill does not provide free legal advice to the victims who may be affected by errors made by DWP or the banks.
The Government have yet to say how many bank accounts would be subjected to surveillance. If people have half a dozen bank accounts, that could be 60 million-plus bank accounts. If those accounts have just 10 transactions a year, that is 600 million transactions. How many transactions are banks going to trawl through, and what sense will they make of it? I am sure that the Minister will give us that information today.
In view of the large volume of notices, bank accounts and transactions, errors are inevitable. The DWP already makes thousands of errors every year, and now it will be issuing even more information notices, which means inevitably more errors. It will be issuing information notices without any personal knowledge of the affected benefit claimants or their exact personal circumstances before it reaches a judgment. A 1% error in matters relating to universal credit could affect 75,000 people and ultimately have life-affecting consequences for thousands of individuals. Banks make errors too in the normal course of their business. The Post Office scandal shows that no computer system or algorithm is ultra safe. So, the Government must be prepared and have some idea of what errors will be made, how many will be made, how many people will be affected and what kind of compensation may be payable.
There is a warning about things to come from Australia, where what has become known as the Robodebt scandal happened against a background of scapegoating welfare recipients. People received letters saying they owed thousands of dollars in debt for wrong claims relating to benefits. Those so-called wrong claims were made because the algorithm used by the government departments and the banks was considered to be error prone. More than 500,000 Australians were affected by the policy and were forced to repay amounts by taking out loans, selling their property and using their savings. Just like in the Post Office scandal, many were named and shamed. People were made to feel like criminals. Eventually, the courts declared the policy to be illegal, and billions of dollars have been paid in compensation. Is that the fate that awaits this country too?
I am sure that the Government have been ultra careful with the Bill, but no matter how careful they are, errors will happen. Given the DWP’s record, people will be wrongfully prosecuted, moneys will be wrongfully clawed back and people will be scarred and will suffer. Banks will make errors too in the provision of information. So, each party needs to be aware of the liability position, and that is exactly what my amendment seeks to ensure. I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, my Amendment 77 is, as the noble Lord, Lord Sikka, has just said, slightly different from the others. I thought about degrouping it, but I decided that life was too short.
Amendment 77 would introduce a reasonableness test—a discussion we have had before—so that an authorised officer must “reasonably” consider that it is
“necessary and proportionate to require the specified information”,
rather than just “consider” that it is necessary and proportionate. We have had a number of debates about a reasonableness test as we have gone through the various days in Grand Committee. Ensuring that an authorised officer should “reasonably” consider, rather than just arbitrarily “consider”, is an important safeguard against misuse of these powers.
Last Monday, the Minister, the noble Baroness, Lady Anderson, argued against a similar change in Amendment 29, saying:
“In addition, having thrilled the Committee with my recitations from Managing Public Money last Wednesday, I am excited to be able to quote from another government page turner, The Judge Over Your Shoulder. All ‘public law powers’ must be exercised with
‘reasonableness or rationality—following a proper reasoning process and so coming to a reasonable conclusion’.
Making a Minister’s belief a ‘reasonable’ belief therefore has no effect, because they are already subject to it”.—[Official Report, 9/6/25; col. GC 159.]
The Judge Over Your Shoulder—known by the rather inappropriate acronym JOYS—was a new one on me, so I looked it up. The Government describe this exciting publication as:
“Guidance to help you navigate the legal frameworks within which public bodies, particularly Government, make decisions … Currently in its 6th edition, it is used to communicate with clients on what to expect when working with government lawyers, allowing for effective collaboration and lowering the risk of legal challenge. The guidance is highly regarded across the legal profession”.
Most importantly, it goes on to say:
“The guidance remains a lay person’s guide to Administrative Law”.
So I am afraid that the noble Baroness’s argument does not hold up to scrutiny. The document is not even official guidance for civil servants; it is merely a lay person’s guide, has no legal status whatever and cannot be used as evidence that public law powers must be exercised with reasonableness or rationality. Unless the Minister can come up with something that actually has some legal force on civil servants and Ministers, the need for these reasonableness tests, which we have been debating throughout this Bill, remains.
As I have said before and will keep repeating, the noble Baroness will not always be in her position. While I completely believe that she would ensure that these powers are exercised reasonably, that may not always be the case for future Ministers or future Governments. We need to legislate for the future, not just for the present situation, so safeguards should be on the face of the Bill to be effective. In my view, a requirement to act reasonably is a very important safeguard.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure briefly to follow the noble Lord, Lord Vaux, who made a typically powerful case. I echo his comments, particularly on the need for safeguards on the face of the Bill. We need only look across the Atlantic to see how badly things can go wrong and how important it is that there are laws on which future Governments—I am not at all referring to this Government—can be held to account.
I support all the amendments in this group, but I will focus particularly on Amendment 79, in the name of the noble Lord, Lord Sikka, which would insert:
“A copy of the information notice must be sent to the parties affected by the notice”.
In considering that amendment, I looked at reports today from the horrific case of Nicola Green, the mother of a teenager with cerebral palsy, who was pursued by the DWP for more than a year, having been accused of fraudulently claiming nearly £3,000 in carer’s allowance. The DWP—this is the point of the story that is relevant to this amendment—wrote to her employer without her knowledge to try to take money from the pay of this part-time college worker who works less than 14 hours a week. That is a demonstration of how people need awareness so that they can know what is going on. To finish the story of Ms Green, last month the tribunal judge ruled in her favour and said that she had done absolutely nothing wrong. The DWP did not attend the hearing and then said that it was planning to appeal against the judge’s ruling. A few days ago, the Guardian got involved and Ms Green has now been told that she will not be pursued and she will receive information on how she can claim for compensation.
That is one case, but what we are looking at here is when a case is getting started, if we assume that there are reasonable grounds, as the noble Lord, Lord Vaux, has outlined should be put on the face of the Bill. If the DWP asks for this information and it has got something horribly wrong and has misunderstood the whole situation, as we know happens all too often, the claimant who knows about the information request will be in a position—hopefully, without going through the year of turmoil that poor Ms Green has gone through—to be able to stop the matter at that point.
Amendment 79 is, therefore, a terribly important amendment. I hope that we might hear from the Minister an ironclad, watertight statement that this will happen anyway, but if that is not what we hear, I will encourage the noble Lord, Lord Sikka, to bring the amendment back on Report, because it is an absolutely crucial issue.
Lord Palmer of Childs Hill (LD)
My Lords, these amendments in the names of the noble Lords, Lord Sikka and Lord Vaux, on the information-gathering powers of the DWP, provide greater clarity and safeguards regarding the collection and consequences of information requests under the Bill.
Amendments 76 and 78 both address liability and aim clearly to establish which party is responsible for any consequences arising from the provision of incorrect information. This clarification will, I hope, be important in ensuring that all parties understand their responsibilities and the potential implications of their actions, thereby promoting fairness and reducing uncertainty.
Viscount Younger of Leckie (Con)
My Lords, I offer my support for most of the proposals in this group of amendments, which strike me as largely thoughtful, proportionate and consistent with the principles that we have returned to time and again throughout this Committee stage: clarity in law; accountability in process; and fairness in the exercise of power. As we know, we have spent three days carefully scrutinising the powers set out in this Bill—powers that are, by any measure, significant. In that context, it is right that we continue to ask whether the safeguards accompanying these powers are sufficient and, where they are not, how they could be strengthened in a practical, proportionate and legally coherent way. We believe that these amendments are consistent in furthering that principle.
First, I have taken note of the cautionary tale arising from the Australian experience, as raised by the noble Lord, Lord Sikka. Amendments 76 and 78, which seek to clarify liability for errors or omissions in information provided under Clause 72, are rooted in a basic but essential legal principle: parties need to know where responsibility lies. If someone is being compelled to provide information under threat of penalty, it must be clear whether they or a third party acting on their behalf will be held liable for any inaccuracies. Without clear statutory guidance, we risk confusion and, worse still, unjust outcomes where individuals may be penalised for honest mistakes or information errors outside their control. These amendments would address that problem in a measured way by introducing transparency and clarity into the process.
Amendment 77 addresses a slightly different but equally important concern. As the noble Lord, Lord Vaux, outlined so eloquently, we are focusing on proportionality and reasonableness in the exercise of investigatory powers. The amendment would insert a reasonableness test requiring that an authorised officer must reasonably consider the request for information to be necessary and proportionate. To my mind, this is simply good law. It reflects what is already expected in broader public law standards, but writing it clearly into the legislation would give both officials and the public confidence that such powers are bound by objective legal norms. It would strengthen decision-making, improve accountability and, perhaps most important, provide a clearer basis for redress if powers are exercised in an overly broad or inappropriate manner. However, I note from the remarks made by the noble Lord, Lord Vaux, that we cannot—or should not—say, “Oh, joy of joys”, in respect of the guidance provided.
With clarity established as to where responsibility lies, by necessity a process will have to be put in place and be tested to make sure that there is oversight and sign-off. If the Minister is not minded to accept Amendments 76 and 77, can she outline in detail what the process is? If she cannot do so, I ask her to write to me and to copy in all those noble Lords who are involved in today’s Committee. The Minister may say that this is all part of the as-yet-unfinished “test and learn”, but a full answer is requested. I think I have picked up that she may be able to enlighten us in this respect at the beginning of this fourth day in Committee. I hope so.
However, I must express my concerns and ultimately oppose Amendment 79 in the name of the noble Lord, Lord Sikka, on the grounds that it risks undermining the effectiveness of the very system that we are seeking to strengthen—although I note the example given, the sad story of Ms Green, highlighted by the noble Baroness, Lady Bennett. The amendment would require that a copy of every information notice issued under Clause 72 be sent to all parties affected by that notice, including, crucially, the individual who is the subject of the investigation.
Fraud investigations, particularly in the social security context covered by Clause 72, often rely on timely access to accurate information before the subject of the investigation is made aware. This is not a matter of secrecy for secrecy’s sake; it is a matter of preserving the integrity of the evidence and preventing interference with the process. If a person suspected of fraud is notified that they are under investigation or even that information about them is being requested from a third party, there is a very real risk that they may destroy or tamper with evidence, close accounts, alter records or otherwise act to frustrate the inquiry before it has a chance to develop properly. This is not speculative; it is a well-established principle in law enforcement and regulatory practice. It is not clear when this notice would be sent, but there is an assumption in the amendment in the name of the noble Lord, Lord Sikka, that it would be sent immediately—perhaps he could clarify that when he winds up—in which case, I rest my case.
There is a reason why investigators, whether in HMRC, the police or other regulatory bodies, are often permitted to conduct inquiries without giving advance notice to those under scrutiny. To do otherwise, as I said, would be to tip off the very individuals whose conduct is in question and, in doing so, jeopardise the ability of investigators to properly undertake their duties. Investigators would be hampered at the outset, fraudsters would have an early warning and those operating within the system in good faith, including civil servants, local authorities and partner organisations, would find it significantly harder to detect and prevent abuse. This is particularly true in cases of organised or sophisticated fraud, where timely access to third-party data may be the only way to build a case before the trail goes cold. It is also true in cases where vulnerable individuals, perhaps manipulated by others, may be at risk of harm if alerted prematurely. I will return to that theme later today.
Of course, we must always strive for fairness and accountability, but there is a distinction between eventual transparency and instant notification. There are appropriate points in the process when the subject is made aware of action against them and can engage in a process of review, but to mandate notification at the earliest investigative stage before facts are even established would, I believe, give potential wrongdoers an unearned advantage. Therefore, I respectfully suggest that the practical consequences of this amendment would be counterproductive and potentially damaging to the very goals of the Bill. We need a fraud enforcement system that is lawful, proportionate and fair but also capable of operating effectively in the face of growing and increasingly complex threats to public finances. That is why I cannot support this amendment.
To conclude, a balance must always be struck between individual rights and the broader public interest. In this case, that balance lies in ensuring that information requests are reasonable, that liability is clear and that powers are used with restraint and purpose but not in mandating disclosures that could derail legitimate investigations. I therefore welcome Amendments 76 to 78, but I am afraid that I urge caution about and ultimately oppose Amendment 79.
The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, I thank all noble Lords who have contributed to this short debate and I welcome the Committee to Part 2 of the PAFER Bill. We are on to the DWP and it will be a joy to travel in this ship together with my happy fellow travellers. Before answering the specifics of the amendment, I want to reflect on some of the comments made by my noble friend Lord Sikka, because he helpfully highlighted a couple of the confusions that have permeated some of the discussion around the Bill.
The Bill contains a number of different measures and, in most cases, they apply to different people. In his speech, my noble friend spoke as though these information-gathering powers applied to all those people to whom, for example, an eligibility verification notice will be sent. In fact, that is not the case at all. A number of the amendments coming up next are about the eligibility verification measure, so I will return to any comments about it then. These information-gathering powers are quite different. They are specifically aimed at people of whom there is a reasonable suspicion of fraud by a named individual. This is a particular category of person.
Clause 72 makes provision for expanded information-gathering powers. There are existing powers in the Social Security Administration Act 1992, but they enable DWP to compel information only from a set list of organisations. That approach is restrictive and can delay or prevent the gathering of information that is relevant to proving or disproving a criminal benefit fraud investigation. So new Section 109BZB, inserted into the 1992 Act by this Bill, will update those powers to enable DWP to obtain relevant information from any information holder in respect of a DWP criminal investigation. That kind of information can be vital in proving or disproving an allegation of fraud.
Amendments 76 and 78, tabled by my noble friend Lord Sikka, concern liability for incorrect or incomplete information provided by an information holder in response to an information notice. The Bill is clear that information providers must comply with the information notice and should also be aware of their own data protection obligations in doing so. Information about those obligations will be included in the code of practice, and the information notice must specify the potential consequences for failing to comply.
Section 111 of the Social Security Administration Act 1992 sets out offences for intentionally failing to provide required information, as well as delaying or obstructing an authorised officer. In those circumstances, DWP can take action. So introducing a separate statutory liability for all errors is not necessary and would, in my view, actually place an unfair burden on information holders, particularly when mistakes are unintentional or minor.
Amendment 77, tabled by the noble Lord, Lord Vaux, would insert “reasonably” into subsection (1)(b) of new Section 109BZB. I hope to persuade the noble Lord that we in fact have a very good case here. I think that it will be easier to write. There may be some disagreement about his comments about JOYS—this will be another theme, I think; I suspect that “Ode to Joy” jokes and other joy jokes will abound. But I will write, because I want to talk specifically about the amendment that he has tabled today and how that affects the DWP parts of the Bill.
The current drafting of subsections (1)(a) and (1)(b) of new Section 109BZB in Clause 72 sets out that, prior to issuing an information notice, an authorised officer must have “reasonable grounds to suspect” that a DWP offence has been committed and must consider it “necessary and proportionate” to require the information. Both those steps have to happen, so I would argue that the drafting already captures the intent of the amendment. We have been doing this for some time. The department already has these information-gathering powers, with well-established training and guidance in place to ensure that they are used appropriately and in line with the existing law.
Authorised officers are trained and accredited before they can use those powers and they have to adhere to the code of practice. The existing guidance makes it clear that they have to consider all the facts, justify their decisions and record their reasoning. That will apply in the same way to the new expanded powers as it does to the current powers. For those reasons, we are confident that the principle of reasonableness is clear in the drafting of Clause 72 and we further support it. I can see that the noble Lord is itching to get to his feet.
Lord Vaux of Harrowden (CB)
I understand the noble Baroness’s point. It was because it said “reasonable grounds” in the first half that the fact that it was missing in the second half—paragraph (b)—stuck out: you have to have reasonable grounds, but then you just have to consider. But my point is more than that. Let us imagine the worst-case scenario, where a future Government decide to go for an all-out DOGE approach to whatever. I have no doubt, as I said, that the noble Baroness and the department at the moment will follow the guidance, et cetera, that she laid out, but that is just guidance and it can be torn up on a whim. If a new Government decide to go all out, there is no reasonableness safeguard; they can just say, “We consider it necessary”, and there does not need to be any reasonableness attached to that. That is the concern. It is not about now; it is about where we might be in a year or five years’ time that worries me.
Baroness Sherlock (Lab)
I see where the noble Lord is going with this and I am happy to pick up the conversation outside. I do not think that the distinction is big enough for it to be a problem, because the reality is that a reasonable suspicion is not just a hunch: it has to be based on an objective test, it requires up-to-date and accurate information and it must be something that an ordinary reasonable person would consider a legitimate cause for suspicion given the same information. So, for information gathering to be legal and justified, the intrusion into a person’s privacy must be necessary, proportionate and in accordance with the legislation. We think that that is belt and braces, but I am happy to pick that up with the noble Lord because I think that we want the same thing. The only question is: do we need any more ways of saying it?
Finally, Amendment 79, in the name of my noble friend Lord Sikka, would require DWP to copy the information notice to all parties, including the subject of the information request. The noble Viscount, Lord Younger, has explained the obvious reason why this is the case: since these powers apply only to named individuals about whom there is a reasonable suspicion of fraud, telling somebody at the outset could clearly prejudice the investigation and potentially enable them to conceal or destroy evidence.
Baroness Bennett of Manor Castle (GP)
I thank the Minister for giving way. It is important that we identify something here. I mentioned that case study because there are, of course, many carers in this situation. As I understand it, the DWP is considering prosecuting carers where it regards the outstanding sum to be more than £5,000. In November, the Guardian reported that more than 250 unpaid carers were potentially facing prosecutions for fraud under DWP guidelines. I fully acknowledge the points made on this—the noble Viscount, Lord Younger, made some useful points—but I think that there are two different sorts of case here. There are undoubtedly criminal gangs organising frauds, where, yes, you would not want to do so in those cases, but in the cases of these carers you know that it is one person and this may cause issues. There are two different use cases here that might need to be approached in two different ways.
Baroness Sherlock (Lab)
Obviously, I am not going to comment on individual cases. As the noble Baroness will be aware, there is an inquiry going on into the carer’s allowance on which we hope to report in the near future, so we will learn more from that.
Let me be clear here: this is the question of whether somebody should be told in good time that they are being investigated. Clearly, that would be a problem. There is a reason why that precise problem is recognised in data protection legislation, which sets out the circumstances in which the DWP and other government departments can process data for law enforcement purposes without notifying the relevant data subject.
To pick up the noble Baroness’s point, it is not as though somebody would never know because, if a fraud investigation uncovered reasonable suspicion of fraud, at some point, for a case to go anywhere, there would have to be an interview under caution with the person suspected of it. The conversation about what had happened would take place at that point, so it is not as though they are never going to know about it; they would have to know about it. We are talking about how they are told, including in what way and at what time. Although I understand where my noble friend Lord Sikka is coming from, the reality is that his proposal would make it impossible to investigate fraud effectively and would allow those who wish to avoid appropriate action on their problems the opportunity to get away with it.
The final comment from the noble Viscount, Lord Younger, was about oversight. As with the review of investigations, the oversight of these measures will be carried out by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. I hope that that reassures him.
I hope that all that has helped to assure the noble Lords and that, on that basis, they will withdraw or not press their amendments.
Lord Sikka (Lab)
I am very grateful to everyone for their contributions to this debate. I want to come back on a couple of issues.
I fully understand the arguments made against Amendment 79, but at the moment the individual becomes aware that something is afoot only much later in the day. Individuals rarely have time to seek legal advice. They often cannot afford legal advice. Early notification that they are subject to scrutiny, especially when they have never committed a crime and are just under suspicion, would mean that they may be able to save the DWP some time, effort and money on needless investigations. They may even be able to go to the local citizens advice bureau or somewhere else to get some advice. Leaving it until a much later stage inevitably means that there will be a lot of psychological stress for people. They will probably throw in the towel, a bit like the sub-postmasters, and think, “I’ve got to get off this merry-go-round. I will plead guilty even though I am not, because I cannot really contest anything with the Government”. So, I understand the arguments made, but I think that the current position of not telling the benefit claimants much earlier on really will lead to problems.
The Minister referred to the information provider’s duty for data protection and so on, but I have a concern, given that the DWP will make errors. It has a history of making thousands of them. Given that banks make errors in providing information, once DWP officials have received the information from the bank, they have to interpret that information and make sense of it. There will be misinterpretations, which will have serious consequences for the people affected.
The question to which I still have not heard an effective answer is: who will be liable? Who will pay the compensation? Will it be the public purse? Will it be the banks? The DWP will have a statutory relationship with the bank and hence can demand information, but banks are normally required to preserve confidentiality or financial information, and a bank will not ask anything from the individual concerned. It cannot at that point be said to owe a duty of care to somebody with whom it does not actually communicate, especially when that duty of care is eroded by the Bill. So the question remains: who will foot the bill, which could run into billions of pounds, if we end up with a similar situation to the one in Australia? I hope that the Minister can clarify that situation about who will foot the bill.
Viscount Younger of Leckie (Con)
Before the noble Lord sits down, I want to raise something, which is more of a question to the Minister and the team behind her. When I was in post, I became perhaps infamous, particularly when I did not understand something, for asking for a flow chart, and I wonder whether this is such a case where a flow chart would be extremely helpful. By that I mean that, when a process starts, what happens? One answers yes or no to questions and then it follows through with the safeguards included. I would find that incredibly helpful, and I suspect the team has one already. If there is one, I would find it helpful to see how the system works and where the safeguards are.
Baroness Sherlock (Lab)
I have never seen a flow chart, but some of these powers are not necessarily part of the same process, so they would not necessarily appear on the same piece of paper. But if I have any other way of explaining it, I would be very happy to do that.
Since I am on my feet, I reiterate that if the DWP is asking for information about an individual and it gathers information, it will most likely be doing so from a number of sources. An authorised officer will then review the information, and if there is felt to be a case for fraud, they will then interview the suspect under caution, who will be given the opportunity to get appropriate advice. There will be a process of engaging and discussion, but even before it gets to that stage, it is entirely possible that somebody will have reached out to find out the reason why an overpayment has been made. So, there are plenty of opportunities, and this specific amendment relates specifically to the extension of an existing power, which is used only when there is reasonable suspicion of fraud by a named individual. So, I do not think this amendment would help achieve the kind of things that have been discussed, and I urge the noble Lord to withdraw the amendment.
Lord Sikka (Lab)
I am very grateful to the Minister for that reply, which gives us plenty to think about—and perhaps a flow chart would be helpful in due course. For the time being, I beg leave to withdraw my amendment.
Lord Palmer of Childs Hill (LD)
My Lords, I give my wholehearted support to the stand part notices in the name of my noble friend Lady Kramer who, as noble Lords might gather, is in the Chamber for the Employment Rights Bill—I should perhaps also be there, but that is why noble Lords have me and not my noble friend Lady Kramer.
The opposition to Clause 74 and Schedule 3 standing part of the Bill is both principled and pragmatic, and would ensure that the Public Authorities (Fraud, Error and Recovery) Bill strikes the right balance between combating fraud and protecting the rights and dignity of individuals. The removal of the requirement for banks to examine claimants’ bank accounts, proposed in both Clause 74 and Schedule 3, would restore a vital safeguard for personal privacy and prevent an unnecessary intrusion into the lives of those who rely on public support. This approach would uphold commitments to civil liberties, ensuring that anti-fraud measures do not come at the expense of fundamental rights, as mentioned by the noble Lord, Lord Sikka, on the previous group. I commend my noble friend Lady Kramer’s leadership in recognising that the fight against fraud must never become a pretext for overreach and unwarranted surveillance.
Equally, Amendments 79B and 80, supported by my noble friend Lady Kramer and others, would wisely align eligibility verification safeguards with those already established for suspected fraud and, crucially, would limit the use of such powers to cases where there is genuine suspicion of wrongdoing. These changes will prevent fishing expeditions—I am sure that there will be fishing expeditions—and protect innocent welfare recipients from undue scrutiny.
My own Amendment 89 to Schedule 3 would ensure that the Bill applies only to the benefits explicitly listed and would further clarify and limit the scope of these powers, which could be pretty heavy, providing certainty and reassurance to the public. Together, these amendments would strengthen the Bill, making it more proportionate, transparent and just. I urge your Lordships to support this package, which embodies the best traditions of parliamentary scrutiny and my party’s belief in both fairness and effective government.
Lord Vaux of Harrowden (CB)
My Lords, I speak to my Amendment 79B and thank the noble Baroness, Lady Kramer, for her support for it. It is a very simple amendment that would make the giving of an eligibility verification notice subject to the same safeguard that already applies to all the other information-gathering powers within the Bill—namely, that the Secretary of State must be satisfied that issuing an EVN is necessary and proportionate for the purpose for which it is issued.
The Minister will no doubt have noticed that I have taken the liberty of inserting “reasonably” into the amendment, as we have just been discussing. Otherwise, the wording is aligned with the safeguard in Clause 3(1)(a), in relation to the Cabinet Office Minister requiring information, and to the wording in Clause 72, in relation to the Secretary of State for the DWP requiring information about suspected fraud under new Section 109BZB(1)(b). This safeguard applies everywhere in the Bill whenever the required information relates to suspected fraud. Rather strangely, however, it does not appear in Schedule 3, where there is no suspicion. That seems the wrong way round. Surely it is even more important that the giving of an information notice should be necessary and proportionate in cases where there is no suspicion.
I am assuming that this omission is in fact an oversight and that, given that it appears everywhere else in the Bill, the Minister will simply accept it. If not, she will need to explain why the exercise of these important and intrusive suspicionless information-gathering powers should not have to be, at the very least, necessary and proportionate in the same way as the exercise of the other information-gathering powers have to be. I will take a little bit of convincing, I am afraid.
Lord Davies of Brixton (Lab)
My Lords, I will speak to my Amendment 80. There is a certain amount of overlap with other amendments not just in this group, obviously, but in other groups. The mysteries of the grouping of amendments are beyond my pay grade, but we are in a situation where we are bound to discuss the same subject again and again—and, I suspect, again. I will read with interest what my noble friend the Minister said in replying to the previous debate. At the conclusion of all these overlapping debates it would be useful to the Committee if she could write a letter explaining how this whole thing fits together.
Lord Verdirame (Non-Afl)
My Lords, I agree with many of the concerns that have been expressed in connection with this group, but I will say a few words specifically in support of Amendment 79B in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. As it stands, paragraph 1(1) in new Schedule 3B affords a very broad discretion to the Secretary of State. It says that the Secretary of State may, for the named purposes,
“give a person of a type mentioned in paragraph 2 a notice … requiring the person to take the following steps”.
On its face, this is an unfettered discretion—or, rather, it is a discretion limited only by the purpose. Other than those purposes, the discretion does not, on its face, have a limit. The power that the Secretary of State has under this clause is very broad because, on receiving those notices, the banks or financial institutions will have to take those two steps. Perhaps later we will explore the step in connection with the eligibility indicators, which is potentially quite intrusive.
It seems to me that the language proposed in the amendment would identify a standard—reasonable satisfaction—that would have to govern the exercise of this discretion. In that respect, together with a number of other amendments also proposed by the noble Lord, Lord Vaux—but particularly in the context of this power—the amendment seems extremely sensible. I urge the Government to consider it and, in due course, accept it.
Baroness Bennett of Manor Castle (GP)
My Lords, I attached my name to the Clause 74 stand part notice tabled by the noble Baroness, Lady Kramer, and Amendment 80 tabled by the noble Lord, Lord Davies. The stand part notice is a simple solution, but the amendment of the noble Lord, Lord Davies, effectively, has the same impact, which is ensuring that you can investigate only when there is cause to investigate. I do not care which way it is done, but it is very clear—I associate myself with every word said by the noble Lord, Lord Davies of Brixton, here—that we are now at the sharp end of the Bill. As the noble Lord said and as I understand it, this is unprecedented in British law. This is going trawling; it is a fishing expedition and a mass intrusion. As the noble Lord said, quoting the DWP itself, it is about “‘persons unknown’ at scale”—that is an extremely telling phrase.
To put this in context, today the High Pay Centre put out its annual report on fat cat pay, which exposed what a hugely unequal society we have. It found that, on average, the top payees in organisations were getting 52 times as much as the median paid worker. The most extreme case of this that it found was the security and waste group Mitie, whose CEO was being paid 575 times the median salary of the workers. That is a comparison to the median but of course we know that many of those Mitie workers will be on the minimum wage or very near the minimum wage, and they will be in receipt of the benefits explicitly identified in the Bill. They will face their bank accounts being trawled through without their knowledge, while the CEO, with that lovely and enormously high pay level, does not face the same intrusion. This is a fundamental inequality in our society that is actively dangerous in terms of building the divisions within society.
The noble Lord, Lord Palmer, powerfully introduced the clause stand part notice, but I note his Amendment 89, which would ensure that the Bill may be used only in relation to the benefits listed in the Bill. I will not do the full Henry VIII story but, as is very obvious—it was made clear in the briefing I think we all received from the Justice organisation—with the Henry VIII powers, the Government can extend this to any other benefit. The one that immediately comes to mind, given how much it is in the headlines at the moment, is the personal independence payment—PIP—and the issues and the level of fear that already exist around that. I cannot remember the specific occasion, but I suspect that the Minister will have joined me, under the previous Government, in questioning Henry VIII clauses. This would shut the door on a Henry VIII clause, and it urgently needs to be done. I commend the noble Lord, Lord Palmer, for identifying that and putting the amendment down.
Baroness Fox of Buckley (Non-Afl)
My Lords, we have heard some important and powerful speeches. I broadly support all the amendments in this group. There is concern outside the House around these eligibility verification notices—people are genuinely worried about them and they are, I think, right to be—but I want to ask the Minister something directly. This Bill has been dubbed “the bank spying powers Bill”. There has been a lot of publicity about it. I know that campaigns such as Big Brother Watch have been gathering up signatures. There was an article in the newspapers today about it. I have heard Ministers, in debates, describe those kinds of descriptions as over-the-top hyperbole and say that it is absolutely ridiculous to talk in this way.
I think that paranoia is inevitable when things are not accountable or clear. I just want to say that I genuinely do not understand how the highly complex monitoring that this Bill demands, in order to provide information to the DWP, can happen unless it uses the processing of the data of all bank accounts. If you ask a bank to provide information on a group of people, the only way it can find out who that group of people is is algorithmically—I will come back to this—which means looking at the data of all bank accounts. That is one of the reasons why the idea of spying powers is raised. Have I got that wrong? Can the Minister clarify whether that is hyperbole and what the reality is? That would be especially helpful before I speak to my amendments on algorithms so that I do not make a mess of what I say.
Lord Sikka (Lab)
My Lords, I support all the amendments in this group, but I want to make a brief comment on Amendment 89. It is inappropriate for the Government to have powers to extend to and include other benefits, because each benefit may well have a different dynamic as to whether there is a possibility of fraud. If you look at the DWP statistics, you will see that some of the other benefits have a very low incidence of fraud; it is universal credit that is out of line, compared to the rest. I do not think that the Government should be allowed powers to add to those three benefits. That would be highly draconian. If the present Government, or a future one, feel that there is a need, they should bring primary legislation. At that time, we can also take the opportunity to smooth the rough edges of this Bill, which might have become visible by then.
Baroness Finn (Con)
My Lords, I rise to speak to this group of amendments, beginning with the Clause 74 stand part notice in the name of the noble Baroness, Lady Kramer, which was moved by the noble Lord, Lord Palmer. In our view, Clause 74 is not only necessary but foundational. It establishes the power to issue eligibility verification notices, which enable authorised officers to request information relevant to verifying a person’s entitlement to public funds or services. This is not an ancillary function; it is a mechanism that enables the Bill to work.
We broadly support Amendment 79B, which proposes the addition of a reasonableness test to the Secretary of State’s power to issue eligibility verification notices under Schedule 3. Throughout this Committee stage, we on these Benches have consistently returned to a set of core principles that should underpin the powers granted by this Bill: proportionality, accountability and clarity in the exercise of discretion. This amendment is very much in keeping with those principles. It would not constrain the function of the powers in question; instead, it would help to ensure that they are used lawfully, wisely and in a way that retains the confidence of both the public and those institutions asked to assist in their implementation.
Specifically, this amendment would require that the Secretary of State be “reasonably satisfied” that issuing an eligibility verification notice is both necessary and proportionate to the objective of identifying incorrect benefit payments. That is, by definition, not an unreasonable bar. It is not designed to frustrate the aims of the Bill or delay the work of the Government. On the contrary, it would simply formalise the expectation that the powers conferred under Schedule 3 should be exercised with care and justification.
This point is particularly relevant when we consider the position of banks and other financial institutions, which may be required under this provision to provide customer information. For those institutions, it is critical that the system is seen to be operating within a clear and lawful framework. They are being asked to co-operate in a sensitive and complex process. Ensuring that the Secretary of State is “reasonably satisfied”, and that this standard is explicitly in the Bill, would help to provide clarity, legitimacy and protection for all parties involved. As the noble Lord, Lord Vaux, and the noble Baroness, Lady Bennett, made clear on the previous group of amendments, legislation needs to be made for the future and, as such, reasonableness safeguards must be on the face of the Bill.
Moreover, this amendment would reinforce public confidence in the system. When members of the public know that strong powers, such as those that allow government access to eligibility-related data, are being exercised only after a specific, documented and reasonable assessment of necessity and proportionality, they are far more likely to view those powers as legitimate. Trust, as we know, is a critical currency in any enforcement regime.
This amendment would not obstruct the use of eligibility verification notices. It would simply require that they be issued on the basis of reasonable grounds, with a clear and proportionate purpose. It would bring consistency to the Bill, reassurance to the institutions involved and greater credibility to the broader anti-fraud effort that we all wish to support.
We oppose Amendment 80, which would substantially limit the exercise of eligibility verification notices under Schedule 3 to the Bill by requiring that they may be issued only where the welfare recipient is already suspected of committing a DWP offence. I suggest that this amendment risks undermining the core function of eligibility verification and, in so doing, would weaken the entire framework that the Government are proposing to put in place to detect and prevent fraud. Let us be clear about the purpose of the eligibility verification power: it is not primarily an enforcement power but rather a tool of assurance and risk management, designed to help to identify cases where payments are being made incorrectly.
The core problem with this amendment is that it conflates suspicion with verification. It assumes that an authorised officer must already suspect a DWP offence before reviewing financial data. In practice, however, it is often the financial data itself—the information provided in an account—that gives rise to that suspicion in the first place.
I turn to Amendment 89. We support the principle behind this amendment, which seeks to ensure that the powers contained in this Bill—substantial powers, we must all acknowledge—are exercised only in relation to the specific benefits explicitly listed in the Bill. This is not a wrecking amendment, nor one that seeks to undermine the Government’s legitimate goal of strengthening our response to fraud and error. Rather, it is about ensuring that when we legislate new powers, they are accompanied by a clear, democratic mandate and appropriate parliamentary scrutiny. The provision that this amendment seeks to remove would grant Ministers the ability, by regulation, to extend the application of these powers to further benefits beyond those originally listed. I submit that such an extension should not be done by regulation alone but rather with the explicit consent of Parliament through primary legislation or a tightly scrutinised process.
The powers outlined in Schedule 3, including access to personal financial information, the issuance of eligibility verification notices and the ability to act on suspicion of fraud, are not minor administrative tools. They represent a significant expansion of state capacity to inquire into private affairs in the name of public interest. That may well be justified in many cases, but it is only right that Parliament retains control over when and how these powers are extended to new areas of social security.
Supporting this amendment means drawing a line in the sand that the list of benefits to which these powers apply is not open-ended and that any extension should come back before Parliament for proper consideration. If, in future, a compelling case is made to include additional benefits, let that case be made here, in public, with scrutiny and accountability. That is how we ensure confidence in the law, in enforcement and in our broader welfare system.
This is not about resisting action on fraud but about ensuring that the tools we use to combat fraud are clearly grounded in public consent, which gives the system legitimacy. It is about protecting the balance of power between executive action and legislative oversight.
We have made the argument throughout Committee that clarity, transparency and accountability must be woven into the fabric of the Bill. This amendment speaks directly to those principles. It ensures that the powers in this legislation are not allowed to expand by stealth but only by clear, deliberate parliamentary decision.
I hope that the Minister will see this not as a restriction but as an opportunity: to reinforce the legitimacy of the powers the Government seek and to show that we are committed not only to effective fraud prevention but to the principled governance of that process. For that reason, we support this amendment.
Finally, in addressing the stand-part notice of the noble Baroness, Lady Kramer, on Schedule 3, we understand that this is an area of concern for many noble Lords across the Committee, but we do not feel that removing the schedule from the Bill is necessarily the most constructive way to go about this in Committee.
I appreciate that this is probing, and we therefore hope that the Government will use this opportunity, in responding to the stand-part notice of the noble Baroness, Lady Kramer, to address the concerns that we and many other noble Lords have raised in Committee, even if we do not support the noble Baroness’s stand-part notice.
Baroness Sherlock (Lab)
My Lords, I am grateful to noble Lords who spoke on this. I promise not to speak for long on this but, since it is the first time we have discussed the eligibility verification measure, I will, for the record, try to explain how it works, and, I hope, help the noble Baroness, Lady Fox—I apologise for my failure to explain it to her hitherto. I will have a go at doing that, and I will talk to the amendments as we go.
Clause 74 introduces new Section 121DB and Schedule 3B to the 1992 Act. They contain the provisions for the eligibility verification measure, which enables the Secretary of State to issue a bank or other financial institution with an eligibility verification notice, or EVN, which will help the DWP identify incorrect payments in the social security system. Ensuring that the right person is paid the right amount at the right time will help prevent both fraud and genuine errors, meaning that people do not accidentally build up debts, with all the concern that that causes.
As I set out at Second Reading, this is a data-requiring measure. It will enable the DWP to ask for data from banks to help identify incorrect payments and verify eligibility for specific benefits. It is about requiring banks to look within their own data and provide limited, relevant information on the accounts they have identified that match the eligibility indicators provided by the DWP. Just to clarify, we will ask the banks to look at accounts into which we make benefit payments, and we will give them the criteria, which clearly can only be things related to eligibility for the benefits under question.
That limited information will help the DWP to identify where claimants do not meet eligibility criteria for the benefits they are receiving. Getting access to information is key to addressing the whole fraud and error challenge. But if your Lordships think about other areas, we have seen how the DWP getting access to data such as earnings information from HMRC has massively reduced income-related overpayments. In fact, if you look at people on PAYE and universal credit, earnings-related fraud and error have pretty much been wiped out by getting access to earnings data directly from HMRC.
I will speak to Schedule 3 in a few moments. Let me look first at Amendment 79B from the noble Lord, Lord Vaux, which seeks to ensure that an EVN may be issued only when the Secretary of State is satisfied that it is necessary and proportionate to do so to achieve the aim of identifying incorrect benefit payments. This is the nub of it. Clearly, I agree that the power must be proportionate and necessary before we use it. We are bringing forward the legislation because we believe it is necessary, and we have already taken enormous steps to ensure that it will be used proportionately.
The reason it is necessary is that taxpayers deserve to know that every pound of their money is being spent wisely, and that benefits are being paid to those who need them and are legally entitled to them. This measure will improve the DWP’s access to important data to help verify entitlements, to ensure payments are correct, and to stop overpayments building up and debt accruing.
The National Audit Office made a telling point in the Commons at the evidence stage, basically saying, “If you want to enforce the eligibility criteria that Parliament has set, such as capital limits, you have to provide the DWP with a tool that goes a bit further than just asking people”. We do not know of other ways to get the necessary information to be able to pursue the kind of overpayments and fraud that are out there. However, I just remind the Committee that the measure has been designed with hugely strict safeguards, most of which are in the Bill, and they are supported with further detail in the code of practice, of which noble Lords have seen a draft, to ensure that the power is being used fairly and proportionately. The legislation sets out the benefits in scope, of which more later, and the type of information that can and cannot be shared under the power, and includes provisions to bar financial institutions from sharing transaction information or special category data.
Baroness Bennett of Manor Castle (GP)
My Lords, the Minister made a powerful point about the position of the current Opposition. As she identified, the old-age pension being covered in the former iteration of the Bill caused an enormous amount of concern. Obviously, all the groups we are talking about are potentially vulnerable, but old-age pensioners are particularly vulnerable and prone to be stressed and worried about this situation. Can the Minister assure me that the Government will not put the old-age state pension underneath the Bill?
Baroness Sherlock (Lab)
My Lords, I am grateful to the noble Baroness for giving me the opportunity to recover my voice and to say that not only will we not do it but the Bill says explicitly that the measure cannot be used on the state pension, so there is no question of it being used for that.
The case load is really straightforward. Fraud in the state pension is so low that it is the one area where the NAO does not qualify the accounts. We have to have a rationale. The reason we have chosen these three benefits initially is specifically because they are the areas where fraud is significant, and we know the information is out there that could make a difference. I can absolutely reassure the noble Baroness on that point: without amending primary legislation, this measure cannot be used on the state pension, and the Government will not do that. Any subsequent Government would have to change the law to be able to do it. I am grateful to the noble Baroness.
Viscount Younger of Leckie (Con)
My Lords, I intervene briefly to add a little history on the reason we included pensions. As the noble Baroness, Lady Bennett, may know, there is some fraud in the pensions area, to the tune of £100 million. This, I admit, is not as much as the £9.5 billion in welfare fraud that the Minister cited, but I just wanted to put the record straight; there was a reason for including pensions.
Secondly, you can have it one way or the other. We thought it would be good to put all benefits in scope in primary legislation, but I accept that another way of doing it is to limit it to the three benefits, as this Government have done, with a view to having secondary legislation for including others. I understand that.
Baroness Sherlock (Lab)
I am grateful. The noble Viscount is quite right: there is some fraud in the state pension. It was a judgment about proportion, having compared the size and value of the case load. It is very small. The fact that the affirmative procedure is used means that there will have to be a debate. The Government cannot simply on their own start investigating new benefits without anyone knowing about it, so that makes a difference.
The Bill is clear that, to help make this measure proportionate, only the minimum amount of information necessary is shared with DWP by the banks. That can include only details about the account, such as an account number and sort code; details to identify the individuals, such as names and dates of birth; and details about how the individuals appear to be breaching the eligibility criteria for their benefit. But still at that point, no one is suspected of having done anything wrong; the presumption of innocence remains, because further inquiries are needed to establish whether a benefit has been incorrectly paid.
Some people may have disregards in place that mean they are allowed to have more money than is normally used in the benefit rules. For example, normally you are allowed to have only £16,000 maximum in capital to be entitled to universal credit, but there are reasons why you might have more than that. Some forms of compensation payments are disregarded, for example. There may be a perfectly good reason, which will be investigated at that point—and that will be that. Others may have made a genuine mistake that has led to an overpayment of benefits, which it is important to correct as quickly as possible for the individual and the organisation.
However, there will be some cases, especially in the early stages, that ultimately lead to fraud being identified; that conclusion will never be drawn from these data alone. As is the case now, any claim where a suspicion of fraud arises is referred to our specialist investigation team, which has to undertake a thorough investigation, following all reasonable lines of inquiry before any determination can be drawn.
Just to reassure my noble friend, whether he accepts it or not, in fraud and error cases, decisions on entitlement will be made by a DWP staff member.
Lord Davies of Brixton (Lab)
It is clear that we are talking about two different stages here. The first intervention into the bank accounts of individuals will be done algorithmically. The DWP will provide the banks or whoever with the set of criteria that they should apply, and the banks will run it through their computers and that will throw up cases. No individual will be involved at that stage. Cases that are highlighted then referred to the DWP are the ones where human intervention will start. But there are the two stages, and the human intervention is at the second stage, not the first.
Baroness Sherlock (Lab)
I think that we are going to repeat ourselves at each other. This is essentially a data-requiring measure—it is a data push. The data is coming across to DWP, and that data will be used with other data, and where there is an indication that there may be an overpayment, it will be dealt with either by reaching out to the individual or, if there is a possibility that it is fraud, it will be referred for a fraud investigation. Any decision on benefit entitlement and fraud and error is made by a DWP staff member.
Lord Davies of Brixton (Lab)
I hope that the Minister will forgive me for making the point, but it is crucial. The bank will send a data file with cases that it has flagged. Will cases from that data file be identified by humans or by the DWP algorithmically?
Baroness Sherlock (Lab)
I think that we are talking at cross-purposes here. The information will be sent across to DWP, and DWP will take information on an individual and, if there is a signal that an individual may have a breach in eligibility criteria and may have more money in their bank account than is permitted, that information will be looked at and taken together with other information and a DWP staff member will make a judgment about what to do about that. I do not think that I can be any clearer than that.
Viscount Younger of Leckie (Con)
I am standing up to be helpful to the Minister. For fear of being rather like a long-playing record, I think that a flow chart would be incredibly helpful—so I am pressing my case for a flow chart. That is all that I shall say.
Baroness Sherlock (Lab)
My Lords, I am not a flow chart gal, but if anyone is capable of turning this into a useful flow chart, I shall have a look into it.
I fully accept, being an observant person, that not everybody in the Committee agrees with these measures. It is clear that they can make a difference to tackling fraud and error. We think that they are proportionate, but I accept that some Members do not think that, and that is obviously completely legitimate. We simply take a different view.
In the next few groups of amendments, we get to look at different aspects of how that would work, but it is the Government’s view that the scale of fraud is such that it needs to be tackled. If there were other, simpler ways in which to do it, we would have used them by now. This is a source of data that will help us to tackle fraud and error in overpayments, which we do not have at the moment. We do not see any other suitable ways in which to do it, so we think that it is proportionate. We have wrapped it around in safeguards as much as possible.
Baroness Fox of Buckley (Non-Afl)
The Minister has been very helpful. There are obviously disagreements philosophically, but what is confusing is that the financial service representatives have suggested that this is a trawling exercise—the quote given was of a “fishing exercise”. The Minister has stressed, “Don’t worry: when we go to the banks and ask for this information, it is suspicionless. We are not treating people as though they have done anything wrong; we are simply finding out”. That is a huge admission that the state—the Government—is going to the banks and demanding that they provide information for no other reason than that these people are on benefits.
Lord Vaux of Harrowden (CB)
I will jump in quickly before the Minister continues. She has been very helpful in explaining how this is going to work. I should say, as I have before, that I think this is infinitely better than it was when we saw it a year or so ago—I just put that on the record again. However, there are two questions about how it works on which I would like clarification.
First, I think the Minister indicated that the banks would not have to trawl all bank accounts, but I do not think that that is right. The logic must be that the DWP provides the criteria that it wants to look at, which is whether someone is in receipt of benefits and, secondly, whether there is a flag. In order to identify whether they are on benefits, the banks will have to trawl through all the accounts to find that out. That seems a necessary step—they have to spot the indicators in the accounts.
More importantly, though, this is not a one-off exercise under the Bill. They do not just send it once and then go away. The Bill allows for these things to be periodic within 12 months, and they can then be extended. I am interested to understand what the Government intend by “periodic”. Under the way that it is currently written, they could be saying, “I want you send us this data every day—or indeed every hour or minute—for the next 12 months”, and they could then extend it. What is the plan in terms of the periodicity of this?
Baroness Sherlock (Lab)
Let me deal with the noble Lord first, because that will be quick and I am conscious of the time—I have already gone over the 20 minutes. The DWP will tell the banks, “We have a reference number and these are the accounts at your bank into which we pay benefits; please look only at those accounts, not those of anyone else”. I have been saying this all the way along the line, but I have clearly failed to get this across. The noble Lord may recall the previous discussions when we were asked why you could not look at every bank account, and the reason is—
Lord Vaux of Harrowden (CB)
I am still not convinced that that is correct. I think that what happens is that there is an indicator that goes with the payment of the benefit, and we are then asking the banks, first, to identify all accounts where that indicator exists—so they have to look at all accounts to identify which those are—and, secondly, for those accounts, whether there are any with an eligibility indicator that is flagged. My reading is that it is in fact quite clear, and it is also clear in the code of conduct and the other stuff.
Baroness Sherlock (Lab)
In as much as we will say to the banks that we would like them to look at the accounts into which we pay benefits and will give them the reference numbers. Clearly, it is up to the banks how they identify those. I think it unlikely that they will take each bank account, look at it individually and make a decision, but it is up to them. We simply want them to look at those bank accounts and to tell us whether, within those bank accounts, they believe that the particular eligibility indicator that we have given them is correct.
Regarding frequency, we will negotiate that with the banks. The previous Government looked at an earlier iteration of this and ran two proofs of concept to establish that it would work and be effective. We now have to take the powers in order to be able to start doing this. So, we have agreed that we will work with a small number of banks and work out bit-by-bit how this works, bring over information as we can manage it, make sure that the system works, and build up as we go. We will determine from that how often we will need to do that and how it works. That has to be determined; we could not determine that in advance because we need the powers in the Bill to be able to start the process.
In response to the noble Baroness, Lady Fox, it is a question of proportionality. Clearly, we already ask the Revenue to tell us how much people earn in order to determine whether or not they meet the earnings criteria for, for example, universal credit. We could simply allow people to tell us, but when we did that, some of them got it wrong; many of them made mistakes; sometimes it changed, and sometimes they deliberately did not tell us. So now, we simply get information directly from the Revenue.
We think that the power is proportionate. Whenever someone compares it to something that feels disproportionate, such as spying or putting bugs in everyone’s houses, I think that we can either claim that this is a mass surveillance power like China would use and then wonder why people are getting paranoid about it, or, while I do my best to be specific about what we are trying to do, we can all try to have a measured conversation about whether or not it is reasonable, while fully accepting that for some people the line will be in a different place than for others for reasons of both philosophy and proportionality. I fully accept that.
I have done the best I can in 25 minutes. On that basis, I urge noble Lords to agree that the clause stand part.
Lord Palmer of Childs Hill (LD)
My Lords, I thank the Minister for that tour de force. I am afraid the problem is that we all have different ideas about what is proportionate. From what I have heard, I do not think what the Government are suggesting is proportionate, and that is where the problem arises. I come from the feeling that there is a presumption of innocence, and this seems to me almost a presumption of guilt.
The Minister has not taken the point about the nervousness of banks. If a bank gets even a modest inquiry—anyone who has a bank account knows that this happens if there is a certain inquiry on your bank account—signs go up in the algorithm used by the bank saying, “We’ve got to look at this”. Anyone who is a Peer or an MP knows that their affairs can be looked at more closely just for that very reason. I hope that, on Report, we can deal in greater detail with how nervous the banks will be about what is proposed. I hope the Minister can come back and give us reassurance from real banks—joint-stock banks—that have said how they view this. I think they will view it wanting to be on the safe side.
However, at this stage, I will not press my noble friend Lady Kramer’s clause stand part notice.
Lord Vaux of Harrowden
“(9) Before giving a person an eligibility verification notice, the Secretary of State must be satisfied that the costs that will be incurred by the person in responding to the eligibility verification notice will be proportionate and reasonable for that person to incur, or the Secretary of State must agree in advance to repay all or some of the costs to the person.” Member's explanatory statement
This amendment is intended to probe how the Secretary of State will ensure that they do not impose undue costs on the banks and to what extent the banks will be able to recoup these costs.
Lord Vaux of Harrowden (CB)
My Lords, I hope that my Amendments 81, 89C and 91 are fairly self-explanatory and that we are getting into more detailed points, which might be easier, rather than points of philosophy.
Amendment 81 relates to the costs that the eligibility verification process will impose on the banks and other financial institutions that must respond to the notices. It is intended to probe how those costs will be treated. We have already had various debates on third-party costs at earlier stages in Grand Committee, but in relation to the DWP clauses around eligibility verification, there is an important difference, which is that, so far, the Government have not made any real attempts to quantify the impact that the EVM process will have on the banks or other financial institutions.
The impact assessment says about the EVM:
“The cost to Data holders has not been estimated at this stage; estimates will be included in a subsequent IA”.
It goes on to give a bit more detail of the impact on third parties, banks and institutions, saying:
“There will be transition costs and on-going costs for businesses. The impact assessment outlines some indicative costs to business, however at this stage we are unable to provide a robust assessment of business costs for validation. This is because the operational solution for the measure is currently being developed, alongside further engagement with banks. We have committed to work in partnership with banks to develop the most appropriate implementation route. Estimates will be included in a subsequent IA”.
Later, the IA refers to set-up costs to banks of around £41.25 million, although that is not based on any substantive evidence.
The Bill itself is entirely silent on the costs of the eligibility verification regime to banks and other financial institutions, and how they might be treated. As we have discussed, this is not about the impact on the banks alone; it is also about the possibility of the unintended consequence of making banks less willing to provide services to benefit claimants. We had a long debate on that previously, and I shall not repeat the arguments.
Amendment 81 would require the Secretary of State to satisfy themselves that the costs to the banks will be proportionate and reasonable or, where that is not the case, to agree to repay some or all of the costs to the banks. This is not a situation where the costs can be recovered from the fraudster, because there may be no fraudster. The banks will, effectively, be working for the Government in this case, so it is appropriate that the Government should cover any unreasonable costs.
Amendment 91 also looks at the costs of the EVN regime. It would add to the scope of the annual independent review—as an aside I very much welcome that independent review; it is a big step forward in the safeguards around this—so that it would now also report on whether the use of EVNs has been proportionate to the costs incurred both by the department and by third parties such as banks. As I have said, there has been no meaningful attempt yet to evaluate the costs to third parties, particularly because the work is ongoing to work out what those will be, so there must be some mechanism to ensure that the costs are proportionate, and the independent review would be the logical and sensible place to do that.
Amendment 89C is more technical; it is designed to deal with a concern raised with me and others by UK Finance. This concern is that the existence of an eligibility indicator might constitute grounds to suspect fraud and therefore impose obligations on the bank to take actions such as closing or freezing the account or issuing a suspicious activity report under the various obligations that the banks already have. It is worth hearing what the impact assessment has to say in this respect. It says:
“In discussion with the banking sector, the Department has been clear that any data received under this measure should not be seen as indicative of any financial crime. Many claimants will have a legitimate, authorised reason to hold savings in excess of capital benefit rules (disregards for injury compensation, for example) and in many cases, overpayments could have been caused by genuine claimant error. Given this, the Department has been clear that there should be no action to risk claimant bank accounts because of the measure”.
So that sounds good. Part 2 of Schedule 3 already goes some way towards this, but UK Finance has made it clear that it does not see the existing wording in Part 2 of Schedule 3 as adequate, as it covers only the suspicious activity report element. UK Finance agrees that there has been extensive engagement with DWP on this but makes the point that, despite this engagement, there is currently no agreed deconfliction on banks’ financial crime obligations. The amendment simply says that information that results from a EVN should not be treated in that way, and should not of itself be treated by the bank as grounds to suspect fraud. The “of itself” is important there. I will be interested to hear what the Minister has to say, given the industry’s remaining concerns. Why does she disagree with UK Finance on this?
An alternative way of dealing with this concern would be to ensure clear guidance from the FCA, which does not seem to be happening. Why are the Government not simply pressing the FCA for such guidance? Amendment 83, tabled by the noble Lord, Lord Davies of Brixton, does something similar, with reference to conflicts between the Bill and the duty of care that banks owe to their customers, and I look forward to hearing what he has to say in that respect. I beg to move.
Lord Davies of Brixton (Lab)
My Amendment 83 is a probing amendment. I want to know more about the Government’s thinking on this. As the noble Lord, Lord Vaux, indicated, this is sparked by the comments of UK Finance, which represents, broadly speaking, those who will have to comply with this legislation, interrogate customers’ bank accounts and provide the DWP with information, so its views are very germane. It submitted a briefing for Second Reading, and a number of its points still stand, except to the extent that there has been any engagement between the DWP and UK Finance since Second Reading. I would be interested if the Minister could brief the Committee.
It is still, however, relevant to mention my points. I will focus on one in particular, as my amendment does. UK Finance raised a range of concerns that need to be taken seriously. I will outline them, just to put this into context. It is concerned about the potential conflict with its duties to deal with financial crime. It regarded this as a diversion from its capacity to deal with economic crime, and it was concerned that there were insufficient safeguards for bulk data access. I would be interested if the Minister could address those issues, either now or in correspondence.
My amendment focuses on the other point that it raised. It said:
“Risks of financial harm: Tensions between the Bill and firms’ existing obligations under the FCA’s Consumer Duty and Vulnerability Guidance could result in harm to vulnerable consumers. Bad actors learn workarounds quickly, so the powers may end up impacting most acutely people inadvertently making—or subject to—errors”.
That is a massive criticism of the Bill’s provisions, and it is important that it should be addressed explicitly, either in correspondence or in reply to this debate. I want to paraphrase in very broad terms the attitude of UK Finance towards the Bill. The truth—although it would not say it in quite these terms—is that it does not like it. It wishes that it was not here because of the pressure that it would place on it in all sorts of ways. That is outlined in its briefing.
I will address more directly the issue of financial harm to vulnerable customers. The Government need to say extensively and explicitly how they expect financial institutions to reconcile their undoubted duty of care towards their customers and their obligations under the Bill. To put this into context, the Child Poverty Action Group says that
“the eligibility verification measure would mean people face more suspicionless surveillance and intrusion into their privacy simply by virtue of being benefit recipients. We believe it is fundamentally unfair and potentially unlawful to subject these families to surveillance that the rest of the population does not face, simply because they are on a low income”.
I already quoted the concerns of Helena Wood of CIFAS. There is no doubt that the provisions of the Bill will be of massive concern to individuals, and that should be a major issue in how the Government implement the Bill—I have made plain my objections in principle—and how it will be handled in relation to vulnerable customers.
I have an amendment—let us hope we get to it on Wednesday—about the affordability assessment. Having an affordability assessment is not my idea; it is in the Government’s briefing note, but they do not explain what they mean by it. We will have a debate on Monday about the nature of that affordability assessment. But that in itself will put pressure on customers. Just being there, it will create pressure, particularly for people struggling with poverty and who have problems with their mental health.
It is essential that the affordability assessment will be able to understand the individual circumstances, but the process of implementing that assessment will in itself create harm for the consumer. I cannot see an easy way through on this, but the Government need to address the issue and tell us what they will do to ensure that this conflict is avoided.
Baroness Fox of Buckley (Non-Afl)
My Lords, there was extensive conversation about the role of banks in the debate on a previous day in Committee, and I probably got carried away with my own hyperbole when I said that they were being coerced into being involved, on which the noble Baroness, Lady Anderson, corrected me. However, I think we can say that they are compelled to be involved and that financial penalties, which will become increasingly punitive, will be levied if they do not do as the Government request. If they get those penalties, the cost might not be an issue but there would certainly be reputational damage. We need to have some context here and recognise that the banks are not queuing up to do this. That is an important point, which the noble Lord, Lord Davies of Brixton, has made. There is a reluctance about some of the things that are happening with the Bill, which I think the Government can admit to.
In all the literature they have produced and in conversations we have had so far, the Government have reassured those of us who are worried about privacy. We are constantly being reassured that there are limitations on the type of data the banks will share. On the other hand, the way in which the Government are dealing with that is by saying that the banks will be fined—there will be a penalty—if they overshare or if they provide inaccurate information, so I fear that this penalty will, again, have the impact of pushing the blame or responsibility on to banks for any errors.
That makes me nervous, because it is not clear to me how they will not see anyone on benefits as just a pain in the neck for them, since they will now have to go through the exercise of checking, which they are being compelled to do or they will be fined or get into trouble, and if they get the information wrong or hand over the wrong information, they can be fined again. Inevitably—this is why I am interested in these amendments—the banks will associate these eligibility verification notices and the work being asked of them for those on benefits, and they will view such people as creating more work and more jeopardy.
I also think the banks are being held responsible for things they should not necessarily be responsible for. I would be interested to know how the Minister feels, because I think it is a reasonable query at this point to ask, “Isn’t there a problem with private banks being asked to be government inspectors?” I think it was one of the MPs who said that the purpose of banks is not to act as an arm of the state. How should private banks respond to the fact that the state is asking them to do a huge amount more in relation to this clamp-down on DWP welfare fraud? It seems to me that, ultimately, we are asking the banks to do what the Government should be doing, and the banks will get the blame if things go wrong. They are the ones who will be doing the surveillance, no matter which way we look at it.
Lord Palmer of Childs Hill (LD)
My Lords, I warmly welcome the spirit and substance of these amendments, which would collectively strengthen the Public Authorities (Fraud, Error and Recovery) Bill by ensuring that our approach to tackling fraud is not only effective but fair and—that word again—proportionate.
Amendment 81 from the noble Lord, Lord Vaux of Harrowden, rightly probes how the Secretary of State will prevent undue costs being imposed on banks and seeks to clarify the mechanisms for cost recovery. This, I believe, is an essential safeguard, ensuring that our financial sector partners are not overburdened by compliance costs, which could ultimately impact customers and the wider economy.
Similarly, Amendment 91, which calls for an independent review of the eligibility verification powers with a focus on the proportionality—that word again—of costs incurred by both the department and banks, is a welcome step towards transparency and accountability in the implementation of these new powers.
I am particularly supportive of Amendment 83, which would place the duty of care that financial services providers owe to their customers at the forefront, ensuring that data sharing with the DWP does not override these fundamental responsibilities. This is a crucial point. While we must be resolute in our effort to combat fraud—on which I am sure we all agree—we must not do so at the expense of the trust and the rights of individuals. It is a very fine line to draw.
Amendment 89C from the noble Lord, Lord Vaux, would remove the risk that the mere existence of an eligibility indicator could trigger unnecessary action against account holders, thereby preventing unintended harm to individuals.
Taken together, these amendments would ensure that the Bill’s powers are exercised with restraint and with full regard to the interests of both institutions and individuals. We must not let it trigger unnecessary actions against account holders under the Proceeds of Crime Act. I support these amendments in their entirety.
Viscount Younger of Leckie (Con)
My Lords, I speak in support of Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, which seek to introduce proportionate and principled safeguards into the operation of eligibility verification notices: namely, that the Secretary of State must first be satisfied that the costs to the person receiving the notice are reasonable and proportionate, or else agree to reimburse those costs in whole or in part, and that this be subjected to an independent review. This is not a marginal or administrative detail; it goes to the heart of how we structure and sustain effective partnerships between the Government and the private sector, and particularly to how we treat the banking sector as a key actor in the fight against public sector fraud.
Throughout our deliberations on the Bill, my noble friend Lady Finn and I have returned time and again to the importance of ensuring that the powers are exercised responsibly, with due regard to proportionality and fairness. This amendment is a natural extension of that principle. It recognises that, when we ask third parties—in this case, banks and financial institutions—to support fraud detection by responding to eligibility verification notices, we are asking them to divert time, resources and personnel to do so. This of course comes at a cost, and it is only right that these costs are acknowledged and handled fairly.
As has been said, the banking sector plays an essential role in supporting government anti-fraud objectives. Banks will help to identify irregularities, flag risks and support enforcement action. But if we want this co-operation to continue and to deepen, we must treat banks as strategic partners, not simply as tools to be leveraged without regard to impact. This amendment would ensure that we are not shifting the financial burden of fraud prevention on to the shoulders of institutions that are neither the source of the fraud nor the primary beneficiaries of its reduction. It would also introduce a basic but important fairness test, that if costs are disproportionate, they should be recognised and potentially reimbursed.
Given the scale and frequency with which these powers may be used under the new framework, we should recognise that banks may be required to undertake substantial internal data searches, compliance checks or system queries, potentially at short notice. As the noble Baroness, Lady Fox, pointed out in her excellent remarks, to do so effectively, banks will need to allocate skilled staff and technological resources. It is only reasonable that we ensure that such work is feasible and fairly compensated where appropriate. Furthermore, the precise detail on how this mechanism will work is still vague from the Government.
I shall not mention flow charts again, for fear of being shouted down, but maybe we need a spreadsheet—although perhaps I shall be shouted down on that basis. Can the Minister give some detail as to how the “test and learn” with the banks is going as regards the operability of the system? In particular, what are the anticipated costs to the banks? It is understandable that the Government may not be able to answer this, as they may say that it will depend on the number of potential cases emerging and issues emanating for each case, which will vary. However, I would imagine—and I think that I said this at Second Reading—that the ongoing test-and-learn process will be able to highlight an average per case cost. If there is no information available, how do we know that the costs are not astronomical or even unsustainable for the system established? I hope that the Minister can enlighten us on that.
Baroness Sherlock (Lab)
My Lords, I am grateful to all noble Lords who have spoken on this group of amendments.
Amendments 81 and 91 in the name of the noble Lord, Lord Vaux, speak to the costs that banks may incur as a result of this measure and asks whether they are proportionate to the savings achieved. Let me say, first, that we acknowledge that, clearly, there will be new requirements on banks as a result of this proposed legislation. It is right that additional asks on banks are scrutinised, and I am grateful to the noble Lord for giving the Committee the opportunity to do that. I can assure the Committee, first, that we are bringing the legislation forward precisely because we believe that it is necessary; and, secondly, that we have taken steps to make it proportionate. We have already been through why we think that it is necessary, in our debate on the previous group, so I will not dwell on that again; let me just say that, given the scale of the savings and the lack of alternatives, we think that this legislation is necessary and that the safeguards make it proportionate.
Various noble Lords asked about the cost. We have estimated, based on initial consultation with industry sources, that the set-up cost will be around £40 million across the sector and that there will be some limited ongoing compliance costs for data holders; further information on that estimate can be found in the published impact assessment. We recognise that there is more work to do with industry to consider the costs further. That is why we committed to publishing a further, updated impact assessment within 12 months of Royal Assent: to update the estimate, taking into account the ongoing work with industry, and to ensure that there is transparency on the costs as we move forward. I assure the Committee that the Government take burdens on business seriously. We are committed to keeping requirements and costs proportionate and to a minimum; this has been a key aim at the forefront of our close and regular engagement with the finance sector.
We are not starting from scratch here. As we have discussed, the previous Government tested this approach through two proofs of concept. We know that it works. We continue to work closely with UK Finance and the finance sector on the delivery of a policy to minimise costs; I can reassure my noble friend Lord Davies both that there have been a number of meetings and Bill forums with UK Finance in recent weeks and that it will carry on working closely with us.
A few banks—a small group of them—are already working closely with us on the design and build of the digital solution that will be used to facilitate the transfer of information, in order to ensure that it is developed in a way that works for the sector. I just want to put on the record our appreciation to those banks for their valued input.
Let me say, however, that the Government can be held to account. The independent reviewer must consider whether the measure has been effective at helping to identify incorrect payments. The independent reviewer could also report on the burdens and costs that financial institutions might experience as part of that assessment. If financial institutions believe that Government are overreaching, they also have the right of review and appeal. Financial institutions can use the reviews and/or formal appeals processes to dispute an EVN, including if they determine that complying with an EVN would be unduly onerous. This is set out clearly in Parts 3 and 4 of new Schedule 3B, as inserted by the Bill. For those reasons, we believe that the amendment is not necessary.
Amendment 83 would require financial institutions, when asked to provide data to the DWP under this provision, not to provide it if they reasonably consider that doing so would conflict with their duty of care towards their customers. My concern is that this amendment assumes that we are asking banks and other financial institutions to look into the individual data that they provide to the DWP. That is absolutely not the policy intent. Let me again remind the Committee that information shared by financial institutions is done so without suspicion or presumption of any wrongdoing on the part of the claimant.
This type of data-sharing is not new to government. The Government already have similar powers to request data from financial institutions or third parties. Noble Lords will be aware, I am sure, that HMRC has the power to obtain data at scale from banks on interest-bearing accounts to support its work in gathering up taxes from all of us. For financial institutions, the duty of care owed to their customers includes obligations on a range of matters, including treating their customers fairly, taking reasonable steps to protect their customers against fraud and scams and providing fair-value services. There is nothing within the eligibility verification measure that would affect or impede these duties from being fulfilled.
This amendment would also have a practical impact: it would put greater burdens on financial institutions. The EVM is simply a data-requiring power; it does not ask financial institutions to make any assessments about the data shared. Asking them to do that would fundamentally change the basis of the policy and increase the burdens on them. I have already said that we have been working closely with the finance industry, and I can assure the Committee that we will carry on doing so.
I speak finally to Amendment 89C, which seeks to remove the risk that information that arises only as a result of complying with an EVN could by itself cause a bank to have to take specific reporting action against the account holder under the Proceeds of Crime Act 2002. I am grateful to the noble Lord, Lord Vaux, for raising this, and I hope to persuade him that the current provision already addresses this issue.
As I have said, the EVM is a data-requiring measure; it is not decision-making power. Information is shared by financial institutions without suspicion or presumption of any wrongdoing on the part of the claimant or account holder. EVM information will be used by the DWP to support our normal processes to help verify a claimant’s eligibility for the benefit that they are receiving. However, to give certainty on this point, we have already created an exemption in Schedule 3 that amends the Proceeds of Crime Act 2002 to make it clear that failure to disclose offences will not be committed if the information that the individual or institution has is only as a result of an EVN. To be clear: if the only reason that the institution has the information is as a result of an EVN, they will not be guilty of a failure to disclose offence under POCA. We have reflected this point in the EVM code of practice. This recognises that, while EVNs are not intended to indicate any wrongdoing, the DWP cannot legislate categorically for whether a person knows that there is other information a financial institution may be aware of.
We are not in a position to dictate to someone else whether they must or must not know or suspect something. This amendment seeks to prevent a person from knowing or suspecting that an offence is being committed if the information that leads them to that conclusion has arisen solely as a result of EVM. In other words, it seeks to legislate for a person’s state of mind—whether they know or suspect something—which we do not think is the way to do it. Our provision maintains the focus on the information available and aligns with the existing POCA exemption for information obtained, for example, as a result of carrying out specific immigration checks.
I always try to explain things in language that I would understand. My understanding is that, as currently drafted, the clause says that you cannot be guilty of a specific offence if you do not report somebody under SARS where the information comes only from an EVN. This amendment would fully exclude someone’s ability to suspect someone who may be acting suspiciously, and that cannot be possible. I hope that that makes sense to the noble Lord, Lord Vaux. He may want to reflect on it and come back to me, but that is the reason why we think that this is not the way forward and why what have done is the right way. I therefore believe that the current exemption, as drafted, is sufficient and aligns with the DWP’s intent that data returned by financial institutions does not in itself suggest any suspicion of fraud.
I will address some of the other comments made, starting with those of the noble Baroness, Lady Fox. I accept that there is a question about what is appropriate out there, but banks already have to do a range of things, including, as I said, HMRC having to report on interest-bearing accounts. We believe that the burdens are proportionate. After the set-up costs, we will see the details to be worked through with them, but once the systems are set up, we do not believe that this will be an extensive burden. Therefore, we hope that that will not be too much of a problem.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this debate and for their support for my amendments. We tabled these cost amendments primarily because we do not know what the costs are but we know that things will evolve in the future, and therefore it seems sensible that the independent reviewer should at the very least have a look at that. The Minister used the word “could”, but I would still like that to be “should”. We may well come back to that point at a later date.
The Minister mentioned that, when we are sending an EVN in, we are not requiring the banks to look into the data that is being provided to the DWP. That is naive. I do not think that any bank will ever just trawl through, pull a load of data out and send it up without checking it, because there are liabilities here to the banks. If they send a load of stuff up that is incorrect and people suffer as a result, guess who will end up getting it in the neck? It will be the bank that provided the incorrect data. It comes back to the debate we had earlier on the amendment in the name of the noble Lord, Lord Sikka, about who is liable. That is slightly naive; there are genuine, real costs here. The banks will be required to review, check and make sure that what they are providing does not cause them problems with their customers, hence the questions on breach of duty of care.
With respect to Amendment 89C—the UK Finance amendment, if we want to call it that—the Minister said that she would try to persuade me. I need to look at what she said more closely to see whether I have been persuaded. However, to be brutally honest, it is not me she needs to persuade—it is UK Finance. I urge her to have further discussions with UK Finance as soon as possible on this matter, because it seems that it is still exercising financial institutions and the industry. There is a lot in the impact assessment to say that they should not have a problem with this, and the Minister has given an explanation as to why she does not think they should, but they are still worried about it, so the department and the Minister still have work to do to make sure that UK Finance is comfortable. If it is uncomfortable, that is not a good way to start this relationship.
The Minister said that the job of the FCA was not to endorse government guidance, and I agree, but that is not what I was asking. The FCA should provide guidance to the industry that says, “If you provide this information, it does or does not have this effect”. It is for the FCA to give guidance in that respect, rather than endorsing what government guidance says. It ought to be proactive. To be honest, it should be involved in this process to make sure that it is happy that this does not cause a problem to the industry, and give guidance to the industry accordingly. Again, I hope that that discussion is going on.
I touch, finally, on the debanking issue, because it has been raised. It is a bit of a misnomer. The bigger concern to me is not that people’s bank accounts will be withdrawn—that is unlikely. More likely is that banks will become less willing to provide future bank accounts. It is not active debanking, but a slow erosion of willingness to provide services to particular groups of people. We have seen for ourselves as PEPs that banks do not like to provide us services as a result of the PEP rules. It will not be any different here. If we make it more difficult and expensive to provide accounts, it will slowly erode over time. It is not debanking in the sense of the closing down of Nigel Farage’s bank account approach, but more the erosion that I worry about.
Having said all that, I think that we will come back to one or two of these issues at the next stage. I beg leave to withdraw the amendment.
Baroness Fox of Buckley
“(4) The Secretary of State must publish the eligibility indicators.”Member’s explanatory statement
This amendment requires the Secretary of State to make public the eligibility indicators against which the banks are required to check their customers’ accounts.
Baroness Fox of Buckley (Non-Afl)
My Lords, my Amendments 82 and 88 attempt to bring much-needed transparency and clarity to how and why banks are being asked to check their customers’ bank accounts via EVMs. I also support Amendment 89ZA by the noble Lord, Lord Vaux.
Amendment 82 would require the Secretary of State to make eligibility indicators publicly available. As noble Lords will have gathered by now, I am opposed to eligibility verification notices in general and in principle. However, if they are to remain in the legislation, we need to maximise the transparency around them to guard against overreach. Amendment would 88 requires codes of practice to
“to include scrutiny provisions about the algorithms used by banks and the effectiveness of the eligibility verification measure”
in this clause.
At present, there is insufficient oversight in the Bill. We know that algorithms are central to the Bill. That is in line with the Government’s commitment to turbocharge data analytics and AI into public services in general and fraud risk detection in particular. Under this Bill, thousands of decisions regarding the collection and review of the private financial information of people receiving benefits will be—de facto at least—automated. That is a high-risk way to facilitate making decisions; especially those of a sensitive nature. Yet there is no other way for banks, building societies and so on to conduct the benefits eligibility checks that the Bill compels them to do without an algorithmic system—we have already touched on that—but the Bill does not include the specific eligibility search criteria of the algorithm involved. These amendments seek to address this lack of oversight.
The Explanatory Notes offer examples of search criteria, such as capital holdings or the legal limits of stays abroad, but there are no provisions to limit the criteria or provide transparency on them. That lack of transparency makes me question whether the Government are using the most appropriate mechanisms for their ends here, given the complexity of benefits eligibility per se, individuals varied circumstances and the sheer scale of the population’s financial accounts, joint accounts and so on.
It is unclear, and certainly no evidence has yet been provided that I am convinced by, why the Government think that banks are better placed than the DWP to conduct these complex assessments, especially when it involves outsourcing unconsented automated surveillance to third parties such as banks. These are all things that we have already discussed, so what I am specifically looking at here are the difficulties in relation to what we are asking banks to do.
There is no information in the Bill specifying who is responsible for supplying the algorithms required for this surveillance. Can the Minister clarify whether the DWP will provide third-party organisations such as banks with its existing search methodology? Will third parties be responsible for developing and deploying their own? I can understand that this might be being worked on. I have gathered from some of the things that the Minister has already mentioned that these technical issues might still be being resolved. However, it is not clear in the Bill who or what will decide on the algorithms, and there will be no accountability in relation to what we ask those algorithms to do.
In both the cases that I have given, we need to be able to probe how the powers will be put into practice. Can the Minister tell us how much testing has been done on the systems the banks will use? If it has not been done so far, when will we have it?
I do not understand why the Bill does not have provisions for quality assurance checks or a periodic review of these new automated systems. Without such quality checks, it seems inevitable that inaccurate information will be flagged and mistakes will occur, at great human cost. We heard similar concerns from the noble Lord, Lord Sikka, today. The noble Lord, Lord Vaux, referenced the Netherlands’ child tax credit scandal, which led to, for example, more than a thousand children being taken into foster care. That was because of algorithmic problems and a particular use of algorithms, with precisely the same ends of tackling fraud. Surely the Minister can see that the constant scanning of millions of accounts in relation to often complex queries and claims will make false positive matches for fraud highly likely.
I was trying to listen to what the Minister said earlier about how no decisions will be taken. Maybe we can clarify all that finally here, in terms of my concerns. I am worried that, as a result, a significant number of false positives will lead to account holders’ personal details being wrongly flagged up to the Government for further investigation, which in turn may incur further privacy intrusion—let alone penalties.
There have been problematic previous schemes that we should learn the lessons from. Take for example financial institutions’ suspicious activity reports, or SARs, which are used to combat money laundering—a laudable aim. But these SARs already have problems. A 2017 study of a sample of the largest banks found that, of approximately 16 million reviewed, 640,000 SARs were filed, yet only 4% of them resulted in law enforcement involvement.
Then there is a DWP pilot: the housing benefit accuracy award initiative, which was used to produce a risk score for housing benefit claimants that was then used as the basis for review of housing benefits by local councils. The algorithm flagged approximately 400,000 cases a year, identifying most of them as high-risk cases. As a consequence, councils were required to conduct file case reviews of those flagged, which involved invasive checks of bank statements, payslips, rent, et cetera. I know someone who was a victim of this and can testify to how awful that experience was. Benefits were suspended where claimants were not compliant or able to produce evidence to support their claim. But data obtained from the DWP by Big Brother Watch, which has been absolutely heroic in alerting the public to the problems associated with the Bill, showed that only one in three people on housing benefits subject to review were in fact being paid the wrong amount. That meant that 200,000 people were placed under suspicion at the hands of an algorithm, despite having done nothing wrong. The algorithm risks are amplified tenfold in the Bill—we should be taking this much more seriously in terms of scrutiny.
On recording how people’s data will be assessed and not relying solely on algorithms, we are given assurances in the Explanatory Notes—the Minister has been clear about this—that
“a human will always be involved in any further inquiries and any decision taken afterwards that might affect eligibility or benefit awards”.
But these assurances are not an adequate safeguard alone, as we have already touched on in earlier groups. On one hand, there is a tendency for human deference to algorithmic outputs—we have all heard the phrase, “The data does not lie”—and I fear that that is what will happen. On the other hand, courts are currently required to presume that computer systems operate correctly, placing the onus upon defendants to provide evidence that the systems they are implicated by are flawed.
There is also the small matter of staffing and resources. With many thousands of accounts being flagged to the DWP under the proposed system, it is not clear what is feasible in terms of the scale and nature of human involvement, or whether it will be genuinely meaningful. The Minister only moments ago assured us that members of the DWP would always be involved. Maybe this is the kind of job creation scheme that the Government are involved in, but it seems that that is an awful lot of civil servants who will be required if fraud is happening everywhere, and so on and so forth. So I worry.
Indeed, the impact assessment on the Bill acknowledges that the DWP may have to slow the volume of data requests to manage the potential volumes, because there will be so many. If a human decision-maker does not have enough time to properly review a decision—which is my fear—as may well be the case with the deluge of data that DWP will expect to receive from banks, the human input cannot be properly regarded as meaningful.
Lord Vaux of Harrowden (CB)
My Lords, I have Amendment 89ZA in this group—I still do not understand the numbering system that the Public Bill Office uses.
Before I move on to that, I want to make a couple of comments on the two amendments that the noble Baroness, Lady Fox, just raised. I have to say that I am a bit cautious about Amendment 82, because if you tell everybody what the eligibility indications are, it becomes very easy to avoid them. There is also a massive, gaping loophole in the Bill, which is that it covers only one bank at a time. I do not know—I would be quite interested to understand from the noble Baroness—whether, having received data from individual banks, the DWP will be amalgamating and therefore will be able to track the sort of concept that, if you have £8,000 in this bank account and £8,000 in that bank account, that puts you up to the £16,000 that would trigger the eligibility indicator. But there is a gaping hole there and, if you publish everything you are looking for, it makes it so much easier to get around it. So I am a little cautious about that one.
I am much more sympathetic to at least the spirit behind Amendment 88. We had a long debate the other day around the issues of machine learning, bias, stereotyping and generalisation creeping into decision-making processes, and there is more to do in this Bill around the safeguards around the use of automated decision-making. I know that the noble Baroness will talk about the code of practice, but that is very specific. It requires a human element only where the decision could impact on benefit eligibility. So it does not include stepping into the next phase of an intrusive investigation using the powers in Clause 72, for example. So, whether or not Amendment 88 is the right way to go, there is definitely more that we need to think about in terms of safeguards around the use of algorithmic or machine learning—or AI or whatever—trawling through this, and a number of amendments later cover the same ground a bit.
Amendment 89ZA is very simple. It simply says that applicants for benefits should be informed at the time of their application that information relating to their bank accounts may be provided to the Secretary of State, and that people who are already in receipt of benefits are informed within three months of the commencement of the Bill.
The information-gathering powers that this Bill creates are a significant step, and are carried out without any suspicion of fraud, so it must be appropriate and fair that people are informed that their bank account information may be provided to the department. I cannot actually see any reason for not accepting this one; it would improve transparency and also make those who are considering fraud think twice if they are being told that their bank account details could be accessed. In fact, I mean “provided”, because technically they are not accessed but provided.
As a general principle, as set out in our data protection laws, people have the right to know where their data is going and how it is being used, and I really cannot see any reason why this situation should be any different.
Viscount Younger of Leckie (Con)
My Lords, I wish to speak broadly in support of Amendment 82 in the name of the noble Baroness, Lady Fox of Buckley. This amendment goes to the heart of something that we should all be able to agree on: that the public have a right to know the rules by which they may be judged and that those tasked with making assessments, such as banks, should not be left to act on unclear or unpublished guidance.
This amendment would require the Secretary of State to publish the eligibility indicators that banks are expected to use when checking their customers’ accounts under the new regime. In plain terms, it asks the Government to set out clearly, before these provisions are enforced, what criteria are being used to determine eligibility. This chimes with the opening remarks made by the noble Baroness, Lady Fox. It is difficult to see how a system of such potential consequence to individuals and to financial institutions alike can be implemented fairly, if the basis on which it operates is not published and understood in advance.
We have heard throughout the debates on this Bill about the need to balance effective fraud prevention with the protection of individual rights, proper due process, and clarity for institutions involved. Amendment 82 speaks directly to that balance. If banks are to play a front-line role in identifying accounts or individuals under suspicion, they must be given unambiguous and publicly available guidance to avoid the risk of overreach, error or unjustified intrusion. We cannot have a system where accounts are flagged or actions taken on the basis of indicators that are withheld from public view. That would be both untransparent and unjust.
We should not legislate for a regime that affects people’s access to their financial resources or that places duties on banks to act in quasi-investigative ways, without knowing exactly how those judgments are to be made. This is not a wrecking amendment—it does not oppose the broader framework of the Bill. It merely insists that, before new powers are exercised, the public and partners involved in delivery know the criteria. That is not too much to ask. In fact, it is the very least we should expect in a system rooted in fairness and good governance. Again, this echoes the remarks made by the noble Baroness, Lady Fox.
To pick up on remarks made by the noble Lord, Lord Vaux, there is a balance to be struck between not giving too much away in the interest of transparency so that fraudsters are given fuel to manipulate the system. Can the Minister say where that balance should be struck, as balance there must be?
Similarly, I speak in support of Amendment 88, also in the name of the noble Baroness, Lady Fox. I believe it represents a sensible and timely addition to the schedule. As we have discussed throughout the passage of this Bill, the use of data and automated decision-making, particularly through algorithms, is becoming an increasingly central feature of fraud detection and eligibility verification. That in itself is not a problem; it is a reflection of the complexity and scale of modern fraud threats. But it also means that we need clear and consistent standards for how these tools are developed, deployed and scrutinised. The cautionary tale from the Netherlands, highlighted by the noble Baroness, Lady Fox, is very much noted. I am sure that the Committee has noted it.
This amendment goes to the heart of the need for standards. By requiring the code of practice to include mechanisms for the scrutiny of algorithms used by those in receipt of eligibility verification notices, typically banks, it creates a shared framework for oversight. This is particularly important when algorithms are applied across several discrete institutions, each of which may have slightly different internal systems, standards or even risk profiles. Without a common baseline, we risk inconsistency, a lack of accountability and potential harm to individuals through opaque or poorly calibrated processes.
Moreover, new sub-paragraph (g) proposed in this amendment rightly extends that principle of scrutiny to the powers themselves, and we must also be willing to assess whether they are effective and 100% secure in their specified and sole objective. We must also be willing to assess whether they are proportionate to the outcomes that they set out to deliver. In short, this is a practical amendment rooted in the principles of clarity, consistency and continuous improvement—perhaps part of the test and learn. It does not obstruct the Government’s goals; it helps to make them more credible and accountable, we believe.
I express my support for Amendment 89ZA in the name of the noble Lord, Lord Vaux of Harrowden, which I believe strikes a careful and important balance between transparency, accountability and the effective operation of the powers contained in this schedule. At its core, this amendment does something quite simple but significant: it ensures that individuals applying for or receiving relevant benefits are clearly informed—that is, in writing—that information relating to their bank accounts may, under certain circumstances, be shared with the Secretary of State. This is a matter of basic transparency and fairness. I note that this is being proposed at the time the benefit is applied for, and I might describe it—perhaps putting words into the mouth of the noble Lord, Lord Vaux—as part of an induction process when one applies for any benefit in scope. In other words, fair warning is given that a benefit that comes from the taxpayers’ pocket has responsibilities attached to it. Perhaps this should also be placed in the code of practice, and I ask that question of the Minister.
If we are to entrust public authorities with powers of this magnitude—which allow for sensitive financial data to be accessed without the individual’s active consent—surely it is right that we also commit to informing individuals of the possibility that those powers might be used. This is not about compromising investigations or alerting fraudsters in advance; it is about ensuring that people understand the system that they are entering and can act responsibly and lawfully within it. Providing this information up front reinforces personal responsibility. As I said earlier, it says clearly to the individual, “If you are claiming public money, there is a legitimate expectation that your eligibility may be subject to verification”. It allows claimants to know the rules of engagement in advance, and it ensures that they cannot claim later to have been caught unawares.
At the same time, I recognise, and I think the noble Lord does as well—I hope he does—that this amendment must not inadvertently encourage more sophisticated methods of deception. It is a fine line to walk, and this chimes with my earlier question to the Minister. We must not turn transparency into a user manual for fraud, but I believe that this amendment is framed carefully enough to avoid that risk. It does not disclose when, how or under what criteria information will be requested—only that it may be. That is, I believe, a proportionate step. Ultimately, this amendment supports the legitimacy of the wider regime, and I therefore support it and hope that the Government will see it as a constructive addition to the schedule.
Baroness Sherlock (Lab)
My Lords, I am grateful to all the noble Lords for their comments. Amendment 82, tabled by the noble Baroness, Lady Fox, would require the Secretary of State to make public the eligibility indicators, as set out in EVNs. Although I understand the point that she is making, I am firmly of the view that making public the eligibility indicators will be counterproductive, for reasons alluded to by the noble Lord, Lord Vaux. It is set out very clearly in the Bill that all eligibility indicators have to link to the eligibility criteria for those benefits that are within the scope of the EVN measure: universal credit, pension credit and ESA. Those eligibility criteria are widely available for anyone to see, including on the GOV.UK website. The DWP does its utmost to ensure that customers who claim benefits are clear on the relevant criteria, and they are reminded many times throughout their claim of the need to report changes of circumstances against these key criteria. This is important because there are people out there who are not fraudsters but who make genuine errors, and we do all we can to help people understand the eligibility rules and ensure that changes of circumstances are reported.
As the noble Viscount alluded to, there is a fine line between transparency and making things easier for fraudsters, but I do not want to publish the specific eligibility indicators that we will set out in an EVN, because to do so would actually help those who want to commit fraud to circumvent the measure. We know from all kinds of sources that there are people out there who study every single rule and piece of information we put out to try to work out how to get around them and get money to which they are not entitled. The Committee would obviously want us to do everything we can to avoid that. So, to protect the effectiveness of this measure and to help stop fraud, we do not think it appropriate that we publish the eligibility indicators.
Turning to Amendment 88, also from the noble Baroness, Lady Fox—
Lord Vaux of Harrowden (CB)
Before the Minister moves on to Amendment 88, I asked about the cross-comparison with datasets from different banks; this goes to the point that the Minister has just been making about it being easy to commit fraud. To what extent will data from bank A be amalgamated with data from bank B to discover whether, when combined, there is an eligibility indicator flag?
Baroness Sherlock (Lab)
An EVN can be used only in relation to the bank account into which the benefit is paid. Therefore, that would be a specific bank account in a specific bank. Of course, the DWP’s authorised investigators have and use a range of sources where they have a suspicion of fraud, and there is a range of mechanisms out there to look at what other information can be gathered in order to make that judgment. I can see that I have not hit on what the noble Lord was asking for.
Lord Vaux of Harrowden (CB)
In the situation where there would be a suspicion of fraud, you have bank A—actually, I suppose it would not have provided the information, would it?
Baroness Fox of Buckley (Non-Afl)
I apologise for jumping up and down. This is the confusion I have in relation to this area: if you are a fraudster and you are watching this Committee very carefully, as the Minister indicated they are doing—I am sympathetic to the idea that I am perhaps being naive in publishing, “Here you are, fraudsters, this is what you should do”—it seems to me that what you would do is set up multiple bank accounts. In fact, I think it was the Minister for Transformation, Andrew Western MP, who conceded
“that we will not have full sight of somebody’s accounts if they bank with more than one institution”.—[Official Report, Commons, Public Authorities (Fraud, Error and Recovery) Bill Committee, 6/3/25; col. 237.]
So it seems to me that the fraudsters are over there playing the system.
This is a Bill that gives enormous powers, about which I worry. It seems that the eligibility criteria should be known in order for them to be accountable. I do not want to be naive, but the people who actually need the eligibility criteria are those people who might, by error, breach the eligibility criteria, but also, democracy requires it because we need to know how to hold this legislation to account. The fraudsters—the people who are deliberately going out of their way to rip off the welfare system—already know how to play this, if that makes any sense. Even as I was tabling the amendment, I was aware of the fact that I am not saying, “Let’s give the game away completely”; however, we cannot just say, “We can’t tell you anything in case the fraudsters find out”, when there are real loopholes here that the fraudsters are going to exploit anyway.
Lord Sikka (Lab)
Related to that, as far as I understand it, some benefits can be paid into foreign bank accounts but they are totally beyond the scope of the Bill, so, presumably, if there is fraud there, it will never really be tackled. Secondly, is it permissible for a UK-resident benefit recipient to request that the benefit be paid into a bank account in the Cayman Islands, the Bahamas, Cyprus or somewhere else?
Baroness Sherlock (Lab)
Just to be clear, this measure is attacking both fraud and error. It looks at overpayments, whatever the source. It is simply one tool among many that is available to the DWP and which will help produce a source of information, which will help to identify incorrect overpayments. Having got that information, the DWP will use the full range of powers and the information available to it. If any fraudsters are sitting down on a quiet Monday afternoon and watching this Committee, they should be warned: the DWP has lots of sources of information; it will investigate them; and it successfully prosecutes many people for fraud. The DWP will use this and other powers to pursue what is there. However, this measure alone has been scored by the OBR to save up to £940 million over the next five years. No single measure will be foolproof alone; it will play its part alongside a range of measures and processes to help root out fraud.
I will have to write to my noble friend Lord Sikka on the Cayman Islands. I do not have them at the back of my mind at the moment, I am afraid, but I will let him know if there is an issue over there.
I say to the noble Baroness, Lady Fox, that I fully accept that there is a line between giving all details in public and tackling fraud. We have given out a lot of information and a lot of protections here, and we have found ways of making sure that there is oversight. One reason for having oversight is that there are things that we will never be able to put out in public; it is important that somebody has scrutiny and can report to Parliament, independent of the department, on how these powers are being used. We would hope that that picks up the remaining areas of concern.
I turn to Amendment 88, also in the name of the noble Baroness, Lady Fox. I will address in turn the two points that it raises. The first is the requirement for the code of practice to include information about the ways in which scrutiny can be applied to the methods that a financial institution may use to identify relevant accounts, for the purposes of the eligibility verification measure. This is not a matter for a code of practice. The criteria that financial institutions must use to identify relevant accounts are described in paragraph 1(2)(b) of new Schedule 3B to the Social Security Administration Act 1992. Accounts must simply meet two tests in order for information to be shared by the financial institution with the DWP: first, the account must receive a relevant benefit payment or be linked to that account; and, secondly, the account in question must meet the criteria that the DWP sets out in the eligibility verification notice. Financial institutions operate in many ways. It must be for each individual financial institution to determine how it identifies relevant accounts.
The key point here is that the EVM asks banks to return specified data only where those two tests have been met. It is a data-requiring power; we are not asking banks to do anything more than that. Again, I remind the Committee that it is the DWP that will review all the information received and DWP staff who will make any decisions about entitlement where potential fraud or error is identified. No decisions will be taken using EVM data alone; decisions about entitlement will be made only once the DWP has made further inquiries.
On that point, the Bill does not introduce any new use of automated decision-making. The DWP will examine data received from banks under the new power, alongside other data received, to determine whether there has been an incorrect overpayment. As is set out in our personal information charter, which is publicly available, the DWP uses automated processing in some decision-making to help us deliver efficient services. The DWP will not make any decision that has significant effect based solely on automated processing unless the law allows this, and claimants will be informed if we make any such decision.
I turn to the second issue in this amendment. It would require the code of practice to contain information about measures that would enable scrutiny of the effectiveness of the EVM. This is, again, an important issue but not one for the code of practice. However, I completely agree with the noble Baroness, Lady Fox, that we must assess how effective the EVM is; that is why, under Clause 75, the independent overseer of the measure must consider the extent to which the exercise of the power has been effective in helping to identify incorrect payments of relevant benefits.
Finally, I turn to Amendment 89ZA, which raises the issue of informing claimants that the EVM may be used to require the sharing of information about their relevant accounts with the DWP. Let me take a moment to update the Committee on the ways in which the DWP will inform claimants and relevant account holders about the measure; I hope that this will reassure the noble Lord, Lord Vaux. The DWP has a personal information charter that sets out how it uses and stores personal information. It is publicly available, and claimants are explicitly directed to it at all times when the DWP requests their personal data. We will update the DWP personal information charter to make it clear that the EVM may be used to require the sharing of their personal information; that commitment is made clear in the draft code of practice, which noble Lords have seen.
This amendment suggests that we should inform claimants either at the start of their claim or within three months of the EVM becoming operational. Our approach of updating the personal information charter means that customers are much more regularly informed about the EVM; this is because claimants are regularly directed to the document throughout their claim. For the benefit of the Committee, I can confirm that claimants are explicitly directed to it in all DWP claim forms; in change of circumstance and uprating letters; in recorded telephone messages; in DWP agents’ telephony scripts; on digital online services; and in other products where the DWP collects personal data. As noble Lords will know, the draft code of practice, which will be publicly consulted on, makes clear that all those who hold a personal account into which a relevant benefit is paid should be aware that information about them and their relevant accounts may be shared by a financial institution with the DWP if the eligibility indicators specified in an EVN are met.
Lord Vaux of Harrowden (CB)
There is a big difference between pointing someone towards a data protection statement—let us be brutally honest: how many of us have ever read one?—and telling people that their bank account details can be provided to the DWP as a result of having this particular benefit. Nobody has ever read a data protection statement, and I do not suppose that they ever will.
Baroness Sherlock (Lab)
To be clear, their bank details cannot be accessed by the DWP under this measure; their bank details can be accessed by the DWP under its other powers. I know that the noble Lord knows this but I want it to be clear for the record because there is a lot of misunderstanding out there; I hope that he will let me finish my sentence. The DWP cannot access people’s bank accounts using this measure or look at transaction data. It does not see what they spend their money on or any of that. It can simply ask banks to let it know whether a particular criterion is met. I take the noble Lord’s point; we think that this is adequate, but he does not, so I am afraid that we may just have to agree to disagree on this one.
Regarding the noble Lord’s other point, on how much data and how many different banks will be involved—and when—we had two choices in doing this: test and learn, which is the subject of much comment; or the alternative, which is a big bang involving all the banks going out together at once, getting their data, bringing it in and going through it. We decided not to do that, as we thought that it would be irresponsible. Test and learn means that, for the first 12 months of the rollout, we will initially work closely with a smaller number of banks and financial institutions, identifying any possible areas for concern, allowing them to be addressed and sorting out teething problems. The measure will then gradually be rolled out with all the relevant financial institutions. The impact assessment says that, in the first year—2026-27—we expect a rollout rate of around 2%, going up to 25% in 2027-28. The idea is that you start very small, make sure that it works, iron out the problems and then grow it as it goes on.
I think it was the noble Baroness, Lady Fox, who mentioned that the data could be slowed down. We do not want to bring in data that we cannot process; we want to bring in data that is appropriate. We will bring it in and manage it, as we are able and resourced to do. I hope that that reassures noble Lords; I encourage the noble Baroness, Lady Fox, to withdraw her amendment.
Viscount Younger of Leckie (Con)
I want a bit of clarity on test and learn. We have had two exercises, which have reached proof of concept. I am confused now because the Minister is, I think, indicating that there are test and learn exercises still to begin. How many are ongoing and how many are due to begin?
Baroness Sherlock (Lab)
Clearly, I am expressing this really badly, because I have said it about 17 times and still have not explained it clearly.
When the noble Viscount was a Minister—perhaps it was his predecessor—under the previous Government, they were working with banks to find out whether the proof of concept worked. The answer is that, yes, it does. Test and learn is about saying, “We’re now going to build this up and operate it at scale. How do we do it? What does it look like?” Bit by bit, we will work with a small number of banks; try it out; make sure that the processes, the data pushes and so on work properly; and work with a small number of people who also understand how the sector works as a whole. Then, when it is working, we will roll it out to a wider number.
I am sorry if I have not been explaining that clearly, but that is the difference. The proof of concept asks: can it be made to work? The answer is yes. The test and learn asks: what is the best way to set this up so that the systems will work and so that we get the right information at the right time—a time when we are able to work it properly? I hope that that has helped.
Baroness Fox of Buckley (Non-Afl)
I give many thanks to noble Lords for their contributions to this debate. In some ways, it has clarified quite a lot for me; in some ways, I am completely confused. I will go off and read the debate, reflect on it then work out how to bring this issue forward on Report.
I thank the noble Viscount, Lord Younger of Leckie, for his supportive remarks in general and the insights that he brought; they are much appreciated. I thank the noble Lord, Lord Vaux, for drawing attention to my dilemmas around transparency. I want there to be more transparency but, as I said, I do not want to be associated with being an idiot—well, that ship might have sailed—in relation to giving the game away. Transparency is important in politics and in terms of trust in a new Bill that will bring about a huge change in the way the state is viewed, in terms of how it relates to citizens on benefits and so on. One of the reasons for this confusion and difficulty is that this Bill insists on treating fraud and error indistinguishably. That is one of the dangers with it. Fraud is one thing, but people who are inadvertently overpaid when errors are made are treated with the same piece of legislation. That is why it was helpful of the noble Lord, Lord Sikka, to remind us earlier that there are people who will play the system—that is one thing—while there are other people who could inadvertently be treated like criminals.
Lord Vaux of Harrowden
“Reasonable grounds for suspicion
5A The existence of an eligibility indicator alone does not constitute reasonable grounds for suspicion for the purpose of section 109BZB (1)(a) of the Social Security Administration Act 1992.”Member's explanatory statement
This amendment would ensure that an authorised person would need more evidence than the existence of an eligibility indicator alone before exercising more intrusive investigations.
Lord Vaux of Harrowden (CB)
My Lords, Amendments 84 and 85 attempt to strengthen important safeguards around the use of information that is gained through an EVM. The Minister has quite rightly said that the scope of the information the banks can provide in response to an EVM is tightly limited. She is right, and that is a very significant improvement to the previous incarnation of the Bill. As currently framed, the only information that can be provided to the Secretary of State by the bank is specified details about the account, such as sort code and account number; specified details about the account holder, such as name and date of birth; and specified details about how the account meets the eligibility indicators. It is also clear in the Bill that transaction data or special category data may not be provided. So far, so good and, as I said, it is a great improvement.
But there is another important potential loophole here. Clause 72 gives the Secretary of State the power to require much more intrusive information if the Secretary of State
“has reasonable grounds to suspect that a person has committed, is committing or intends to commit a DWP offence”.
So, if the existence of an eligibility indicator alone would meet the threshold of “reasonable grounds to suspect”, then the tightly drawn restrictions on the data that banks can provide under an EVM become somewhat meaningless. It will just move on to the next phase almost automatically. We have had a lot of discussion around automation, and I agree with the noble Baroness, Lady Fox, that given the volumes of data that will be provided over time, it seems extremely likely that it will—in fact, it is extremely unlikely that it will not—be processed automatically by the DWP, which will choose which ones to investigate more deeply. We have heard about the human elements and will come on to those in the second amendment in this group. but the code of practice does not cover the transfer from EVM to Clause 72’s more intrusive data searching.
Nothing in the code of practice or the Bill would prevent this eligibility indicator being used as reasonable grounds to suspect and, therefore, the Clause 72 provision being triggered with no other safeguard. There may be many reasons why the existence of an eligibility indicator might be entirely innocent. The impact assessment and the noble Baroness have given the example of authorised disregards and genuine error—and genuine error on the part of both the individual and the department. So it seems that, before exercising the robust and intrusive powers under Clause 72, much more should be required, or at least more should be required, than just the existence of an eligibility indicator alone, and I stress “alone”. That is what Amendment 84 tries to achieve, and I think this is probably in line with what the noble Baroness intends, so I hope that this or something like it will be acceptable.
The second amendment, Amendment 85, deals with another critically important safeguard. In response to various concerns raised about the use of algorithms, algorithmic processing, the use of AI and so on, the noble Baroness has stated very clearly that information must be reviewed by a human person before action is taken, and a previous group discussed how bias and stereotyping can creep into automated systems—I will not repeat that. But again, the human element—the human review—does not appear anywhere in the Bill. There is a reference to human decision-making in paragraph 4.31 of the draft code of practice:
“No data source is perfect or infallible. That is why in fraud and error, a human will make any final decisions that affect benefit entitlement, and any indications of potential fraud or error will be looked at comprehensively”.
But this does not set out any level of seniority or qualification, and it covers only final decisions that affect benefit entitlements and not, for example, decisions to affect the intrusive investigative powers that Amendment 84 is looking at. More importantly, the code of conduct can be changed at will by the department; there is no parliamentary oversight or what have you.
As I have said before, I do not doubt the noble Baroness’s intentions in this respect, but the Bill will outlast her tenure and indeed her party’s tenure. Future Governments or Ministers may not have vulnerable people’s interests at heart in the same way that she does. Imagine a future Government applying a DOGE-style approach to this.
The requirement for any decision to be taken by a suitably qualified and senior human is such an important safeguard that I believe it must be in the Bill and not left to the whim of any future Government who might wish to simply automate the whole process—and they could do that: they just change the code of conduct. The issue is not about decisions that affect benefit entitlement alone; as I say, appropriate human review should cover also the use of the more intrusive powers under Clause 72, and the code of conduct does not cover that at all.
I am very happy to discuss the wording, but the principle of suitably qualified and senior human review before decisions are taken is, for me, one of the key safeguards. I hope the noble Baroness will be able to look sympathetically at this amendment, especially as all it does, I think, is to codify what she has consistently said will be the case. I beg to move.
Lord Verdirame (Non-Afl)
My Lords, I will be very brief. I very strongly support everything that the noble Lord, Lord Vaux, has said on these two amendments. They are some of the most important amendments that have been debated today because they go to a very fundamental principle. The power in Clause 72, with the new Section 109BZB, is quite significant, and we need to have limits to the exercise of this power in the Bill, both as regards the reasonable grounds—that is Amendment 84—and as regards the human decision-maker. I will not repeat the noble Lord’s reasons because I thought he put his case so compellingly, but I am very much in favour.
Lord Palmer of Childs Hill (LD)
My Lords, I am also pleased to welcome Amendments 84 and 85, tabled by the noble Lord, Lord Vaux of Harrowden, which serve to strengthen the safeguards within the Bill.
Amendment 84 would ensure that an authorised person must have more than just the existence of an eligibility indicator before embarking on more intrusive investigations. We believe this is a vital protection against overreach, ensuring that individuals are not subjected to unnecessary or disproportionate scrutiny based on limited evidence. Such a safeguard is entirely in keeping with my party’s principles of fairness and proportionality—that word again—and it will help to maintain public confidence in the system by ensuring that investigations are always grounded in robust evidence.
Amendment 85, which requires that information received following an eligibility verification notice is reviewed by an appropriately senior person before any changes to benefits or intrusive investigations are commenced, is equally welcome. This amendment introduces an important layer of oversight and accountability, ensuring that decisions with potentially significant consequences for individuals are not taken lightly or without proper consideration. By embedding these checks and balances into the Bill, we would be not only protecting the rights of claimants but upholding the integrity of our counterfraud efforts. I confirm other comments about how important these amendments are, and I hope that we can carry them forward to Report if need be.
Viscount Younger of Leckie (Con)
My Lords, I rise to speak in support of speak in support of Amendments 84 and 85 in the name of the noble Lord, Lord Vaux of Harrowden. These are thoughtful, proportionate and necessary additions to this schedule, and they speak directly to the themes that we on these Benches, and many across the Committee, have consistently returned to throughout Committee: clarity, fairness and safeguards for the individual in the exercise of significant state powers.
Amendment 84 seeks to ensure that the mere presence of an eligibility indicator is not, in and of itself, treated as constituting reasonable grounds for suspicion, as required under new Section 109BZB(l)(a) of the Social Security Administration Act 1992, before certain investigatory powers can be triggered. This is of fundamental importance. The Bill proposes a system whereby data provided by financial institutions, under an EVN, may trigger further investigatory steps. But what is an eligibility indicator? It is, in essence, a flag: a signal generated through algorithmic or rule-based analysis that a particular feature of a person’s financial behaviour may be anomalous or potentially inconsistent with benefit entitlement.
As I have said before, we must be absolutely clear: an eligibility indicator is not a finding of fact. It is not, in itself, evidence of wrongdoing. Amendment 84 simply ensures that the existence of a flag must be the beginning of a process and not the end of one; that further evidence or analysis must be applied before escalation; that human judgment must play a role, as has been mentioned today; and that when the state exercises its powers, especially when those powers touch on privacy, dignity or the right to subsistence, it does so on the basis of reasonable grounds. This is a proportionate safeguard. It respects the need to act on suspicious patterns, but it also respects the rights of the individual and the integrity of the system.
Amendment 85 builds on this principle by adding an additional layer of oversight—namely, that any action to suspend or amend a person’s benefits or to initiate intrusive investigatory steps must first be reviewed by a person of appropriate seniority and experience, authorised by the Secretary of State. Again, this is not an attempt to frustrate or delay the enforcement regime—it is a recognition that decisions on subsistence-level support must be taken with proper scrutiny by individuals equipped with the training, authority and awareness to make such decisions with the necessary care.
We must also remember that these are not abstract powers. They affect real and often vulnerable people, whose entire financial well-being may rest on the outcome of these decisions. A mistaken suspension of benefits, based on an unreviewed flag or misinterpreted data, can mean missed rent, no food on the table or the spiral into debt and instability. Also, it is possible that, if the system did not work as intended, individuals who suffered wrongful financial detriment—or, worse, reputational detriment—could take legal action.
If we are to maintain public trust in these powers, it is vital that there is confidence in not only their lawfulness but their soundness. A requirement that an appropriately senior official reviews and signs off on such actions is not a high bar. It is, in many ways, the least that we should expect of a responsible and accountable system. Can the Minister confirm, as she did the other day in respect of the Cabinet Office debates, the exact level of an appropriately senior official?
I should add that this chimes with remarks I made in our debate on a previous group about the need to have a so-called four eyes principle of oversight by a human being on decisions made—a fail-safe system for the monitoring of decision-making. The noble Lord, Lord Vaux, outlined the arguments in this respect very well. Together, these amendments would provide what so many across the Committee have called for: safeguards that ensure that the system operates justly as well as efficiently. They would not remove powers or obstruct action. They would embed standards of evidence, scrutiny and accountability into the decision-making process—standards that we would demand in any area of public life where the stakes are this high.
Baroness Sherlock (Lab)
I am grateful to all noble Lords. The noble Viscount just described these amendments as thoughtful and necessary. I think that they are characteristically thoughtful, but I hope now to persuade the noble Lord, Lord Vaux, that they are not in fact necessary. This is a good one, so I offer the noble Lord this.
First, to be clear, Amendment 84 would require an authorised person to need more evidence than just that provided through the EVM before carrying out an investigation under new Section 109BZB, which is to be inserted into the Social Security Administration Act 1992 by this Bill. I agree that the fact that an account meets an eligibility indicator set out in an EVN does not on its own constitute reasonable grounds for suspicion and cannot on its own be used as grounds for exercising fraud investigation powers under new Section 109BZB of the Act. The meeting of an eligibility indicator does not mean that a benefit has necessarily being overpaid. As I have made clear before, the EVM information does not come with a tag of suspicion attached.
The fact that an account meets an eligibility indicator does not mean that there are any grounds for suspicion of fraud or other offences; it does not even mean that a benefit has necessarily been overpaid. Paragraph 3(1) of the EVM legislation makes it clear that eligibility indicators indicate only that a benefit may have been, or may be, incorrectly paid. Whenever the DWP reviews a claim following the receipt of EVM information, it will initially look into its own systems to cross-reference between the data received via the EVM and the information that the customer has previously provided to the department. The DWP’s existing powers under Section 109 of the Social Security Administration Act 1992 can be used only where there is a reasonable suspicion of fraud, and only DWP-authorised officers will be able to request information under new Section 109BZB.
The requirement for reasonable suspicion before exercising powers under new Section 109BZB is set out in that section. This means that, before a case is referred to an authorised officer for a criminal investigation and these information-gathering powers are used, certain criteria must be considered: there must always be a reasonable suspicion of fraud, and all information requested must be necessary and proportionate for the investigation.
Amendment 85 would require information received following an EVN to be reviewed by an appropriately senior person before a person’s benefits can be amended or suspended, or before further investigatory powers can be used. Again, I hope to persuade the noble Lord, Lord Vaux, that this is not necessary. First, as I said, the eligibility verification measure is a data-requiring power, not a decision-making power. We have been clear that the limited data shared by financial institutions does not suggest any wrongdoing on its own. Data will be used, if appropriate, by DWP officials to make further inquiry and to ensure that the benefits being received are correct in line with the claimant’s circumstances and the relevant benefit eligibility criteria.
Obviously, the noble Lord does not specify what “an appropriately senior person” is. Let me assure him that these DWP officials are already trained to make these decisions, and they do so every day as part of the DWP’s business-as-usual activity. Decisions on claims and applications are made by trained officials on the Secretary of State’s behalf every day. This applies across many of the DWP’s processes with claims and applications; those decision-makers are usually administrative or executive officer grade.
When fraud is suspected and DWP wishes to use the power under new Section 109BZB of the Social Security Administration Act 1992, this can be used only by a DWP authorised officer of executive officer grade who has been trained and accredited. Only these authorised officers are able to request information under these powers, and they must always have reasonable grounds to suspect a DWP offence and consider it necessary and proportionate to require the specified information.
In all cases, before any decision is made, officials will look at any indications of fraud and error comprehensively. For example, DWP will look within its own systems to check for any inconsistencies between the data received via EVM and the information the customer has provided to DWP. There could, for example, be a disregard in place, which means that a claimant can have more money than normally allowed under the benefit rules. Alternatively, a DWP staff member may reach out to the claimant to request further information. In such cases, an appropriately trained and skilled staff member will make any decisions that affect benefit entitlement or changes to a claim. The suspension of a claim would be used only as a last resort and only after repeated attempts to contact the claimant and checking for any known vulnerabilities. I hope that, in the light of that, the noble Lord is reassured and will feel able to withdraw his amendment.
Lord Vaux of Harrowden (CB)
My Lords, I thank all noble Lords who have taken part in this debate for their support on this. I welcome the clear statement from the noble Baroness that she agrees—which is a very good start—that the eligibility indicator in itself would not be reasonable grounds. I need to go back and carefully read what she said to understand exactly what is guidance, what is code, what is Bill, et cetera. But I am reassured by a lot of what she says.
I suppose my caution still comes back to this point: my worry is not with the noble Baroness but with a Government in five or 10 years’ time of a rather different hue and with slightly less squeamishness, shall we say, about some of this stuff. Are these safeguards robust? We are giving substantial new powers to the department, therefore these safeguards need to be robust and not changeable at will by a future Government. That is what I want to dig into and understand a bit better when I go back into this. So we may come back to this, and I hope we will discuss it further between now and Report. But, in the meantime, I beg leave to withdraw the amendment.
Baroness Sherlock
(a) the period of 14 days beginning with—(i) the day on which the eligibility verification notice was given, or(ii) if the person seeks a review of the notice under paragraph 13, the day on which the person is notified of the outcome of the review, or(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.”Member’s explanatory statement
This amendment means that the tribunal can extend the time limit for appealing against an eligibility verification notice.
(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.”Member’s explanatory statement
This amendment means that the tribunal can extend the time limit for appealing against a penalty imposed for a failure to comply with an eligibility verification notice.
Lord Sikka
Member’s explanatory statement
This amendment and another in the name of Lord Sikka seeks to restrict the DWP’s powers in relation to eligibility verification solely to bank accounts held in the name of the benefit claimant only.
Lord Sikka (Lab)
My Lords, good laws should consider unexpected negative consequences and eliminate them before any legislation is implemented. One consequence of the Bill could be that it might increase homelessness and financial exclusion. This arises because DWP’s powers of surveillance apply to bank accounts to which benefits are paid even though the account is not wholly under the control of the benefit claimant. These include bank accounts in the name of landlords and others. I am sure the Minister will be able to give us more information about how that will be dealt with.
A perennial problem is that some landlords and letting agents might refuse to let property to individuals receiving housing benefit or housing costs payments through universal credit, as they fear that rent might not be paid in full or on a timely basis. Housing benefit is usually paid directly to the tenant but, under certain circumstances, it can be paid directly to the landlord. Examples include circumstances where the tenant is unable to manage his or her finances, and may be considered to be vulnerable because of addictions, medical conditions, learning disabilities or physical disabilities. There may be evidence that the claimant consistently does not pay the rent and uses rent money to fund other aspects of his or her lifestyle. The claimant may well have fallen eight weeks behind in rent payments. Under these circumstances, benefits can be paid directly to the landlord. Of course, if the benefits are overpaid, the DWP already has powers to recover the overpayment from landlords without extended surveillance of the bank accounts. It is not clear, therefore, why the Government are taking on additional powers.
Under this Bill, the landlord’s bank account receiving the benefit will become subject to an information notice and related surveillance. It is not clear what the information notice sent to the landlord’s bank account would want to know. It cannot be whether the landlord has excessive savings or income above some ceiling, as the balance of that account and transactions leading to that balance have no influence on the claim of the tenant for any benefit. The money is paid to the landlord on behalf of the claimant whose circumstances are nothing to do with the financial position of the landlord. The landlord’s bank account, or accounts, may contain transactions about the letting business, rental payments from other tenants, tax payments, savings, investments, dividends, capital transactions and more. Such transactions are nothing to do with the benefit claimant whose rent is paid into the landlord’s bank account. Can the Minister explain what the DWP would want to know about the landlord’s bank account?
Faced with erosion of financial privacy, a landlord might refuse to have benefits paid directly into his bank account and refuse to let property to anyone receiving benefits, as that would be the only way of retaining financial privacy. The result could be increased homelessness. This is the fear that many disabled people have already expressed to me at various meetings, especially as their accommodation is adapted to their needs. They fear that other landlords would not incur the expenditure to provide them with suitable accommodation. It would be helpful if the Minister would explain whether landlords can refuse to have benefits paid directly into their bank accounts, and what would prevent them refusing to let property to people on benefits.
Of course, it is not just landlords who face this surveillance. For a variety of reasons, benefit claimants may be unable to open or manage a bank account. Many banks refuse to open a bank account for individuals sectioned under the Mental Health Act. Indeed, I have experienced that problem directly because, in my family, we have a person who has recently passed away who was sectioned, but no bank would give him a bank account. Every bank that we visited on the high street said, “Sorry, he cannot have a bank account”. Under these circumstances, the only option is to have a joint account into which some money or the benefits are paid. However, that person, the other bank account holder, then comes under surveillance. As I understand it, the third party whose name is on the joint bank account would definitely be subject to an information notice or surveillance. This will persuade many to refuse to be a joint bank account holder. In the case of a joint bank account, the money attributable to the benefit claimants may not easily be determined without detailed investigation. It is not quite clear what the bank would tell the DWP, because the bank can only look at a bank account; it cannot tell which money belongs to the claimant and which money to somebody else.
Can the Minister explain how the joint account holder’s money would be separated from that of the benefit claimant’s? Faced with loss of privacy, joint account holders may terminate their involvement, causing hardship and financial exclusion. Of course, the Government can insist that no benefit claimant is denied their bank account; that would go some way towards alleviating this problem—but no other Bill actually insists on that. What assessment has been made of the unexpected negative consequences, and what steps are the Government taking to eradicate them?
Lord Palmer of Childs Hill (LD)
My Lords, I welcome Amendments 89A and 89B, tabled by the noble Lord, Lord Sikka, which seek to ensure that the Department for Work and Pensions eligibility verification powers are restricted solely to bank accounts held in the name of the benefit claimant. The noble Lord, Lord Sikka, said a lot about this, and I agreed with it. These amendments are a measured and proportionate response to concerns about the scope of data-gathering under the Bill. By limiting DWP powers in this way, we would provide vital reassurance to claimants and their families that only their own accounts, not those of partners, relatives or unrelated third parties, will be subject to scrutiny. This approach would uphold the important principle of privacy and ensures that the fight against fraud does not inadvertently cast too wide a net, potentially impacting innocent individuals.
Further, these amendments would reinforce the Bill’s existing safeguards, which already stipulate that eligibility verification notices may be issued only for the purpose of identifying incorrect payments of relevant benefits and only in relation to accounts in receipt of specified benefits. By making it explicit that only the claimant’s own accounts can be examined, we would strengthen public trust in the system and demonstrate our commitment to fair and proportionate use of government powers.
So many people have joint accounts and accounts with more than two names on them, and I am not sure what would happen in those circumstances. You can see that, when Tom Bloggs or Sarah Bloggs have an account, there may be a reason to look at them—but if it is held by Sarah Bloggs and Tom Jones, what happens then? There is a danger here that people will be brought into the net, because accounts held in several names are very common, and I am not reassured from what I have read that they will not be dragged in in some way. I support the amendments from the noble Lord, Lord Sikka, in this case.
Viscount Younger of Leckie (Con)
My Lords, I shall speak briefly to this group. For once I shall be helpful to the Government, as I rise to speak in opposition to Amendments 89A and 89B in the name of the noble Lord, Lord Sikka.
These amendments would limit the scope of Department for Work and Pensions eligibility verification powers, as we see it, so that they apply only to bank accounts held solely in the name of the benefit recipient, including joint accounts from scrutiny. I recognise the intention behind this proposal, which is to protect privacy and the financial autonomy of those sharing bank accounts with benefit claimants—the noble Lord, Lord Sikka, very eloquently set out his stall—but I respectfully argue that the amendments would create a significant and problematic loophole in the integrity of the fraud and error detection system.
Let us be clear: if these amendments were adopted, a person under investigation for suspected misrepresentation of assets or income could very easily shield those resources simply by transferring them into a joint account, potentially with a spouse, relative, or even a third party. Under the proposed wording, such an account would then fall outside the reach of the DWP’s verification powers, regardless of whether the claimant retained full control over the funds or continued to benefit from them. Perhaps the Minister can help me and the Committee in understanding how the DWP test-and-learn mechanism might have highlighted such an issue, and how it might have provided such a solution.
This is not a theoretical risk. We know from operational experience that individuals engaged in fraudulent activity will often use exactly such mechanisms to conceal income or capital. The ability to move money to a joint account is a clear weakness that could be exploited by those who—we must remember—are believed to have stolen money from the taxpayer.
Under the current drafting of the Bill, the Government rightly allow verification of accounts held by or accessible to the claimant, including joint accounts. This does not mean that third parties will have their data or finances indiscriminately accessed. There are safeguards in place. The department will not be able to view or interfere with every joint account at will, only those, as the Minister indicated earlier, where eligibility indicators suggest a relevant connection, and only where necessary to verify benefit entitlement. These powers are proportionate and targeted.
The amendments, however, would tie the hands of investigators, even where there is a clear and compelling reason to examine whether the claimant has access to or control over funds that affect their entitlement. In so doing, they would introduce a gaping loophole in the very process that is meant to protect taxpayer money and ensure fairness across the system. Let us not forget the public interest at stake here. We are talking about a welfare system that supports millions of people, but also one that must command public confidence and demonstrate that it is both compassionate and resilient to abuse. Creating a known and easily exploited blind spot, as these amendments would, risks undermining that confidence and inviting avoidable losses to fraud or error.
Moreover, this is not a question of criminalising or persecuting people who live with others or hold joint accounts for legitimate reasons. It is about ensuring that where state funds are being claimed on the basis of need, the system has a fair and proportionate—to use that word again—ability to verify the facts, including the assets and income to which the claimant may have access.
No one benefits from a system where loopholes are left open, least of all the people whom the welfare state exists to support. These amendments may be well intentioned, as I said earlier, but they would weaken the ability of the department to carry out its responsibilities effectively, and in doing so would undermine both the fairness and sustainability of the benefits system. I therefore urge noble Lords not to support these amendments. Let us uphold the principle that verification powers should be robust, proportionate and resistant to manipulation—and not inadvertently create a rule that the dishonest can use to their advantage.
Finally, I feel that I might have written a speech for the Minister, but I am sure that she will tell me that I am completely wrong and, perhaps, rebut some of my points.
Baroness Sherlock (Lab)
My Lords, I thank noble Lords, especially the noble Viscount, for doing some of my work for me; I am very grateful. I cannot support my noble friend’s amendments, but I am grateful to him because he has raised a point that people need to understand, and this Committee is exactly the right place to understand the issue.
It might be worth taking a step back. There will be two ways of getting information. We could either go to banks and say, “Here is Mr John Smith, please give us everything you know about him”, but then we would have to give personal information about the individual to the banks, which they do not have. Or we could do what we have decided to do, which is to say: “This is the account into which we pay the money. Please give us the information from that account according to these criteria”. We have gone with the second, because we will not be giving out personal information to financial institutions. However, that does have some consequences, which I will go through one at a time.
First, DWP benefits can be—indeed, are—paid into joint accounts held by one or more individuals. It is therefore essential for financial institutions to share information about joint accounts and any linked accounts that include a relevant benefit payment. Perhaps the most critical reason why we need joint accounts to be in scope of the EVM is that both pension credit and universal credit are household benefits; by that, I mean that eligibility for these benefits will depend on the circumstances of those in the household, including incomes and savings held by both account holders, not just by one individual. It is therefore vital to receive information on joint accounts.
In cases where the relevant benefit is paid into a joint account, information about both account holders and other linked accounts may be shared by the financial institution with the DWP. Again, I have explained why: it is because we cannot give out personal information about them. Once the information is shared, the DWP will then identify the benefit claimant and delete any information that is not relevant to the claim. That is made clear in the code of practice, which noble Lords have had a chance to see; this will be relevant in a moment to the points that the noble Lord made about landlords.
It is worth pausing here. Unlike previous iterations—it may be that the noble Lord is thinking back to some of those—this measure specifically excludes certain accounts from its scope: business accounts, credit card accounts, mortgage accounts, and a lot of other accounts that were previously in scope but are not anymore.
On landlords, if a benefit is paid into a landlord’s account then, yes, that will come back, but, basically, the test will then be: is the account or person a benefit claimant? If not, the information will be discarded and destroyed. Although it is possible, for the reasons I have explained, that a landlord’s account could be identified by a bank if it matches the eligibility indicators and is not a business account, the DWP can easily identify landlords having a housing benefit paid directly to them once we have received the data from a bank. The DWP will screen out these cases and disregard their data. I hope that that assures the noble Lord and that he can in turn assure those who were concerned.
The question of appointees is something that I raised under a previous iteration of this; I simply have not been able to find a way around it. Corporate appointees and businesses are excluded, but, for personal appointees, we simply have not been able to do that. Of course, the appointee’s account will have the benefit paid into it, if the benefit is relevant. The only thing you could do is exclude anyone you knew was an appointee, but then many appointees are claimants in their own right, so you simply could not do that either.
All I can say is that, by receiving from institutions, we will filter out any information that is not relevant; I hope that that will reassure the noble Lord. We are interested only in information on benefits paid by the DWP to benefit claimants; that is for them. If the appointee is holding the benefit for that individual, that is in scope—of course it is—but not if it is for other purposes; likewise goes for landlords. Those with powers of attorney will be treated in the same way as appointees. Again, if the money is for the benefit claimant and it is about that, we can look at it; if it is not, we cannot. I hope that that will reassure my noble friend and that he can withdraw his amendment.
Lord Sikka (Lab)
I thank the Minister and the noble Viscount, Lord Younger, for their illumination of, and contribution to, this issue. I am not really that convinced by their replies, to be honest. The reason is that a landlord can simply say, “I just won’t rent a property to anyone on benefits”. That way, the whole bank account—into which not just the benefit claimant’s benefit but other things go—is outside the scope of any DWP inquiry.
In time, we would notice that the amount of accommodation, especially for disabled people, had shrunk because of this piece of legislation. I think that many people would be dissuaded from becoming joint bank account holders with somebody who receives benefits for the same reason: they value financial privacy. We have to remember that this Bill is removing financial privacy only from people who are generally old, sick, disabled or unfortunate—everybody else can enjoy financial privacy. That would be the response.
So, in due course, there would be very heavy and negative social consequences. As I said earlier, the Minister can alleviate some of these by ordering banks or by creating legislation that says that the banks cannot refuse anyone a bank account. That way, many more people can have a bank account and the landlords, family members and friends may well be less likely to be subject to surveillance. This is something I will mull over for the next stage, but, for the time being, I beg leave to withdraw this amendment.
Lord Sikka
Member’s explanatory statement
This amendment seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review of eligibility verification measures.
Lord Sikka (Lab)
My Lords, there are three amendments in this group. Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer. All three seek to strengthen the review into the impact of eligibility verification on vulnerable persons. I will just speak to my Amendment 90.
Amendment 90 seeks to clarify whether the Government will take account of the views of recipients of the benefits in question in any independent review and suggests that this would be best achieved by ensuring that at least 50% of the review body is elected by benefit claimants. The proposed review under the Bill is welcome, even though it creates another quango. One difficulty is that regulators and reviewers are all too often appointed to advance political aims and objectives rather than serve the people. One needs to look no further than regulators of water and energy—the Independent Water Commission is currently reviewing the water industry, but its terms of reference exclude consideration of public ownership of water, even though that is favoured by many, including those who are experiencing high customer bills and sewage floating in rivers at the bottom of their gardens. I am seeking the representation of the people directly affected.
All too often, Governments claim that regulatory and review functions are best carried out by individuals with some experience of the field. None has more experience of the field than benefit claimants—after all, they are directly impacted. They will know the frustrations of answering 243 questions to apply for pension credit; they will also be subjected to financial surveillance and may be concerned about that. They are also affected by the DWP’s errors, including erroneous prosecutions, as we heard earlier. They have direct experience of that, and are therefore eminently qualified to directly participate in the review process.
This Bill refers to an independent review by a reviewer, but that reviewer will essentially be a political appointee. The review team is unlikely to include benefit claimants or someone experiencing hardship due to benefit cuts, confusing DWP forms or inconsistent application of DWP rules. Such a person and his or her team are unlikely to be able to bring the daily experiences of benefit claimants into the review. It is vital that the experience of the people on the receiving end of this legislation is brought directly into the review—their words and their worldview, not filtered through what was heard by somebody on some regulatory body or review commission. Quite often, there are cosmetic consultations or token discussions with the affected people. That is not really appropriate here.
Amendment 90 would empower benefit claimants and enable them to elect individuals to carry their worldviews into any review. The person so elected would be accountable to the claimants, whereas the proposed reviewer would not be accountable to any benefit claimant. There is absolutely nothing that they can do about it—they cannot force that person to consider their worldviews deeply. I fully appreciate that extending democracy may well be a contentious issue, even in Parliament, and that empowering people may well be contrary to some government department’s policies. Nevertheless, I would like to see greater representation of benefit claimants in any review that is carried out under the Bill. I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I will speak to Amendments 91A and 91B in my name in the group, and I thank the noble Baroness, Lady Kramer, for her support in this.
As the noble Lord, Lord Sikka, just said, these two amendments are designed to expand the scope of the independent review and the powers of the independent reviewer. I was very pleased to see the introduction of an independent review around the EVN powers; it adds an important safeguard. But as drafted, the scope of the review is quite limited, covering only whether the exercise of the powers has complied with Schedule 3B and with the code of practice, and whether it has been effective in identifying or assisting in identifying incorrect payments. It does not cover any of the other impacts that the exercise of the powers might have beyond that; we talked in the previous group about the costs, for example.
We have previously discussed and raised concerns about the effects that the Bill could have on vulnerable people, so I will not repeat those again—we have had quite a lot of debates around it. However, the possibility of those impacts on vulnerable people is both real and important, so it should be considered once those powers are in force, and, frankly, the obvious place for that is the independent review. So Amendment 91A would simply add an assessment of the impact on vulnerable persons to the scope of the independent review.
Amendment 91B is about the powers of the independent reviewer to obtain information. As it stands at the moment, they have no information-gathering powers. All the Bill says is that the Secretary of State “may” disclose information to the independent reviewer, and that is not good enough. For the independent review to be meaningful, the reviewer must have the legal ability to obtain all the information that he or she considers necessary to carry out the review. That is what Amendment 91 attempts to achieve: to allow the independent reviewer to request whatever they feel necessary to carry out the review, and to put a requirement for the Secretary of State to disclose what is requested. I rather hope that neither of those is particularly controversial as amendments go.
Just generally, I should say that these are the last amendments that I have tabled, which may relieve the Minister, so I just wanted to say that I hope that she accepts the spirit in which all of them have been put forward. I accept that the Bill is much less concerning than its predecessor was, and I hope that she sees the amendments as generally constructive, aimed primarily at ensuring that the safeguards against misuse of these powers are both robust and, importantly, permanent. I will be very happy to meet with her between now and Report to see whether we can find common ground on some of them.
Lord Palmer of Childs Hill (LD)
My Lords, it is another sort of spirit that I want at the moment.
I am pleased to welcome these thoughtful amendments, which significantly enhance the transparency, accountability and fairness of the Bill. Amendment 90 from the noble Lord, Lord Sikka, seeks to ensure that the voices and experiences of benefit recipients are taken into account in any independent review of eligibility verification measures. This is a vital step in building trust and legitimacy for these new powers, ensuring that those most affected have a say in how the system is reviewed and improved. Listening to recipients will provide invaluable insights, helping to identify unintended consequences and ensuring that the system remains responsive and humane.
Similarly, Amendments 91A and 91B are tabled by the noble Lord, Lord Vaux of Harrowden, and my noble friend Lady Kramer, who is busy in the Chamber on the Employment Rights Bill, where I should have been. These are crucial safeguards. Amendment 91A requires that the independent review specifically considers the impact of eligibility verification on vulnerable persons, ensuring that our most at-risk citizens are not overlooked or disproportionately affected. Amendment 91B strengthens the review process by obliging the Secretary of State to disclose all information reasonably requested by the independent reviewer rather than leaving disclosure to ministerial discretion. These changes will create a more vigorous and effective oversight regime, fostering public confidence that the powers are being exercised justly and transparently. I support these amendments.
Viscount Younger of Leckie (Con)
My Lords, in speaking for the Opposition, I should say that there is quite a bit to say, but I have cut down my remarks in the interests of time. I think the Committee will be pleased to hear that.
I regret that once again I oppose an amendment by the noble Lord, Lord Sikka, whose proposed change to Clause 75 seeks to replace the appointment of an independent person with that of a
“panel, at least 50% of which is … elected by recipients of the benefits in question”.
Although I understand the sentiment behind this proposal—namely, to ensure that the voices of benefit recipients are heard in the process of oversight—I respectfully submit that this amendment is not the right way to achieve that goal. It is very democratic in spirit but unworkable.
I will begin with the practicalities. This amendment, if accepted, would introduce a highly complex, costly and poorly defined mechanism for oversight. The idea of electing panel members from among benefits recipients across all forms of social security is, on the face of it, well-meaning, as I said, but in practice it presents serious challenges. Who would organise and administer such elections? How would the eligibility to vote or stand be determined? What benefit types would qualify and what mechanisms would ensure proportional representation across regions, demographics and types of support? Those questions are not trivial; they go to the core of whether such a panel could ever be considered credible, workable or legitimate in the eyes of the public, including the very claimants it is intended to empower. I also suspect that it would take an age to establish. Those are rather harsh remarks, but I wanted to make those points.
Moreover, we must ask what value this mechanism adds that is not already achievable through more conventional, proven models of independent oversight. There are already established ways to ensure that claimants’ experiences and perspectives inform the design and review of eligibility verification processes through public consultation, user engagement panels, stakeholder round tables and the commissioning of qualitative research from trusted bodies. Those are the serious proposals the Minister must consider, and I am sure she will, in the formulation of the Bill.
The proposal put forward by the noble Lord, Lord Sikka, is surely a probing one, although I do not think he said that—but it does not stand up to scrutiny. For example, we must also consider the principle at stake here. Although it is right that we take account of the views of claimants whose lived experience is, I admit, vital in shaping fair and effective policy, it is not clear why 50% of an independent review body should be drawn exclusively from that group and no other. If the logic is that those affected by a policy should have a say in reviewing it, then surely one should equally argue that those funding the system—namely, taxpayers—should have a similar right to elect members or, indeed, that professionals with technical expertise in fraud prevention, digital systems or legal due process should be the ones appointed. In other words, this proposal risks becoming an exercise in representational logic that ticks a few boxes but is ineffective.
On the other hand, Amendment 91A in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, speaks to principles that we on these Benches have returned to time and again, which I will not repeat now. Clause 75 establishes an independent review of how the Secretary of State’s powers are being exercised. It is only right and essential that when we assess how these powers are working in practice, we also assess how they are affecting those who are most at risk of being overlooked, misunderstood or wrongly penalised by the system. That is precisely what Amendment 91A would ensure. It would add a single but vital criterion to the scope of the review—the need to examine the impact on vulnerable persons, not as an afterthought or a footnote but as a formal and explicit part of the oversight process.
Why does this matter? We know from evidence, experience and common sense that those with vulnerabilities are more likely to struggle with complex paperwork, to misunderstand official communications and to have irregular financial arrangements that do not fit neatly into bureaucratic templates. Those individuals are not necessarily gaming the system; they are trying to get by. But unless the operation of the Bill is sensitive to their needs, they could too easily become the collateral damage of a system designed to root out frauds. Let us be clear: it is entirely possible to take tough action on fraud and take care not to harm vulnerable people in the process. It is not a question of either/or; it is a matter of how we build safeguards into the system so that it delivers justice, not just efficiency.
Amendment 91B, also in the names of the noble Lord, Lord Vaux, and the noble Baroness, Lady Kramer, addresses a critical point of principle—namely, that the independent reviewer must be genuinely independent. At present, Clause 75 allows the Secretary of State to determine what information may be disclosed to the independent reviewer. In our submission—and, I suspect, in the views of the noble Lord, Lord Vaux, the noble Baroness, Lady Kramer, and other noble Lords—this is not the way to construct a genuinely independent mechanism of review. We cannot have a system in which the Secretary of State can control the flow of information to the independent reviewer. We believe that this amendment would restore some balance.
Baroness Sherlock (Lab)
My Lords, my noble friend Lord Sikka’s Amendment 90 would require the independent oversight of the EVM to be carried out by a panel of people, at least half of whom would be elected by recipients of benefits in the scope of the measure.
First, I can clarify for the benefit of the Committee that the independent person in the Bill could be an individual, a group of persons or a panel. However, in appointing the person, we want to be clear that the Government will follow the direction of the Governance Code on Public Appointments throughout the process. In accordance with that code, it is for the Secretary of State to appoint an appropriate person or persons to the role of independent overseer, as set out in Clause 75, because, as the code says:
“The ultimate responsibility for appointments and thus the selection of those appointed rests with Ministers who are accountable to Parliament for their decisions and actions”.
However, the process will be overseen by the Commissioner for Public Appointments to ensure that it is robust and fair; this is in line with precedent.
My noble friend accused us of allowing some forms of politics to invade these decisions. I must say that the Secretary of State has a track record of appointing well-respected and experienced people to review the DWP’s work, even when that kind of oversight is not required. For example, in December she appointed Liz Sayce, the former chief executive of Disability Rights UK and formerly chair of the Social Security Advisory Committee, to lead the independent review into overpayment of the carer’s allowance; she also wanted Charlie Mayfield to lead a joint DWP and Department for Business and Trade review into the factors behind the growing levels of inactivity. I can assure the Committee that we will similarly look for relevant and independent expertise in this area. Clearly, the independent reviewer will have the discretion to engage with not only benefit claimants but any other key stakeholders whom they may consider appropriate, and we do not need to legislate for them to exercise that discretion.
The review must consider the extent to which the Secretary of State has complied with the legislation and the code of practice. The independent overseer will then consider the extent to which the Government have complied with the many safeguards outlined in the legislation and the code. So, the independent review is in the interests of all those who receive a payment for a relevant benefit and will help ensure that their rights are protected.
Amendment 91A in the name of the noble Lord, Lord Vaux, would require the independent reviewer to include in their annual report any impact that the EVM may have on vulnerable persons. Although I obviously agree that the DWP needs to consider carefully the vulnerabilities that our customers may have, I do not think that this amendment is necessary given the nature of the measure and the existing safeguards, including the oversight and reporting provisions. Again, I remind the Committee that this measure will actually help some of our customers, including those who are vulnerable. We know that people make genuine mistakes; access to this important data will help us find those mistakes sooner and enable us to correct them. Detecting overpayments earlier will help prevent claimants accruing large debts to the department in cases where an overpayment is recoverable.
The key issue is that this is just a data-requiring power. It will simply require a bank to share limited information where benefit-receiving accounts meet the eligibility criteria specified in a DWP notice. The process of a bank sharing data through this measure will have no direct impact on the person’s claim of vulnerabilities. The measure is not about targeting anyone; it is about ensuring that claimants are paid the correct amount of benefit. It is only then that, under the DWP’s long-standing business-as-usual processes, people may experience changes to their benefit award—for example, where, following further inquiries, it is determined that the payment is not correct or that they do not meet the eligibility rules for the payment.
A major aspect underpinning the issues raised by the noble Lord, Lord Vaux, is a broader question as to how the DWP supports vulnerable people in those processes. Layers of support already exist in the DWP to ensure that customers who are vulnerable or have complex needs have the right support put in place. DWP staff regularly conduct vulnerability checks and are proactive on this; when we do identify vulnerable individuals, we ensure that they receive the necessary support and adjustment. We have specially trained staff to support our most vulnerable customers, and they have access to a wide range of guidance to support them. Across our various benefits and services, colleagues record any support needs provided by the customer to ensure that, whenever a claimant speaks to the DWP, it is aware of how best to help them. As I have already set out, in cases of fraud and error, a DWP staff member will be the one making decisions affecting benefit entitlement.
Finally, I remind the Committee that the independent reviewer will report annually on how the powers have been exercised in line with the legislation and how effective they have been at identifying incorrect payments. They will be able to cover any issues they deem relevant, including the impacts the measure is having and what that means for DWP customers. Asking the independent reviewer to assess impacts on vulnerability would, by necessity, take the scope of the review far broader than the EVM, as it would need to focus on wider parts of DWP business. To accept this amendment would therefore fundamentally change the scope of the annual review.
Lastly, I understand what the noble Lord, Lord Vaux, is trying to achieve with Amendment 91B, but I do not believe it is necessary. The legislation already allows the Secretary of State to disclose information to the independent reviewer for the purpose of the reviews under new Section 121DD, and I assure the noble Lord that the DWP will of course work openly and collaboratively with the independent reviewer. We will provide them with the information requested and work with them to help identify the information they need to complete their review, sharing this under the existing provisions.
Should any incentive be needed, if the independent reviewer did not consider that they had received all the information they needed, the report they published and laid before Parliament would no doubt reflect this. It would be clear for Parliament to see and scrutinise it and hold the Government to account on it. However, I am confident that that situation will not arise because our deterrent will be quite enough. Nevertheless, to provide further assurance to the Committee that the Secretary of State will provide everything relevant, I am happy to commit to make this clear in the code of practice for the measure, but I would rather not legislate unnecessarily.
To close, I know that the noble Lord knows that the inclusion of this oversight matters to the whole Committee; it matters to me as much as it matters to him. The Government have not resisted calls for transparency and have a strong track record of working openly with independent reviewers, such as the independent review of carer’s allowance overpayments.
Since the noble Lord, Lord Vaux, mentioned that Amendment 91B is his final amendment, I want to say that I very much take his amendments in the constructive spirit in which they are intended. This is what the House of Lords Committee is for—to make sure that we pursue the aims of the Bill and that we do so in the most constructive and appropriate way possible. I look forward to carrying on engaging with him. For now, I hope that my noble friend Lord Sikka, whom I am sure I will see in future, will feel able to withdraw his amendment.
Lord Sikka (Lab)
My Lords, I am very grateful to the Minister and the noble Viscount, Lord Younger, for their contributions. The argument that something is costly and timely has been made for centuries against universal suffrage, but somehow we overcome that objection and recognise that people can be elected on to all sorts of bodies. In the rest of Europe, workers are elected on to company boards; nobody said that is costly and time-consuming. Perhaps we are yet to catch up with that kind of democratic revolution.
Regarding the cost, I understand the point made, but what has not been asked is: what is the cost of not doing it? There is also a cost associated with not doing something—in this case, not bringing the direct experience of those impacted by this legislation: those whose lives may be ruined, who may be named and shamed in the neighbourhood, who may perhaps end up losing somewhere to live or who cannot buy food or anything. There is a huge social cost that is basically being ignored. The cost of not doing it is more injustice and more exclusion.
Of course, if the Government want to reach a halfway solution, they could bring the NGOs and civil society organisations representing the disabled, poor, old and sick into this review, but that is not what I think I heard from the Minister—although I hope that, in time, that will be thought through again. Nevertheless, I wanted to fly the flag for democracy and public accountability. For the time being, I beg leave to withdraw my amendment.
Israel: Arab Israeli and Jewish Israeli Communities
(1 day, 4 hours ago)
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Baroness Royall of Blaisdon
To ask His Majesty’s Government what support they are giving to grassroots movements in Israel which are working to bring Arab Israeli and Jewish Israeli communities together.
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Collins of Highbury) (Lab)
My Lords, the United Kingdom Government remain committed to supporting peaceful coexistence and dialogue. We actively promote interfaith understanding through initiatives such as the Drumlanrig accord. Our diplomatic missions regularly meet with Arab Israeli and Jewish Israeli organisations that promote dialogue and co-operation between Arabs and Jews. For six consecutive years we have funded Search for Common Ground, which has brought together Jewish and Muslim religious leaders for dialogue programmes.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful for the Answer from my noble friend the Minister. At this time of yet more war and violence, we think of Jews and Arabs in Israel who are now in real danger, but we must not let the Israeli-Iranian hostilities obscure the evil destruction of Gaza and the starvation of its people, or the appalling situation in the West Bank. The situation is intolerable. We must support the efforts of movements such as Standing Together, which work across the religious divide, bringing Arab Israeli and Jewish Israeli communities together, working for peace, equality and social justice, desperately trying to find an end to the war. When far-right extremists recently tried to block aid going into Gaza, they formed a humanitarian guard of Jewish and Palestinian citizens of Israel, which enabled trucks to get through.
Baroness Royall of Blaisdon (Lab)
The question is coming, my Lords. These organisations, together with the ones cited by my noble friend, are worthy of our support. I am glad that the Government are supporting them, but I ask all noble Lords to support these organisations, which deserve our solidarity.
Lord Collins of Highbury (Lab)
I share the opinion of my noble friend. Over the last eight years, I have been actively engaged, along with many noble Lords across the House, with a number of organisations, not least Tracks of Peace, that promote human, racial and religious tolerance, also focusing on business, education, the environment and health—issues that affect all people in Israel and the Occupied Territories. We are absolutely committed to building that dialogue, despite the horrendous situation in which people now find themselves. I thank my noble friend for her question. She is absolutely right; we should not forget the issues underlying community cohesion.
Lord Leigh of Hurley (Con)
My Lords, I declare my interest as chairman of Jerusalem Foundation in the UK. The Minister will be pleased to hear that British citizens donated $10 million last year to coexistence projects in Jerusalem. I am sure he will agree with me that the fact that Israel, with a 20% Arab population, has not seen violence inside Israel represents success in coexistence and an understanding from the Arab population of what Israel is trying to achieve. Does the Minister agree that it is not clear that the Arab population of east Jerusalem wants a two-state solution, at least not in the near future? Will he ask our consul in east Jerusalem to undertake proper research to understand the views of the citizens of east Jerusalem, so that we can act accordingly?
Lord Collins of Highbury (Lab)
I thank the noble lord. He is right that we should support all efforts for community cohesion. We are obviously committed to a two-state solution, where the rights of Palestinians and the State of Israel are well protected. Through that, as I said on previous occasions, we are supporting the Palestinian Authority in the reforms it needs to take to ensure that they can properly represent the people of Palestine. We are absolutely committed to that.
Lord Purvis of Tweed (LD)
My Lords, I thank the Minister for his reference to Search for Common Ground and declare that I am the voluntary chair of its UK board. On a profound visit that I made to the region through the commendable organisation Yachad, I met a family in a kibbutz whose parents had been brutally murdered by Hamas, and they spoke to me very movingly about their desire to carry on their parents’ work to cross a political and geographical divide for peace. I welcome the Statement that humanitarian support from the UK Government will be protected at this difficult time, but will the Minister confirm that development support for organisations such as Yachad and for community and civil society initiatives will be protected?
Lord Collins of Highbury (Lab)
The Prime Minister has made it clear that Gaza remains the focus and priority of our activity. We are working with a range of groups, and, to repeat what the noble Lord opposite said, we have to recognise that a lot of them are financing themselves. We remain committed to the sort of organisations that the noble Lord referred to because underneath all the tragedy we now see is a genuine desire for peace and progress. That means that we need to see economic development in all parts of Israel and the Occupied Territories.
Baroness Hayman (CB)
My Lords, like others who have spoken, I too have been supportive and admiring of the courage and commitment that many, whether Palestinians or Israelis, have put into their peacebuilding organisations, many of them brought together by the Alliance for Middle East Peace. The Minister talks about the two-state solution and how we get there. Does he agree, and are the Government taking steps to ensure, that representatives of ordinary citizens from those communities need to be there to build up that peace process when it eventually comes?
Lord Collins of Highbury (Lab)
I could not agree more with the noble Baroness. Another important element of this is not only to ensure that a range of communities are properly represented in the future but to focus on our women, peace, and security agenda. Women can play an important role there too, and I am committed to that. We will have plenty of opportunity to address the big picture in our debate on the Statements tonight, but I repeat that, underneath all that, there is a real strong desire on the ground for intercommunity and interfaith organisations, and for economic development to lift people out of the situation they are in.
Lord Callanan (Con)
My Lords, it is vital that UK Aid funds genuinely beneficial operations and organisations which seek to alleviate and promote peaceful coexistence in the region. Can the Minister confirm how regularly the FCDO audits or reviews the activities of NGOs and grass-roots organisations receiving UK funding in the region, and whether any UK-funded organisations operating in Israel or the Occupied Palestinian Territories have ever been subject to investigation for links to proscribed groups?
Lord Collins of Highbury (Lab)
I cannot give the noble Lord a direct answer because I am not sure in which direction his question is going, but I assure him that the FCDO regularly audits its contributions, not least to ensure that the UK taxpayer has value for money. If there are any reports that raise concerns about how money might be being used not in accordance with the original grant then of course we will investigate them. If the noble Lord has information that I am not aware of, perhaps he can let me have it later.
Lord Winston (Lab)
My Lords, I declare my interests: I am a supporter and member of an organisation called Omdim Beyachad—Standing Together—and, over the years, I have been responsible for the teaching and supervision of many PhD students from Gaza, Israel and the neighbouring Arab countries. I congratulate the noble Baroness, Lady Royall, on her excellent Question and the Minister on his wonderful answers, which are really helpful. The point is this: creating an important infrastructure for education is important now if we are to achieve some kind of proper peaceful coexistence. The British embassy was extremely useful in helping this, and I hope we can encourage that to occur again in due course, because it is one way in which we must try to help solve the problems in the Middle East.
Lord Collins of Highbury (Lab)
I thank my noble friend. He is right that there are a range of initiatives. They may seem unimportant at the moment, in the context of the situation that Israel and Palestine find themselves, but it is those routes that are essential for progress. Educational support and support for people who have a strong entrepreneurial instinct for economic growth is what we should be focused on. We should not forget that, despite the terrible conflict that we find ourselves facing at the moment.
Adult Social Care
(1 day, 4 hours ago)
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Lord Wood of Anfield
To ask His Majesty’s Government what steps they are taking to remedy skills shortages and workforce gaps in the provision of adult social care.
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, the Government are committed to recognising the adult social care workforce as the professionals they are. In April we expanded the care workforce pathway with four new role categories providing guidance on care workers’ career development. We are continuing the learning and development support scheme, backed up by up to £12 million in funding, and introducing new digital workforce tools. That is in addition to introducing legislation for the first ever fair pay agreement for care workers.
Lord Wood of Anfield (Lab)
I thank my noble friend for that Answer. I draw the House’s attention to my interests in the register. Social care workers do an extraordinary job, including with my own mother, but there are huge skills shortages in this sector, estimated at over 130,000 at present. Partly as a result of that, the sector is dependent on foreign workers, who make up 20% to 25% of the workforce, yet last month the Government said the recruitment of overseas care workers will end in 2028. That is the year when the report by the noble Baroness, Lady Casey, on the future of social care will be published. What is the Government’s strategy in the interim period now that 2028 is the cut-off date for recruitment from overseas—before the plan for reform of the sector has been published?
Baroness Merron (Lab)
It is probably worth me saying that, while the changes announced in the recently published immigration White Paper mean that overseas recruitment for adult social care will end, as my noble friend said, that is because, as he will know, the Government wish to reduce reliance on an overseas workforce. That is why there is a transition period. Until 2028 the visa extensions and in-country switching will be able to continue. The Government are also taking a range of actions to make the sector more available, more highly professionalised, more skilled and better rewarded than we have seen thus far. In all these ways, the transition period is important. The estimate is that the transition period will allow this change to be made, and better support and professionalisation for domestic as well as existing international workers can continue.
Lord Laming (CB)
My Lords, can the Minister go a bit further on that very helpful reply? Taking into account the range and nature of the personal care that these social care staff provide daily, is it not time that we got on urgently to professionalise the service, to make sure that they all get the proper training and that their status is rewarded with appropriate recompense?
Baroness Merron (Lab)
Yes, indeed. I pay tribute to the adult social care workforce who work hard, day in, day out, to provide the standards that the noble Lord refers to for those in our communities who are often the most vulnerable. I could give a range of examples but will refer in particular to the learning and development support scheme, which was launched in September 2024. It provides funding for eligible care staff to complete courses and qualifications, including a new level 2 adult social care certificate, and has been backed by £12 million this financial year. I give that as just one example; I am sure the noble Lord will be welcoming of the other actions that the Government are taking.
Baroness Barker (LD)
My Lords, the spending review announced £4 billion for social care, but that £4 billion will come from the NHS and not until 2028. Can the Minister confirm that there was nothing in the spending review about the two intervening years, in which local authorities are supposed to implement the fair pay award?
Baroness Merron (Lab)
Your Lordships’ House will be aware of the financial situation that we inherited and seek to put right. The Government have made available up to £3.7 billion in additional funding for social care authorities in 2025-26, and the noble Baroness is right that just last week the spending review allowed for a further increase of over £4 billion to be made available for adult social care in 2028-29. We are taking a whole range of actions. The Employment Rights Bill, which we will come back to later today, seeks, for the first time ever, to bring in fair pay and professionalisation for those in the adult social care workforce. So it is not that nothing is happening in the meantime. We are making progress and ensuring that the funding will be available so that we have not just a decent adult social care workforce but a way of tackling what no Government have managed to tackle before.
Lord Kamall (Con)
My Lords, given the persistent workforce gaps in adult social care over many years, and given the concerns that there are over immigration—even though immigrants often do the work that local people do not want to do—can the Minister outline what plans the Government have, with a clear structure, to make this a more attractive career, particularly to young people in the UK? What are the Government doing in partnership with social care providers, which are stretched at the moment, to look at alternative ways of funding training and skills development and to make sure that this is an attractive career for those in the UK, rather than always having to rely on immigration?
Baroness Merron (Lab)
As the noble Lord rightly outlines, this is a move, over a number of years, to reduce the reliance on international recruitment. I am really glad that just a couple of weeks ago the Department for Education announced the launch of a health and social care foundation apprenticeship, set to begin in August this year. This is focused on young people and will give them a paid route into the sector so that they can earn as well as gain skills and experience. It will be a wonderful foundation for young people, ensuring that they are encouraged into what is an extremely valuable sector and will have the right skills, including technical skills, and the ability to carry out the job. That is just one of the measures but it is an extremely positive initiative, as the noble Lord calls for.
The Lord Bishop of London
My Lords, given the well-documented regional and social economic disparities in access to adult social care, in what way are the Government, in focusing on the shortages in the workforce, focusing their efforts on tackling this inequality in access?
Baroness Merron (Lab)
In general terms, of course, the independent commission into adult social care will be part of our critical first steps towards delivering a national care service. The commission, as the right reverend Prelate is well aware, will be chaired by the noble Baroness, Lady Casey. I agree with the right reverend Prelate that there are particular demands in certain local areas, and the strategy will take account of that, including the fact that, based on the growth of the population aged 65 and above, the sector may need 540,000 extra new posts by 2040. That is a big challenge, but by setting up the professionalisation, the training, the skilling and the fair pay for people, it is one that we will be in a much better place, across the country, to be able to deliver on.
Baroness Butler-Sloss (CB)
In supporting the noble Lord, Lord Laming, I ask the Minister whether anything can be done officially to raise the status of care workers. Status is often very important for people wondering what sort of job to have.
Baroness Merron (Lab)
The noble and learned Baroness is absolutely right about status, which assists retention as well as recruitment. Clearly, the first ever fair pay agreements will make that possible. The need to work with various partners across the sector was raised in an earlier question. The way in which those negotiating bodies will work will absolutely bring together all the partners in the sector to get to the right place. That will certainly include fairer pay, which we will see through the Employment Rights Bill, but also training and skills and the care workforce pathway, the care certificate and having a skills record. These represent a comprehensive package to raise the status in the way that the noble and learned Baroness asks for.
Social Energy Tariff
Lord Foulkes of Cumnock
To ask His Majesty’s Government what consideration they have given to introducing a social energy tariff.
Lord Watts (Lab)
On behalf of my noble friend Lord Foulkes and with the permission of the House, I beg leave to ask the Question standing in his name on the Order Paper.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, the Government know that more needs to be done to support vulnerable households that are struggling with bills while we transition to clean power. Earlier this year, we published a consultation on the expansion of the warm home discount, giving more eligible households £150 off their energy bills. These proposals will bring about 2.7 million households into the scheme, pushing the total number of households that will receive the discount next winter up to around 6 million. The department has considered all responses, and a government response will be published in due course.
Lord Watts (Lab)
My Lords, I am grateful for the Minister’s response; I think all Members, on both sides of the House, agree that this is needed. Given the situation the Government found themselves in financially, I congratulate them on finding the resources within that difficult period to do something positive about it. When will this be introduced and when will this matter be resolved?
Lord Wilson of Sedgefield (Lab)
The consultation has just ended, and we expect to make an announcement in due course. The question is about a social tariff, but if you look at organisations such as National Energy Action, you will see that there is no one definition of a social tariff. We are doing everything we can in the circumstances to extend the warm home discount to as many families as possible.
Baroness McIntosh of Pickering (Con)
My Lords, speaking as honorary president of National Energy Action, I ask the Minister: would it not be better to increase the warm home discount for those households already eligible—it has not been increased for about the last three to five years—rather than extending the same amount, a very small amount, to a larger number of households? Increasingly, those living in fuel poverty really need more than the £300 available.
Lord Wilson of Sedgefield (Lab)
I welcome that question; we have to balance increasing it for a certain number of people with widening it out to as many people in fuel poverty as possible. The Government are doing the right thing by extending it from about 2.7 million to 6 million people in fuel poverty—to people who would have received no payment whatever.
Lord Vaux of Harrowden (CB)
My Lords, one of the main reasons why electricity prices are so high is the bizarre way the wholesale market works. If I need to buy 10 pints of milk, so I go to my supermarket, where they are 95p each but it has only nine, and then buy the 10th pint from the corner shop for £2, I do not have to go back to the supermarket and pay the difference so that all 10 cost me £2 each. That would clearly be insane. But that is exactly how the electricity wholesale market works. Does the Minister agree that that is mad and that it is time we stopped setting the wholesale price at the highest cost generator in each half-hourly trading slot?
Lord Wilson of Sedgefield (Lab)
That is a good question, and the Government keep this under review at all times. We find ourselves in very difficult times; since the fuel crisis in 2022, we have been dealing with a very difficult situation, and this is under review all the time.
Earl Russell (LD)
My Lords, some 16% of our energy bills are made up of levies, which the MCS Foundation has found could be costing bill payers some £300 per year. Does the Minister agree with the call of Make UK, Energy UK and the Climate Change Committee for policy actions to remove levies from electricity bills to better incentivise people to switch to low-carbon energy? What actions are the Government taking on this?
Lord Wilson of Sedgefield (Lab)
There is a levy for the warm home discount, but that works out at only £1.50 a month per household, which is not that high considering how many people it takes out of fuel poverty.
Baroness Jones of Moulsecoomb (GP)
My Lords, does the Minister agree that spending more money on home insulation would be a more permanent solution to the energy problems that low-income families face?
Lord Wilson of Sedgefield (Lab)
The noble Baroness makes a valuable point. We will invest £13.2 billion in the warm homes plan over the spending review period, in line with our manifesto commitment. This builds on last year’s initial settlement of £3.4 billion, and we have taken a major step forward in our plans to upgrade up to 5 million homes over this Parliament, cutting energy bills for good and fulfilling our manifesto commitment to deliver the warm homes plan.
Lord Offord of Garvel (Con)
My Lords, as has been pointed out, we have a social tariff. We had one previously, before 2011, but it was abolished in favour of the warm home discount. I welcome any initiative by the Government to increase that to alleviate any suffering, but any talk of a social tariff would be a sticking plaster over the fundamental problem raised by the noble Lord, Lord Vaux: that the cost of our electricity is way too high. Our domestic electricity is three times more expensive than that of the US, and industrial electricity is four times more expensive than that of the US and seven times more than that of China. This is the real problem. Only one-third of electricity prices in domestic bills are wholesale prices; 46% of the total costs are the green levies and subsidies, which are being accentuated by the accelerated and self-inflicted rush to decarbonise the grid. Will the noble Lord go back to his department so that we can come up with a new plan for energy that is affordable for all?
Lord Wilson of Sedgefield (Lab)
We have plans on the go to make everybody’s energy bills cheaper. We need to move towards having energy that is essentially homegrown, as at the moment it is not. We need to move in that direction if we want to bring down bills, which is the target of this Government.
Lord Cashman (Non-Afl)
My Lords, I welcome the steps the Government have taken on this difficult issue, but will they consider the very simple approach of abolishing the standing charge on all public utilities, which is a punitive tax on those who can least afford it?
Lord Wilson of Sedgefield (Lab)
I thank the noble Lord for that question. We had a comprehensive review involving Ofgem in December to discuss this issue. We know that too much of the burden of the bill is placed on standing charges. We are committed to lowering the costs of standing charges and have worked constructively with the regulator, Ofgem, on this issue.
Baroness Hayman (CB)
My Lords, I declare my interest as a director of Peers for the Planet. Does not the conversation that has just gone around the House illustrate clearly that there are a number of serious issues with the cost of electricity that need to be looked at in a comprehensive way? As has been said, we need to look at decoupling it from gas prices, the tariffs and the effect of zonal pricing—if it comes in, and many people have suggested it. When are the Government going to look at all those issues in the round? Is that something the REMA review will do, and when will we hear the results of it?
Lord Wilson of Sedgefield (Lab)
We will hear from the REMA review in due course. We take this issue very seriously and we will be looking at all the factors the noble Baroness has mentioned. When we have reached a conclusion, we will come back to the House.
Defence Industrial Base
(1 day, 4 hours ago)
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Lord Lancaster of Kimbolton
To ask His Majesty’s Government what steps they are taking to support the defence industrial base.
Lord Lancaster of Kimbolton (Con)
My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare my interest as a member of the Army Board.
The Minister of State, Ministry of Defence (Lord Coaker) (Lab)
My Lords, our new defence industrial strategy will make sure that national security and a high-growth economy are aligned to deliver the changes we promised: cracking down on waste, building resilient supply chains and boosting Britain’s defence industry. By strengthening our relationship with industry, innovators and investors, we will make it easier and more attractive than ever before to do business in defence.
Lord Lancaster of Kimbolton (Con)
My Lords, the Prime Minister’s EU reset supposedly opens the door for the United Kingdom to participate in the European Union’s €150 billion defence procurement fund. However, there were reports over the weekend that France is now insisting that any beneficiary of that fund—any project—will have to have 85% EU content. That would be a disaster for UK industry. Can the Minister reassure your Lordships’ House that the Government will seek cast-iron guarantees that before they put any money into the fund, it will be a level playing field without artificial restrictions so that UK industry can compete fairly against its EU counterparts?
Lord Coaker (Lab)
The noble Lord makes a point the Government themselves would make: access to the €150 billion Security Action for Europe fund is really important. Of course, we will act in the best interests of the UK and ensure that British industry is protected as far as we possibly can. The only reason we can access that money, under whatever terms we are able to negotiate and discuss with our European friends, is because we have a security and defence partnership. Without that partnership, which the British Government and the Prime Minister negotiated successfully with the EU, we would not be able to bid for the money or be involved at all. So I take the noble Lord’s point, but we should also think that the Government have done well to negotiate the security and defence partnership.
Lord Spellar (Lab)
My Lords, do the Government themselves not also have to place orders with British companies? Like me, does the Minister regret that the previous Administration gave the contract for the fleet solid support ships to a publicly supported, publicly owned foreign shipyard, to the detriment of work in the United Kingdom? Does he also accept that the defence industry depends on a supply chain that supplies both civilian and military use? Therefore, should we not be looking at rebuilding British industry and buying British?
Lord Coaker (Lab)
My noble friend makes an important point. He will know that one of the actions of the Government was to see the fleet solid support ships now built in Belfast. That is a really important success that the Government have had. But he is also right that we must ensure that, as far as we can, we rebuild the sovereign capability of our country to have the defence industry it needs. Let me be clear: the sovereign capability of our own industry is now a national security requirement. One thing that Ukraine has forced us to do is to wake up to the fact that we need our own industry, as well as depending on others.
Baroness Pinnock (LD)
My Lords, can the Minister explain whether the proposed SME support hub has been established and how many SME businesses the Government anticipate will engage with the hub? Furthermore, will the Government urge engagement from SMEs from every region of England?
Lord Coaker (Lab)
There used to be something called the Defence Suppliers Forum, but it did not include SMEs. We have established the Defence Industrial Joint Council, which, as well as big industry—the primes—will include small and medium-sized businesses. The noble Baroness makes a good point; another thing we have learned from Ukraine is the agility and adaptability of small companies and businesses, which have shown their worth—clearly, we need to grow them. The number of small and medium-sized companies will grow over the next few years through the Government’s determination to grow all sectors, including the SME sector.
Lord Craig of Radley (CB)
My Lords, what steps have the Government taken recently to reconcile the possible risk of failures in developing novel defence capabilities against the need to ensure that government funds are paid out with due care and avoidance of unnecessary risk?
Lord Coaker (Lab)
The noble and gallant Lord asks a good question. We have reinvigorated and put more money into the defence innovation fund. With respect to defence, you cannot move forward without innovation, challenge, new technology and new ideas. One of the lessons from Ukraine is that sometimes, for not an awful lot of money, innovators—those who think for themselves—provide the defence equipment and security that we need. Of course, we must be sensible and not throw money away and waste it, but innovation is an important part of any defence industrial strategy, which is why it was mentioned in the defence review and why the Government are putting more money into it.
Baroness Goldie (Con)
My Lords, the strategic defence review is an admirable blueprint for what our defence capability should be. But, as it stands, it is devoid of any specific information about implementation. The Government have accepted the 62 recommendations from the reviewers, but they have given no detail about how or when they will deliver them. We know the review was predicated upon a defence budget of 3% of GDP. I ask the Minister: when is that 3% is happening and is it sufficient to implement the recommendations fully?
Lord Coaker (Lab)
The Prime Minister has been very clear about his commitment to ensure that the 62 recommendations are properly funded. The noble Baroness will know that the 3% is a commitment in the next Parliament, should the economic circumstances allow us to do so. The Prime Minister’s commitment is absolute, with respect to funding the defence review, and the noble Lord, Lord Robertson, accepts and understands that. As to when we will lay out the capabilities, the noble Baroness knows that alongside the defence review and the defence industrial strategy, in the autumn there will be a defence investment plan. This will be a line-by-line outline of the capabilities and choices needed to deliver the defence review according to the budgets that have been set.
Lord West of Spithead (Lab)
My Lords, I ask my noble friend the Minister: does the Treasury now understand that all this military equipment requires a drumbeat of orders? For example, if you want 30 frigates and they have 30-year life, one frigate has to roll off the production line every single year, year after year. The same goes for all other types of equipment. Historically, we have ordered little batches and then there has been a gap, so SMEs lose trade and cannot do anything. Then we order another little batch and there is a big fight about it. The Treasury has to understand the need for the drumbeat—have we managed to get the message through?
Lord Coaker (Lab)
The Treasury understands the need for that drumbeat. My noble friend is absolutely right that you cannot turn defence industry production on and off like a tap, and that we have to maintain the capability to produce ships or whatever military equipment that we need. It is also particularly important that we maintain the skilled labour and not allow those skills to be lost. My noble friend will know that the numbers of ships are now set out over the next few years, with designs for frigates and destroyers being planned for what comes next. I also draw noble Lords’ attention to the up to 12 additional AUKUS submarines. So the Treasury understands both the need for more money—which has been injected—and the need to ensure that we get that steady drumbeat, as my noble friend says.
Captain of the Honourable Corps of Gentlemen-at-Arms and Chief Whip (Lord Kennedy of Southwark) (Lab Co-op)
My Lords, it is the turn of the Conservative Benches. We have four Conservatives up. Can they quickly decide which one of them wants to ask the question?
Lord Naseby (Con)
As the Minister must know, there are a number of former RAF stations that, until the defence review, were not required; I mention particularly the example of RAF Scampton. Will the Minister now have another review of those airfields to see which are appropriate to meet the new defence requirements? As a former pilot, I would have thought that there were two or three that would fill that category.
Lord Coaker (Lab)
The defence review will require us to look at what bases we have in order to deliver the defence review, whether they are RAF or other facilities. Of course, we need to do this in a sensible way and one which delivers value for money. The number of bases and where they are is important, whether they are RAF or other bases.
Employment Rights Bill
(1 day, 4 hours ago)
Lords ChamberRead Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Hunt of Wirral
“Workplace intimidation in regard to balloting (1) The Employment Relations Act 2004 is amended as follows.(2) After section 54(12)(c) insert—“(d) measures are in place to prevent workplace intimidation.””Member’s explanatory statement
This new clause requires the Secretary of State to consider whether there are sufficient measures to be in place to prevent workplace intimidation before they make any order to allow balloting to take place by a means other than by posted ballot.
Lord Hunt of Wirral (Con)
My Lords, Amendments 247, 248 and 250 stand in my name and in the name of several of my noble friends. Amendment 247 requires the Secretary of State to consider whether sufficient measures are in place to prevent workplace intimidation before approving any balloting method other than postal ballot.
I believe the postal ballot has served as a cornerstone and a guarantor of democracy for good reason: it provides privacy, anonymity and time for reflection. Workers receive their ballot papers at home, and can consider the issues away from workplace pressures, mark their ballot in complete privacy and return it without anyone knowing how they have voted. This system has protected workers from intimidation for generations. Alternative balloting methods, while potentially more convenient or faster, create new possibilities for intimidation that simply do not exist with postal ballots. When voting moves into workplace environments and on to devices that can be observed, we fundamentally change the dynamic of how workers participate in crucial decisions about industrial action.
Consider workplace balloting stations. Denied the privacy of home voting, workers might find themselves voting in break rooms, meeting rooms or other workplace locations where colleagues, supervisors, or even union officials can observe who is participating and when they are voting—and potentially seek to influence their decision through presence alone. The queue to vote becomes visible; the time spent considering options becomes observable; and the act of voting transforms a private decision into a semi-public one. Electronic balloting presents its own challenges. They might use personal devices in workplace settings where screens can be observed or where pressure can be applied to vote immediately rather than after proper consideration. The technology that enables quick voting can also enable quick pressure.
Each of these alternative methods, while offering potential benefits in terms of speed and convenience, also creates vulnerabilities that postal ballots simply do not have. The private space of the home; the sealed envelope; anonymous returns—these features of postal balloting provide protections that we must be careful not to lose as we embrace new technologies and methods.
We simply want assurance that, before any alternative balloting method is approved, proper safeguards exist to prevent intimidation scenarios. These might include requirements for private voting spaces, prohibitions on observing voting, secure systems that protect voter anonymity, or cooling-off periods that prevent immediate pressure to vote on the spot. Workers should be able to vote according to their genuine views about proposed industrial action, free from any form of pressure or intimidation, regardless of the source.
The employee who has concerns about strike action, or worries about lost wages, or simply needs time to consider the implications should be able to participate in balloting without feeling rushed or being observed. This protection is particularly important because industrial action ballots directly affect workers’ livelihoods. These are not abstract political decisions. They are choices about whether to risk wages, potentially face disciplinary action, or take steps that could affect their employment. Workers deserve the space and privacy to make these difficult decisions according to their own circumstances and conscience.
Amendment 248 takes a clear and necessary step to protect the fundamental principle of democratic voting by prohibiting balloting taking place in the workplace. This would prevent the Secretary of State making any order that would allow trade union ballots and elections to be held in workplace settings. The workplace is fundamentally incompatible with free and fair democratic voting. When balloting moves into the workplace environment, we create a setting where the very people who have power over workers’ daily lives, career prospects and working conditions, can observe, influence and potentially intimidate voters during the democratic process.
This prohibition recognises a simple truth: the workplace is not a neutral space. It is not a safe space for democratic participation; it is an environment structured by power relationships, hierarchies and dependencies that can compromise the integrity of voting. When workers must cast ballots surrounded by colleagues, supervisors, union officials or managers, the essential privacy that democracy requires is fundamentally undermined.
Consider what workplace balloting means in practice. Workers would be voting in break rooms, where conversations could be overheard; in meeting rooms, where attendance could be monitored; or in common areas, where voting behaviour becomes visible to everyone present. The simple act of participating or not participating in a ballot becomes observable workplace behaviour, rather than a matter of private and democratic choice. The physical presence of authority figures during workplace balloting creates inherent pressure. Union officials can observe who votes enthusiastically and who hesitates. Shop stewards can monitor participation levels and, potentially, identify workers who seem reluctant to engage. Supervisors, even if not directly involved in the balloting process, may become aware of industrial action votes taking place on their premises during work hours.
This pressure operates both explicitly and implicitly. Workers may feel compelled to demonstrate loyalty or enthusiasm through their voting behaviour when that behaviour occurs in workplace settings. The colleague who takes time carefully to consider ballot questions may be seen as insufficiently committed. The voter who votes quickly may be assumed to be following group pressure rather than individual conscience.
Workplace balloting also creates logistical pressures that can compromise democratic participation. Workers may feel rushed to vote during limited break times or lunch periods. They may worry about being seen as taking too long away from their duties. The natural rhythm of workplace life—shift patterns, busy periods and urgent deadlines—can interfere with the thoughtful consideration that democratic voting requires.
Amendment 250 would introduce a crucial requirement for transparency and accountability in industrial action by requiring trade unions to conduct and publish economic impact assessments and family tests before balloting their members on strike action. It would require trade unions to take three essential steps before any ballot for industrial action can take place: publishing an economic impact assessment; publishing a family test on the impact of industrial action; and informing their members that these reports have been published. That would ensure that workers had access to comprehensive information about the broader consequences of proposed industrial action before they cast their votes.
The case for impact assessments is compelling when we regard the real-world consequences of industrial action. For example, in 2023 the RMT union estimated that its industrial action had cost the UK economy £5 billion. The Office for National Statistics reported that during those 16 days of NHS strikes between December 2022 and February 2023 at least 93,000 out-patient appointments, 18,000 elective procedures, 9,500 mental health and learning disability appointments and around 28,000 community service appointments had to be rescheduled because of strike action. That had a significant impact on people who were in urgent need of important support.
The ongoing Birmingham bin strikes provide a stark illustration of how industrial action can affect whole communities. Birmingham City Council declared a major incident after 17,000 tonnes of rubbish were left uncollected on the streets, requiring assistance from not only other local authorities but even Army specialists for logistical support.
The strike has disproportionately affected lower-income and inner-city areas, such as Sparkhill, Balsall Heath, Small Heath, Sparkbrook and Ladywood, where refuse has piled up to a greater degree than in more affluent suburbs. The health implications have been severe: uncollected waste has the potential to create not only nuisance for the community from flies and vermin, but public health risks. The policing costs alone have been substantial, with the costs of policing the Birmingham waste dispute reaching almost £1 million.
Lord Jackson of Peterborough (Con)
My Lords, I support the amendment so eloquently moved by my noble friend Lord Hunt of Wirral. There is not much more to add, but I will try. I also put my name to the amendment.
I thought we had gone past the stage where we look back at history and do not learn its lessons on protecting the franchise and the ballot in sensitive elections. There are no more sensitive elections than workplace elections, on which people’s very livelihood, careers, family and income depend.
I take your Lordships’ Committee back to February 1834. Colleagues on the other side of the Chamber will be aware that in 1833 agricultural workers in the village of Tolpuddle in Dorset quite rightly formed a union to fight wage cuts. The following year they were arrested, arraigned, found guilty and transported not because they had administered oaths, which was the official reason for their incarceration, but because they assembled as a group. The point is that they did not have a secret ballot. They had an open meeting to form the union and a strategy for fighting those wage cuts, and they were betrayed by two union members. If you talk to Unite the Union and GMB, there is nothing new under the sun.
That said, the point was they did not have a secret ballot. One reason that the unions have evolved in a positive way over many years—hitherto, until we reached this Bill—is that we have had that workplace democracy, unlike in the bad old days of the 1970s and before, where people were pressured to join a union in the closed shop and sometimes pressured to support industrial action which was uncalled for and damaging both to their own jobs and to the business generally, as we saw, for instance, in 1984 with the miners’ strike. Amendments 247 and 248 tabled by my noble friend Lord Hunt of Wirral are very sensible. I would say: be careful what you wish for, because there is another historical example, although noble Lords on the other side may resile from it. The Jim Crow laws in the southern part of the United States existed for many years post-reconstruction in 1865. That they marginalised, traduced and undermined the right of black people, of African Americans, to vote was, in effect, because they did not have a secret ballot and had to register, and there were many legal impediments to them voting.
We respect the integrity of the secret ballot. We would not dream of asking local councillors, parish councillors, borough councillors, county councillors and certainly not Members of Parliament to seek election on the basis that their electorate would be corralled into voting a certain way and there would not be a secret ballot. That is as it should be and as it has been for modern times, and it is correct. Why are we now going back to a potential era of bullying, harassment and attacking people who may not support the union line? Give people a chance to think, reflect and choose the right way for not just themselves and their families but their union by means of a secret ballot. For those reasons I strongly support my noble friend’s amendment, and I hope the Minister will give it due regard.
Baroness O'Grady of Upper Holloway (Lab)
My Lords, I oppose this group of amendments. I have to say that it is with deep regret, because my assessment of them is that they are trying to stir up a spectre of trade union intimidation, which reminds me strongly of the initiative going back in history—not quite as far as the noble Lord, Lord Jackson—to 2014, when the Government commissioned Bruce Carr QC, as he was then, to conduct an investigation of intimidation in workplaces. As it transpired, Mr Carr declined all opportunities to make any recommendations whatever on the basis of the evidence that he received. For the TUC’s part—and I was at the helm at the time—we described it as a party-political stunt and said that, frankly, the then Conservative Party in government should have repaid the taxpayer for the significant cost of conducting that investigation that led to zero—I repeat, zero—recommendations for changes in the law. In fact, Mr Carr went on just a year or two later to oppose the then Conservative Government’s Trade Union Bill as “a threat” to industrial relations and to civil liberties.
That brings me to safe and secure e-balloting. It seems to me that anybody who was a true democrat would be looking to increase opportunities for participation in safe, secure, secret and electronic balloting. Any boost to democracy should be welcome. I have to say that it is disappointing that those who oppose the right for trade unionists to cast their vote safely, securely and secretly by electronic ballot apparently believe that there is no threat of intimidation in respect of political parties. Therefore, it is fine for political parties to use modern methods of balloting; it is not fine for trade unionists. I would ask what view that gives us of the perception of trade unions from the Benches opposite, when, on the contrary, we should be proud of trade unions. We should tackle the causes and not just the symptoms of industrial action. We should be proud of constructive industrial relations in this country, which are vital for productivity and growth.
Baroness Kramer (LD)
My Lords, Amendments 247, 248 and 250 would introduce further requirements in relation to trade union ballots, particularly concerning the risk of intimidation, the use of workplace locations and the information that unions must provide to members. While the intention to ensure that ballots are conducted fairly without pressure is understandable, I question whether these proposals are justified. They appear to introduce new procedural barriers for trade unions, with little evidence that safeguards are failing. There is a broader concern that measures of this kind may tilt the balance even further against workers attempting to organise and exercise their rights. I would be grateful if the Minister could set out whether these amendments are proportionate and necessary, and how they align with the broader approach to employment and industrial relations.
Lord in Waiting/Government Whip (Lord Katz) (Lab)
My Lords, I thank the noble Lord, Lord Hunt of Wirral, for introducing these amendments tabled by his noble friend Lord Sharpe of Epsom. I thought that, with the contribution from the noble Lord, Lord Jackson of Peterborough, we were starting the history lessons a little early today—early in terms of this being the first group and in going back to the 1830s. I bend to no one in enjoying anecdotes about the Tolpuddle Martyrs, so I thank the noble Lord for his contribution, although I am not sure what it added to the debate.
Amendment 247, although well intentioned, is unnecessary. We all share the concerns outlined by the noble Lord, Lord Hunt of Wirral, about interference in balloting around industrial action. We understand that no worker takes a decision about voting for industrial action lightly—whether it is strike action or action short of a strike—and that they understand the consequences, because if action is voted for, they will be the ones who suffer directly by losing pay. We must ensure that when we talk about this, we talk about both sides of the ledger.
The amendment is well intentioned, but it is unnecessary, because Section 230 of the Trade Union and Labour Relations (Consolidation) Act 1992 already requires that every person entitled to vote in an industrial action ballot must be allowed to do so without union interference. Furthermore, recognition and de-recognition ballots under Schedule A1 are already subject to provisions prohibiting unfair practices whereby the Central Arbitration Committee can order that a ballot is re-run if an unfair practice claim is found to be well founded. To introduce a new voting method to statutory trade union ballots using Section 54 of the Employment Relations Act 2004, the Government must already consider that the new method would allow the ballot to meet the requirements under Section 54(12). Specifically, the Government must consider that those entitled to vote have an opportunity to do so, that votes are cast in secret and that the risk of any unfairness or malpractice is minimised. Therefore, safeguards are already provided for in Section 54(12)(c) that cover intimidation if it takes place in the workplace or elsewhere. The noble Lord’s amendment is therefore not required.
I thank my noble friend Lady O’Grady of Upper Holloway for reminding us of the outcome of the inquiry by Bruce Carr QC, as he was then, about the absence of intimidation within workplaces. It is important that we bear this in mind. The question was asked. It was tested by independent opinion and the proposition that underlies the spirit of these amendments was found to be wanting.
Amendment 248, also in the name of the noble Lord, Lord Sharpe of Epsom, would prevent the Secretary of State using the power in Section 54 to allow workplace balloting as a new means of voting in trade union ballots and elections. Unfortunately, the amendment fails to take into account the fact that workplace balloting is already an option for statutory trade union recognition and derecognition ballots. The existing legislation permits workplace ballots conducted by independent scrutineers appointed by the CAC. One wonders why this is deemed acceptable by the Front Bench opposite but other sorts of workplace balloting are not.
Furthermore, as I said earlier, any new voting methods introduced under Section 54 of the Employment Relations Act 2004 must enable a ballot to meet the requirements of Section 54(12). The Government are committed to updating our industrial relations framework and aligning it with modern working practices and technology. This includes allowing for modern and secure balloting for statutory trade union ballots.
Lord Hunt of Wirral (Con)
My Lords, I am very grateful to my noble friend Lord Jackson of Peterborough. I had not thought, when preparing my address, to look back to 1834. The only time I ever talk about 1834 is recalling that on 16 October 1834, this whole place burned down and gave rise to the new mother of parliaments we know today. Only Westminster Hall survived that terrible fire in 1834.
All I will say about the Tolpuddle Martyrs who were sentenced to be sent to Australia is that two years later they were pardoned, and they all went to Canada; I think Canada benefited hugely from that exodus. But I am not quite sure that we can read across because so much has changed, as the noble Baroness, Lady O’Grady of Upper Holloway, reminded us.
The noble Baroness also referred us back to the coalition—it was not a Conservative Government but a coalition in 2014—and cited Bruce Carr KC, who I respect hugely. He is a brilliant advocate in this whole field of employment law, but I am not quite sure that I read across in the way the noble Baroness did.
I agree with the noble Baroness, Lady Kramer, that it is all a question of balance. We have to try to do our best to get the balance right but, as we draw the debate on these amendments to a close, I want to say how sorry I am that the Government declined to accept these modest but essential amendments, although I pay tribute to the noble Lord, Lord Katz, for saying that they are well intentioned. Of course they are, because they are rooted not in ideology but in common sense, democratic principle and a genuine concern for those people who will be affected most by this legislation.
Throughout this short debate, we have tried to put across the case that industrial action is not just a technical but a deeply human process. It involves individuals making weighty decisions that affect their income, their job security, their families and the wider community. That is why the processes we set in place to govern these decisions must be fair, private and informed.
We argue in these amendments that workers deserve to vote on industrial action in conditions that are free from coercion or surveillance. We said that the workplace, structured as it is by hierarchies and power dynamics, is not and cannot be a neutral environment for democratic expression. I do not need to go back to the 1970s but, of course, that is when I entered Parliament for the first time, and we saw a lot of decisions made in the workplace that people regretted afterwards.
I ask the Government to consider the very real risk of intimidation, whether explicit or subtle, and to preserve the privacy that postal balloting has long guaranteed. We were not asking the Government to turn the clock back on technological progress; we were just saying that any movement away from the postal ballot has to be accompanied by genuine, enforceable safeguards. Yet, sadly, the Minister refused to accept even the simple premise that the method of voting matters—that how a person votes is as important as the person for whom they are voting.
We also asked for transparency. Through Amendment 250, we sought to ensure that unions undertaking industrial action do so with an honest reckoning of the broader consequences—economic, social and familial. We know that strikes do not happen in a vacuum; they ripple outward, touching the lives of patients, parents, commuters, businesses and whole communities. I certainly do not want to prohibit strikes, but we believe that workers have to be given the full picture before they make a serious decision to withdraw their labour.
I am particularly disappointed because these amendments would strengthen the public’s confidence in this legislation. They would have shown that Parliament is serious about protecting not only workers’ rights but democratic process, public welfare and social responsibility. Instead, the message is now that efficiency is more important than privacy, that speed matters more than integrity, and that the consequences of industrial action—no matter how far reaching—need to be honestly appraised before the strike begins.
All I will say in conclusion is that the debate does not end here. I do not believe that these concerns will go away. The consequences of inaction, the risks of intimidation, the lack of transparency and the damage to public trust will, in time, make themselves known. When they do, I hope the House will remember the case that we have made today. In the meantime, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom
“(2A) Subsection (1) only applies where the protected industrial action is the result of a properly conducted ballot in accordance with sections 226 to 232.”Member's explanatory statement
This amendment ensures that subsection (1) only applies where protected industrial action follows a properly conducted ballot under sections 226–232.
Lord Sharpe of Epsom (Con)
My Lords, the amendments in this group seek to address gaps in our current legislation by establishing clear exemptions from detriment protections when workers engage in unacceptable conduct during industrial disputes, while creating a comprehensive framework that restores balance to industrial relations.
I am willing to be corrected, but we do not believe that these specific protections against certain leverage activities currently exist in legislation, which is precisely why Amendment 252 is necessary. However, this forms part of a broader package addressing systemic failures in our industrial relations framework. In our assessment, leverage may manifest in various forms, but at its core lies a deliberate strategy to publicly intimidate and humiliate employers, compelling them to make concessions in industrial disputes that they would not otherwise consider. We fundamentally reject this approach as unacceptable in civilised industrial relations.
When describing leverage in the context of the Grangemouth dispute, Unite the Union explicitly stated:
“Leverage targets all areas of weakness of an employer … Leverage is the translation of an organising mind-set into the planning and implementation of a campaign strategy, underpinned by the escalation of pressure to create uncertainty”.
Even more concerning, Unite the Union expressed the view that in a leverage campaign
“the employer is routinely treated as a target to be defeated not a friend to be convinced”.
This adversarial approach treats employers as enemies to be vanquished, rather than as partners in resolving legitimate grievances.
Amendment 252 specifically identifies actions that constitute leverage: intimidation at picket lines; protests at company premises or the private homes of senior managers; the harassment of non-striking workers; and deliberate actions designed to undermine business continuity planning. Workers who engage in these intimidatory tactics should face the prospect of dismissal without recourse to employment protection.
However, the problems extend beyond leverage tactics. Amendment 251C responds to the troubling rise of wildcat strikes and unofficial action lacking democratic mandates. The Grangemouth dispute exemplifies this. Leverage tactics were employed in pursuit of objectives that may not have commanded genuine workplace support. If workers are to enjoy enhanced protections, those protections should be reserved for action properly sanctioned through domestic process under Sections 226 to 232 of current legislation.
Amendment 251G seeks to address the growing problem of co-ordinated action by workers outside of established collective bargaining frameworks. We have seen increasing instances of social media-organised workplace action that deliberately circumvents union structures and creates chaos for employers facing industrial action without recognised representatives to negotiate with.
Amendment 251D seeks to address the very real risk that, without proper definition, every minor management decision during a dispute could become grounds for a detriment claim. We have seen in other jurisdictions how broad definitions create litigation cultures, where employers face constant threat of claims for routine operational decisions. This amendment would prevent the trivialisation of genuine grievances while protecting employers from vexatious claims.
Our compensation framework amendments respond to documented failures. Amendment 251K would establish three bands of detriment severity—minor, serious and extreme—addressing the current lack of guidance that leads to wildly inconsistent awards. Amendment 251L would require proof of “actual financial loss”, preventing the speculative claims that proliferate without such requirements. Amendment 251N would restrict compensation to economic losses, preventing the concerning trend towards “injury to feelings” awards that represent a fundamental category error in industrial relations contexts.
Amendments 251E and 251F seek to address the stark reality that industrial action has already compromised public safety. During recent NHS strikes, emergency cover was inadequate, putting patients at risk. The 2019 London Underground strikes left commuters stranded, creating security vulnerabilities. Amendment 251E would provide essential legal clarity for employers who must prioritise continuity of critical operations. Without this protection, fear of litigation prevents necessary operational decisions. Amendment 251F recognises that some industrial action poses direct threats to public health and safety. Such considerations must take precedent over detriment protections.
Baroness Kramer (LD)
My Lords, I speak to Amendment 251C through to Amendment 252, in the name of the noble Lord, Lord Sharpe. These amendments would introduce a wide range of limitations to the new right not to suffer detriment for participating in protected industrial action. The amendments seek to define and restrict the scope of protection, introducing exclusions based on business continuity, public safety, union membership status and compliance with employer instructions. They propose new requirements around compensation, such as proof of financial loss, statutory severity bans and caps on awards.
Although I understand the desire to ensure clarity and prevent misuse of these protections, I am concerned that, taken together, these amendments risk hollowing out the underlying right. They would place significant hurdles in the way of workers seeking redress and could undermine confidence in the fairness and accessibility of the system. I would be grateful if the Minister could clarify whether the Government support this overall direction of travel and how they intend to ensure that the core principle of protection from unfair treatment during lawful industrial action is preserved in practice.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I thank the noble Baroness for her contribution, and I thank the noble Lord, Lord Sharpe of Epsom, for tabling these amendments. I ask noble Lords to bear with me as I respond to each of them.
I want to be clear about why this clause is required. Clause 73 inserts new Sections 236A to 236D into the Trade Union and Labour Relations (Consolidation) Act 1992. New Section 236A is required because the Supreme Court ruled in April 2024 that Section 146 of the 1992 Act is incompatible with Article 11 of the European Convention of Human Rights.
Amendments 251C, 251F, 251H and 251J are unnecessary as their purpose is already covered in existing legislation. In the case of Amendment 251C, Clause 73 already requires a ballot compliant with Section 226, as specified in Section 219(4) of the 1992 Act, and makes it clear that protection is limited to cases where the action is compliant. Furthermore, in the case of Amendment 251J, secondary action is already prohibited under Section 224 of the 1992 Act, and the new protection of Section 236A will not apply where the industrial action was unlawful secondary action.
With regard to Amendments 251F and 251H, Section 240 of the 1992 Act allows for criminal prosecution of those who intentionally and maliciously endanger life or cause serious injury to a person by going on strike. Furthermore, if an act of an employer is motivated primarily by health and safety concerns, not for the sole or main purpose of preventing or deterring the employee from taking protected industrial action or penalising them, they have a defence from detriment claims, and the tribunals will consider whether the employer’s act or failure to act constitutes detriment.
Amendments 251D and 252 seek to prejudge a full and open consultation on this issue by setting out circumstances in which the detriment protection will not apply. We will prescribe detriments in secondary legislation only once we have conducted a comprehensive consultation seeking views across the public, including those of workers, employers, trade unions and all other stakeholders.
With reference to Amendment 252, that protection from prescribed detriment applies only where the sole or main purpose of subjecting the worker to detriment is to prevent, deter or penalise the worker from taking protected industrial action; for example, if a worker is subjected to detriment solely or mainly because they have harassed or bullied non-striking workers, the protection will not apply. I can be clear that criminal law will continue to apply to pickets.
Amendment 251E would be an unnecessary limitation on the protections from detriment. The prohibitions that new Section 236A places on an employer are clear: the sole or main purpose of the action must be to deter or penalise industrial action, which would not apply in the case of genuine maintenance of critical operations. Amendment 251G would be an unreasonable restriction to apply to detriment protections. Non-union members have the right to participate in official protected industrial action and, where that is the case, must be afforded the same protections from detriment as union members.
Amendments 251L and 251N would place a burden on individuals to prove that they had suffered financial or economic loss as a result of detriment, and would limit the circumstances where they were eligible for compensation. These hurdles and limits would potentially deter them from engaging in industrial action, limiting compliance with the Supreme Court ruling and Article 11.
Amendments 251M and 251P seek to restrict compensation with regard to business deeds. I want to be clear that an employer’s action or failure to act in relation to prescribed detriments will be a legal obligation that cannot be breached proportionately, and there is no legitimate business interest defence for seeking to deter or penalise an employee for taking protected industrial action.
Amendment 251K seeks to establish bands of detriment severity of “minor”, “serious” and “extreme”, and would require the Secretary of State to specify maximum compensation limits for each, which tribunals would have to comply with. New Section 236D is already clear that employment tribunals must have regard to any loss sustained by a claimant that is attributable to the actions of, or failures to take action by, an employer. Therefore, tribunals will award compensation based on what the tribunal considers to be just and equitable and will be able to proportionately determine the amount of compensation, taking into account all the relevant circumstances. I hope I have reassured the noble Lord. I therefore ask him to withdraw Amendment 251C.
Lord Sharpe of Epsom (Con)
I am very grateful to the Minister for his very comprehensive answer, and also to the noble Baroness, Lady Kramer, for her comments. I will have to read Hansard very carefully, because there is quite a lot of detail in the Minister’s answer, but I will say that for months we have listened to Ministers speak at considerable length about the urgent need to address bad actors in our workplaces. On a number of occasions, they have painted fairly vivid pictures of unscrupulous employers who exploit workers, flout employment law and engage in practices that undermine good industrial relations. However, having been presented with clear evidence of equally concerning bad actors within the trade union movement, the Government’s response has been, in effect, to stay silent. I repeated those Unite comments, and I will repeat them again here, that
“the employer is routinely treated as a target to be defeated not a friend to be convinced”.
To use a word that came up in the last group, that is not “constructive” or collaborative; that is very hostile in intent.
Without going into enormous detail, Amendment 251L, for example, would require proof of actual financial loss, which is a basic principle that would prevent speculative claims. I do not see how that would deter anyone with a legitimate claim from engaging in industrial relations, so how would their Article 11 rights be infringed, as I believe the Minister outlined?
We will have to come back to these amendments because, as I say, there was a good deal of detail in there. Once again, the Minister is relying on the mythical consultation; I would like to know when that consultation on these aspects of these amendments will take place. Of course, that also calls into question when he expects all this to be implemented—a subject to which I am quite sure we will return on a number of occasions this evening. But for now, I beg leave to withdraw.
Lord Prentis of Leeds
“Amendments to law on unlawful inducements(1) The Trade Union and Labour Relations (Consolidation) Act 1992 is amended in accordance with subsections (2) to (3) below(2) In section 145A (inducements relating to union membership or activities)—(a) after subsection (1), insert—“(1A) A worker has the right not to be excluded or omitted from an offer made by the employer to any of its workers if the exclusion or omission was on the ground that the worker—(a) ?save-line2?was, or proposed to become, a member of an independent trade union;?save-line2?(b) had taken part, or proposed to take part, in the activities of an independent trade union at an appropriate time;(c) had made use, or proposed to make use, of trade union services at an appropriate time;(d) had failed to accept an offer made in contravention of this section or section 145B;(e)?save-line2? was not a member of any trade union, or of a particular trade union, or of one of a number of particular trade unions, or had refused, or proposed to refuse, to become or remain a member.”(b) in subsection (2), for “subsection (1)” substitute “subsections (1) and (1A)”;(c) in subsection (4), for “subsections (1) and (2)”, substitute “subsections (1), (1A) and (2)”;(d) in subsection (5), after “has made him an offer” insert “or has excluded him or omitted him from an offer”.(3) In section 145D (consideration of complaint)—(a) in subsection (1) after “145A”, insert “or relating to an infringement of section 145A(1A)”;(b) after subsection (1) insert—“(1A) On a complaint under section 145A relating to an infringement of subsection 145A(1A) it shall be for the employer to show the ground on which the worker was omitted or excluded from the offer.””Member’s explanatory statement
This amendment seeks to ensure that workers are protected if they are excluded or omitted from an offer because they are trade union members. The provision aims to ensure that section 145A applies to conduct which undermines the employees’ rights to freedom of association.
Lord Prentis of Leeds (Lab)
My Lords, Amendment 253A concerns inducements relating to union membership or activities. This is a simple amendment to clarify Section 145 of the Trade Union and Labour Relations (Consolidation) Act 1992. The reason for this amendment rests in the dispute between Livv Housing Group, a housing association based in Liverpool, and its staff, represented by UNISON and Unite.
In 2011, the pay of Livv Housing workers had fallen by over 30% in real terms. But Livv Housing was not a failing company: it had recorded annual surpluses in the last five years ranging from £14 million to £25 million, with reserves of over £110 million. In the autumn of last year, talks on a long-overdue equal pay agreement and an annual pay rise had broken down. Union members voted to take lawful industrial action. Livv Housing did not engage. It did not look to the underlying causes of the dispute. Instead of seeking a fair deal, it decided that it had found a loophole in the 1992 Act which it would exploit.
Lord Hunt of Wirral (Con)
My Lords, I thank the noble Lord, Lord Prentis of Leeds, for describing this amendment to us. It is simple and easy to understand but founded on a very difficult and testing industrial dispute. Looking back over my time as a parliamentarian, I often found that facts get distorted, beliefs underpinned and positions entrenched. The last thing that should ever happen is an overt change in the law. I do not believe that is necessary. Let me explain why.
The Minister should not support this amendment, which, as the noble Lord, Lord Prentis, explained, seeks to extend Section 145A of the Trade Union and Labour Relations (Consolidation) Act 1992 to cover the exclusion or omission of a worker from an offer on grounds related to trade union membership or activity. While the noble Lord presented this amendment as a measure to strengthen workers’ rights and reinforce freedom of association, in reality, on reflection, as he virtually admitted when he introduced it, it is poorly drafted, conceptually flawed, legally confusing and potentially deeply damaging to the legitimate and practical functioning of workplace relations.
At its core, the amendment misunderstands the balance that needs to be struck between protecting the rights of trade union members and preserving the autonomy of employers to make operational decisions in good faith. The current law already provides robust protections against unlawful inducements that seek to undermine collective bargaining. I recall, because I was in government at the time, that Sections 145A and 145B were carefully crafted to target deliberate attempts by employers to bypass or undermine collective agreements. This amendment goes significantly beyond that, seeking to introduce for the first time in statute a wholly ambiguous and legally unstable concept—exclusion from an offer—without providing any meaningful guidance or definition as to what such exclusion means, how it is to be assessed and in what contexts it is to be deemed unlawful.
An offer, by its very nature, is made on the basis of specific criteria—sometimes economic, sometimes strategic and sometimes tied to an individual’s performance or to business need. To say that a worker has a right not to be omitted from any offer and to link any such omission to trade union membership or activity would place an intolerable burden on employers. It would open the door to speculative claims and second-guessing of decisions that may have been made for entirely legitimate and neutral reasons, relying on an inference of motive in the absence of solid evidence. Effectively, it demands that employers should treat all workers identically in every instance of any offer—whether it is financial, procedural or preferential—or face litigation and the reversal of the burden of proof. Let me explain.
The amendment proposes that in any case brought under the new Section 145A(1A), it will fall to the employer to demonstrate the grounds upon which the worker was excluded. That is a fundamental reversal of the ordinary legal principle that a claimant must prove their case. It turns routine management discretion into presumed unlawful conduct unless proven otherwise. Such a reversal may be appropriate in narrow cases where discrimination is clearly alleged and supported by a pattern of conduct, but to write it into statute so broadly and in such general terms is not only disproportionate, it is potentially destructive to employer-employee trust and clarity. No employer, however well intentioned, will be able to manage negotiations or individual agreements with confidence under such a regime.
Furthermore, the amendment also risks creating legal confusion by overlapping with other provisions already in place to protect against victimisation or unfair treatment. Section 146 already protects against detriment related to trade union activities. Section 145A already prohibits inducements that would bypass collective bargaining. If the goal is to ensure fair treatment of trade union members, the proper route is through targeted enforcement of those provisions, not through the introduction of vague and speculative new rights that overlap and conflict with existing law.
The amendment is also unbalanced in its approach. It fails to consider that there are many reasons why an individual might not be included in an offer that are entirely unconnected to trade union status. It might be on account of their role, their location, the timing of their employment or performance-based factors. Yet under the proposed amendment, a worker could simply allege that their omission was because of trade union membership or activity, and the burden would shift entirely to the employer to justify its actions. That is not just an invitation to abuse; it is a structural distortion of fairness in employment law.
It must also be acknowledged that this amendment could have chilling effects on legitimate collective bargaining. Employers may feel compelled to make across-the-board offers rather than engaging in more flexible, targeted negotiations that take into account differences in role, responsibility or need. That could undermine not only business efficiency but also the ability of unions themselves to secure advantageous outcomes for specific groups of members. The very act of negotiating special terms for one group might now trigger complaints from others, citing this amendment as grounds for a claim of exclusion.
In conclusion, let me be absolutely clear: freedom of association is a vital right and must be protected. I do not believe, however, it would be served by new laws that are unclear, that burden employers without cause or that generate more confusion than clarity. This amendment—despite its rhetorical appeal to equality and fairness—will in practice be a blunt and imprecise instrument, increasing litigation, reducing operational flexibility and contributing little, if anything, to the genuine promotion of union rights. I hope the Minister will agree with that.
Lord Leong (Lab)
I thank the noble Lord, Lord Hunt, for his lengthy contribution. All he had to say was, “I do not support the amendment”. I thank and appreciate my noble friend Lord Prentis of Leeds for tabling Amendment 253A, which sets out that workers have a right not to be omitted from an offer by their employer because, among other reasons, they are trade union members. This amendment has been laid in response to a particular matter regarding the housing association Livv Housing Group, which last year reportedly made a pay offer to only those members of its workforce who confirmed that they were not trade union members. I am pleased that this matter has now been positively resolved in the workplace, as set out by noble friend.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
Do I take it the noble Lord wishes to withdraw the amendment without further contribution?
Lord Sharpe of Epsom
“(4) The Secretary of State must conduct a review to assess the impact on emergency services arising from the repeal of the Strikes (Minimum Service Levels) Act 2023.”
Lord Sharpe of Epsom (Con)
My Lords, I support the amendments tabled after Clause 75, which would require the Secretary of State to assess the impact of repealing the Strikes (Minimum Service Levels) Act 2023 in terms of emergency service provision and the broader resilience of our public infrastructure during industrial action. These are pragmatic and proportionate amendments, and I regret that they are even necessary, but the manner in which Clause 75 proposes to repeal this legislation—abruptly and with no review, consultation or supporting evidence—leaves us no choice.
The 2023 Act was narrowly drawn. It applied only to a tightly defined set of sectors—ambulance services, fire and rescue, health, transport, nuclear decommissioning and border security—in which a complete withdrawal of labour poses serious and obvious risks to life, safety, national security or national functioning. It did not ban strikes or criminalise union membership. It allowed a minimum service level to be set, by regulation, after consultation with affected sectors. In other words, it was a public protection measure, a mechanism of last resort, and it mirrored provisions already in countries across Europe and beyond.
The Government now seek to repeal the law, seemingly on the basis that it achieved nothing. They will no doubt point to the fact that industrial action has continued since the Act came into force. Indeed, we know from statistics that 160,000 working days were lost to strike action in the first quarter of 2025 alone. However, that statistic proves nothing about the value, or otherwise, of the Act. It proves only that the right to strike continues to be exercised, as it should be.
The Strikes (Minimum Service Levels) Act was never intended to eliminate strike action, and its success should not be judged by whether workers stopped striking. It should be judged by whether the public was kept safe when strikes did happen, whether ambulances still reached heart attack victims, basic fire cover was maintained and border infrastructure functioned at a minimum level.
That is a relevant test, and the Government have produced no evidence to show that those minimum protections were either unnecessary or ineffective. In fact, if the Act truly achieved nothing, why the rush to repeal it? Governments do not normally spend valuable legislative time repealing laws that they believe have no impact. The truth is that this law has teeth: it provides leverage, and it establishes a legal baseline. The Government want to remove it not because it is useless but because it places limits on how far certain interests can allow disruption to stretch.
Even if one believes the Act was flawed, the responsible course would be to review its effects before repealing it, particularly when the law was so recent and implementation across sectors was still under way. Consultations on minimum staffing levels had not been concluded in all sectors, practical guidelines had only begun to take shape and the real-world application of the law was still emerging, so to repeal it now is to abandon public protection in the name of political symbolism, to uproot a tree before it even had time to settle and declare it a failure for not bearing fruit.
What is most striking, however, is that the Government have provided no evidence that repealing the Act will lead to improved industrial relations, despite making that very claim in the impact assessment for this Bill. It is asserted almost in passing that the removal of the Act will restore trust or reduce tensions in negotiations, but where is the proof of that? Where is the analysis? Where is the independent data or stakeholder feedback to support that optimism?
We are told to take it on faith that repealing a legal framework designed to protect the public will somehow produce a more harmonious climate between unions and employers. But we are not here to govern by faith—we are here to scrutinise and to ask hard questions, and to legislate with due diligence. I put this to the Minister directly: can the Government point to any serious evidence, whether from unions, employers, emergency service leadership or international examples, that repealing this Act will improve negotiation outcomes, reduce disruption or lead to faster resolution of disputes? If not, why are we legislating in the dark?
What is the Government’s alternative? If we strip away the only existing mechanism for maintaining safe service levels during strikes, what replaces it? Nothing in the Bill offers an equivalent safeguard. There is no provision for voluntary cover agreements, no incentives for minimum staffing, no rapid arbitration scheme and no contingency powers for life and limb services. We must assume that the Government are content to simply let key public services fall to zero capacity during industrial disputes. There will be no legal recourse, no duty to plan and no obligation to protect the public. That is not reform.
Meanwhile, the public, who continue to support the right to strike in principle, also expect a functioning state. They expect to be able to call an ambulance and get one; they expect transport to limp along during industrial disputes, not collapse entirely; and they expect public safety to be preserved. The amendments before us are not extreme; they merely require a clear-sighted review of the implications of this repeal, something that any responsible Government would do as a matter of course.
I urge noble Lords to support these amendments. If the Government are confident that repealing the Act would strengthen industrial relations and carry no risk to public welfare, they should have no objection to reviewing that impact and reporting to Parliament. If they are not confident, I submit that the repeal should not proceed at all.
In short, the issue here is not ideology; it is competence. We are about to discard the only statutory mechanism for ensuring minimum service level provision during strikes—a model recognised across Europe and endorsed by ILO principles—without evidence, without a plan and without a single word of accountability to Parliament. As I said earlier, that is not governance; it is recklessness. I beg to move.
Baroness Coffey (Con)
My Lords, I will speak to each of the three amendments in this group, starting with Amendment 254. A significant part of the reason for the minimum services, as my noble friend has just laid out, was to recognise that certain issues were affecting daily life.
It is worth while considering the timing of aspects of this, not long after the end of the Covid lockdowns, and recognising the economic challenges that our country faced. In combination with people’s need to access urgent medical support, bearing in mind that a number of activities had been cancelled many times already, the impact of seeing further strikes—cancelling a basic level of operation for patients—was starting to become potentially very difficult for the country to manage and for patients in getting better.
Other sectors were also discussed, and transport is a good example. I expect that none of the train operating companies used this, partly because many of them found different ways to keep trains running on a basic level—good examples of that would be Greater Anglia or South Western Railway. Greater Anglia will soon become a nationalised rail operator, so I would be very interested to know—I appreciate that the Minister may not have an answer today—what the practice will be in the future as a consequence of this. At the time, the operating company Abellio was able potentially to have gone to this piece of legislation to keep trains running, although it did not have to. Will nationalised rail companies be allowed to continue to keep services running so that users can get to work, or wherever they need to go, even though there are other people on strike? My expectation, candidly, is that no nationalised company will in any way go against any trade union strike. I cannot see a Labour Government Minister using that, so by repealing this legislation the Government will have lost a lever on behalf of many of the users of public services, or services put forward for public use, across the country.
At one point there was a discussion about schools. A similar issue had arisen with children during Covid, through no fault of their own and no fault of the teachers. Schools were kept open, by and large, physically for certain workers but also online. Undoubtedly, there was a challenge for education but also, frankly, the inconvenience to working parents when schools go on strike is particularly harmful and is disruptive to those families and the wider economy. But it was decided not to do that. We reverted back to making sure, in the spirit of the Act’s intentions, that we would keep it to what were deemed to be absolutely key public services. Otherwise, there would have been significant detriment to the wider public.
Amendment 258, tabled by the noble Lord, Lord Fox, and the noble Baroness, Lady Fox of Buckley, on a review into the impact on small businesses, would be very helpful. Huge changes are being put in place after nine years of a piece of legislation that from the economy’s perspective has worked reasonably well. I appreciate that the trade unions may not have liked it—and I recall it being voted against, back when this was being debated in the House a decade ago—but it is vital to the wider economy that we get our companies growing.
It seems to change every time, but I think that overall the number one mission of this Government is growth and the economy. Yet they are starting to do things, through this Bill and other situations, that seem to be driven by ideology rather than pragmatism and practicality. As a consequence, the basics and the consequences of some of this legislation, or the repealing of existing legislation, need to be considered in proper economic depth. I would love this to have happened with an updated impact assessment for us to consider before we conclude the Bill. By the way, I am grateful to the Minister for making sure that the letter the Secretary of State sent me has been placed in the Library so that every Peer can see it, but it worries me that that issue will not be considered further.
Amendment 256 links with the idea of a certification officer. I will come to series of amendments on that soon, so I am not sure how much of a certification officer role will be left. When it applies its thoughts on how it goes about the enforcement of the laws to which it is subject—and which it is also doing on behalf of trade union members—it should consider our role in the world and, in particular, how that contributes to make sure that we have a growing economy. I am sure all Members of your Lordships’ House would agree that we need it to grow.
Baroness O'Grady of Upper Holloway (Lab)
My Lords, I oppose Amendment 254 and the other amendments in this group.
I also admit to a certain degree of pleasure that they have been tabled, because they draw attention to the fact that such was the rejection, not just of unions or the minimum service levels Act but of the public and employers, that not a single employer used the minimum service levels Act and not a single work notice was issued. That was because the Act was so widely regarded as unfair and unworkable and, in addition, that it would put fuel on the fire of difficult industrial disputes when all decent people wanted to resolve those disputes. Finally, it ignored the fact that life-and-limb voluntary agreements are in place in the industries and sectors where safety is genuinely at stake.
I thank the Benches opposite for putting forward the amendments.
Baroness Noakes (Con)
My Lords, the noble Baroness, Lady O’Grady of Upper Holloway, and I took part in the debates on the 2023 Bill when it went through your Lordships’ House—obviously, on different Benches. She is right that no employer sought to use the powers in the 2023 Act, but the Act had only a relatively short existence in which it was available to employers before, in effect, we went into an election period.
I accept that, at the time, employers did not wish to take advantage of the Act’s provisions. The main purpose of the Act was to protect individual citizens to ensure that they had the levels of service that they needed. That goes beyond safety issues, which are the minimum levels to which unions tend to sign up for, so that ordinary citizens have minimum service levels to get themselves to work, to get themselves to their hospital appointments and so on. We did not give that Act enough time to see: first, whether it would work in practice, which I believe it would; and, secondly, whether it would be popular with the British public, which I am absolutely certain it would have been, if it had had a proper amount of time to come into effect.
I accept that those in the party opposite, throughout the passage of that Bill, registered their strong opposition to it. So I understand that, in power, they seek to expunge it from the statute book. However, that is a grave mistake that ignores the needs of ordinary citizens and places unions above the needs of ordinary citizens.
I particularly support the amendment in the name of the noble Lord, Lord Fox, which seeks an impact assessment on SMEs. I will always support an impact assessment on SMEs, because we have not had a proper one yet. I do not believe that Part 4 of the Bill will have the biggest impact on SMEs—other parts, particularly Part 1, will decimate SMEs—but I support any opportunity to get full public exposure of the impact of the provisions throughout the Bill on the health of our very important SME sector.
Baroness Lawlor (Con)
My Lords, I support the amendments from my noble friends Lord Sharpe of Epsom and Lord Hunt of Wirral to require an impact assessment on the effect on the emergency services. That is proposed in Amendment 254, which seeks to insert proposed new subsection (4) to Clause 75; and in Amendment 255, on the ability of the services listed in the 1992 Act to provide minimum service levels with a new Section 75, requiring an impact assessment.
As noble Lords will remember, the Strikes (Minimum Service Levels) Act 2023 enabled the Secretary of State to set minimum levels of services in essential services, so that employers could give notices to trade unions that their employees must comply with Section 234B. Specified services included health, fire and rescue,
“decommissioning of nuclear installations and management of radioactive waste”
and border security. These are vital areas of the public services and, indeed, often incorporate private sector services too.
The noble Baronesses, Lady O’Grady and Lady Coffey, both pointed out that the Act was not drawn on, but it is my view that it acted as a leverage, as has already been pointed out. I support also what the noble Baroness, Lady Noakes, said: given time, the Act would have come into its own. It was not given time, partly because the Opposition, who were then in pole position to take over from the Conservatives at the next general election, made it clear that they would repeal it and fought tooth and nail against the Bill throughout the debates.
Clause 75, to repeal the Strikes (Minimum Service Levels) Act 2023 for minimum service levels in these sectors, will appear, as has been said, to many people in this country as an irresponsible act of Government. They see that, every time the Labour Opposition is about to come to power or has the chance of coming to power, the trade unions ramp up their campaign, often calling strikes and causing chaos in the public services—some emergency services included—thus providing the Labour Government with the springboard to measures such as the present one, and indeed the present clause.
However, even if it served as leverage, the chaos was mitigated as a result of the 2023 Act, with schools kept open, rail services running reliably, if not quite as frequently, and hospital treatments taking place. Given the militancy of the unionised workforce mainly in the public sector, employers there may not particularly relish serving workplace notices, but there may be an incentive, and it may be necessary to give employers in the public sector an incentive or an instruction to do so. Right now, the issue we and the public face is, will we have our emergency and essential public services for which the country as a whole pays handsomely through its taxes for such services? Will people have a right to the benefit of the service they pay for?
Being an employer is not an easy job; it is a hard one: one of constant interaction and agreement with employees on whom the success of any enterprise depends, be it a business or charity or the public sector. It may be necessary to have such a requirement, as was stipulated under the Strikes (Minimum Service Levels) Act 2023, to bring employers who are not minded to go that extra mile to find an agreement to some dispute. It might be necessary to have that if there is no other incentive in place, and very often, in publicly paid for services, there is no incentive for an employer to go that extra mile.
Moreover, the prevalence of industrial action, with the disproportionate impact on the public sector and emergency services, must owe something—and does, in my view—to the prevalence of a proportionately large group of the public sector being unionised: almost 4 million, 3.9 million, in 2025 and 3.8 million in 2024, of the 6.4 million trade unionists.
This figure indicates that we are dealing with a potentially militant public sector union membership of around 50% who can hold our country to ransom if there is not a requirement for minimum service levels. This is not a very fair deal for employers who may want that extra muscle which the law has given to reach some agreement, and for the employees to reach an agreement also.
By inserting a requirement for an impact assessment, we shall at least be encouraging information to be supplied to taxpayers and the public, so they too can lend their voice to the need to mitigate the damage done by the lack of availability of treatment in hospitals and the damage done to children’s education, to border controls and to fire services, not to mention basic rail travel to go to work and earn a living, which is perpetuated by Clause 75. I therefore support my noble friend’s amendments, and I urge the Government, even if they are determined to bring forward this unnecessary clause, to allow the public to judge the impact by producing an impact assessment.
Baroness Kramer (LD)
My Lords, I shall speak briefly to this group of amendments, which introduce various review provisions linked to the operation and impact of measures in the Bill. Amendments 254 and 255, in the names of the noble Lords, Lord Sharpe and Lord Hunt, seek to ensure that the consequences of key provisions, particularly around the repeal of the Strikes (Minimum Service Levels) Act and the content of Clause 75, are properly assessed after implementation. While post-legislative scrutiny can be helpful, there is a balance to be struck between evaluation and reopening the substance of the reforms.
I shall also speak to Amendment 258, tabled by my noble friend Lord Fox, who is unfortunately unable to be here today. His amendment would require a review of the impact of Part 4 on small and medium-sized enterprises within six months of Royal Assent. I am sure he will be delighted by the number of voices that have joined in support of that approach today, because this is an important proposal. Small and medium-sized businesses do not have the legal departments or HR infrastructure that larger organisations enjoy. Clarity, simplicity and practical support are essential if those firms are to understand and comply with new duties under employment law, particularly where industrial relations are concerned. This amendment would help to ensure that legislation worked in practice for the full range of employees it affected, and I hope that the Minister will give it due consideration.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for her contribution and I will endeavour to respond to her amendments. However, I will not respond to Amendment 256, because it is not in this group; it is in group 6.
I respectfully disagree with the noble Baroness, Lady Lawlor. Trade unions do not cause chaos in this country. They are fighting for the better pay of their members. This Bill will update the UK’s outdated employment laws and turn the page on an economy blighted by insecurity, poor productivity and low pay. We will raise the floor on workplace rights to deliver a stronger, fairer and brighter future for the world of work in the UK.
I agree with the noble Baroness, Lady Noakes, that we must be conscious of how the reforms will impact SMEs, and I will come back to that later.
I thank the noble Lord, Lord Sharpe of Epsom, for tabling Amendments 254 and 255, and the noble Lord, Lord Fox, for Amendment 258, moved by the noble Baroness, Lady Kramer. On Amendments 254 and 255, our impact assessment of the repeal of the strikes Act was published on 21 October 2024 and is available for all to read. I remind all noble Lords that repealing the Strikes (Minimum Service Levels) Act 2023 is a manifesto commitment. The Act received Royal Assent in July 2023, but, since then, 2.7 million working days were lost to strikes in 2023—up from 2.5 million in 2022. Therefore, the Act has not proved to be effective, even though it has had a short lifespan. It has not prevented a single day of industrial action but has contributed to industrial unrest. Before the Strikes (Minimum Service Levels) Act 2023, most industrial action was consulted on, and voluntary agreements were put in place for minimum service levels in the interests of security. The system worked perfectly, so I do not see why this Act should be in place. There is nothing new to add to that assessment.
Lord Sharpe of Epsom (Con)
My Lords, I am very grateful to the Minister for his response, and to my noble friends Lady Coffey, Lady Noakes and Lady Lawlor for their comments. I also thank the noble Baroness, Lady Kramer, for introducing the important amendment tabled by the noble Lord, Lord Fox, which I neglected to speak to but will do in a second, for which I apologise. Regarding the Minister’s assertion that the unions do not cause chaos, perhaps somebody should alert the RMT to that. By its own estimation, it cost the economy £5 billion in 2023. I would call that fairly chaotic.
As we conclude this debate, I express some disappointment at the Government’s response to the modest and reasonable amendments that we have tabled. We have simply asked for evidence. A number of the assertions that the Minister made are based on none whatever. We have asked for an impact assessment—we repeatedly ask for impact assessments on all manner of aspects of this Bill. I will take him up on his offer of that meeting. However, to come back to the implementation plan, it would be a much better-informed meeting if we had an implementation plan and a timeline. We will not drop this until the Minister can provide one. I am sure he will be working “at pace”, in his noble friend’s phraseology.
All we have done is ask for the Government to pause and consider the real-world consequences of repealing a law that was designed to protect public safety during times of industrial action. The Government claim, with some optimism, that removing the Strikes (Minimum Service Levels) Act 2023 will somehow improve industrial relations. However, when they were asked to produce any evidence from employers, unions, the public or independent experts, none was forthcoming. There is no analysis of outcomes, no tracking of safety impacts, no consultation findings and no plan for what replaces the protections that they are so eager to tear down. In short, there is no case, just conviction without content.
We could go on and talk about how this is not theoretical, and I would again point noble Lords to look at Birmingham. If the Government truly believe that the 2023 Act was flawed, they should prove the case with data, with stakeholder consultation and with a sober assessment of what ought to follow in its place, and not simply repeal it blindly, prematurely and with no credible alternative offered. We are not asking for the impossible. Our amendments ask for a review, a report and a basic assessment of impact. They are measured, responsible and in keeping with the House’s role in ensuring good governance.
I have two more points. I should have acknowledged and expressed very strong support for Amendment 258 in the name of the noble Lord, Lord Fox. That rightly seeks a review into the impact of Part 4 of the Bill on small and medium-sized enterprises, and I look forward to picking that subject up with him again when he is back.
I note that my noble friend Lady Coffey asked a very specific question about the nationalised rail industry. I am sure we would all like an answer, so perhaps the noble Lord will write with the Government’s intentions when it comes to governing that particular sector. For now, I beg leave to withdraw my amendment.
Baroness Coffey (Con)
My Lords, this whole group of stand part notices is basically about the removal of powers from the certification officer. We have already debated Clause 77. In thinking through what is going on here, I wondered whether there would be anything of a certification officer left, because it feels like a lot of this stripping out of certain aspects—for example, in Clauses 79 to 83—is very limiting in terms of what could be left to be done.
Since the Trade Union Act 2016 came into effect, the world has somewhat moved on in terms of transparency and wanting to know what is going on in an organisation. I appreciate they are not state bodies, but trade unions play an important role in our country. It is important that, while recognising there is a declining membership, not in the public sector but in the private sector, for those people who are contributing money every week, every month, every year—whatever it is—having a good amount of information in a consistent way is a good thing in terms of thinking about how we promote aspects of transparency.
We have had considerable debate, as I say, about Clause 77. But I am struggling to understand what the issue really is—why it is so difficult for these things to be produced. In thinking about investigatory powers, let us put a bit of reality or real life into this. There has been a situation within the last six months where an election for the general secretary of the Fire Brigades Union happened. On a 29% turnout, a person was elected. That turnout of votes equated to something like fewer than 10,000 people casting their votes in favour of that candidate. However, it was subsequently discovered that 3,000 ballot papers were not issued. I am happy to be corrected if I am wrong, but the difference between winning and losing was less than 3,000. Understandably, the person who lost, who had been in post for nearly 20 years, was somewhat aggrieved. However, when it was decided there had obviously been a breach and something had gone wrong, the certification officer went through a proper process. The Government may well argue that it would have been safer to email out ballots, or do an online ballot, rather than relying on the post. I am sure the union staff were not the only people struggling with things not being delivered by Royal Mail at that time. However, after that process, the losing candidate chose not to require the election to be rerun, which would have been within the gift of the certification officer. In terms of general justice, without having to go to the expense of going to the High Court, a certification officer was a simple way to try to remediate something that was clearly unfair.
However, the person who lost—I am not going to name them—was then very quickly appointed general secretary of another trade union. This time, that was challenged directly by the union’s members. In that instance, I think they went not to the certification but immediately to the High Court. So, one person having lost an election, another trade union—that is the teaching union—used its procedures incorrectly to put them in place as its new general secretary. Then, thanks to the legal challenge, the executive committee of that union recognised that it had not acted properly. This same person, by the way, is still acting general secretary of that trade union. The election commences on Thursday; it is up to the members who they decide to vote for, of course.
I looked at the fairness of a variety of the decisions that the certification officer made over time, and the same teaching union was in breach a few years ago because its general secretary outstayed their elected term. They were then made an acting general secretary and, about a year later, there was another election. It is very expensive if trade union members have to go to the courts over these sorts of things. As I researched these clauses and found out what has happened in real life, it reminded me somewhat of Animal Farm, and how—what was it?—“Two legs bad, four legs good” evolved over time to suit the needs of those who decided that they would be in charge.
I appreciate that trade unions might feel that we should not need to have a certification officer, but these are good examples of where people have had recourse to an independent person who, by law, is not subject to ministerial direction. Those people can have complete confidence in the integrity of the certification officer, and that going to them will lead to somebody having a look, without the cost of going to the High Court—as we know, that is expensive. I understand that Labour has this mantra that it is going to repeal anything to do with the 2016 Act, but I really want the Government to consider why, seeing some of the changes that have happened. By the way, at the same time, they are bringing in different rules for employers in dealing with their employees. It is perfectly valid for them to do so, but just imagine the impact these sorts of stories have. It so happens that both the trade unions in my examples are public sector unions, and we have seen their overall membership increase, but we should not be surprised if lack of confidence has started to drift people’s concerns away on why they need to pay to be a member of a trade union.
I wish the Government would consider carefully what the removal of any of these clauses would do to help the average worker and the average trade unionist, who may not be highly connected and may not have chosen to join a political party or to dedicate their lives, from quite an early age, to being part of that trade union leadership. They should also think about, and this is one of the reasons why I got triggered, what happens when somebody completely left-field—or right-field, whatever—comes in and their union’s ruling body decides, “Yeah, we like the look of that person” and they are not sure why; it may have felt sorry that he had just lost an election elsewhere. Let us think carefully about whether it is the right approach to remove all these powers from the certification officer, which I think people from every level can see are used, rarely and not extensively, to apply some common sense.
Lord Hunt of Wirral (Con)
My Lords, I will speak in support of my noble friend Lady Coffey. I thank her for bringing forward these crucial amendments to oppose Clauses 76 and 78 to 83 standing part of the Bill. In doing so, she not only upholds the integrity of trade union regulation but calls out a deeply troubling double standard in the Government’s approach to industrial relations.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I thank all those who have contributed to this debate, and I thank the noble Baroness, Lady Coffey, for giving me the opportunity to speak to these clauses and, I hope, to reassure her. Let me point out why they are important provisions that must stand part of the Bill.
The theme these clauses all share is that they remove some of the unnecessary bureaucratic burdens placed on trade unions as a result of the Trade Union Act 2016. This includes removing powers placed on the certification officer which have never been used since their introduction. Your Lordships’ House will be aware that the Government’s manifesto committed to repealing the 2016 Act, and these clauses deliver on that. They will enable trade unions to focus more of their time and efforts on delivering in the interests of their members.
Clause 76 seeks to reverse the effect of Section 7 of the Trade Union Act 2016. It will remove the additional reporting requirements imposed on trade unions for their annual returns to the certification officer concerning details of industrial action taken during the reporting period. I can assure noble Lords that trade unions will still be required to submit an annual return to the certification officer, but the amount of information they will have to include will be reduced. In addition, unions will continue to be required to provide information in those annual returns relating to their governance and finances, including the management of their political funds, as they have done for many years.
Clause 78 will remove the power of the certification officer to enforce certain requirements relating to trade unions’ annual returns. However, the certification officer will still hold enforcement powers for the other remaining annual return requirements—that is, those not removed by Clauses 76 and 77, for example in relation to a union’s financial affairs and governance. Clause 79 will repeal the certification officer’s enhanced investigatory powers, which include an ability to compel trade unions to produce documents, the power for inspectors to launch investigations, and the related power of enforcement.
The reason why Clause 79 is introduced is that the enhanced powers created by the 2016 Act are simply not necessary. No evidence of regulatory failure existed at the time of the 2016 Act, and the statutory obligations that existed prior to that Act regarding trade union finances, governance and reporting requirements were found to be sufficient. In addition, the Certification Officer has never used the additional powers since their introduction. Removing the Certification Officer’s enhanced investigatory powers is part of the Government’s commitment to reset industrial relations and ensure that employers, unions and the Government work together in co-operation and through negotiation.
In the examples that the noble Baroness gave, the Certification Officer—as I think she admitted—acted with complete propriety and authority. I assure her that unions continue to be hugely respectful of the power and authority of the Certification Officer. I also assure her that the Certification Officer’s role is partly to ensure that the rights of workers are properly protected. I really do not recognise the noble Baroness’s analogy with Animal Farm. Our repeal does not affect the ability of a trade union member to complain to the Certification Officer about an election and have that investigated.
Similarly, Clause 80 will remove certain powers of the Certification Officer to investigate trade unions proactively without first having received a complaint from a member of that trade union. Trade unions are voluntary organisations run by and for their members. We are returning the Certification Officer’s role to one where the Certification Officer adjudicates where the Certificate Officer receives members’ complaints in relation to a union. I assure the noble Lord, Lord Hunt, that members will not be shy about complaining if they feel that an injustice has been done within the conduct of their union. However, the Certification Officer will retain the power to investigate a union’s financial affairs. The Certification Officer’s powers have been in place for many years and were brought in prior to the Trade Union Act 2016.
Clause 81 will reverse Section 19 of the Trade Union Act 2016 to remove the Certification Officer’s ability to impose financial penalties on trade unions. I can tell noble Lords that the Certification Officer has not imposed a single financial penalty to date. However, the Certification Officer will retain the power to issue enforcement orders following the changes made by Clause 81, and if those orders are not complied with the the union could be found in contempt of court.
Clause 82 will remove the Secretary of State’s power to make regulations that require the Certification Officer to impose a levy on employers’ associations and trade unions. It was resisted by employers’ associations and unions when it was introduced. The levy impedes on the rights of voluntary association and has attracted criticism from the International Labour Organization. The ILO was concerned that the levy could negatively impact on the rights of workers to organise and bargain collectively and reduce the financial capacity of trade unions to carry out such collective bargaining on behalf of their members. The Government believe that we should interfere as little as possible in the activities of social partners, which are, as I say, voluntary associations.
Clause 83 will reverse changes made by Section 21 of the Trade Union Act 2016 so that the right of appeal against decisions of the Certification Officer to the Employment Appeal Tribunal is only on a question of law, as opposed to being on questions of fact as well as law. That returns the appeal process to the position before the Trade Union Act 2016, where appeals against the Certification Officer’s decisions were on points of law only. It also aligns with many other enforcement bodies on employment law. For example, appeals against the decisions of employment tribunals are considered only on points of law, not points of fact.
I hope that that explanation has been helpful and therefore that Clauses 76, 78, 79, 80, 81, 82 and 83 stand part of the Bill.
Lord Sharpe of Epsom
“Certification Officer: growth dutyWhen discharging its general functions, the Certification Officer must, so far as reasonably possible, act in such a way as to advance the following objectives—(a) the international competitiveness of the economy of the United Kingdom, and(b) its growth in the medium to long term.”Member’s explanatory statement
This new clause would require the Certification Officer to advance the objectives of the international competitiveness of the economy and its growth in the medium to long term.
Lord Sharpe of Epsom (Con)
My Lords, as my noble friend Lady Coffey mentioned a short while ago, we have been told by this Government on numerous occasions that growth is their number one priority. Growth, growth and more growth has become something of a mantra for Ministers, but the harsh reality is that their actions are consistently undermining this stated objective, and their latest economic performance demonstrates the urgent need for the amendment before us today.
The UK economy shrank more than expected in April. The standard measure of economic output, GDP, contracted a sharp 0.3% according to data from the Office for National Statistics. Additional costs on businesses were also levied during that month as employer national insurance contributions took effect, which businesses told the ONS played a part in their performance. The biggest part of the economy, the services sector, contracted by 0.4% and manufacturing dropped by 0.9%. The Government are manifestly failing to reach their stated growth target.
It is not enough for the Government to tell workers, businesses and the British public what they want to hear about growth while simultaneously implementing policies that actively undermine economic competitiveness. The trade union provisions in the Bill represent a perfect example of this contradiction: they expand the protections and rights that will inevitably increase costs, reduce flexibility and diminish our international competitiveness, all while the Government claim to be prioritising growth.
My amendment would require the Certification Officer, when discharging functions under the Bill’s expanded trade union framework, to advance the objectives of international competitiveness and medium to long-term economic growth. It represents a vital safeguard against the economic damage that unconstrained implementation of these provisions could inflict. The Certification Officer oversees trade union administration from registration to financial transparency to complaint procedures. Under the Bill, these functions will expand significantly as new rights and protections are introduced. Without a growth duty, there is no mechanism to ensure that the Certification Officer considers the broader economic implications of how these expanded powers are exercised.
We operate in an intensely competitive global economy. Our European neighbours and international competitors are not standing still while we load additional costs and restrictions on to British businesses. When the Certification Officer makes decisions about trade union regulation, registration and oversight, those decisions must be made with full awareness of their impact on our ability to compete internationally. Countries such as Germany, despite having strong trade union traditions, maintain regulatory frameworks that prioritise economic competitiveness. Singapore, Ireland and other successful economies have demonstrated that worker protection and economic growth are not mutually exclusive, except when regulators are required to balance these objectives explicitly.
This amendment ensures that as we expand trade union rights and protections, we do so in in a way that enhances rather than undermines our economic position. It requires the Certification Officer to ask not just whether a decision serves trade union interests but whether it serves the broader national interest in maintaining a competitive and growing economy.
The concept of growth duties is well established across government precisely because regulators have learned that narrow focus on single objectives can create unintended economic consequences. Financial regulators have competitiveness objectives because financial regulation that ignores competitiveness can drive business overseas. Planning authorities must consider economic impact because planning decisions that ignore economic consequences can destroy local economies. Environmental regulators operate within frameworks that balance protection with economic considerations because environmental regulation that ignores economic reality becomes counterproductive.
The offshore employment trend demonstrates exactly why such balanced approaches are essential. When regulators focus solely on enhancing protections without considering economic consequences, they risk creating conditions where the protections become meaningless because the activity they are meant to regulate simply moves beyond their jurisdiction. It would be extraordinary if trade union regulation, which directly affects workplace costs, flexibility and productivity, were exempt from such considerations. This amendment brings the Certification Officer into line with best practice across government by requiring explicit consideration of economic impact.
The Government may argue that trade union regulation should focus solely on worker protection without economic considerations, but this position is fundamentally flawed for a number of reasons, and recent evidence makes it increasingly untenable. For example, it would create an artificial separation between industrial relations and economic policy that exists nowhere else in government and has proven counterproductive in practice. Every other area of regulation requires consideration of economic impact precisely because regulators have learned that ignoring economic consequences undermines policy objectives. It would also contradict the Government’s stated priority of growth while simultaneously demonstrating the practical impossibility of separating worker protection from economic performance.
When companies such as The Legends Agency can build multi-million-pound businesses by helping UK employers avoid UK employment law, the Government’s approach has clearly failed on its own terms. I beg to move.
Baroness Noakes (Con)
My Lords, I am a great fan of international competitiveness and growth objectives for regulators. When the first one was introduced for financial services regulators in the Financial Services and Markets Act 2023, I thought it was an incredibly important addition to the way regulation of financial services is undertaken. Just last week, your Lordships’ Financial Services Regulation Committee issued its report on how that international competitiveness and growth objective is working, and I commend it to noble Lords.
I support what my noble friend Lord Sharpe of Epsom has said about applying the duty to the Certification Officer, but I invite him to consider whether there is a much more important area where such a duty should be applied in this Bill, which is to when the Secretary of State makes decisions about, for example, the enforcement provisions or making the various regulations that we know are necessary to make Part 1, and indeed other parts of the Bill, operate effectively.
The most important aspect of the Bill is going to be driven by what the Secretary of State does once it is enacted, but there is not an equivalent requirement on the Secretary of State to take into account the needs of international competitiveness and growth. It is essential for the Secretary of State to have that at the front of his mind when making regulations that will have such a big impact on the way that businesses operate in this country. I therefore commend my noble friend’s amendment, but if he is considering bringing something back on Report, he might consider something a little broader.
Lord Fuller (Con)
My Lords, this nation must earn its place in the world, and, regrettably, we are losing to some of our industrial competitors, particularly in energy-intensive industries such as steel, aluminium and so on. We must live by our wits, and that means increasingly leaning on highly skilled, knowledge-based employment in an economy that values strong intellectual property rights, the rule of contract and property rights themselves. That requires an economy with flexibility and agility.
Earlier today, along with other noble Lords, I sat on the Home-based Working Committee. We are seeing firsthand how the world of work is changing, not just in the way that we go to work but in the way that we sometimes work from home. The entire technological underpinning of our economy is changing too. We have not yet seen the end of artificial intelligence and what it might do to low-skilled, somewhat transactional arrangements.
It does not help the economy, and by extension those who work in it, if all participating employers and unions do not recognise that we have a duty to move with the times. We cannot put a wall around our economy and create some high-cost walled garden as the rest of the world trades its way to prosperity, leaving us behind. I strongly support Amendment 256 and want to give more power to the officer who, more than anyone, can cajole and encourage workers’ representatives to recognise the world as it is, rather than the world as they might wish it to be.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for tabling Amendment 256. We fully recognise the importance of supporting growth and international competitiveness across our economy, and we will of course continue to pursue policies that will deliver on our economic ambition. However, we do not consider this duty to be appropriate for the certification officer.
The certification officer is not a traditional regulator; they are an independent quasi-judicial officeholder. Their core functions are to oversee regulatory compliance fairly and impartially and to ensure trade unions and employers’ associations adhere to statutory requirements in relation to their finances and governance. This includes investigating complaints, maintaining accurate registers and ensuring that democratic processes are upheld. Imposing a duty to promote growth and competitiveness would cut across this role. It risks introducing competing priorities, blurring legal clarity and ultimately undermining confidence in the CO’s neutrality. We cannot require the certification officer both to conduct their judicial and regulatory functions and to deliver economic outcomes. The certification officer has no role in relation to the international competitiveness of the United Kingdom economy or its growth in the medium to long term.
As noble Lords will know, this Government have been active in requiring a number of regulators to apply a growth duty. Those bodies to which the growth duty currently applies are purely regulators—regulators that set strategies and make decisions that significantly affect the type, scale and location of economic activity in important sectors. The decisions regulators take can set the parameters for economic activity across the economy, and, of course, we recognise that; but the certification officer does not have this responsibility or power. We share the noble Lord’s commitment to economic growth, but it must be pursued in the right way. Furthermore, requiring the certification officer to follow a growth duty would not be practicable, and there is no evidence that imposing such a duty would have any meaningful impact on the UK’s growth or international competitiveness. It would be like asking a court to consider cases based on their impact on economic growth rather than on the evidence of the case.
For those reasons, I must ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 256.
Lord Sharpe of Epsom (Con)
My Lords, I thank the Minister for her answer, but I have to say that I am unpersuaded. The gist of it was that the certification officer does not have either the responsibility or the power, but by definition this amendment would deliver both those things. I completely agree with my noble friend Lady Noakes, and I shall take her suggestions on board and have a careful look at this. I do not believe that this amendment and the suggestions she made are mutually exclusive; in fact, if anything, they are very complementary. I thank my noble friend Lord Fuller for his comments, which, frankly, were just an expression of complete common sense.
I express my disappointment at the Government’s rejecting this amendment. I think it reveals more about the Government’s true priorities, frankly, than all the rhetoric about growth that we have heard. The Government are absolutely right to identify growth as a priority, but they will not find it in this Bill. In fact, there is nothing in the Bill that will bring any growth. I challenge the Minister to identify a single provision in these hundreds of pages that will increase productivity, enhance competitiveness or create jobs. The Government’s own impact assessment suggests the same: it is a document notably silent on growth benefits, while cataloguing increasing costs and regulatory burdens.
If the Minister is genuinely confident that the Bill will support growth, and if she truly believes that the expanded trade union protections and enhanced worker rights will somehow boost economic performance, I am surprised and somewhat mystified that she will not accept this amendment. The argument was that the certification officer is not a traditional regulator, but they still have a regulatory function, so I do not really see what difference that makes, frankly. What could be the objection to requiring the certification officer to consider growth when discharging functions under a Bill the Government claim supports growth? If these provisions truly advance economic competitiveness, a growth duty should be welcomed as a validation of the Government’s approach.
I could go on, but I do not see the point. The Government have rejected a genuine opportunity to demonstrate that their growth rhetoric has substance. The amendment would have required no fundamental changes to their approach, simply consideration of the economic impact when implementing trade union provisions. It would have aligned trade union regulation with best practice across government, while preserving all the work protections the Government claim to champion. The fact that they cannot even accept a modest requirement demonstrates that the commitment to growth is hollow rhetoric. It is designed to disguise an agenda focused more on trade union empowerment, regardless of economic consequences. How very disappointing for our great nation. I beg leave to withdraw the amendment.
Baroness Coffey
“Right to consider employer offerAfter Section 69 of the Trade Union and Labour Relations (Consolidation) Act 1992, insert the following new section—“69A Right to consider employer offerA trade union must present any offer from the employer to their membership for a vote whether or not the trade union supports the offer.””
Baroness Coffey (Con)
My Lords, noble Lords may think that this amendment is a little odd: why does there need to be a right to consider an employer offer? It came about because of something that happened in the Port of Felixstowe within the last few years. At one point there was huge frustration on the part not just of the employer but of several workers, because, with the union and the employer negotiating in good faith—I am not criticising the union at all—the offer then made did not need to be put to the members. I am not suggesting that this is a loophole: I appreciate that there is back and forth and a current requirement to give lots of notice, with everything being done by post and so on. I can understand that it may not be reasonable that, every time an employer moves by a penny or so, that has to be spelt out. That would be truly ridiculous, but there is something to be said for establishing what is going on. Where is the leverage being applied?
Unfortunately—and I am not saying that there is a causal link between the two issues, but there is definitely a correlation—after a considerable number of strikes in the port of Felixstowe, within 18 months it was announced that a significant shipping line would no longer use Felixstowe as its principal destination in the United Kingdom but would go to the new London port at Tilbury instead. As I say, I am not saying there is a direct causal link, but I have my concerns about the lack of reliability. This, by the way, was the first dispute in 30 years at the port of Felixstowe, and it was quite fractious. It got more fractious because people started to break the strike. I understand that that is not the ideal place for people to be; nevertheless, people—although not everybody—felt that their union was not looking after them and their interests, but perhaps starting to look after the national interest. That led to quite a lot of aggro, not just face to face but on Facebook, with families falling out. In quite a small community, the impact of that can be quite substantial.
When I was speaking to people who worked at the port and to the employer, what stayed with me for some time was that they would have liked the chance to vote, even though the organisers of their local union—or, as they believed, the national union—decided they could not. For that reason, and recognising the transition that is coming as a consequence of the Bill, such as moving to much greater use of digital ballots, there is something to be said for enabling workers not to have to go through something as awful as breaking a strike. I understand why trade union members do not want to do that; but they feel that things need to be done in their interests locally, and that their employer should be allowed to make the offer.
I have put the amendment in this way—I am conscious of what the noble Lord, Lord Prentis of Leeds, who is no longer in his place, said earlier—because employers should not be trying to get around all sorts of rules to stop people being members of trade unions. That is already protected in law; the noble Lord referred to a situation that has only recently been resolved.
In effect, this amendment addresses one of the trade union disputes in my experience that I believe has had a consequential economic impact on a key part of the east coast. I should say that I intend to respond to comments made on this amendment.
The Deputy Chairman of Committees (Baroness Fookes) (Con)
The noble Baroness will need to because it is an amendment, and therefore at the end one has to ask for it to be either considered or, by leave, withdrawn.
Lord Fuller (Con)
My Lords, I support this amendment, but not for the reasons my noble friend gave. Many years ago—Members on the Government Benches may realise quite how long ago this is when I give the names of the unions concerned, which are long since consigned to history—I was the director of a small haulage firm. It no longer exists or trades, but I cut my teeth on labour relations behind the wheel.
In our small business, which employed about 50 people, there were three types of worker: those who were not in a union at all, a small number who were with the TGWU—that dates me—and those with a new union, the United Road Transport Union. The shop steward of the URTU came to see me and said: “It’s like this, John. I think that you should recognise our union”. So I did. It was personally convenient to deal with one person rather than try to have a mass meeting with 30 or 40 people, all with different views. Unlike what some noble Lords might think of those on the Conservative Benches, I found a huge amount of value in being able to negotiate with the URTU, which had the most members but was not entirely pervasive in our company. Arthur Harris was in the TGWU—he was such a long-standing member of our business that he was employee no. 1 on our payroll system—and was not about to go to the URTU for a moment.
The point of this story is that I negotiated in good faith with the URTU and recognised that it had the most members. When making an agreement, we were somewhat apart but not completely, and I said: “Peter, put this offer to them and let’s see what they say”. He did not really want to, but the point is that I needed to make the offer as well to the other union, the TGWU, and to those members who were not in a union at all.
My noble friend made the point about the Port of Felixstowe and I inferred from her remarks that there was a single union to deal with, but that is not the landscape for many organisations. Later this evening I will talk about my experiences in local government, where there are three different unions involved—UNISON, Unite and the GMB—and a complicated negotiating environment.
I support this amendment because it provides equality to the smaller unions, not just the big ones, some of which have their own agendas. It is incumbent on all unionised labour to at least see what is on the table, whether or not their union negotiated it. That is why my noble friend’s Amendment 257A is very important and should be given proper consideration; it recognises the complex labour landscape found in many companies, particularly in private business, not just the monolithic larger organisations where there are single unions, facility time and other things.
Lord Hunt of Wirral (Con)
My Lords, I strongly support my noble friend’s amendment, which, as she explained, addresses a fundamental democratic deficit in our current industrial relations framework. I thank my noble friend Lord Fuller for giving his personal experience of how important this deficit can be if it is not addressed.
This amendment would require trade unions to present any employer offer to their membership for a vote, regardless of whether the union leadership supports it. My noble friend gave the example of Felixstowe; others could give similar examples, such as what has been happening with the Birmingham strike. This is not an anti-union measure—it is a pro-democracy measure that seeks to strengthen the voice of individual workers within the collective bargaining process. It recognises that in a democratic society it should be workers themselves, not union officials, who decide whether an employer’s offer meets their needs and aspirations.
The principle underlying this amendment is simple and would be seen as uncontroversial in any other democratic context: those affected by a decision should have the right to make that decision for themselves. When union leaders can simply reject employer offers without consulting their membership, they effectively deny workers the fundamental right to democratic participation in decisions that fundamentally affect their livelihoods. We would surely not accept a system where parliamentary leaders could reject government proposals without allowing MPs to vote. We would not tolerate local councils where executives could dismiss motions without having to present them to councillors. The same should surely apply to trade unions.
This amendment recognises that the priorities, circumstances and risk tolerances of individual workers may differ from those of their union leadership. A young worker saving for a house deposit may take a very different view of sustained strike action from that of an established worker nearing retirement. A worker in precarious financial circumstances may prefer settlement on reasonable but suboptimal terms to prolonged uncertainty and loss of income. Surely we all want to avoid a situation where workers are denied a voice in decisions that so profoundly affect their lives.
Contrary to weakening collective bargaining, this amendment would strengthen it by increasing member engagement and ensuring that union positions truly reflect membership priorities. When workers know that they will have the final say on offers, they are more likely to engage with the bargaining process and provide clear guidance about their priorities. Enhanced member involvement can improve union negotiating positions by ensuring that they are based on genuine membership preferences rather than leadership assumptions. It can also increase employer confidence in the bargaining process by ensuring that negotiated agreements will not be undermined by membership rejection.
Although many trade unions always act in good faith when considering employer offers, this amendment would put protections into legislation to prevent bad actors denying workers their democratic voice. Without legislative safeguards, the system could enable a dangerous information asymmetry where union officials control what information reaches members and the manner in which that information is presented.
Baroness Jones of Whitchurch (Lab)
I thank the noble Baroness, Lady Coffey, for tabling Amendment 257A. I am happy to explain to the noble Baroness that this amendment is not appropriate.
As the noble Baroness knows, trade unions are already required by existing legislation to ballot their members before commencing any industrial action. Union executives are therefore required to obtain a mandate from their members to negotiate with their employer on their behalf before industrial action can commence. We believe that union executives, as representatives of their members, are best placed to judge whether an offer is acceptable and in the best interests of the union members before deciding whether to ballot their members. Balloting members is a considerable financial and administrative challenge and repeated ballots could cause an unnecessary burden—as well as confusing members as to what was being proposed and the likelihood of a higher offer.
Amendment 257A would also remove the power of union executives to negotiate on behalf of their members for a deal that they consider will deliver before balloting members on an offer. This is one of the main reasons that members join a union: they delegate to those negotiators to get the best deal for them. The negotiators will have done a great deal of detailed research on economic indicators, what is happening in their market, on the knowledge of the financial stability of the business, and so on. They will take a very wide range of factors into account into that bargaining process. This is why, quite often, negotiations take time, because all those factors have to be discussed in some detail in a way that an individual member would not be able to do.
Furthermore, the amendment has no safeguards to prevent gaming. Were we to accept it, there are risks that employers could submit multiple derisory offers to unions in order to interfere with the industrial action ballot mandate by forcing the union to constantly re-ballot members on derisory offers at the cost of the union. As the noble Baroness said, balloting on small increases would be ridiculous, but this is exactly what her amendment would require.
We consider, therefore, that existing legislation is effective. As union representatives are elected by their members to represent them, union executives should have the discretion as to whether they put an offer by an employer to their membership. If a union executive believes an offer is acceptable, they should be free to put that offer to their membership and make that judgment at the time.
We think the noble Baroness’s amendment is unnecessary; the current system works well, and it brings great benefits to individual members. I therefore ask the noble Baroness, Lady Coffey, to withdraw her amendment.
Baroness Coffey (Con)
I thank the Minister for her reply. She will be aware that I am a Back-Bencher and I do not have hundreds of civil servants crafting the perfect amendment and saying when to discuss these sorts of issues.
I am conscious that through the Bill, the mandate will be extended to 12 months. There is, therefore, the potential for handing over considerable power that is delegated to negotiators. I fear there will be situations that develop that can have economic consequences on workers when there are spats that not everybody wants to be involved in. I recognise all the other changes the Government are making in digitising the operations of the trade unions, and that is why I thought it was worth discussing at this point.
This has been a very useful debate. I thank my noble friends Lord Fuller and Lord Hunt for their support and consideration—and their experience, particularly that of my noble friend Lord Fuller. Having taken all this into account, I beg leave to withdraw the amendment.
Baroness Coffey
Baroness Coffey (Con)
My Lords, I have tabled Amendment 257B simply because I did not see the answer in the Explanatory Notes to the Bill. This is quite a straightforward one for the Minister.
In Section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992, the regulations are normally done by negative resolution—or the annulment, as set out in new subsection (6). However, I want to understand why the Government felt that these particular regulations needed to be done through the affirmative procedure. They are not the only changes—that I am aware of—in the Bill to that section, or others, of the Act. Can the Minister explain why they have been singled out? Given the trend of your Lordships’ House over many years, why do we not move to having affirmative resolutions instead of annulments for these ones in the future? I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendments; they are measured, necessary and principled amendments to Clause 85, which rightly restore a degree of parliamentary scrutiny that had been quietly eroded in the original draft of the Bill. As we stated at Second Reading, there are 173 delegated powers in the Bill, which is unacceptable—not just to those the legislation will impact, but to the House.
In the Minister’s contributions on similar legislation in the past, she expressed her strong reservations about the use of delegated powers. I recall well her interventions, which were made with clarity and conviction, as she tabled amendments recommended by the Delegated Powers and Regulatory Reform Committee. But we now find ourselves considering a clause that does precisely what she once warned against because it carves out certain sensitive and constitutionally significant areas and exposes them only to selective scrutiny.
The original version of Clause 85 created a two-tier system. Some regulations would require affirmative approval from this House, while others—no less consequential—would not. This piecemeal approach to oversight is not only undesirable but unnecessary. Regulations made under Section 293 of the Trade Union and Labour Relations (Consolidation) Act are not merely technical: they pertain to fundamental matters, such as the rights of trade unions, the balance of power between employers and employees, and the protections afforded to those who take lawful industrial action. It is therefore only right and proper that all regulations made under this section should be subject to the affirmative resolution procedure: they should be laid before and approved by both Houses of Parliament.
My noble friend’s amendment achieves this. It does so with economy of language, but with significant constitutional consequence. It removes the artificial distinction introduced by subsection (5), and instead applies a uniform standard of scrutiny to the entirety of Section 293.
Since the Government took office, many of us across these Benches have expressed concern about the growing use of skeleton Bills, Henry VIII clauses and broad enabling powers that allow Ministers to legislate without adequate consultation or scrutiny. This amendment is a quiet but firm step in the other direction back towards balance, principle and the proper functioning of Parliament.
Again, I thank my noble friend for tabling her amendment, and I hope the Government will not merely accept it but embrace it to show their commitment to transparency and to the constitutional propriety of this House.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Sharpe, for his contribution. I remember standing before him during the PRaM Bill and we discussed this very matter. Some of this negative resolution is required because not only does it save parliamentary time but it is technical. Anyway, I thank the noble Baroness, Lady Coffey, for tabling Amendments 257B and 257C, which would make all the powers under Clause 56 subject to the affirmative procedure, as well as existing regulation-making powers that are currently covered by the negative procedure, by virtue of current Section 293 of the Trade Union and Labour Relations (Consolidation) Act 1992.
It is worth noting that most of the access regulations are already subject to the affirmative procedure. Indeed, as the noble Lord, Lord Sharpe, mentioned, only four of the 12 delegated powers are subject to the negative procedure. Given the technical nature of those delegated powers, and to save parliamentary time, the Government are of the position that making them subject to the affirmative procedure would not be appropriate.
Further to this, as mentioned in previous debates, all regulations under Clause 57 will be consulted on via public consultation, the outcome of which will be published for all to see. This is an important process, which will help ensure that our policy development is informed by the practical experience and needs of trade unions, businesses and stakeholders.
The noble Baroness, Lady Coffey, and the noble Lord, Lord Sharpe, will have noted in previous debates in this place that the Delegated Powers and Regulatory Reform Committee said that
“it is heartening that in a Bill with so many delegated powers”—
the noble Lord, Lord Sharpe, mentioned 173—it had
“only found four on which to raise concerns”.
Clause 56 was not one of those. Therefore, I ask that the noble Baroness, Lady Coffey, to withdraw Amendment 257B.
Baroness Coffey (Con)
My Lords, I thank my noble friend for his comments. Undoubtedly, in the last decade, this House has started to move to have far more under the affirmative procedure, so it gets a level of scrutiny, although I appreciate your Lordships’ House does not vote against them. That is how to make sure legislation is properly considered, recognising it will be put to debate, which is certainly not the case with many regulations considered in the negative way. With that, I beg to withdraw.
Lord Freyberg
“Unionisation and collective bargaining in the arts and cultural sector(1) The Secretary of State must by regulations establish—(a) alternative collective bargaining models for trade unions in the arts and cultural sector,(b) provisions for financial viability assessments to ensure mandatory unionisation does not place unsustainable financial burdens on smaller institutions, and(c) a dispute resolution mechanism tailored to cultural institutions.(2) The Secretary of State may by regulations define which organisations form part of the arts and cultural sector.(3) A statutory instrument containing regulations under this section is subject to the negative resolution procedure.”Member’s explanatory statement
This amendment establishes a tailored unionisation framework for arts and cultural organisations that includes alternative bargaining models for freelancers, financial viability assessments, and sector-specific dispute resolution to balance worker protections with organisational sustainability.
Lord Freyberg (CB)
My Lords, this group of amendments addresses the arts and cultural sector. I declare my interest as an artist member of DACS. I thank the noble Earl, Lord Clancarty, the noble Baroness, Lady Bennett of Manor Castle, and the noble Lord, Lord Parkinson of Whitley Bay, for their support for the various amendments I have tabled in this group. I also thank the Minister and her officials for meeting with the noble Earl, Lord Clancarty, and me earlier this month to discuss these amendments.
The arts and cultural sector is of national importance. Creative industries generated some £126 billion in gross value added, representing almost 6% of the economy, and supported roughly 2.4 million jobs, as of 2022. However, its workforce is highly atypical. A recent study found that a fully 32% of creative and cultural jobs are freelance, more than double the 14% of the wider UK workforce. Creative organisations tend to be small, low-margin and reliant on irregular income, such as ticket sales, grants and philanthropy. In short, a one-size-fits-all employment regime risks harming both workers and institutions. Our amendments in this group aim to strengthen protections for arts workers—especially freelancers—without inadvertently pushing theatres, galleries and arts charities over the edge. I remind the House of the earlier Amendment 16, moved by the noble Lord, Lord Parkinson, regarding theatres and casual workers, as another worry.
The creative workforce is famously project-based and freelance-heavy. For example, BECTU reports that many film, TV and theatre freelancers were initially excluded from Covid support schemes. We propose sector-specific measures: flexible collective bargaining, phased implementation of new rules and targeted support, balanced by accountability measures such as impact reviews. These proposals reflect best practice abroad. For instance, new EU guidelines explicitly enable self-employed workers to engage in collective bargaining, and many countries even use cultural levies to fund arts employment. Our aim is therefore practical: to adapt the Bill’s intentions to the realities of the arts. It is a vital opportunity for the sector’s needs to be heard.
The Earl of Clancarty (CB)
My Lords, my Amendment 287 in this group seeks to establish a freelance commissioner. I thank my noble friends Lord Freyberg and Lord Colville, and the noble Lord, Lord Clement-Jones, who have supported this amendment. I support all the other amendments in this group, including Amendment 286, which is similar in intent in wishing to improve the situation of freelancers in the creative industries, and Amendments 301 and 302 in the name of the noble Lord, Lord Clement-Jones, which very usefully seek to define what a freelancer is.
The only thing that I would add to Amendment 301 is the category of sole trader, which would highlight the point that an artist is always working, whether they have a client or not and whether we are talking about a visual artist, a photographer, a musician, a composer or a novelist. The buyer, the publisher, the venue or gallery may materialise at some stage, but it is sometimes a thing of the future. In the creative industries, worker and client are not always walking hand in hand at any one time.
I very much support the Bill as far as it goes, but a truly modern employment Bill—and it is an employment Bill, not an employee Bill—would have included consideration of the self-employed and freelancers, a group which of course includes the creative industries. On 5 June in the previous debate in Committee, the noble Lord, Lord Hunt of Wirral, said
“we cannot claim to be modernising employment law if we ignore how it interacts with one of the fastest growing and culturally significant sectors of our economy”.—[Official Report, 5/6/25; col. 950.]
In trying to deal with the problem of zero-hours contracts in the wider economy, the Government are already encroaching on this territory but without properly assessing the wider effects of doing so—one good reason why the whole landscape of employment needs to be looked at through employment law in the round.
As the previous debate on the amendment on theatre workers, tabled by the noble Lord, Lord Parkinson of Whitley Bay, pointed up, there is the danger of unintended consequences affecting workers in the creative industries. Freelancers constitute around 15% of the total workforce of the country, but as the noble Lord, Lord Freyberg says, the figure runs at twice that national average in the creative industries, rising to 70% in the visual arts and 80% for musicians. Indeed, freelancers are often described as the backbone of the arts landscape. For a number of reasons, this is a growing workforce, despite—or in some cases because of—the increasing difficulties for workers.
Lord Clement-Jones (LD)
My Lords, I declare an interest as chair of Authors’ Licensing and Collecting Society. I rise to speak to Amendments 301 and 302, which aim to provide vital protections for freelance workers in the UK. It was a pleasure to hear the introductions from the noble Lord, Lord Freyberg, and the noble Earl, Lord Clancarty, who set the scene extremely effectively.
The common theme is that the Bill take steps to modernise employment law but risks leaving a significant segment of our workforce behind. As we have heard from both out initial speakers, the UK’s freelance workforce is a powerful engine of our economy and culture, particularly in the creative industries. As both illustrated, the number of self- employed is not only rising rapidly, reaching 1 million now in the creative industries; but the actual proportion of those engaged in the creative industries, representing 32% of jobs within the creative sector, is an extraordinary figure.
Despite their immense contribution, however, freelancers currently lack a single clear voice representing their interests to government. This absence has led to a decline in pay and conditions, with nearly two thirds of freelancers reporting low or unfair pay in their careers, and an overwhelming majority impacted by late payments. As the noble Earl, Lord Clancarty, mentioned, the Covid-19 pandemic starkly exposed their vulnerabilities, highlighting a lack of security, unequal access to opportunities and inadequate basic safety nets. These three amendments specifically address those critical issues.
A fundamental problem is the lack of a consistent legal definition for freelancers. Freelancing is not the same as self-employment, and freelancers often operate through a mixture of engagements, blurring the lines of employment status. This ambiguity creates uncertainty and can inadvertently exclude them from rights.
Amendment 301 proposes to insert a new section into the Employment Rights Act 1996, providing a clear definition: a freelancer is an
“individual who is engaged to work by a company directly on flexible contracts, through their own company or through other companies on a short-term basis, and who is typically responsible for their own tax and national insurance contributions and is not entitled to the same employment rights as employees”.
I take the point of the noble Earl, Lord Clancarty, about sole traders, but this clarity is essential for effective policy-making and for freelancers themselves to understand their status and rights.
The amendment also empowers the Secretary of State to issue further guidance and to create an online tool to assist in determining freelancer status, adapting it as time goes on. Once we have a clear definition, we need a dedicated champion, and the noble Earl’s Amendment 287 proposes the establishment of an office of the freelance commissioner, to be led by an independent freelance commissioner appointed by the Secretary of State. This role, as he mentioned, has been overwhelmingly called for by voices across the sector, including my own Authors’ Licensing and Collecting Society, Creative UK, the Federation of Small Businesses, Prospect and a host of other organisations to which he also referred.
The freelance commissioner would serve as a critical conduit between industry and government, providing expert knowledge and genuine oversight. The responsibilities are set out in the amendment, but, in effect, he or she would advocate for the needs of freelancers across all government departments; bridge the existing gap in representation, especially where councils such as the Creative Industries Council lack advocacy for individual artists or creatives; drive change in government and business, aiming to eradicate the red tape affecting freelancers; gather and analyse crucial data on the freelance workforce, with a focus on the creative industries; and improve government understanding of the employment issues facing freelancers.
Finally, to ensure that the commissioner’s role is embedded in government policy considerations, Amendment 302 introduces a duty on relevant government departments to consider the specific needs of the freelancer workforce when formulating new policies or regulations. Currently, freelancers are often left behind in government policy due to gaps in data and their irregular employment patterns. They are more susceptible to economic fluctuations and lack the fundamental protections that employees enjoy, such as sick pay, flexible working hours and parental rights.
This amendment would mandate that departments such as the Department for Business and Trade, the Department for Work and Pensions and the Department for Culture, Media and Sport have due regard to freelancer circumstances. Crucially, it would also require those departments to consult with the freelance commissioner during the development of any such policies. This duty is vital to ensure that upcoming employment reforms are fit not only for more traditional forms of employment but for the self-employed and freelance workforce, thereby safeguarding the long-term success of industries such as the creative sector.
These three amendments, which seek a clear definition of a freelancer, the establishment of a dedicated freelance commissioner and a statutory duty on government to consider freelancers in policy-making, are interconnected and essential. They represent a fundamental recognition of the modern workforce and a commitment to creating a fairer, more secure environment for those who drive innovation, creativity and economic growth.
Viscount Colville of Culross (CB)
My Lords, I apologise for being unable to here at the beginning of this debate despite having added my name to Amendment 287. I was stuck on the motorway for the last three hours. I absolutely support the amendment; it is an incredibly good measure. I hope that the Minister will listen kindly to my noble friend’s amendment and speech.
Baroness Caine of Kentish Town (Lab)
My Lords, I support Amendment 287 tabled by the noble Earl, Lord Clancarty, which provides an opportunity to address a long-standing gap in protection for freelance workers. To illuminate that, I will focus on one area of specific concern: health and safety.
At least 70% of the production workforce in film and TV operates on non-permanent contracts. Technically classified as “self-employed”, they do not meet the standard definition of autonomous self-employment. Current laws surrounding health and safety at work are often open to interpretation by those on productions who hire them, and, in some productions, a culture of minimum compliance becomes compounded by an industry that tends to self-regulate. Freelancers often do not raise safety concerns or request reasonable adjustments to the work they are doing, as they fear gaining a reputation for being difficult in highly networked industries where word of mouth is a powerful currency.
To illuminate that further, let me turn to a tragedy raised in this place last February by my noble friend Lady Smith of Basildon—the now Leader of the House—while in opposition, during a very well received debate led by my noble friend Lord Bragg on the contribution of the arts to the UK economy and society. She referenced the work of the Mark Milsome Foundation, a campaign established following the tragic workplace death of this highly respected and experienced camera operator on a film set in 2017. At the inquest on Mark’s death, the coroner concluded that, on that set,
“the risk of Mr Milsome being harmed or fatally injured was not effectively recognised, assessed, communicated or managed”.
Despite these findings, no one has ever been held accountable, suggesting a gap or flaw in the law that needs to be filled or rectified, affording freelance employees the same safety rights, benefits and policies as others in employment.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a great pleasure to follow the noble Baroness, Lady Caine. She made some terribly important points; they are literally about matters of life and death.
I have added my name to Amendment 259, alongside the noble Lord, Lord Freyberg, and the noble Earl, Lord Clancarty. I apologise to the noble Earl for not having also signed Amendment 287; I certainly would have done so, had I caught up with it sooner. I previously backed a similar amendment from the noble Earl to an earlier Bill under the previous Government.
I declare my position as beneficiary of the Authors’ Licensing and Collecting Society, with which the noble Lord, Lord Clement-Jones, is associated. I published one book with the society last year, and I have another one coming out this year.
Amendment 259 is about unionisation and collective bargaining in the arts and cultural sector, and it calls for alternative, appropriate models for the sector. I hope the Labour Government see sense and come back in support of the amendment. They believe—I hope—in the values of collective bargaining and of workers being able to get together to fight for appropriate conditions, whether it is health and safety, pay or work security.
I declare another position—or, perhaps, a situation—in that, 20 years ago, I reviewed a lot of London fringe theatre on my own website. Speaking to some of the actors and the other creatives involved in those performances, I learned that the conditions under which they were employed, or hoped to get paid, were often very precarious. I very much doubt that that situation has improved.
The noble Lord, Lord Freyberg, spoke about the insecurity of Covid and what followed it. The Republic of Ireland saw that situation and took a step to deal with it: it introduced the universal basic income trial, which ran from 2022-24 and paid creative workers a weekly stipend of €325 for three years. We still have not had the formal impact assessment of that, but I have heard a great many anecdotal reports about the more stability and reduced stress for creative workers. Realised from anxiety, they had time and headspace to open up new possibilities and create trajectories. They spent time researching, experimenting and taking risks and really saw the benefits in their creative practice. What we are proposing here is not going as far as a universal basic income but is a collective bargaining approach that strengthens the position of creative workers within their sectors and organisations, particularly freelancers. This would surely be a positive step at least heading in that direction.
Finally, it might feel as if we are addressing something that has been an issue for a very long time. There is a very famous painting called the “Poor Poet”, done in three versions by the German painter Carl Spitzweg. It shows a garret room with a leaking roof. There is no fire or bed, only a mattress on the floor, and the poet is tucked underneath every bed covering because he cannot afford to heat his room. That has been a long-term stereotype, but it does not mean we have to continue that.
More practically, in the reality of Britain in 2025, many people cannot even manage to access conditions such as that. There is a real issue—and no one else has brought this up yet—about access to the creative sector being open to a wide variety of people from a wide variety of groups in our society, not just to people who can access the bank of mum and dad when things go a bit wrong and can afford to work as an unpaid intern for years. If we are going to have a creative sector that truly harnesses the talents of all our society, opens opportunities and—if I have to put it this way—is great for the economy, then surely all the amendments in the group, but particularly the amendments on collective bargaining and the freelance commissioner, would take us some steps down that road?
Lord Londesborough (CB)
My Lords, I address Amendment 287 on the creation of an office for a freelance commissioner in the name of my noble friends Lord Clancarty, Lord Freyberg and Lord Colville of Culross, who has managed to beat our limited motorway system but arrived just too late to speak, sadly.
I am somewhat conflicted about this thought-provoking amendment, in that I have argued at Second Reading and in Committee against the overreach of the Bill and its sheer complexity and burden on employers, especially for small and micro businesses. On the noble Baroness’s comment, I do not want to be seen to be adding baubles to the Christmas tree. However, I agree that year by year the arguments grow for the establishment of a freelance commissioner, partly because the number of freelancers is growing and will continue to do so. The current 2 million plus freelancers will easily rise to 3 million within the next 10 years in the UK alone as employers shed staff from payroll, weighed down by the combination of increased national insurance contributions, national minimum wages increasing much faster than the rate of inflation and all the new rules and regulations coming in this very Employment Rights Bill.
Just look at the recent and alarming drop reported last week by the ONS of 274,000 workers coming off payroll during the past 12 months. We do not yet have the data to track how many of them are transitioning to freelance or self-employment. Indeed, as my noble friends have pointed out, the data on this area of freelancing and self-employment is poor and not up to international standards, and that is a real problem when we are trying to assess exactly what their contribution is to the economy.
I am going to muddy the water slightly, but you could argue that there is a need for an independent commissioner for the self-employed. We have been talking about freelancers, but there are 4.2 million self-employed people, including freelancers, in the UK. Those numbers are going to increase given the impact of technology, digital communications, AI and, particularly, the practice of working from home. I accept that there are key differences between freelancers and many self-employed people, for example, sole traders or those running their own businesses or partnerships, perhaps with just one or two contractors, but freelancers, although independent and project-based, are also self-employed and are treated just the same way for tax purposes by HMRC.
I accept that freelancers and the self-employed are not as valued or appreciated by Governments of all parties as they should be. This was brutally exposed during the pandemic with furlough and other schemes. If we want to develop a proper entrepreneurial spirit and environment in this country, we should do much more to value and look after those who create their own jobs and face up to all the risks and jeopardy that that involves. That includes freelancers, not just in the creative industries, but in other sectors where they are prevalent, which are as diverse as construction, professional services and agriculture. The Government need to give Amendment 287 serious consideration and, while doing so, think through how the interests of all the self-employed, not just freelancers, should be represented.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Lords, Lord Freyberg, Lord Clancarty and, particularly, Lord Clement-Jones, for their valuable contributions and amendments in this group and for the thoughtful way they have introduced them. I am very grateful for their tireless advocacy on behalf of the freelance workforce, who so often find themselves on the margins of employment policy. I will speak in particular to Amendments 301 and 302, tabled the noble Lord, Lord Clement-Jones, which I was happy to sign.
Amendment 301 introduces a new clause which, for the first time in statute, provides a clear and much-needed definition of a freelancer. This definition acknowledges the reality of modern working life, where individuals are often engaged on short-term contracts, operating through their own companies or via intermediaries and managing their own tax and national insurance affairs. These individuals, who are distinct from employees or workers as defined under current legislation, are nonetheless a vital and growing component of our labour market, as the noble Lord, Lord Londesborough, has just pointed out. The amendment does not seek to blur the lines between employment statuses, but rather to draw a necessary and clarifying distinction that enables policy and legislation to recognise freelancers in their own right. The inclusion of the provision for the Secretary of State to issue guidance ensures that the definition can evolve with working practices and case law, and that is both sensible and future-proofed.
Amendment 302 builds on this by creating a duty—a statutory obligation—for relevant government departments to have due regard to the freelancer workforce when shaping new policy. Too often freelancers are treated as an afterthought, and they fall between the cracks of legislation designed for binary employment categories. This amendment seeks to correct that omission. It ensures that the realities of freelance working are considered proactively in policy design, not reactively after the damage has been done.
Furthermore, the amendment ensures that the freelance commissioner, a role established to advocate for and advise on matters affecting freelancers, is appropriately consulted in the policy-making process. That is a modest yet essential safeguard to ensure that expertise is brought to bear when policies may significantly affect freelance professionals, particularly in sectors such as the creative industries, technology and media, where freelancing is not the exception but the norm.
These are thoughtful and proportionate amendments. They do not create undue bureaucracy, nor do they entrench rigid definitions. They offer clarity, fairness, and recognition to a workforce that contributes enormously to our economy and cultural life, yet is often unprotected and unheard in legislative terms. These proposals are not about privileging one form of work over another. They are about ensuring that our legal and regulatory frameworks reflect the diversity of modern work. I commend the noble Lord, Lord Clement-Jones, and his cosignatories on bringing these matters before the Committee, and I urge the Government to give serious consideration to these amendments as practical and principled improvements to the Bill.
I will take this opportunity to speak more broadly regarding the wider group of amendments concerning the impact of this legislation on freelancers and the cultural and creative sectors. Amendment 285 proposes a temporary waiver for small and independent cultural organisations in financial hardship. This is a pragmatic and compassionate measure. We all support robust employment protections, but a one-size-fits-all rollout risks devastating unintended consequences: closures, lay-offs or the collapse of small institutions that are already on the financial brink. The idea of a grace period and progressive enforcement is a proportionate way of balancing worker protections with organisational survival.
Lord Katz (Lab)
My Lords, I am grateful to the noble Lords, Lord Freyberg and Lord Clement-Jones, and the noble Viscount, Lord Colville of Culross, for tabling their amendments, all concerning the creative and cultural sectors. I am pleased to be having this debate on how this important sector is being supported by the Government and how workers within the sector will benefit from the Bill. I pay tribute particularly to the noble Lord, Lord Freyberg, for his excellent and long-standing work in this area. I think it is fair to say that he is a creative inspiration to us all in his endeavours to support this very important sector.
The Government share this passion and certainly understand the importance of this sector. I draw attention to the significant work that we are already doing to support it. These sectors—creative and cultural—are a vital source of growth. Creative industries are estimated to have contributed £124 billion in 2023, accounting for 5.2% of UK gross value added, and the cultural sector is estimated to have contributed some further £35 billion in the same year, accounting for 1.5% of UK GVA.
The creative industries and cultural sectors are a distinct part of the wider UK workforce, as the noble Lord, Lord Freyberg, explained. They have a significantly higher proportion of self-employed individuals, reflecting the sector’s entrepreneurial and freelance nature. In the latest published data, as of 2023 there were 2.4 million filled jobs in the creative industries and 666,000 filled jobs in the cultural sector. Of these jobs, nearly half, 49.6% in the cultural sector, were self-employed, and 27.9% in the creative industries, compared with 14.5% of UK jobs overall. This flexibility not only drives innovation but supports the more project-driven nature of the creative industries. However, we also know that freelancers’ creative careers, despite offering a more flexible and autonomous way of working, are often precarious and come with lower job security; many speakers in this debate spoke to that fact. I highlight the contribution made by the noble Baroness, Lady Bennett of Manor Castle, setting out the precarious nature of working in this sector.
I turn specifically to Amendment 259 in the name of the noble Lord, Lord Freyberg. Through the Bill we are introducing the school support staff negotiating body and introducing a framework for negotiating bodies in the social care sector to help tackle recruitment and retention issues there. The Government recognise that other sectors, such as the arts and culture sector, may well benefit from more formal frameworks for collective bargaining, and we intend to consider other sectors in due course. In the meantime, we want to encourage collective bargaining at the local level in these sectors. It is the Government’s intention that we should learn the lessons from this process in the social care sector first, before considering where it may be appropriate to introduce similar frameworks in other sectors.
I am struck at this point by the contribution from the noble Lord, Lord Londesborough. As he said, while the focus of these amendments is to discuss the nature of freelancing in the creative and cultural sectors, freelancers are self-employed but of course there are self-employed workers in many other sectors beyond. It is not a simple thing to analyse, that is for sure.
Regarding Amendments 284 and 288, also in the name of the noble Lord, Lord Freyberg, regarding impact assessments, as your Lordships’ Committee will be aware, we have already published a comprehensive set of impact assessments. This analysis is based on the best available evidence on the sectors likely to be affected by these measures, including the arts, entertainment and recreation industries. We recognise the importance of ensuring that the impacts of these policies on workers, businesses and the economy are considered, and that analysis is published outlining this. That is in section 17 of the summary impact assessment, which assesses the impact on all different sectors, including the creative industries. We already intend to publish further analysis, in the form of both an enactment impact assessment when the Bill secures Royal Assent and further assessments when we consult on proposed regulations to meet our better regulation requirements. We are also committed to consulting with businesses and workers ahead of setting out secondary legislation, including the sector mentioned in the amendment.
On Amendments 285 and 331 in the name of the noble Lord, Lord Freyberg, we recognise the importance of preserving and supporting the financial sustainability of cultural organisations, including small and independent cultural organisations. However, we want to avoid uncertainty or even unintended negative consequences for cultural workers. We welcome views on the ways that cultural organisations experiencing financial hardship can be supported, including the types of advice that they may require on employment practices. More generally, the Government will continue to work with the creative and cultural sector to understand how this legislation can work with it in its context, while strengthening legal protections for employers. But again, this must not lead to uncertainty or negative consequences for the workforce, which we believe staged implementation, for example, would create. I think the noble Lord, Lord Freyberg, will know that both DBT and DCMS have been engaging with sector organisations, including UK Theatre, to have productive conversations to support this sector in understanding and adapting to the new legislation, while considering what additional support we could give to this sector in particular.
Finally, I address Amendments 286 and 287 tabled by the noble Lord, Lord Freyberg, and Amendments 301 and 302 in the name of the noble Lord, Lord Clement-Jones, regarding freelancers. Freelancers may benefit from the reforms to trade union legislation and improvements in the enforcement system, including the regulation of umbrella companies. We have also committed to additional measures to strengthen protections for the self-employed. The noble Earl, Lord Clancarty, rightly raised issues facing those who are self-employed, such as action to tackle late payments. We have already announced a package of measures to tackle late payments to small businesses and the self-employed, including a new fair payment code, upcoming legislation requiring large companies to include payment performance in their annual reports and an upcoming consultation on potential measures to go further. Other measures to strengthen protections for the self-employed include the right to a written contract, an extension of health and safety, and blacklisting protections.
On health and safety, my noble friend Lady Caine of Kentish Town raised the honourable campaigning work of the Mark Milsome Foundation, in a speech that showed both passion and insight in this area. It is essential that employers in the creative industries do not use—or rather, abuse—the multifarious employment statuses of those working in the sector to evade their responsibilities, particularly when it comes to health and safety. As the noble Baroness, Lady Bennett, said, it can indeed be a matter of life and death.
I am pleased that my noble friend Lady Caine acknowledges that this Bill may not be the most appropriate vehicle for the changes that she wishes to secure and that secondary legislation or amendments to the Health and Safety at Work etc. Act would perhaps be more appropriate. However, I am happy to take this back to colleagues in DBT and DCMS.
As has been noted, the creative industries have a high proportion of freelance workers, who are crucial to the sector’s success. To respond to the noble Lord, Lord Clement-Jones, and others, the sector is working to address the recommendations of the Good Work Review, a deep dive into the working practices in the creative industries, which highlighted freelancers’ job quality as a particular concern. My colleagues in the Department for Digital, Culture, Media & Sport are working with industry to understand government’s role in any solutions that are developed. I and my DCMS colleagues will be happy to continue discussing how best to support freelancers, and the creative industries more widely. It is with this in mind, and the Government’s unwavering support for the creative industries, performing arts and entertainment sectors, that I ask the noble Lord, Lord Freyberg, to withdraw Amendment 259.
Lord Clement-Jones (LD)
My Lords, the Minister has noticed the strength of feeling across the House in terms of support for some of the freelance amendments. I very much appreciate what the noble Lord, Lord Sharpe of Epsom, said earlier. However, across the Benches there is very strong support for further protection for freelancers. Will one of the options in the Good Work Review, which the Minister referred to, be the appointment of a freelance commissioner—with all the other aspects that I have mentioned in terms of definition and duties?
Lord Katz (Lab)
I was certainly happy to reflect that there was cross-party agreement on this. I am unable to recall the exact terms of the Good Work Review here, so I undertake to write to the noble Lord with some more detail if that is acceptable.
Lord Clement-Jones (LD)
Perhaps the Minister could add another bell or whistle to what he has just said. Will he undertake to meet those with a strong interest in the protection of freelancers on a cross-party basis, to have discussions, before Report?
Lord Katz (Lab)
I am always happy to meet with noble Lords on these important matters.
Lord Freyberg (CB)
My Lords, I thank the Minister for his very helpful answer and all noble Lords who have taken part in today’s very interesting and in-depth discussion that I think we have all valued and benefited from.
I will make a couple of observations. The noble Earl, Lord Clancarty, made a very powerful point about the lack of government representation from freelancers when he said there was not then and there is not now any clear channel between freelancers and government. I do agree with the points made by many noble Lords about this. The noble Lord, Lord Clement-Jones, talked about having a freelance commissioner for advocacy and driving change. We need more work on this, because it is not clear that freelancers are getting the type of direction that the Government need to give on this.
I was struck by the very powerful speech by the noble Baroness, Lady Caine, on the concerns about health and safety in the film industry. Again, a freelance commissioner would be able to look at this in more detail and drive that through. There does not seem to be the same powerful advocate without that, so I hope the Minister will consider how to strengthen that. The noble Lord, Lord Londesborough, made a powerful speech about the number of freelancers who are going to come into this area; therefore, not to have them represented in this Bill is an oversight.
When I was anticipating what the Minister would say, I had various things down: asking for a carve-out, asking for special treatment for one sector, phased implementation is a slippery slope, oversight already exists through Arts Council England and DCMS, there is not enough evidence to justify these changes and we already have a Minister for Culture. However, as others have rightly said, this is not about a carve-out or an exemption, it is about adaption. The creative workforce is structurally different, highly freelance, project-based and often dependent on public and charitable funding. Our amendments aim to ensure that employment rights can be applied fairly and effectively in this context.
Lord Sharpe of Epsom
“Impact on industrial action (1) The Secretary of State must, within 12 months of the day on which this Act is passed, publish an independent assessment of the impact of this Act on the number of working days lost to strike action.(2) The assessment must include data comparing the number of working days lost to strike action in the 12 months following the passing of this Act with the 12 months prior.(3) The Secretary of State must lay a copy of the assessment before Parliament.”
Lord Sharpe of Epsom (Con)
My Lords, my Amendment 262 concerns an issue of considerable importance, not merely for those involved directly in industrial relations but for the health of our broader economy, the stability of our public services and the legitimacy of this legislation. The amendment would require the Government to commission and publish, within 12 months of Royal Assent, an independent assessment of the impact of this Act on the number of working days lost to strike action, specifically comparing the 12 months following its enactment with the 12 months preceding it. That report would then have to be laid before Parliament. This amendment is modest in scope. It does not seek to obstruct the Bill or alter its provisions. It merely seeks transparency, accountability and, above all, vital evidence-based analysis in due course.
There is a striking—if I may use that word without inflaming the debate—absence of hard data or persuasive analysis in support of the central justification for these changes, namely that repealing certain elements of the Trade Union Act 2016 will result in better industrial relations. Indeed, the Government’s own impact assessment acknowledges that there could be a benefit
“if Trade Union reforms lead to better industrial relations”.
I emphasise “if”. Hope is not a good substitute for policy. Nor should legislation of this consequence be built on assumptions rather than analysis. I will therefore structure my remarks around three core questions which the Government have failed to answer convincingly and which this amendment would help to address.
If we are to repeal elements of the 2016 Act, we must first understand what standard the Government are using to declare that Act a failure, or at the very least to assert that it is no longer fit for purpose. The Trade Union Act 2016 introduced significant changes: minimum turnout thresholds for strike ballots; requirements for information on ballot papers; limits on picketing; and restrictions on facility time in the public sector. It was controversial, certainly, but it was also justified by the Government of the time as necessary to ensure that industrial action had a strong democratic legitimacy, and that the wider public were protected from excessive disruption.
Now we are told that these measures must be rolled back, but we have at no stage been told what objective, or even subjective, measure of success or failure is being applied. Are we to believe that the 2016 Act failed because it did not eliminate all industrial action, because it was unpopular with some stakeholders or because it placed an administrative burden on unions—or, more worryingly, is it being repealed simply as a matter of political preference? To look at some figures, according to the Office for National Statistics, the number of working days lost to strike action was at a historic low throughout the period following the 2016 Act until a sharp rise in 2022-23, partly driven by inflation, the consequential erosion of real-terms pay and broader discontent in the traditional public sector.
Are we being told the legislation was ineffective because strikes still happened in 2022? If so, that ignores the very different macroeconomic context we now face. Or is the claim simply that industrial relations will somehow improve if these legal constraints are lifted? In any of those cases we must ask: compared with what? Compared with the pre-2016 environment? Compared with our European neighbours? Or compared with a model of workplace consensus that may not exist in reality? Without a baseline for comparison, the Government’s argument is essentially unfalsifiable and unjustifiable.
Let us assume for the sake of argument that the Government believe that these changes will lead to more equitable bargaining, greater union engagement and ultimately improved relations between employers and workers. Even if that were true, we must still ask at what cost. If these reforms lead to a rise in industrial action, that will have implications not only for the affected sectors but for the public at large. Trains will be cancelled, schools will be closed, hospital appointments will be postponed, bin collections will be missed and courts will be adjourned. These are not abstract costs, so it is extraordinary to repeal a major piece of industrial relations legislation without offering any quantification of the risks of increased disruption and without explaining how those risks will be mitigated.
The impact assessment leans heavily on the idea that increased union involvement could lead to improved communication and better outcomes, and perhaps it could. But the fact remains that the cost of getting this wrong will be borne not by policymakers but by the public. That is why this amendment is so crucial. It simply asks the Government to return to Parliament within a year and tell us whether this has worked. Has industrial action decreased or increased? Are we seeing the promised harmony or the feared escalation? If it is the latter, we as legislators have a responsibility to know that and to act accordingly.
Perhaps the most fundamental question of all is: what actual, empirical, verifiable evidence do the Government have to support their central claim? We have not been given a retrospective analysis of the Trade Union Act 2016 and its impact. We have not been provided with consultation data that robustly supports repeal. We have not seen sector-by-sector breakdowns of how these measures will improve the industrial landscape. We have not even seen clear articulation of the problem the Bill is trying to solve. Indeed, the rationale appears to be more ideological than evidential. It seems to be based on the belief that loosening legal constraints will somehow foster good will and reduce conflict. All the academic research and literature on industrial relations remind us that legal frameworks matter, that institutions shape behaviour, and that rules, when clear, consistent and fairly applied, help prevent conflict and not exacerbate it.
If the Government are so confident in their position, why not test it? Why not commit to measuring its effect? Why not, a year on, lay before this House and the other place an honest assessment of whether their theory of change has delivered the desired result? If the evidence proves them right, they will be vindicated. If not, Parliament should be empowered to revisit the legislation. There is, after all, considerable flexibility inherent in legislation so riddled with Henry VIII powers. I look forward to the Minister’s reply and I beg to move.
Lord Fuller (Con)
My Lords, I rise to support Amendment 262 in the name of the noble Lord, Lord Sharpe, and others, because I want to talk about a simple economic truth. One of the provisions in the Bill will reduce the thresholds at which industrial action may be called or authorised. The truth is that when you reduce the threshold, the likelihood of industrial action does not grow linearly; it grows exponentially. The amendment is needed because the Bill, sadly, will provide the world with a real-life experiment that will inform political and economic science of that simple truth.
It could be worse than that. My experience comes from local government and my relationship with the National Joint Council. Local government employs 1.8 million local government workers. There are three principal unions: Unite, UNISON and GMB. Within the cohort of local government workers, I have negotiated with the craft workers, the Salisbury workers and the coroners. There is a red book, a green book and a blue book; there is even a gold book covering senior fire officers and police officers. There are 136 different activities that local authorities do and, of course, there are 350 principal councils. I have engaged with all this complexity over about 10 years sitting on the National Joint Council, the device through which the employers engage with the unions. I have sat alongside the noble Baroness, Lady Taylor, on that body for many years, and now we both find ourselves in here.
As part of the gang of four, the top four local government councillors engaged in these important negotiations, I have learned a lot of things. There is less beer, there are fewer sandwiches and there are palatial premises built by one of the unions in Euston. It has not been easy work, but we have had a series of national agreements engaging on a respectful basis. It has been valuable work. The important point is that there have been powerful incentives to avoid industrial action. The bar has not been impossible, but it has been a high bar against which strike action must be called. It has sort of worked, because there has been an equilibrium between the employer and the employees across 1.8 million unionised workers —just under a third of them all—in this country.
That equilibrium has meant that when there is a strike, it is serious. When people down tools, it is in the news. The Birmingham bin strike is a case in point: there is a strike, and it is serious. My anxiety about so many of the provisions in the Bill is that it is going to dissolve the powerful incentives to avoid industrial action and instead, arithmetically and structurally, put in the provisions where it is encouraged. The Bill sets the wrong balance, because we are not talking about simple organisations with single unions and small workforces in local government. We are talking about a very complex landscape. If you reduce the thresholds, people are more likely to strike because a minority, as little as 10%, of workers could call a strike. When 10% hold the 90% over a barrel, that is clearly not in the interests of the public; it is not in the interests of the workers; and I do not believe that in the long term it is in the interests of the unions.
Amendment 262 calls for a robust assessment of the effect of the Bill on days lost to industrial action. Not only is that the right thing to do but we would do a service, because it would demonstrate once and for all that simple efficiency of labour relations: if you reduce the threshold to call industrial action, the number of days lost to strikes will go up geometrically. I regret that we are going to do a service to political and economic science, but if that is the way it is, Amendment 262 is the way to achieve it.
Baroness Lawlor (Con)
My Lords, I support my noble friend Lord Sharpe’s amendment to ask for an impact assessment that details the number of days lost to strikes in the 12 months since the Act was passed and in the previous 12 months. He spoke about the repeal of elements of the 2016 Act and about the ONS statistics.
Part of the reason why we need an impact assessment on the number of days lost to strikes is because, as my noble friend said, we have no evidence. This Bill, in particular aspects of Part 4, is likely to increase the number of strike days. I say that because the main problem with many of these clauses is that they undermine the balance between the employer and the employee, which my noble friend Lord Fuller spoke about as both a public sector and private sector employer. They remove the arrangements on a number of accounts which allow for a balance to be struck between the interests of employer and employee, and for agreement to be reached.
The clauses also remove the inducements and encouragements to avoid industrial action. We spoke earlier about Clause 73, on protection against detriment for taking industrial action: new Section 236A gives workers the right not to be subject to detriment as a result of official and protected industrial action and stipulates that an employer may not take action, and may not refrain from an action, to prevent the employee engaging in legitimate industrial or protected action. Yet excluding the employer’s ability to give inducements to workers for not taking protected industrial action where others do, is in fact prohibiting actions by the employer to hold back or to encourage workers not to take such action. One example might be to offer a bonus or withhold some extra benefit.
There are very good reasons to avoid strikes, not least for the good of the whole economy and the good of this country. Employers and employees should be given a level playing field, and many of the measures taken by the previous Government since 2016 and before then, all of which are in the 1992 Act, allow for that level balance to be struck between both parties. But many of these measures will encourage industrial action, which is not to the good of workers, employers or to the country at large. An impact assessment would at least provide the evidence that the country so badly needs if we are to start putting pressure on the Government to restore the balance in this delicate arrangement between both parties.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Fuller, and the noble Baroness, Lady Lawlor, for their contributions. I will be brief; I do not want to stand between noble Lords and their dinner break.
I thank the noble Lord, Lord Sharpe of Epsom, for his Amendment 262. We have already debated impact assessments at great length and I will not repeat the same arguments. Any industrial action is regrettable and all parties have a duty to seek a resolution to such disputes. Failure to do so is basically a lack of management and leadership by all. We have also debated the repeal of the 2016 Act in previous debates. I will not mention that either. Furthermore, it is a manifesto commitment.
Despite its good intentions, the amendment would impose a review procedure that in effect repeats what the Government already intend to do. We recognise the importance of ensuring that the impacts of these policies on workers, business and the economy are considered, and that analysis assessing these impacts is published. Our impact assessment also outlines a plan for monitoring and evaluating the impact of the Bill and subsequent secondary legislation.
As noble Lords will see from the impact assessment, our Employment Rights Bill could have a positive direct impact on economic growth, helping to support the Government’s mission for growth and ensuring that we raise living standards across the country and create opportunities for all. The Bill is expected to benefit people in some of the most deprived areas of the country by saving them up to £600 in lost income from the hidden costs of insecure work.
To conclude, I reassure your Lordships that we already have robust plans in place to assess and review the Bill’s impacts, including on industrial action. My commitment in an earlier debate to meet noble Lords to discuss the impact assessment further still stands. I therefore ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 262.
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Lord, Lord Leong, for his answer, but I am, of course, disappointed. I must say to him that of course he could not repeat the argument about the impact assessment because it is manifestly inadequate and overreliant on the word “could”, which he just used again.
So it is with a sense of frustration that I close this debate on Amendment 262 because, let us be blunt, the Regulatory Policy Committee has already deemed the Government’s own analysis inadequate. It found that the assessment underpinning this Bill failed to consider important variables, lacked robust modelling of strike-related costs and omitted any real evaluation of how the repeal of the 2016 Act provisions might drive up the number of working days lost to industrial action. That is criticism born not of political bias but of technical expert judgment, but the Government persist in asserting that an independent stocktake of actual strike days would be superfluous.
During the Bill’s passage, no fewer than 160 government amendments were tabled on Report, some of the most consequential of which would fundamentally alter the trade union landscape: changes to ballot thresholds, as my noble friend Lord Fuller explained; adjustments to picketing rules; and alterations to facility time arrangements. Many came late, with scant time for meaningful consultation and no accompanying update to the impact assessment. In effect, we are being asked to sign off on a statute the final shape of which was revealed only in piecemeal fashion and for which no comprehensive evaluation has ever been produced. There is more flesh on the skeleton now, but it still makes for a pretty unsavoury sight.
The consequences of this are already evident. Businesses stand in limbo. They are unsure how to prepare—again, the lack of an implementation plan. HR directors, legal advisers and finance teams are all left guessing which rules will apply. If the Government can point to a single one who is not, could they please say so, because we have spoken to very many and cannot find a single one who is not left guessing? They require clarity, not uncertainty. They need to know, for instance, whether a union ballot will again require a 50% turnout, or whether the conduct of pickets will be governed by new or old prescriptions. In their absence, investment decisions are deferred, retention and, especially, recruitment strategies are on hold and the workforce, unsure of its rights and obligations, faces unnecessary anxiety.
To deny acceptance of this amendment is to deny the very notion that policy should be tested against outcomes and treats legislation as unchallengeable, rather than a living instrument whose impacts must be monitored, and it tells employers, workers and the public alike that we legislate in the dark. So I regret deeply that the Government have chosen to reject the amendment. Doing so signals a reluctance to subject themselves to the discipline of evidence, shirks the responsibility to measure the real-world consequences of their own handiwork, and turns a blind eye to the limbo in which businesses and the public languish. That is not acceptable. If the Government’s reforms truly will deliver better industrial relations, they should welcome the chance to prove it. If Ministers are as confident as they claim to be, let them fast-track the assessment. Let them demonstrate that strike days are falling, that workplaces are more harmonious and that public services are protected. For now, I beg leave to withdraw the amendment.
Lord Katz (Lab)
My Lords, I beg to move that the House resumes. We will then move on to consider two Foreign Office Statements taken in the other place. In recognition that the Statements have been combined, the usual channels have agreed that the usual time for consideration be extended by 20 minutes, with 40 minutes for Back-Bench questions in total. We will therefore not return to the Employment Rights Bill before 8.38 pm.
Conflict in the Middle East
(1 day, 4 hours ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Foreign, Commonwealth and Development Office (Lord Collins of Highbury) (Lab)
My Lords, I shall now repeat a Statement made earlier today in another place by my right honourable friend the Foreign Secretary. The Statement is as follows:
“With permission, Madam Deputy Speaker, I will remind the House that the Foreign Office has been responding to two crises this past week. My honourable friend Minister Falconer will update the House on the Government’s extensive efforts to assist those who lost loved ones in Thursday’s devastating Air India plane crash. Just nine days ago, I was in Delhi, strengthening our friendship. Our nations are mourning together, and my thoughts are with all those suffering such terrible loss.
With permission, I will now turn to the Middle East. Early last Friday morning, Israel launched extensive strikes across Iran. The targets included military sites, the uranium enrichment facility at Natanz, key commanders and nuclear scientists. The last 72 hours have seen Iranian ballistic missile and drone strikes across Israel, killing at least 21 Israelis and injuring hundreds more, and Israeli strikes have continued, including on targets in Tehran, with the Iranian authorities reporting scores of civilian casualties.
Prime Minister Netanyahu has said that his operations will
‘continue for as many days as it takes to remove the threat’.
Supreme Leader Khamenei has said that Israel ‘must expect severe punishment’.
In such a crisis, our first priority is, of course, the welfare of British nationals. On Friday, we swiftly stood up crisis teams in London and the region. Yesterday, I announced that we now advise against all travel to Israel; that is as well as our long-standing advice not to travel to Iran. Today, I can update the House: we are asking all British nationals in Israel to register their presence with the FCDO so that we can share important information on the situation and leaving the country.
I can announce today that we are also further updating our travel advice to signpost border crossing points, and we are sending rapid deployment teams to Egypt and Jordan to bolster our consular presence near the border with Israel. That presence has already been supporting British nationals on the ground. Israel and Iran have closed their airspace until further notice, and our ability to provide support in Iran is therefore extremely limited. British nationals in the region should closely monitor our travel advice for further updates. The situation remains fast-moving. We expect more strikes in the days to come. This is a moment of grave danger for the region. I want to be clear: the United Kingdom was not involved in the strikes against Iran. This is military action conducted by Israel.
It should come as no surprise that Israel considers the Iranian nuclear programme an existential threat. Khamenei said in 2018 that Israel was a ‘cancerous tumour’ that should be ‘removed and eradicated’. We have always supported Israeli security. That is why Britain has sought to prevent Iran obtaining a nuclear weapon through extensive diplomacy. We agree with President Trump when he says that negotiations are necessary and must lead to a deal. This has long been the view of the so-called E3—Britain, France and Germany, with whom we have worked so closely on this issue. It is the view of all of the G7, who have backed the efforts of President Trump’s envoy, Steve Witkoff. For more than two decades, it has been the cross-party view in this House. Lord Cameron of Chipping Norton and Lord Hague of Richmond led diplomatic efforts on this issue, as did Baroness May of Maidenhead and the former right honourable Member for Uxbridge and South Ruislip. This Government have continued to pursue negotiations, joining France and Germany in five rounds of talks with Iran this year alone. Ours is a hard-headed, realist assessment of how best to tackle this grave threat. Fundamentally, no military action can put an end to Iran’s nuclear capabilities.
Just last week, the International Atomic Energy Agency board of governors passed a non-compliance resolution against Iran, the first such IAEA finding in 14 years. The director-general’s comprehensive report details Iran’s failure to declare nuclear materials. Iran remains the only state without nuclear weapons accumulating uranium at such dangerously high levels. Its total enriched stockpile is now 40 times the limit in the JCPOA. Its nuclear programme is part of a wider pattern of destabilising activity. The Government have taken firm action in response.
When Iran transferred ballistic missiles for use in Russia’s illegal war in Ukraine, we imposed extensive sanctions, including against Iran Air, and we cancelled our bilateral air services agreement. In the face of unacceptable IRGC threats here in the United Kingdom —with some 20 foiled plots since 2022—the Crown Prosecution Service has for the first time charged Iranian nationals under the National Security Act, and we have placed the Iranian state, including the IRGC, on the enhanced tier of the new foreign influence registration scheme.
A widening war would have grave and unpredictable consequences, including for our partners in Jordan and the Gulf: the horrors of Gaza worsening, tensions in Lebanon, Syria and Iraq rising, and the Houthi threat continuing. That is why the Government’s firm view is—as it was last October, at the time of the ballistic missile attack on Israel—that further escalation in the Middle East is not in Britain’s interests, or in the interests of Israel, Iran or the region. There are hundreds of thousands of British nationals living in the region and, with Iran a major oil producer and one fifth of total world oil consumption flowing through the strait of Hormuz, escalating conflict poses real risks for the global economy. As missiles rain down, Israel has a right to defend itself and its citizens, but our priority now is de-escalation. Our message to both Israel and Iran is clear: step back, show restraint, do not get pulled ever deeper into a catastrophic conflict, the consequences of which nobody can control.
The Prime Minister chaired COBRA to discuss the situation last Friday, and spoke to Prime Minister Netanyahu, President Trump and Saudi Crown Prince Mohammed bin Salman. The Prime Minister is now at the G7 summit in Canada, discussing with our closest allies how to ease tensions. The Government have deployed additional assets to the region, including jets for contingency support for UK forces and, potentially, our regional allies concerned about the escalating conflict. In the last 72 hours, my honourable friend the Minister for the Middle East and I have been working flat out trying to carve out space for diplomacy. I have spoken to Israeli Foreign Minister Sa’ar and the Iranian Foreign Minister Araghchi, underlining Britain’s focus on de-escalation. I have also met the Saudi Foreign Minister, Prince Faisal, and had calls with US Secretary of State Rubio, EU High Representative Kallas, and my counterparts from France and Germany, the UAE, Qatar, Oman, Jordan, Turkey and Iraq. Those conversations are part of a collective drive to prevent a spiralling conflict.
This new crisis has arisen as the appalling situation in Gaza continues. This weekend, hospitals in Gaza reported that over 50 people had been killed and more than 500 injured while trying to access food. This Government will not take our eye off the humanitarian catastrophe in Gaza. We will not stop calling for aid restrictions to be lifted and for an immediate ceasefire, and we will not forget about the hostages. This morning I met Yocheved Lifschitz and her family, whose courage and dignity in the face of Hamas’s barbarism were a reminder of the plight of those still cruelly held in Gaza. We will not stop striving to free the hostages and end the war. Our vision remains unchanged: an end to Iran’s nuclear programme and destabilising regional activity, Israel secure in its borders and at peace with its neighbours, and a sovereign Palestinian state, as part of a two-state solution. Diplomacy is indispensable to each of those goals. Britain will keep pressing all sides to choose a diplomatic path out of this crisis. I commend this Statement to the House”.
Lord Callanan (Con)
My Lords, I thank the Minister for repeating the Statement. We have seen Israel and Iran launch fresh attacks against one another yesterday and, sadly, again today, although it is worth noting that Israel is targeting predominantly nuclear and military sites, whereas Iran seems to be just launching missiles indiscriminately into civilian areas. This is a grave situation and we face the very real possibility that it could yet get a lot worse.
I agree with the Foreign Secretary that our first priority must be to ensure that British citizens in Israel are supported to get out of the region as quickly as possible. It is reported that approximately 40,000 tourists are currently stranded in Israel. As the Minister said, flight routes and land borders have been closed. I appreciate that this is a highly changeable situation, but I hope the Minister can set out the Government’s plans for making sure that British citizens are brought out of harm’s way as quickly as possible.
I totally understand that the Foreign Office is faced with a serious challenge, but we must remember that for British citizens on the ground this is a terrifying and desperately stressful situation. James Eden, a 72 year-old grandfather from my home city of Newcastle, is hoping to take a four-hour bus ride through the Negev and then cross to Egypt before flying home. Despite being a British citizen in a country that the FCDO has now put on its red list, Mr Eden has said of the Foreign Office that all it does is send alerts. On the support that the Foreign Office is providing to help him escape, Mr Eden said, “They are not going to stop me, but they are not going to help me get out of Egypt either”. It is deeply concerning that British citizens are being left in the lurch over their evacuation from what the FCDO has recognised as a high-risk area. I understand the limitations that the Foreign Office has with regard to the closure of airspace, et cetera, but we need to remember that normal people are now in a war zone, and they need all the support, reassurance and help they can get from the Foreign Office in getting out of harm’s way and back home to their families in the UK.
Further to this point, I take the opportunity to ask the Minister what steps the Government are going to take to protect civilians in Israel from falling victim to Iranian rocket attacks. As I said, Iran has deliberately targeted civilian communities in places such as Tel Aviv and Haifa, and the UK has a capacity to support Israel in anti-air operations which will help to protect civilians from further harm. I hope the Minister can update the House on what plans the Government have to use UK assets to defend against Iranian attacks on civilian targets. If this is no longer the ambition of the Government, what has changed since the last time, when the UK military helped to bring down missiles and drones?
Throughout this time of crisis we need to be clear in our resolve that Iran should never have nuclear weapons. Iran has repeatedly defied international conventions, undermined regional peace, and supported extremist groups across the Middle East. It continues to arm and finance proxies responsible for violence in Lebanon, Syria, Iraq, Yemen and, of course, Israel. Iranian leaders have been brutally clear in their stated desire to completely eradicate the State of Israel, and we should listen to what they have said on this. A nuclear-armed Iran would not be a stabilising force—far from it. It would be a threat multiplier, emboldening aggression, enabling coercion, and potentially triggering a regional arms race from which it may not be possible to return. We must never allow the bankrollers of Hezbollah, the Houthis, Hamas, and Palestinian Islamic Jihad to gain access to that sort of weaponry.
As the Minister said, the IAEA has said that as of 17 May Iran has amassed 408 kilograms of uranium, enriched up to 60%. That material is a short technical step away from weapons-grade levels of 90%. The agency has said that Iran is now
“the only non-nuclear-weapon state to produce such material”,
which is of “serious concern”. That is enough uranium to make several nuclear bombs. The Iranian Government have always claimed that they want to master nuclear technology for peaceful purposes, but this, as the IAEA has made clear, is palpable nonsense. We should be working with and fully supporting our allies, including Israel, to ensure that Iran never has access to this sort of weaponry. The warning signs are flashing and I hope the Minister can tell us what steps the Government are taking now to make sure that this fear is not realised. Israel is engaged in an existential fight for its own survival as a nation, but it is also fighting dangerous religious extremism on behalf of the rest of the liberal free world. It should have our full support in that fight.
With regard to the announcement about sanctions last week, it is now more important than ever that we maintain a constructive, effective and open dialogue with Israel. We must be clear that we support it and its civilians when they are targeted by Iran, which has killed numerous civilians in its attacks over the weekend. Can the Minister assure the House that the relationship and leverage so often referred to by the Government have not been negatively affected by the decision to sanction the Israeli Finance and National Security Ministers? I would also appreciate further clarification from the Minister about why this decision was reached. The sanctions imposed on Mr Ben-Gvir and Mr Smotrich —who have said, I completely agree, many outrageous things—ban them from entering the UK and freeze any assets that they have in the United Kingdom. Can the Minister explain why these specific sanctions were chosen? Was there a high chance that Messrs Ben-Gvir and Smotrich would travel to the UK to
“incite violence against the Palestinian people”?
Do these men have substantial assets in the UK which would enable them to do this?
We must ensure that we approach matters of this importance and delicacy with a clear strategy and an eye to the future. We cannot make decisions which seriously change our international relations merely to appease political support from certain sections of society, some of them in this country. In the face of this deeply volatile and dangerous moment in the Middle East, the Government must demonstrate clarity, consistency and compassion. British citizens stranded in a conflict zone must be our immediate priority, as the Minister has said. At the same time, we must stand firm with our allies against attacks on civilians, ensuring that the UK does all it can to uphold international security. That means using our diplomatic leverage wisely, not undermining it through ill-considered sanctions that risk damaging vital relationships. Above all, we must maintain our unwavering resolve to prevent Iran, a state that arms violent proxies and threatens regional peace, from ever acquiring nuclear weapons. The challenges are immense, but so, too, is our responsibility, so I urge the Minister to set out today how the Government will meet this moment with the seriousness and the strategic foresight that it demands.
Lord Purvis of Tweed (LD)
I thank the Minister for repeating the Statement made today. I start by referring to the previous Statement on the designations. I have previously described in the House a visit that I made to a destroyed Palestinian village, Zanuta. The community education room in that village, which was co-funded by the UK taxpayer, was bulldozed and the community remains uninhabitable. That is just one example—of too many—of illegal actions by settlers in Palestine. It was an egregious example, not just because we paid for part of the facilities but because it was done in direct line of sight of a local authority justice centre and court. The IDF offers informal—as it says—policing, which is there to prevent Palestinians returning.
Outposts, illegal even under Israeli law, have been expanding, while the violence against the Palestinian communities, which is also illegal under international law, has been not only conducted with impunity but promoted, facilitated and incited. These Benches therefore welcome the measures that the Government have introduced—indeed, the Minister knows that we have called for them for over 18 months—but, as the situation has deteriorated over that period and Palestinians have come under further unjustified violence, we need to expand these measures to include those who are financing and facilitating. If, as I understand it, these measures are being introduced under the human rights regime, those who are supporting those designated can be covered within the expanded remit. Perhaps the Minister could confirm that that is the case.
These Benches believe that this is now the time to recognise a state of Palestine. Not only is it imperative that we do so to prevent further abuses of international humanitarian law, but we are sanctioning those who say that there should be no process at all. The Government’s position is that we should recognise Palestine as part of a process. It is now becoming apparent that there are very many people who do not believe in a process at all.
Lastly on Gaza, we have seen just today more Palestinian civilians killed while simply pleading for food in Gaza. The UK must act urgently to work with others to close the GHF and prevent the use of profiteering mercenaries and to immediately restore safe routes of supply for food and medicine.
Over the weekend, as the Minister referred to, people across the UK have watched with horror as war has broken out between Israel and Iran. This is, as noble Lords have said, a very serious moment for peace and security in the world and here at home. We have seen the start of yet another conflict where civilians are casualties; indeed, both Israeli and Iranian targets have been within densely populated areas and, as we have heard, Iran is offering little discrimination with regard to its responses.
It is worth stating two important principles. The first is that the State of Israel has a right to exist and to defend itself, and the stated goal of the state of Iran to wipe out the State of Israel is contrary to international law and unacceptable. The Islamic Revolutionary Guard Corps continues to seek to suppress its opponents in the UK, and we have called for that organisation to be proscribed. The Foreign Secretary told the House of Commons that we are awaiting promised legislative reforms to close “gaps” that the “state threats” of Iran have been exploiting. Can the Minister tell us what the timetable of that is going to be?
Secondly, Iran’s ambition to create a nuclear weapon to menace the region is also a threat to UK interests, and successive Governments have been right to seek to contain that risk. They have also been right, working with allies through the E3 process, to pursue that through diplomatic means. That is why the actions of the Netanyahu Administration are a huge gamble. It is perhaps an ambition of the United States to carry on diplomatic means. While the first Trump Administration was wrong to withdraw from the JCPOA, the second has been right to seek that diplomatic track. Could the Minister update us on our latest contacts with the United States Administration on their efforts on diplomacy? The danger in war is that any ambition for the diplomatic route could be derailed and the Iranian regime may end up being even less transparent and reduce diplomatic routes even further. The degraded capacity of an Iranian regime could be even harder to contain if it is seeking to expand and attack UK and our allies’ interests.
Whether it is Netanyahu seeking to involve the USA in regime change in Tehran or Tehran itself seeking to expand and threaten trade and energy supplies and their routes, this is an extremely difficult moment. The danger is real and the threat to the UK—as the Minister said, not only to the UK but to our key allies, Jordan and Iraq in particular—is apparent.
We should heed the advice and the warnings of the IAEA director-general, Rafael Grossi, who said in a statement today:
“Military escalation threatens lives, increases the chance of a radiological release with serious consequences for people and the environment, and delays indispensable work towards a diplomatic solution for the long-term assurance that Iran does not acquire a nuclear weapon”.
We on these Benches agree with him, and we welcome the Foreign Secretary stating that he will be working with E3 allies and be in contact with Tehran this evening. Could the Minister outline the context of what we are seeking? Are we seeking to put the E3 process back on track, or are there any other allies that we can work with on the diplomatic route?
Regrettably, we need to plan for the worst even though we may hope for the best in diplomacy. Those British citizens living in the Middle East will be extremely anxious this evening. Can the Minister confirm that adequate additional resources have been deployed to provide consular support to them, and that—working with allies, including the EU—contingency plans are being developed to support their evacuation should it become necessary?
Lord Collins of Highbury (Lab)
My Lords, I welcome the cross-party support for the Statement; it is much appreciated. This is an extremely concerning and dangerous moment for the entire region and events are moving as we speak. Further escalation is in no one’s interest. We want to see both sides step back and show restraint because no one benefits from a widening conflict. As I said in repeating the Statement, we did not participate in the Israeli strikes. Our focus is on encouraging our partners to de-escalate and to find a diplomatic solution through dialogue.
The Prime Minister has had calls with Prime Minister Netanyahu, President Trump and the leaders of France, Germany and the United Arab Emirates, and the Foreign Secretary has spoken to his Iranian counterpart to urge restraint. As we have said, Israel has a right to self-defence, and the UK has grave concerns about Iran’s nuclear programme. Stability in the Middle East is in everyone’s interests, and further discussions to help to find a diplomatic resolution will take place at the G7 summit in Ottawa.
I fully understand noble Lords’ concerns for British nationals in the region, and we share those concerns. The safety and security of British nationals are our top priority. Our advice to British nationals in Israel and the Occupied Palestinian Territories is to keep up to date with developments and follow the instructions given by local authorities, particularly the Israeli Home Front Command. That is the best way of staying safe.
As I said in the Statement, we are launching a “register your presence” portal for British nationals in Israel, to build a clearer picture of who is in the region and who may need assistance. We urge British nationals in Israel to complete this when it becomes available. Our embassy in Tel Aviv and the consulate in Jerusalem are working round the clock and can be contacted 24/7 by any British national in need of consular assistance. We have also sent rapid deployment teams to either side of the Israel-Jordan border to assist those who choose to travel out of the country via land. This is a fast-moving situation. British nationals should read the FCDO’s advice on what to do if you are affected by a crisis abroad. We are monitoring the situation closely and keeping all plans under constant review.
On the point made by the noble Lord, Lord Callanan, as I said in the Statement, we did not participate in any element of the Israeli or Iranian military strikes. It would not be appropriate for me to speculate on future operations decisions; that would benefit only our adversaries.
We must consider the long-term context here. For decades, Iran has pursued destabilising activity in the Middle East and committed human rights violations, and it is increasingly making threats against individuals in the United Kingdom. We have long-standing grave concerns about Iran’s nuclear programme, which has escalated beyond all credible civilian levels.
However, as the Israelis and the US President have made clear, a military solution cannot resolve Iran’s nuclear escalation for the long term. The consequences of continued conflict would bring serious damage not only to the region but globally. Only a diplomatic solution can resolve the nuclear issue for the long term, which is essential for international peace and security and preventing nuclear proliferation around the world. Diplomacy is in the interests of all concerned. It has been the focal point of President Trump, and we certainly support his efforts in reaching that diplomatic solution.
The UK has bilateral defence relationships with a broad range of Middle Eastern partners, including Jordan, Saudi Arabia, Oman, the United Arab Emirates, Qatar, Bahrain, Kuwait, Iraq, Lebanon, Israel and Egypt. Operation Kipion is the UK’s maritime presence in the Gulf and the Indian Ocean, where we have frigates and mine-countering measures. As the PM announced, the UK has deployed further aircraft to the region, but it would not be appropriate to discuss operational defence and intelligence matters further. We are absolutely focused on all those diplomatic efforts.
The noble Lord, Lord Callanan, focused on what the Iranians have been up to with their enriched stockpile, which is more than 40 times the JCPOA limit. The total of Iran’s highly enriched uranium stockpile on 17 May was 408 kilograms, and there are more than nine significant quantities of highly enriched uranium. The approximate amount is such that the possibility of Iran manufacturing a nuclear explosive device cannot be excluded; there is no credible civilian justification for highly enriched uranium. As the IAEA declared on Thursday, Iran has not been complying with its nuclear non-proliferation obligations for the first time in 20 years. IAEA Director-General Grossi confirmed on 13 June that he had been in contact with inspectors in Iran. He also confirmed that the level of radioactivity outside Iran’s Natanz site has remained unchanged.
I am gravely concerned by reports that Iran’s parliament is preparing legislation to withdraw from the Treaty on the Non-Proliferation of Nuclear Weapons. Withdrawal would be a serious breach of Iran’s long-standing international commitments and would isolate Iran further.
Following the conclusion of the Iran nuclear deal in 2015, the UN Security Council passed Resolution 2231, which includes a mechanism known as the UN snapback. If the snapback process is fully implemented, it will result in the reimposition of the seven UN security resolutions: an embargo on the transfer of conventional arms to Iran; a ban on Iran developing and testing nuclear weapons; a ban on all enrichment pre-processing and heavy water-related activities; asset freezes; travel bans; and unlimited financial trade restrictions. Snapback would likely have a significant short-term impact on the value of Iran’s currency, compounding already high inflation. These are the consequences of its actions if it does not listen to the diplomatic calls, particularly those made by President Trump. The economic consequences would be disastrous.
This is a fast-moving situation. We are urging Israel to comply with international humanitarian law, and we urge all sides to step back and think of the consequences. Only a matter of hours ago, Israel warned the Iranian broadcasting authority that it would attack its headquarters, which it subsequently did. We hope that there were no casualties.
The noble Lord, Lord Callanan, asked about last week’s Statement on sanctions, These sanctions are taken against individuals because of their incitement of and support for violence in their personal capacities. They have a long history of dangerous, extremist and inflammatory views predating their official roles. This language is absolutely to be condemned. Even the Israeli ambassador to the United Kingdom said in recent interviews that their statements do not represent government policies. These sanctions apply to individuals in their personal capacities, not to their ministries or departments. I have seen the consequences of those statements in the Occupied Palestinian Territories, particularly in some of the isolated outposts, as they are called, of settlers, which have launched direct attacks on Palestinian villages and their way of living, even ensuring that schoolchildren could not get to their schools. Their actions have incited violence, and it is important that we respond to them.
It is important that we do not take our eye off the ball in relation to the situation in Gaza. We are continuing to call on the Israeli authorities to allow humanitarian access. It is vital. As the noble Lord, Lord Purvis, said, even in recent days, we have seen further injury and deaths to people seeking food and other sustenance during this difficult period. I will no doubt answer many more questions, and if I have not picked up on any questions, I am sure I can cover some of the points in the Back Bench debate.
Lord Pannick (CB)
My Lords, I thank the Minister for repeating a very sensitive Statement. I was in Jerusalem last week, speaking at a legal seminar at the Hebrew University, and I was very fortunate to fly out on Thursday night, hours before airspace was closed, otherwise I would be one of the terrified British citizens mentioned by the noble Lord, Lord Callanan. I can tell the Minister that it was clear from my conversations with many Israelis, including those highly critical of the Netanyahu Government, that they are deeply concerned. They find it intolerable that Iran should be allowed to continue to progress towards the production of nuclear weapons, given that Iran has made it very clear that it will use such weapons to seek to annihilate Israel, given that Iran is in breach of the requirements of the International Atomic Energy Agency, as we saw last week, and given all the other steps taken by Iran to promote terrorism over the past few years.
I understand that the Government wish to see de-escalation, but I have two questions. How can Israel and the world be assured that any promises now made by Iran will be respected? Secondly, I repeat the question asked by the noble Lord, Lord Callanan, to which I do not think the Minister responded. In the meantime, will the Government take the practical step of helping Israel to defend its citizens, both Arab and Jewish, by our military assisting in shooting down missiles which are aimed at the civilian population in Israel, a step which the Government have rightly taken in the past?
Lord Collins of Highbury (Lab)
I say to the noble Lord that our focus is not to shift away from what Iran is doing. We are absolutely clear. We supported President Trump’s initial statements in terms of dialogue. President Trump has focused, this time around, on ensuring that Iran complies with the commitments it has given in the past, particularly in relation to the JCPOA. I have already mentioned the fact that there are facilities in terms of the snapback that is still available at the United Nations.
We want to keep absolutely focused on de-escalation to avoid this conflict having a wider implication that is extremely dangerous, so we are urging both sides to step back so that President Trump can be absolutely focused on delivering that dialogue to ensure that they comply with those international obligations. The noble Lord asked me about how we can ensure that they will keep their word. The only way we can ensure that is by using the mechanisms that are available to us at the moment. One thing is clear: military action will not stop this. It will not resolve the long-term situation over nuclear development. It is only through the proper scrutiny that we have had in place before, and the appropriate sanctions that might be available if they fail to comply, that we can ensure long-term security.
Lord Polak (Con)
My Lords, I refer the House to my interests in the register. Will the Minister say where these sanctions get us? Together with a partial arms embargo, the refunding of UNRWA, which in turn funds Hamas, and ceasing trade talks with our ally, HMG have been consistently on the wrong side since they took office. Even the Minister, who campaigned for proscription of the IRGC when on this side of the House has seemingly changed his mind. He should apologise to the people of Iran and to Vahid Beheshti, who has campaigned so bravely outside his office. Is it therefore any wonder that Britain was not briefed before the attack on the Iranian military and nuclear facilities? It is also no wonder that the PM seems to have had only a brush-past conversation with President Trump tonight. It is clear what the Iranian regime would do if it had nuclear warheads on its ballistic missiles.
It took five or six hours on Friday for His Majesty’s Government to utter the words that Israel has a right to defend itself. What was the reason for the delay? Will the Minister tell the House which side HMG are on—the democratic, freedom-loving partner and ally, Israel, which is targeting military and nuclear facilities, or the Islamic regime led by the ayatollah, which supports Hamas, Hezbollah and the Houthis and targets civilians? They are the enemies of the people of Israel, enemies of the people of Iran and, frankly, enemies of all of us in this Chamber.
Lord Collins of Highbury (Lab)
The noble Lord knows full well my position and that of this Government. We have been absolutely clear that Israel has the right to defend itself. There has been no hesitation or delay in relation to that. We have fully understood not just the threat that Iran poses to the State of Israel and its intent to destroy it but its malign influences everywhere else, including on United Kingdom soil. That is why we have been focused on dealing with Iranian nationals; we have arrested Iranian nationals and the Crown Prosecution Service, as I said, announced National Security Act charges against three of them. This is the first time that Iranian nationals have been charged under the Act. The independent criminal investigation will certainly be respected, but the CPS considers the evidence gathered sufficient to link the accused with the Iranian state.
We know what they are about and what they are trying to do, but there is a mechanism. Nobody accepts that the long-term solution to the nuclear threat that Iran poses is simply responding with military action. President Trump has made it clear that he sees dialogue and diplomacy as the long-term solution. Our position on the current military situation remains one of de-escalation, withdrawal, stepping back and thinking about the wider consequences and implications of how escalation can be taken out of our control. That is what the Prime Minister is focused on at the G7. He is absolutely engaged with all allies, and we are working towards being able to focus on all the actions we can take to ensure compliance with those international agreements. I stand fully behind the right of Israel to exist and to defend itself, but the situation at the moment requires us to focus on de-escalation.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
I respectfully say that we just want questions, not statements, because a lot of noble Lords want to get in.
Lord Turnberg (Lab)
My Lords, whatever we think of Israel’s actions against Hamas, there is at least one thing we should agree on: a sense of gratitude for what Israel is doing in Iran. Does my noble friend the Minister accept that Israel has done a great service for us in the UK and the rest of the world? Does he accept—I am sure he does—that the threat to us all of a nuclear Iran is not simply theoretical but very practical and that trying to resolve it is a very valuable activity? Does he accept that Iran’s sponsorship of terrorism in the UK, of which we have seen several examples recently, will diminish, that the supply of drones by Iran to Russia will be curtailed and that the Iranian people may have a chance of relief from the terrible oppression they are under? Will he offer some support for Israel’s help in curtailing the activities of this malign group?
Lord Collins of Highbury (Lab)
I thank my noble friend. The Foreign Secretary and the Prime Minister have spoken to their Israeli, American and Iranian counterparts, and all parties recognise that, ultimately, only a diplomatic settlement can address the nuclear issue for the long term. He will have seen that the Israeli national security adviser made the point on Friday that military strikes alone will not destroy Iran’s nuclear programme. I regret that many years of talks on the nuclear issue have not yet delivered a solution. We have strongly supported US and Iranian efforts to come to a deal in recent months and will continue to do so. It is in no one’s interests, certainly not those of the United Kingdom, for the current situation to escalate. This is an extremely dangerous moment for the world, and we need to ensure that people step back.
Baroness Janke (LD)
My Lords, the Israeli Government recently approved 22 new settlements in the illegally occupied West Bank—the largest such expansion in decades. Israeli settlements in the Occupied Palestinian Territories are illegal under international law, yet the Government continue to allow trade with these settlements, contrary to the ICJ’s July 2024 advisory opinion, which reiterates the UK’s legal obligation not to recognise or assist illegal occupation, including through trading goods or services. Will the Government publish the advice they have received on their likely complicity with the Israeli Government in the committing of war crimes in the West Bank and Occupied Territories?
Lord Collins of Highbury (Lab)
I apologise to the noble Baroness; what was her last question? Could she please repeat it?
Baroness Janke (LD)
Will the Government publish the legal advice they have received on their likely complicity with the Israeli Government in the committing of war crimes in Gaza and the Occupied Territories?
Lord Collins of Highbury (Lab)
Let me be clear that no Government publish their legal advice, and I am certainly not going to go down that route.
I agree with the noble Baroness that Israeli settlements are illegal under international law and do harm prospects for a two-state solution. Settlements do not offer security to Israelis or Palestinians. Settlement expansion and settler violence have reached record levels.
The noble Lord, Lord Purvis, asked me about the recognition of the Palestinian state. Sadly, as a consequence of the current situation, the conference on the two-state solution that should have been held this week has been postponed, for understandable reasons. We are very keen to work with France and the Saudis to ensure that that conference is reconvened. We remain committed to recognising the Palestinian state, but at the moment when it will achieve the most impact. We need to ensure that the conference and the focus on the two-state solution can be a real, achievable vision in the near future.
The Lord Bishop of Southwark
My Lords, I pray for wise judgment and a swift end to the current conflict between Israel and Iran. I pray for restraint and for the safety and well-being of Jewish people, here and around the world. I support the steps that have been made to protect British nationals and I am appalled by the attacks on civilians, wherever they occur.
On the Statement made in the other place last Tuesday, we on this Bench are clear that the Israeli Government’s prosecution of their war in Gaza is now displacing Palestinians from their homes and destroying the infrastructure necessary to support life. It is a war that cannot be divorced from the accelerated annexation of land we are seeing in the West Bank. I welcome the recent steps the Government have taken to sanction racist and extremist elements in the Israeli Government. I urge them, however, to go further and recognise Palestinian statehood while a recognisable Palestinian structure remains, not to await a more conducive time that may never materialise. Will the Minister look again at the advice to businesses trading with illegal settlements, as well as the current labelling of settlement goods?
Lord Collins of Highbury (Lab)
Our commitment to a two-state solution is unwavering. We are committed to recognising a Palestinian state, but at a time when it has the most impact in achieving that reality, and is most conducive to long-term prospects for peace. We are clear that that does not need to be at the end of the process. Certainly, UK bilateral recognition is the single most important action the United Kingdom can take with regard to Palestinian statehood. It is important to get the timing right, so that it creates genuine momentum and is not simply a symbolic gesture.
We have noted President Macron’s comments and we are in constant dialogue with all partners on how we can best use the postponed conference to advance Palestinian statehood and the two-state solution.
On the other elements of the right reverend Prelate’s question, the current guidance and processes are more than adequate in terms of identifying that.
Lord Austin of Dudley (Non-Afl)
The unilateral, one-sided sanctions announced last week suggest that the Government’s view is that incitement and extremism are only a problem on the Israeli side. This is obvious nonsense, when people such as Mahmoud al-Habbash, who is a Palestinian Authority supreme Sharia judge and the President’s adviser on religious and Islamic affairs, says that Israel has no right to exist and that the 7 October attacks and terrorist attacks on Israel are legitimate. Will the Minister agree to meet me and other Members of your Lordships’ House to look at extremism and incitement among the Palestinian leadership, and commit to imposing sanctions on those people as well?
Lord Collins of Highbury (Lab)
I am more than happy to meet the noble Lord, as he knows; we have had many exchanges on this subject, so I do not have a problem with doing that. Most noble Lords know my position in relation to the extremism that he talked about. I have been a friend of Israel for many years and I have spoken out about its right to defend itself. However, I have witnessed the consequences of some of the settler violence, incited by extremist rhetoric. It has driven Palestinians from their homes, and encourages violence and human rights abuses. This fundamentally undermines the two-state solution. Settler violence has led to the deaths of Palestinian civilians and the displacement of whole communities. Extremist rhetoric advocating violence is appalling and dangerous, and these actions are not acceptable, which is why the Government have taken action.
The noble Lord knows how this Government have condemned Hamas and other extremists who have threatened the statehood of Israel. We have made it absolutely clear that Hamas has no place in the future of a peaceful Palestine and a peaceful Israel.
Lord Ahmad of Wimbledon (Con)
My Lords, I draw attention to my entry in the register. The Minister talked about the important levers of diplomacy. On the issue of snapback, the noble Lord knows that the clock runs out by October. Snapback should have been exercised because we have already seen Iran betraying the basis of the resolution.
On our Gulf partners, can the Minister confirm that states such as Bahrain, which is a key partner, have also been spoken to? What about our influence over Oman, which of course was going to host the meeting between the Iranians and the Americans? The levers of diplomacy work when they are exercised. Can the Minister assure the House that it is not only the E3 but our Arab partners who will be fully immersed in finding a diplomatic pathway?
Lord Collins of Highbury (Lab)
I hope I made it clear before. Over the weekend, the Foreign Secretary and Minister Falconer reached out to all our allies in the region. The noble Lord is right and I agree completely that we need to ensure constant communication and dialogue with all our allies in the region. We have been focused on that. The simple, straightforward answer is that he is right.
Baroness Berger (Lab)
My Lords, I have received a number of messages from British nationals who are currently in Israel, including the following, which I share with permission: “About to have 50 missiles. So scared. I don’t care about me, but it makes it so hard with a young child. I am covering my child with my body when I hear the booms, it’s that loud. I called the FCDO and there is nothing the UK Government can do right now”.
I have listened very closely to what the Minister has said, but will the Government proactively facilitate evacuation via one of Israel’s neighbours rather than wait for British nationals to get through Egyptian or Jordanian borders?
Lord Collins of Highbury (Lab)
We are doing whatever is possible. As I said, our embassy, and the consulate in Jerusalem, are working around the clock and can be contacted 24/7 by any British national in need of consular assistance. As I said, we have deployed a rapid deployment team to either side of the Israeli-Jordan border to assist those who choose to travel out of the country via land. The situation is fast-moving. British nationals should read the FCDO’s advice and also follow, wherever appropriate, local government advice. I reassure my noble friend that we are monitoring the situation closely and keeping all plans under constant review.
Lord Hannay of Chiswick (CB)
My Lords, I thank the Minister for the Government’s Statement, which struck exactly the right note. I have two questions I would like to put to him. The first relates to the provisions of the United Nations charter on the use of force. Does he agree that the only possible cover, under the UN charter, for the unilateral military action that was taken last Friday by Israel is indeed Article 51 of the charter, and that for that to be operated, there has to be an imminent threat—I say “imminent”, a word which is being used in courts very frequently—of an Iranian attack on Israel? Do the Government have any information of any kind that indicated that such an attack was in fact imminent at the time Israel took its action?
My second question to the Minister is, does he not think that the E3 possibly has a role to play in supporting the efforts of President Trump to get back to a negotiating, diplomatic discussion of Iran’s nuclear programme? If that is so, are we going to co-operate actively as a member of the E3 in canvassing that with all those concerned?
Lord Collins of Highbury (Lab)
I will address the last question first, which is absolutely right. We are working with the E3, but we are also working in Ottawa to make sure that we can build a strong alliance to support these diplomatic efforts of President Trump to ensure a dialogue, and a deal—as he puts it—that will ensure safety and security in this incredibly dangerous moment.
I am not going to speculate on what information Israel may or may not have had. All I would say is that at this moment in time, we are urging the most important thing, which is to step back, not escalate the situation and not engage with others. As I said earlier, the Prime Minister has had direct calls with Benjamin Netanyahu, President Trump, the leaders of France and Germany and of course other allies in the region, particularly the United Arab Emirates. We have been conveying one simple message: we have urged restraint, to step back and de-escalate. That is the way to ensure a future deal, as President Trump put it.
Baroness Helic (Con)
Given Israel’s demonstrated capacity for precision targeting in operations in Tehran, conducted with reported minimal civilian casualties, what assessment have the Government made of the proportionality and distinction applied in Israel’s use of force in Gaza, where, according to The Lancet, the civilian fatalities have exceeded 70,000?
Lord Collins of Highbury (Lab)
I think the noble Baroness knows our position in relation to the action in Gaza. We have been very clear that we have taken specific action by refusing to export arms to Israel that may be used in Gaza. We see the actions as being absolutely disastrous for the people of Gaza. We have seen the consequences and have been absolutely focused on trying to ensure that Israel works to deliver what we have been calling for: an immediate ceasefire, an immediate end to hostilities, and the release of hostages. But most importantly, we want to see them ensure that the humanitarian aid that is so necessary is able to be delivered.
Baroness Goudie (Lab)
My Lords, while we are sitting here, the UN is scaling back its aid due to historic funding cuts. It is cutting back from $44 billion to $29 billion because of a drop in contributions, particularly from the US and from other western countries, which are reducing aid in order to prioritise defence spending. Tom Fletcher, who leads the UN’s Office for the Coordination of Humanitarian Affairs, said:
“Brutal funding cuts leave us with brutal choices”.
What pressure can the Minister put on not only our country but the other countries, including the United States, to continue the aid during this terrible time, particularly for the people in Gaza and for others who will be suffering in the whole region?
Lord Collins of Highbury (Lab)
My noble friend knows my position, and there is no doubt that, as the Prime Minister has made absolutely clear, a priority for aid will be Gaza. The situation is desperate, but of course, we have to remember the consequences generally for the change in the situation, particularly in relation to official development assistance. These are the direct consequences of the illegal invasion of Ukraine—the incredibly dangerous moment for the world, where the United Nations charter has been completely ignored. The West has had to respond by ensuring that the security of this country and of Europe is a priority. That is why the focus has to be on defence. My noble friend also knows that, in terms of development, I am absolutely focused on making sure that we use all the tools in our toolkit to ensure progress, particularly on the empowerment of women, which I know is an issue and a strong focus of her activities.
Lord Livingston of Parkhead (Non-Afl)
My Lords, as is clear, Iran was heading towards the ability to create nuclear weapons. We can debate the timeframe, but given that the Iranian leadership chants repeatedly not just death to Israel, death to America, and death to infidels, but “death to England”, and given the failure of the diplomatic path to stop a potential nuclear-armed Iran, does the Minister not think that the British Government should reflect on the “death to England” chant and be doing something more than just saying, “Arms alone will not work”?
Lord Collins of Highbury (Lab)
I am not just reflecting the United Kingdom’s view on this situation; I am also reflecting the view of the President of the United States, who has been absolutely focused on reaching a deal—a deal that would end the escalation of Iran’s nuclear programme. The noble Lord is absolutely right: we have seen the escalation, far beyond the limits committed to in the JCPOA. It is enriching uranium to such a level that there is no plausible civilian use. We absolutely understand the threat that this suggests, and that there is a need for international efforts to hold Iran to account. But I repeat: in the discussions with Israel and with American and Iranian counterparts, all parties recognise that, ultimately, only a diplomatic settlement can address the nuclear issue in the long-term. That is why we are completely focused on the moment—on de-escalation. It is an incredibly dangerous moment. We know that, even as I speak, further action is being taken.
If the situation escalates, we will not see control of the nuclear arms race; the consequences will potentially be far worse. That is why we are completely focused on the diplomatic effort and on supporting President Trump’s efforts.
Lord Lamont of Lerwick (Con)
My Lords, I refer to my entry in the register of interests. It would be catastrophic if Iran were ever to get a nuclear weapon; I am totally opposed to that. I totally support the right of Israel to defend itself and to exist; I totally condemn many of the things that have been said about Israel by Iran.
However, I believe that a diplomatic solution is still possible. I say that because we had a diplomatic solution in 2015 with the JCPOA, which, if it were in operation today, would mean that there would be only 300 kilograms of enriched uranium in Iran’s stocks and that it would be enriched to only 3.67%. The mistake was that Trump tore up that agreement—that is why we are faced with the situation we have today. The Iranians agreed to the original proposition in 2015. The IAEA certified that they were complying with it, and it had the right of inspection throughout the country. The agreement was achieved then, and it could be achieved again if we put our minds to it. I beg the House not to get too bomb-happy and to consider that a diplomatic solution is better than the lives being lost.
Lord Collins of Highbury (Lab)
I of course recall many exchanges with the noble Lord in 2015, when we discussed the JCPOA. I also acknowledge the incredibly hard work that my noble friend Lady Ashton put into securing that agreement. However, we are where we are now, and the most important thing is not to look back but to think about what President Trump is determined to do now. Our diplomatic efforts are focused on bringing all our allies—particularly, as the Lord, Lord Ahmad, said, all regional allies—into focus to ensure that we get a deal that ensures compliance with the principles that were originally in that agreement and that we stop Iran obtaining and developing nuclear weapons. That is what we are absolutely determined to ensure does not happen and why we support President Trump.
Viscount Stansgate (Lab)
My noble friend the Minister is absolutely right when he says that this is an incredibly dangerous moment. I declare an interest, as I have very close family members who live in north Tel Aviv and who have spent the last two nights in a bomb shelter. Can my noble friend say more to the House about the conference, sponsored by Saudi Arabia and France, to advance a two-state solution? In what way will the UK Government support it, and will they take part in it?
Lord Collins of Highbury (Lab)
As I indicated on Friday, President Macron announced the postponement of the conference—for obvious reasons, not least because many of the participants who would make that conference a success would not be able to get there. However, I reassure my noble friend that, as I have said on previous occasions, we are absolutely committed to ensuring that the conference is a success, that we focus on the importance of the two-state solution and that we look at the means to help deliver that. That is why we will work closely with President Macron and the Saudis to ensure that the conference is reconvened when it is safe to do so. It gives me the opportunity to say again that it will be safe to do so when we can ensure that the situation that we currently face is de-escalated and that people step back.
Lord Dodds of Duncairn (DUP)
My Lords, in light of all the evidence, particularly in relation to the deliberate targeting of the civilian population of Israel, why are the Government continuing to dither and delay over the proscription of the IRGC?
Lord Collins of Highbury (Lab)
We have been very clear about the actions we have taken. I am not going to repeat all of them, including the arrest of Iranian civilians and the actions of the CPS. We have been clear that the evidence has shown the direct involvement of the Iranian Government in these activities. We have taken action, and we have sanctioned the Islamic Revolutionary Guard Corps. We are absolutely determined to ensure that its malign influence cannot be taken any further. We are going to do everything we can to ensure it cannot influence or exert pressure both here and elsewhere.
Lord Pickles (Con)
My Lords, I was very surprised that the Minister said that the reason that Iran was seeking to get nuclear power was to intimidate the region. I do not think that is the case at all. If you are a bomb-happy regime, the object is to kill Jews and to wipe Israel off the map. If you are willing to launch nuclear weapons across the valley of Armageddon, snapback and diplomacy do not mean an awful lot.
Lord Collins of Highbury (Lab)
I do not underestimate the threat Iran poses. When we see the leadership of Iran saying that it wants the destruction of Israel, we must take its threat seriously. I totally understand that, which is why we are absolutely focused on Iran not having access to nuclear weapons. If it had them, it would pose a threat not only to Israel but to the security of this country and many others. That will be what we are focused on. I do not want to keep repeating it, but there is a clear acceptance that the long-term solution will be delivered not by military action but by diplomatic agreements, which is what President Trump has been focused on and has repeatedly said.
Baroness Miller of Chilthorne Domer (LD)
My Lords, there is no doubt that the long-term solution, as the Minister rightly says, must be diplomatic, and I am glad he emphasised the importance of nuclear non-proliferation. The vast majority of countries in the Middle East would like it to be a nuclear weapons-free zone. He is right to emphasise the danger, but I think during the diplomatic discussions the Government will have to address—and I do not expect him to comment on this—the nuclear ambiguity of Israel’s possession of nuclear weapons too.
Lord Collins of Highbury (Lab)
I am going to be absolutely focused on one thing, which is what this crisis now faces: the potential of Iran obtaining nuclear weapons. It is the real threat in this situation. It is presenting the real danger, which is what our focus will be on.
Baroness Morris of Bolton (Con)
My Lords, I welcome the Statement and the sensitive way in which the Minister has answered questions at a very difficult time. Last week in the other place, the Minister for the Middle East, Hamish Falconer, said right at the beginning of his Statement:
“The two-state solution is in peril”.—[Official Report, Commons, 10/6/25; col. 913.]
If there is to be any hope of a two-state solution being delivered, there must be a functioning Palestinian banking and finance sector, but it is currently on its knees due to the actions of the Israeli Government, including withholding Palestinians’ own money and with Minister Smotrich threatening total collapse. I ask the Minister what we, our allies in the West and friends in the Gulf are doing to help to make sure that does not happen.
Lord Collins of Highbury (Lab)
That is in nobody’s interests, and so far the action that is supposedly threatened has not been taken. To do so would ensure the complete collapse of the financial situation in the Occupied Territories. I agree with the noble Baroness that it would be a catastrophe if that action was taken, and we are doing what we can to influence the situation. It would be an incredibly retrograde step, and would deeply impact the ability of Palestinians to carry out what possible normal livelihood they have at the moment; it would be a disaster.
Employment Rights Bill
(1 day, 4 hours ago)
Lords ChamberRead Hansard Text Watch Debate Read Debate Ministerial Extracts
Lord Hunt of Wirral
“Consultation on trade union legislation(1) The Secretary of State must initiate a consultation on the effects of the provisions in Part 4 of this Act on the operation of the Trade Union and Labour Relations (Consolidation) Act 1992. (2) The Secretary of State must lay before each House of Parliament, no sooner than eighteen weeks after the initiation referred to in subsection (1), a report on—(a) the outcome of that consultation, and(b) the Government’s proposals for changes to the legislation referred to in subsection (1).”Member’s explanatory statement
This new clause requires the Secretary of State to undertake a consultation on the operation of trade union legislation.
Lord Hunt of Wirral (Con)
My Lords, Amendments 263 and 330 standing in my name require the Secretary of State to conduct a consultation on the effects of the provisions in Part 4 on the operation of the Trade Union and Labour Relations (Consolidation) Act 1992 and to report on the outcome and any proposed changes. It is a modest proposal, even a restrained one, but, make no mistake, it is a necessary amendment and a crucial one.
What we have before us in Part 4 is not the result of careful planning, measured engagement or evidence-based policy. No, what we have instead is a so far unconsulted set of sweeping reforms to trade union law inserted on Report in the other place with little scrutiny and even less transparency. I believe it is extraordinary that provisions of such weight, which could dramatically alter the balance of industrial relations right across the country, should arrive in this House having not been through a proper public consultation. The provisions would allow the Secretary of State to rewrite fundamental aspects of how trade unions operate, how they are recognised, how they interact with businesses and how ballots are conducted. This is not a footnote to the Bill. This is, I believe, a redrawing of the boundaries of employment law and industrial relations. It has been done without engaging employers, without informing the HR community and without giving those who will be most directly affected any chance to prepare.
We must ask ourselves who, precisely, was consulted. It certainly was not business. It was not those employers, large and small, who will be forced to navigate the implications of this legislation. We are left to presume that only the trade unions were consulted, or at least advised, because the changes serve their interests almost exclusively. They have access to workplaces in ever-broadening circumstances. There is the weakening of independent oversight by stripping powers from the certification officer; the dilution, or in some cases outright removal, of long-standing ballot thresholds that were introduced to protect the legitimacy of industrial action; and the potential for significant changes to trade union recognition processes that could alter the employer-union relationship fundamentally—all to be done by secondary legislation.
That point cannot be emphasised enough. These changes are not in the Bill. They are hidden in the detail that is to be brought forward later through regulations, through statutory instruments, through mechanisms that allow for no amendment and only limited debate. That is no way to legislate on matters as fundamental as the recognition of trade unions or the conditions for lawful industrial action. These are not administrative details. These are foundational questions of how workers and employers interact under the law. They deserve full, open, transparent scrutiny. They deserve proper consultation.
Perhaps most galling of all is that even when the Government speak of consultation, they do so with inconsistency and confusion. I draw your Lordships’ attention to two statements by the Minister for Employment Rights in the other place, Mr Justin Madders. On 7 May he stated unequivocally:
“No decision has yet been made by the Government as to whether or when to exercise this power. Therefore, there is no planned timetable for consulting on it at present”.
No decision, no timetable, no consultation—yet less than a month later, on 3 June, the same Minister declared:
“The Government will consider what criteria to assess whether to lower the recognition threshold in due course, including through the public consultation process”.
We go from no consultation to a planned consultation in the space of four weeks.
This is not just a contradiction. It is, sadly, becoming a symptom of a Government who are making policy on the hoof and who are unable or unwilling to provide clarity on matters of legal and constitutional significance. Let us talk plainly about what that power is. It is the power to reduce the threshold for trade union recognition to just 2%. No justification is offered for that number. There is no White Paper, no consultation document, no cost-benefit analysis, no report from ACAS, no statement from employer organisations or trade bodies, not a single name that the Government can point to that supports the reduction of that recognition threshold to just 2%.
Yet here we are, with Ministers potentially claiming this power to change that threshold by statutory instrument, out of reach of substantive parliamentary control. Why is it 2% and not 20% or 50%? If the Government believe that a change is needed, surely a change should be in the Bill and the rationale should be available to all stakeholders, including this House. If the Government are not prepared to provide that rationale, surely we are entitled to suspect that it has not been thought through.
How will employers respond to these changes? What of the small businesses, the charities, the start-ups, the growing firms that have never had to deal with trade union recognition processes before? They are not anti-trade union. They are simply unprepared, yet under these proposals they may soon be required to accommodate access, to facilitate recognition and to engage in statutory processes for which they have no guidance, no support and no warning. These employers are being thrown into an environment of legal uncertainty, an environment shaped not by consultation or consensus but by expediency. It is also abundantly clear that the Government have shown little interest in listening when they have, in the past, consulted.
On those parts of the Bill where consultation has occurred, however limited, the views of employers and professionals have largely been ignored. We are hearing consistently that business voices are being drowned out and that legitimate concerns about workability, proportionality and unintended consequences are being brushed aside. What then is the purpose of consultation, if it is treated as a procedural formality rather than a genuine dialogue?
Let me repeat again for emphasis: on trade union recognition itself, there has been no consultation. It was confirmed in the other place. To move forward with such a major change in industrial relations law without even the courtesy of asking stakeholders their views is frankly an abdication of responsible governance.
I do not stand here as someone hostile to trade unions: far from it. I recognise their historic role and their ongoing contributions to workplace fairness and safety. But fairness has to go both ways. Changes of this scale must be fair, transparent and built on consensus, not stealthily inserted into a Bill and then pushed forward by ministerial decree. That is why the amendment matters. It seeks only to do what the Government should have done in the first place. It seeks to restore process and balance where neither is currently present. I urge your Lordships to support it, not out of ideology or political interest but out of principle, out of a shared commitment to deliberative democracy and out of basic respect for all those who will live and work under the laws we make in the House. I beg to move.
Baroness Coffey (Con)
My Lords, the reason I support the amendment is that it links making sure we get the consultations done and then not proceeding with the legislation until that has been printed. This goes to the heart of trying to understand, in effect, the detail of the Bill and how it really will impact jobs, because that is what this is about; how we will not only help workers but make sure they have jobs to still be in. That continues to be the underlying concern, which is why this perfectly formed group of amendments makes sure that at least this House knows full well what the expectation is that employers have, and the risks and opportunities that are highlighted, before it makes the final decision on when this becomes legislation.
Baroness Verma (Con)
My Lords, I just want to intervene very briefly as well. I have raised numerous times that I worry that small and medium-sized businesses have been completely left out of the debate. I spend all my time speaking to small and medium-sized businesses, and most of them are very unaware and quite nervous when they get to hear that a lot of legislation is coming their way, and they are certainly not prepared for it.
My grandfather, Mr Ujagar Singh, was one of the founders of the Indian Workers’ Association, and he created that with others to ensure that Indian workers had rights in the 1930s. So I understand it when we are standing up for workers’ rights, because at that time many Indian workers were not even protected by the unions that were here at the time. I am always conflicted, because I want to always make sure that we always have the right laws in place for the workforce. But, at the same time, I have been in business for over four decades, I talk to small businesses all the time, and the one thing that makes me incredibly worried and nervous is the absolute lack of consultation that has gone on with this enormous Bill that will actually destroy jobs, because those small businesses will just close up and shut shop.
Lord Leigh of Hurley (Con)
My Lords, likewise, I have spent the last 40 years advising SME businesses—not always with success, but I do not have a bad track record. Therefore, I support my noble friend Lord Hunt of Wirral’s very appropriate and wise amendment. I know that he too has spent many years advising SME companies from a legal perspective, so he, like me, has a relationship and dialogue with them.
I can tell your Lordships that every single SME company that I have spoken to has honestly no idea of what is in Part 4: they have not tuned in to it or focused on it. They have their own worries—business rates, NICs, trade, oil, energy, you name it—so this is not on their radar. We have received representations from a galaxy of their representatives, such as the British Retail Consortium, the Institute of Directors, the CBI even, the family small businesses association, the British Chambers of Commerce—the list goes on—all of which say that there has been no dialogue and no opportunity to make representations to government.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I thank all noble Lords who contributed. I will pick up the points that the noble Baroness, Lady Verma, and the noble Lord, Lord Leigh, made about SMEs. Last Wednesday, I gave a speech at an event on the Commons Terrace to a group of SMEs. Most of them were B Corp companies. I think there were about 2,000 of them. I spoke to them about what we are doing with this Bill. I must say, the atmosphere in the room was actually very supportive. Every one of them said that they welcomed the Bill. In fact, some of them said they would do more than what the Bill is doing. So what the noble Lord, Lord Leigh, said about the Government not talking to SMEs is basically not true. We are in constant, regular conversations, whether it is me, Minister Jones or the Secretary of State; we have meetings, including with officials, with all kinds and sizes of business on a daily basis.
I thank the noble Lord, Lord Sharpe, for his amendments, which were spoken to by the noble Lord, Lord Hunt. The Bill provides that a number of clauses related to the repeal of the Trade Union Act 2016 will commence two months after Royal Assent. This includes clauses related to the notice and mandate period for industrial action, trade union political funds and simplification of industrial action notices, which the Government consulted publicly on from October to December last year. We have been clear about our intention to repeal the great majority of the Trade Union Act 2016—it was a manifesto commitment—which places unnecessary red tape on trade union activity that works against their core role of negotiation and dispute resolution.
More generally, the Bill provides for a number of provisions in Part 4 to come into force on or two months after Royal Assent, while other provisions can be commenced via regulations. These amendments would frustrate those intentions by allowing no part of Part 4, covering all of the provisions regarding trade unions and industrial action, to commence until a report following consultation on the effects of the provisions in Part 4 has been published. The further consultation suggested is not required, given that the Government regularly engaged with business, employers, members of the public and unions in advance of introducing the Bill.
The plan to make work pay was established in collaboration with businesses, trade unions and business organisations, and the Government continue to undertake comprehensive engagement. Furthermore, we have been continuing to provide many opportunities for everybody to input into the development of the Bill. For example, we ran a public consultation with all stakeholders—unions represented only 16% of the respondents on specific trade union-related measures in Part 4—from October to December last year. That was open to all to enable the consideration of their views. The Bill will, of course, continue to be subject to parliamentary scrutiny in the usual way, and we will also be conducting further public consultation.
Baroness Verma (Con)
Can the Minister tell me what percentage of the consultation was among BME businesses?
Lord Leong (Lab)
I thank the noble Baroness for her question. I do not have the figure, but I will find it out and write to her.
The Bill will, of course, continue to be subject to parliamentary scrutiny in the usual way. We will also be conducting further public consultation on certain parts of Part 4 where there is detail to be set out in secondary legislation or codes of practice. Further consultation of the kind envisaged by these amendments before Part 4 can come into force is therefore not required.
These amendments run counter to the Government’s manifesto commitments, as I said earlier. They seek to delay the commencement of essential parts of the Employment Rights Bill with no valid justification and would hinder the delivery of improved workers’ rights. I therefore ask the noble Lord, Lord Sharpe, to withdraw his amendment.
Lord Leigh of Hurley (Con)
Will the Minister clarify something? In relation to the jolly reception he went to on the Terrace where the delegates were rapturously applauding the introduction of the Bill—in fact, going further—did he say that they were all from B Corp companies, with all the ramifications that brings?
Lord Leong (Lab)
I would not say all, but most of them were members of B Corporations.
Baroness Noakes (Con)
Further to that point, will the Minister clarify whether he is talking about medium-sized companies, which might just about cope with the bureaucracy of being a B Corp, or about the vast majority of businesses in this country, which are small and micro companies? There is a big difference between companies with fewer than 50 employees, or fewer than 10 in the case of microcompanies, and those that run up to 250 employees. The issues are quite different.
Lord Leong (Lab)
I thank the noble Baroness for her question. I am very clear about micro-businesses, medium-sized businesses and small businesses. At the event I attended, we had everybody. Not all were B Corps. We had owner-run businesses, businesses with just one or two employees and medium-sized businesses as well.
Lord Hunt of Wirral (Con)
My Lords, I am disappointed that the Minister does not wish to engage in responding positively to this amendment. My noble friend Lady Coffey put it very much in context, and my noble friend Lady Verma stressed again the complexity of what we are talking about so far as small and medium-sized enterprises are concerned. My noble friends Lord Leigh of Hurley and Lady Noakes further put questions to the Minister, to which I do not think he has responded positively.
I say once again that I cannot see why the Government cannot accept this amendment. On trade union recognition, for instance, there has been no consultation at all. Yet this is a major change. It is the “etc” in Part 4 that I get worried about. Part 4 is described as:
“Trade unions and industrial action, etc”.
There is so much here that has not been consulted on. I agree with the Minister that there has been some consultation, but have the Government really listened to the results of that consultation? Why have they not consulted more widely, particularly on trade union recognition? I think this is an aspect to which we will have to return on Report. In the meantime, I beg leave to withdraw the amendment.
Lord Sharpe of Epsom
“(3A) A person may not be appointed as an enforcement officer under this section unless they—(a) possess professional qualifications relevant to the enforcement of labour market legislation;(b) have undergone prescribed training in the exercise of statutory powers, including rights of entry, inspection, and seizure.”Member’s explanatory statement
This amendment ensures that enforcement officers possess appropriate professional qualifications, training, and suitability.
Lord Sharpe of Epsom (Con)
I will speak to Amendments 263ZA, 263ZB, 263B, 263C and 271ZA in my name. I will also briefly refer to Amendments 268 and 271 tabled by my noble friend Lord Holmes of Richmond who sends apologies that he cannot be here this evening.
Amendments 263ZA and 263ZB go to the heart of what it means to enforce employment and labour rights in a manner that is consistent with the values of competence, fairness and democratic accountability. They correct a notable deficiency in the current drafting of the Bill and help to align the enforcement regime with the expectation of the workers it is meant to protect and the legal and moral standards of the state that commissions that protection. The role of an enforcement officer is not merely administrative. It is a position of public authority. It carries with it the power to enter workplaces, examine records and question individuals and in some circumstances to impose sanctions or refer matters for prosecution. These are not trivial tasks. They are functions which, if carried out poorly, inconsistently or abusively, can cause serious harm, not only to employers but to vulnerable workers who may already be in a precarious or marginalised position.
Under the clauses currently drafted, there is no explicit requirement for enforcement officers wielding these powers to possess any formal qualifications or specific training. That silence is troubling and perplexing. We would not allow an environmental health inspector to carry out food safety inspections without the requisite public health training, we would not permit a planning enforcement officer to issue legal notices without understanding the statutory framework in which they operate, yet here we are contemplating giving substantial and often intrusive powers to individuals without requiring that they meet even a basic threshold of professional competence. This amendment seeks to address that omission in a way that is clear, proportionate and entirely consistent with how enforcement is handled in other regulatory spheres. It is not enough to presume that competence will arise through experience alone or that the Secretary of State will voluntarily set high standards through policy or guidance. Experience in other areas has shown that when qualification and training requirements are not embedded in statute, they become vulnerable to erosion, particularly when budgets are tight or political pressures arise.
The second amendment proposing new subsection (4A) is of equal importance. It would require the Secretary of State to ensure that enforcement officers maintain records of all enforcement actions, that they provide written notice to the persons affected by those actions explaining the reasons for the intervention and that they submit activity reports to an independent oversight body. Again, this is not a matter of administrative detail but a fundamental principle. Enforcement that is opaque is enforcement that is liable to error, inconsistency and, in the worst cases, abuse. The powers under this part of the Bill are extensive and potentially disruptive. They can lead to business interruptions, reputational damage and personal distress. For these reasons, it is only right that enforcement activity be recorded, explained and subject to independent scrutiny.
The requirement to maintain accurate records of enforcement action is essential not only for the protection of those being investigated, but for the proper functioning of the enforcement system itself. Without such records there can be no effective auditing of performance, no analysis of systemic trends and no evidentiary basis for defending an action should it be challenged in the employment tribunal or the courts. Similarly, the obligation to provide written notice to those affected by enforcement actions is a basic requirement of procedural fairness. It ensures that individuals and businesses understand why a given action was taken and gives them the opportunity to challenge it if they believe it to be unjustified or disproportionate. It is a protection against not only state overreach, but the perception of arbitrary or unfair behaviour by agents of the state. Perhaps most importantly, the requirement for regular reporting to an independent oversight body injects an essential layer of democratic accountability into what is otherwise a closed executive process.
The oversight body would not be tasked with micromanaging individual cases. Rather, its function would be to ensure that the enforcement regime as a whole operated in a manner consistent with the rule of law, with proportionality and with respect for the rights of those subject to state power. The amendments would protect businesses from inconsistent or poorly executed interventions, and they would protect the integrity of the enforcement regime itself from reputational damage and legal challenge.
Lord Carter of Haslemere (CB)
My Lords, I will speak to Amendments 263A and 279ZZA, which in content are quite closely connected with the amendments that the noble Lord, Lord Sharpe, has been discussing. It was gracious of the Minister to meet me to discuss my amendments. This is how the legislative process should ideally work, with give and take on both sides, and I am looking forward to the “give” bit of that from the Government.
My Amendment 263A seeks to ensure that the Secretary of State cannot direct enforcement officers in how and when they exercise their powers. As the Bill stands, enforcement officers will have no separate legal identity from that of the Secretary of State. They will simply be part of a so-called fair work agency that will have no independent legal status. This is why the fair work agency is not mentioned in the Bill, which refers only to the Secretary of State and his or her enforcement officers. Legally, the so-called fair work agency is the Secretary of State.
Because enforcement officers will, for legal purposes, be the Secretary of State, Ministers and their advisers would, but for my amendment, be able to direct the way they exercise their enforcement powers. As belt and braces, Clause 87(6) confirms this where it provides that an enforcement officer can exercise his or her powers only “to the extent specified” in their appointment by the Secretary of State.
So what are those enforcement powers? Under Clause 93, enforcement officers will be able, at the bidding of Ministers, to require a person
“to attend at a specified time and place and to provide information by answering questions”
or providing documents. Under Clause 94, they will also be able, at the bidding of Ministers, to
“enter any premises, and … inspect or examine … or … seize”
documents and retain them for as long as necessary, as well as examine computers. No warrant of a court generally seems to be necessary to enter business premises; a warrant will be required only to enter a dwelling, a place where people live.
Let us be clear, Ministers will acquire all the powers of the Gangmasters and Labour Abuse Authority, which is being abolished. These powers include investigating possible labour market abuse and breaches of modern slavery legislation, HMRC’s powers to investigate compliance with the national minimum wage and the powers of the director of labour market enforcement. The full list of legislative powers transferring to the Secretary of State is set out in Schedule 7, paragraph 35 of which confers an extraordinarily wide Henry VIII power on the Secretary of State to add, by regulations, any enactment that affects the rights of employees and trade unions and the duties of employers.
This is not all. Clause 98 allows enforcement officers—let us remember that that is the Secretary of State—to be granted certain police powers under the Police and Criminal Evidence Act, including to search, arrest and interview suspects in relation to labour market offences. The Bill before us would transfer all this to the Secretary of State. It is a startling acquisition of intrusive new powers by the Executive. Effectively, the Secretary of State will, through his or her enforcement officers, have his or her own employment rights police force to direct operationally in whatever way he or she chooses. This is in contrast, for example, to our regular police forces and the National Crime Agency, which are both operationally independent of the Home Secretary. It is unlike HMRC, which is a non-ministerial department, precisely to ensure that it operates at arm’s length, with complete operational independence from Ministers to ensure that the administration of the tax system is fair and impartial. It is also unlike the soon to be abolished Gangmasters and Labour Abuse Authority, the day-to-day operational activities of which are, as a non-departmental public body and not part of the Crown, currently independent from government.
In its report on the Bill of 4 April 2025, the Constitution Committee said:
“Powers to enter and search premises and to seize property represent a significant interference with individual liberty. They are ordinarily vested only in recognised legal officials who typically operate independently of, or at least at arm’s length from, the government. Given the range of enforcement powers potentially exercisable under the Bill on behalf of the Secretary of State, we are concerned that the Government has not provided sufficient reassurances about the safeguards for this regime”.
This is the point of my Amendment 263A. It is imperative that the Bill makes crystal clear that enforcement officers appointed by the Secretary of State enjoy complete operational independence from Ministers and their advisers in the way they carry out their wide-ranging and draconian powers. If it does not, it is not impossible to imagine an unscrupulous Secretary of State requiring them to operate in a way that is not in the public interest and might even constitute an abuse of power, to target an unfriendly media organisation for political purposes or for some other wholly inappropriate purpose—who knows?
To quote the great Master of the Rolls, Lord Denning, in the iconic constitutional case of R v Commissioner of Police of the Metropolis, ex parte Blackburn, establishing the operational independence of the police, the commissioner of police
“is not the servant of anyone, save of the law itself. No Minister of the Crown can tell him that he must, or must not, keep observation on this place or that; or that he must, or must not, prosecute this man or that one … The responsibility for law enforcement lies on him. He is answerable to the law and to the law alone”.
This analogy is not perfect, but the principle is the same: it is the importance of operational independence from Ministers by those exercising investigatory and enforcement powers.
My second amendment in this group, Amendment 279ZZA, seeks to ensure that exactly the same inspection, complaints, misconduct, governance and accountability arrangements as currently apply to the Gangmasters and Labour Abuse Authority apply to enforcement officers when they are exercising their extensive powers of oversight, inspection, training and accountability, and complaints procedures. Some of the amendments to which the noble Lord, Lord Sharpe, has spoken are getting at the same thing by a different route.
This is all the more necessary given that the powers of the independent Gangmasters and Labour Abuse Authority, which is a non-departmental public body and therefore a non-Crown body, are passing to the Secretary of State. The Minister may say that the Secretary of State is sufficiently accountable for enforcement officers because of the requirement for an annual report to be laid before Parliament, detailing the extent to which enforcement functions are being exercised in accordance with the labour market enforcement strategy. However, that is akin to marking your own homework.
Baroness Noakes (Con)
My Lords, the amendments just spoken to by the noble Lord, Lord Carter of Haslemere, are clearly very important. I hope the Government will take them extremely seriously. I have three amendments in this rather strange group, which seems to be the dustbin for amendments broadly about the fair work agency but which have not found their way into a separate group through the degrouping process.
My Amendment 269 calls for some transparency about the advisory board which Clause 90 requires the Secretary of State to set up in connection with their enforcement functions. Under Clause 90, the Secretary of State decides on what matters the board should provide advice, but there are no provisions about what happens to that advice. The Secretary of State can ignore it and no one, importantly including Parliament, will be any the wiser. My amendment is modest, requiring a report setting out the advice given to the Secretary of State at least once a year. Importantly, that report would be laid before Parliament, which would be an additional tool allowing it to hold the Secretary of State accountable for the discharge of the huge new powers under the Bill. I am sure that the Minister supports effective parliamentary accountability, so if this amendment does not find favour, I invite her to set out how the Secretary of State will be held accountable by Parliament in relation to the enforcement functions.
My Amendments 270 and 279 return to one of our recurring themes on this Bill: its effect on small businesses. I am grateful to the noble Lord, Lord Londesborough, for adding his name to the amendments. Amendment 270 is directed at the labour market enforcement strategy that the Secretary of State is required to produce under Clause 91. My amendment merely requires a separate analysis of, and a strategy for, enforcement for small and micro businesses—that is, those with fewer than 50 employees. Enforcement really should not be one size fits all. What is reasonable to expect from a large corporation with a well-funded HR function is not the same as can reasonably be expected from a business with 10 employees.
I am not seeking to say that small businesses should not comply with employment legislation; I am trying to ensure that the circumstances and needs of smaller enterprises will be taken into account in the enforcement strategy. For example, the impact of heavy-handed use of the entry and seizure powers would be drastically different for a well-resourced organisation compared with a small organisation. In a small business, the burden of dealing with enforcement activity would almost certainly end up at the door of the business owner, who would inevitably then be distracted from running the business.
We have to remember that small and micro businesses account for the vast majority of businesses in the UK and are the backbone of the UK economy. We all in your Lordships’ House want to see growth in the economy, but—as the Minister will be aware—growth does not come from what Governments do, it comes from what businesses of all shapes and sizes do. Therefore, imposing onerous enforcement mechanisms and powers could threaten the ability of small businesses to operate and play their part in the success of our economy.
We need small businesses to thrive because they employ nearly half the private sector workforce in our country, and because small businesses are where large, successful businesses start; without the success of small businesses, we will not have businesses that grow to be large ones in due course. So my point is that enforcement needs to be sensitive to the circumstances of small businesses; that is all my amendment is seeking to achieve. I hope that the Minister can support that.
My final amendment, Amendment 279, is inspired by the same concerns about the impact of the new powers on small and micro businesses. Clause 141 creates a new set of offences for officers of corporate bodies and makes those officers personally liable for prosecution if they have consented to whatever action has broken the law or been negligent.
Again, we have to look at how this is likely to impact on small businesses. They are often family affairs. The directors are often the main entrepreneur, together with the entrepreneur’s spouse and maybe some representatives of the adjacent generations; outside directors are not common at the small end of the spectrum. Under this Bill, a small company will already be liable to be prosecuted for the full range of offences set out in the Bill. So what is gained in public policy terms by allowing the enforcement authorities to proceed against individuals as well in such cases?
Let us say that the directors include the business leader’s husband and business leader’s father, who founded the business. Such companies operate on informal lines, unlike the large corporations, which have legal teams and all sorts of compliance functions with adequate forms of documentation. It would be too easy for enforcement to be aimed at individuals just because they were directors of very small companies that did not see the need for highly formalised decision-making processes. That is not how small businesses actually operate in practice. They would probably be very soft targets for enforcement teams, especially those trying to earn their spurs by securing some convictions. My contention is that we should not let that happen.
My amendment takes small and micro businesses out of the scope of Clause 141 entirely. If the Government do not like that—and I suspect they will not like it—can the Minister explain what protections will be built into enforcement to ensure that prosecutions are aimed at the most egregious behaviour rather than at the most convenient targets?
Lord Londesborough (CB)
My Lords, I rise to speak to two amendments in this group, 270 and 279, which are both under the name of the noble Baroness, Lady Noakes. I support and have added my name to both of them. I will start with Amendment 270, which addresses Clause 91 and calls—quite reasonably, in my view—for separate analysis and proposals for a labour market enforcement strategy for small and micro businesses.
As the noble Baroness pointed out, here we have another section of the Bill where the one-size-fits-all approach will be very difficult to enforce without running the risks and incurring the costs of applying the proverbial sledgehammer to crack nuts—the nuts in this case being the small and micro businesses with fewer than 50 staff.
Given the huge scope of this Bill, which has approaching 200 clauses, small businesses are very likely to have much higher levels of non-compliance—much of it inadvertent—compared with their medium-sized and larger counterparts. This is for two principal reasons. First, they simply do not have the in-house HR compliance or legal resource to cover all this legislation, and very often it will fall on the business owner or manager to keep up, while he or she struggles with all the other challenges of trying to run a business profitably and sustainably in the face of all sorts of macroeconomic and microeconomic headwinds.
Secondly, there are the disproportionate costs associated with being fully compliant that fall on small and micro enterprises. They simply do not have the budget or cashflow to spend on external advisers and employment lawyers who can advise them on how to navigate all the new clauses and conditions that run across the hundreds of pages of this Bill. As we have heard, a visit to a small or micro business from an enforcement officer, however well trained they are, will have a far greater and more unsettling impact on the owner and their staff than a visit to a medium-sized or large business.
As the noble Lord, Lord Sharpe, pointed out, I note that the Government appear not to be planning to provide any material assistance to SMBs to help them understand and comply—or are they? I throw that question to the Minister. As we know, the impact assessment for the Bill rather shrugs its shoulders by admitting that SMBs will be disproportionately hit, in terms of costs and their time, and they are apparently just expected to suck it up. As the noble Baroness said, this is not to argue against an enforcement strategy per se, but it needs to be tailored and proportionate to the size of the business, specifically for micro and small companies.
On Amendment 279, it is for very similar reasons that I support this exemption for officers of micro and small businesses from the extension of liability in Clause 141. I support an exemption because these businesses typically do not have boards of directors or advisory groups, or non-exec chairs or governors; they tend to be managed by one or two principals who hold responsibility for pretty much everything to keep the business going, including finance, sales, marketing, customer engagement, product or service development, not to mention general HR which, as we all know, is going to get more far more complicated.
Finally, speaking from my own lived experience as an adviser to several small companies, and having run an SME myself for nearly 30 years, I say that we really must guard against deterring business owners and entrepreneurs from starting up and scaling businesses, and specifically from creating new jobs, often at high risk, without threatening them or, indeed, their officers with excessive and menacing levels of extended liability. I say this, mindful of the fact that the ONS reported last week that we had lost 109,000 payroll jobs in the space of one single month. It is not a great time to be spreading fear and uncertainty.
Baroness Coffey (Con)
My Lords, jumping to Clause 92, I shall start by addressing Amendment 271ZZB in my name. It refers to the annual report that the Secretary of State would be expected to make on the extent to which they have undertaken the enforcement functions. I have a particular problem with suggesting that it is acceptable to have in primary legislation:
“As soon as reasonably practicable after the end of each financial year”.
There have been plenty of other reports which say that things will not fit the grid slot, or that all these other things that get in the way. We get promised a child poverty strategy, then we discover it will arrive probably about seven months after originally planned. Those sorts of things are the reason I have simply suggested that this should be done within three months. I have seen that happen for other things, such as the Environment Act, where a specific timing is put on reports. To me, this is no different in that regard, so something as sloppy as that should not be left in the Bill.
Clearly, we are now on to Part 5, a really chunky part of the Bill that deserves detailed consideration. The previous Administration started this idea of bringing together the different enforcement bodies, and I think everybody is united on this. It is noteworthy that the Labour Government, in the variety of papers they have put out, say that they are going far further than any of that. That is why this needs careful consideration.
In this Bill, not only do we see significant changes in employment rights and in the scope of what is here, but, as has been pointed out, this is also a radical change in who gets to do it. As the noble Lord, Lord Carter of Haslemere, pointed out, I would be interested to find anywhere else within government—perhaps the Civil Nuclear Police and the Armed Forces—that would have this level of direct control by the Secretary of State.
That said, I will explain why I have some sympathy with the Government in how they are going about this. I am also very struck by Amendment 269, tabled by my noble friend Lady Noakes. Setting out the advice the board has given to the Secretary of State would not be unprecedented, because this is exactly what the Office for Environmental Protection does on matters involving environmental legislation. By the way, Ministers are not expected to ask—nor do they have to ask—the OEP for advice, but they can. However, the OEP can and does publish the advice that it gives, solicited or not. That open transparency, to which my noble friend Lady Noakes referred, in how these powers are being used would be welcome to give confidence in this new body. We will be debating, perhaps on Wednesday rather than today, why I think some of this is so novel. It certainly merits all that scrutiny.
More broadly, I completely understand what the noble Lord, Lord Carter of Haslemere, is saying about the extent of the powers being given. I have some sympathy and, in another group, I talk about these enforcement officers—who used to be known as labour market offence officers—and combining all these different agencies and how that comes together. For example, the Environment Agency is a regulator that has powers to investigate criminal offences. It started an investigation on 18 November 2021, and at no point would it ever brief Ministers on the progress or intimate details of that investigation. To this date, it still has not brought any charges. We recognise that the public expect somewhat more of Ministers nowadays, powers having been set out, and that it is possible for all these things to happen. If Ministers are then, effectively, locked out from what is going on in terms of this operational independence, I can understand why they are keen to have a closer relationship with what is going on.
I will explain this in more detail in the other group, but having it as an executive agency with this advisory board provides an element of scrutiny but not the independent oversight, which is why the framework to which the noble Lord, Lord Carter, refers is important in trying to get this balance in whether people are behaving themselves in applying the law. I am not suggesting that any civil servant or any enforcement officer would necessarily want to go rogue, but they would have that extra oversight, with such significant powers. Let us be candid: a Secretary of State does not have the time to go through every single assessment of every operation that would be expected under the widened scope of legislation that this new agency will be enforcing.
I have some sympathy with the noble Lord, Lord Carter, who wants to see a pretty tight grip on what is going on, but I understand why the Government have set it out in the way that they have. Nevertheless, as my noble friends on the Front Bench pointed out, that aspect of oversight is important. As has been explained, considering how small businesses will handle this gets us into pretty tricky stuff.
By the way, I fully supported the development of the Gangmasters and Labour Abuse Authority. That is where a lot of the powers that may seem pretty tough in this Bill originated. How can I put it? Some people, whether in aspects of modern slavery or otherwise, can be pretty tough employers. I understand why some of what is, in effect, emergency access to offices and documents is needed: to make sure we tackle the abuse of workers. Overall, however, this is going to be a sensitive area. I encourage the Government to be as open and transparent as possible, and to consider not only the level of scrutiny but also the transparency in terms of reports—which would be, I am sure, welcomed by the Government and, candidly, by people relying on these agencies to do this work for them in the future.
Lord Stoneham of Droxford (LD)
My Lords, my noble friend Lord Goddard is disappointed that he is unable to speak on this group this evening. Given the multiple groups of amendments concerning the fair work agency, we will restrict our comments to this group. The Department for Business and Trade has set out the rationale for the fair work agency, suggesting the current system of employment rights enforcement is fragmented and inefficient. We agree. This fragmentation causes confusion for both workers and employers and leaves many breaches, such as underpayments, unchallenged. The Bill aims to establish the fair work agency and will consolidate existing bodies responsible for enforcement, abolishing those authorities and transferring their functions.
However, there remains some uncertainty about the agency’s precise scope and responsibilities, how it will relate to existing organisations, the level of funding it will receive, how it will access and use data, and the mechanisms for compliance and oversight. Although the Bill includes data-sharing provisions and the Minister has highlighted further detail, these issues will be key in determining the agency's effectiveness.
On powers and oversight, many enforcement powers currently held by other bodies will be transferred to the fair work agency, including powers of entry. New powers, particularly in relation to HMRC, will also be introduced. Oversight of these powers is planned to be provided through independent policing standards authorities, but it is important that the limits to these powers are clear and that they are exercised proportionately.
Regarding resourcing, it is understood that around £600 million is currently allocated across the authorities being restructured into the new agency. I am sure that discussions with the Treasury on the appropriate level of funding are ongoing, but is the Minister confident that this figure will provide the resources needed to meet the scale of the agency’s mission?
Bringing enforcement functions together in the fair work agency should improve the Government’s ability to tackle labour market abuses, including serious issues such as modern slavery. It is also acknowledged that previously, fragmented responsibilities caused confusion, duplication and ineffective enforcement, so this consolidation aims to provide a clearer, stronger enforcement framework.
I will not speak at length on the amendments put forward by the noble Lord, Lord Carter, but what he said was very wise. He raised important questions about the advisory board’s composition and enforcement powers which deserve further consideration by the Minister and the Government. Given the wide-ranging powers the agency will have—from workplace inspections to civil penalties and criminal enforcement orders—it is only right that Parliament has a clear opportunity to scrutinise how these powers will be used in practice.
Before the agency becomes operational, there should be clarity around its remit, resourcing and relationship with other enforcement bodies, and around the structures of accountability that will apply. This is particularly important for small and medium-sized businesses, which often lack the internal capacity to navigate complex regulatory frameworks. Advance scrutiny and a clear published framework would offer reassurance to both workers and employers that the agency’s approach will be proportionate and well targeted. We would welcome the Minister’s further explanation of how the Government intend to maintain transparency and accountability, to ensure balanced representation on the advisory board, and to keep Parliament informed throughout the phased implementation of the fair work agency.
Finally, I seek clarity on the Government’s timeline for the agency’s full implementation and how they plan to keep Parliament updated on progress. These are significant institutional changes and deserve close attention. I look forward to the Minister’s response.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I am grateful to all noble Lords who have tabled amendments in this group, all of which pertain to the governance of the fair work agency and its relationship with government. While I appreciate and respect the spirit in which they have been made, I must set out why the Government do not believe they are necessary or appropriate.
Amendment 263ZA in the name of the noble Lord, Lord Sharpe, has good intentions; however, in practice, it introduces unnecessary rigidity into a system that already works effectively. Currently, enforcement officers undergo extensive training; for example, HMRC officers complete an 18-month programme that equips them with the skills and knowledge they need. This is a robust and proven process. There is no evidence that adding a legislative requirement for qualifications would improve outcomes. Moreover, this amendment would reduce flexibility. It would impose a legal burden that could hinder recruitment, especially when enforcement needs evolve rapidly. Finally, it is important to note that Clause 87(6) already gives the Secretary of State the power to specify which powers an officer may exercise in the appointment. This ensures appropriate oversight and safeguards without the need for additional legislation.
Similarly, Amendment 263ZB, also tabled by the noble Lord, Lord Sharpe, is, in practice, unnecessary and creates duplication. The powers granted under the Bill already require enforcement officers to provide written notices such as a notice of underpayment. These are not optional; they are embedded in the operational framework. Moreover, current enforcement bodies such as the Employment Agency Standards Inspectorate already maintain detailed records of inspections. Officers also operate with a strong emphasis on consent and co-operation, often arranging visits in advance and documenting their findings thoroughly. Introducing a statutory requirement for additional reporting and oversight risks creating administrative burdens without adding meaningful value. It could divert resources away from enforcement and into bureaucracy. This amendment seeks to legislate what is already standard practice; it is not needed in the Bill, and I urge noble Lords to reject it.
Turning to Amendment 263C, the Bill already provides limitations on what powers officers can exercise through letters of appointment. I appreciate the noble Lord’s desire to ensure that enforcement officers exercise powers in a way that minimises disruption and harm to individuals and businesses, particularly as they will be extensive powers. This includes their powers to enter premises to determine whether there has been non-compliance. However, while these powers are by nature disruptive, they will be required to be exercised proportionately and reasonably, and, where possible, officers will carry out their duties on a consensual basis. In practice, this means officers will correspond with a business in advance to arrange a reasonable time and date before they visit, and they will also generally enter during business hours.
It is also worth noting that we are setting up the fair work agency as an executive agency of the Department for Business and Trade. Enforcement officers will therefore be civil servants who are subject to the usual standards of public life and will be required to operate in line with the Civil Service Code. The fair work agency will take a balanced approach to carrying out its role. This is in everyone’s interests.
Baroness Verma (Con)
I want to ask the Minister a question. It may be that I have missed the answer, although I have tried really hard to listen to every word that she has said. If a business wants to appeal against a decision by an enforcement officer, where does it seek that appeal?
Baroness Jones of Whitchurch (Lab)
I did cover that, but now I have forgotten what my answer was. I will write to the noble Baroness, but I think it was in my earlier contribution.
I reiterate on the small business question that businesses that comply with their obligations should not see any increased burden from enforcement activity. The fair work agency will target only the minority of employers engaged in illegal practices, so including specific carve-outs could create loopholes that bad actors might exploit. In fact, businesses of all sizes stand to benefit from a fairer labour market where exploitative practices are actively addressed as this will create a level playing field for all.
Let us not forget that we are creating the fair work agency to deliver an upgrade to the enforcement of workers’ rights. If we created a carve-out for businesses based purely on size, we would be creating a two-tier system for enforcement. This is unfair for workers and businesses.
Amendment 268 risks compromising the balanced representation of the advisory board. The current drafting has been carefully chosen to reflect the social partnership model that has served the Low Pay Commission and ACAS well for many years. The noble Lord, Lord Sharpe, asked on behalf of his noble friend Lord Holmes whether representatives of labour market standards would be on the advisory board. The Secretary of State will appoint individuals if they are considered to be independent experts. That recruitment and selection process will include a thorough assessment of the applicant’s qualifications, experience and potential conflicts of interest.
Vulnerable workers have been waiting for the fair work agency for years. It will deliver the worker protection enforcement authority that was proposed in the Liberal Democrat 2024 manifesto and the single enforcement body that was the policy of successive Conservative-led Administrations. It now forms a key plank of the plan to make work pay, a key manifesto pledge upon which this Government was elected. Bringing together the fragmented labour market enforcement landscape has been a policy aim for successive Governments. We cannot let this critical policy be delayed any more. I therefore ask the noble Lord to withdraw Amendment 263ZA.
Lord Carter of Haslemere (CB)
I am very grateful for what the Minister said in response to my amendments. I think she said that the framework document will state that enforcement officers will have complete operational independence from Ministers, which is reassuring to know. Presumably, therefore, it would be possible for the terms of appointment of enforcement officers under Clause 87(6) to state the same thing. Clause 87(6) states that:
“A person appointed under this section may exercise any powers of an enforcement officer to the extent specified in the appointment”.
There is another perfect place in which to reassert that they are operationally independent of the Secretary of State.
Baroness Jones of Whitchurch (Lab)
I said earlier in my contribution that the letters of appointment made to these people will spell out their duties. Obviously, their relationship to the Secretary of State will be spelled out in the letter of appointment. I have said several times now that they will be operationally independent, so that could be a key message in those letters of appointment.
Lord Sharpe of Epsom (Con)
I am very grateful to the Minister for her extensive answer and to my noble friends Lady Noakes and Lady Coffey, the noble Lords, Lord Carter of Haslemere, Lord Londesborough and Lord Stoneham, for their contributions to this short but very interesting debate.
As we come to the end of our discussion on these amendments to the Employment Rights Bill, I express my thanks to noble Lords who have contributed with such clarity and conviction and my disappointment with the Government’s response. Amendment 269, tabled by my noble friend Lady Noakes, fits very neatly with the requirement on the Secretary of State to produce annual reports under Clause 92. The Secretary of State has a duty to consult the advisory board, so I simply cannot understand why the Government would reject the idea of just combining the two and getting on with it. Equally, I do not understand why they would not want to take the suggestions of my noble friend Lady Coffey to tighten up the requirement. Nothing under those terms for the advisory board or the reports that need to be produced by the Secretary of State require a great deal of external information.
We have tabled amendments that are measured, constructive and rooted in principle. We have not sought to gut the Bill or to frustrate its aim of enforcing fair and lawful treatment in the labour market. On the contrary, we have sought to strengthen it and to ensure that the powers that it grants are effective and accountable, that enforcement is robust and fair and that ordinary businesses, especially small and micro enterprises, are not crushed under the weight of uncertainty, disproportionate penalties or faceless bureaucracy.
The noble Lord, Lord Carter, made excellent points about accountability. Enforcement is about not just force but legitimacy. It is about trust, and trust is only sustained when those who wield power are subject to oversight, transparency and to reasonable limits. That is not red tape. It is just a democratic principle. That is why we ask for qualifications and training to be made a prerequisite for enforcement officers, an obvious step given the serious powers that they will be entrusted with.
The Minister rejected my amendment introducing that notion, saying that it was not necessary because of Clause 87(6), just referred to by the noble Lord, Lord Carter. I note that Clause 87(3) says:
“In this Part ‘enforcement officer’ means a person appointed by the Secretary of State under this section”—
note that it says, “a person”, not necessarily “a qualified person”—whereas Clause 87(6), on which the Minister replied, says:
“A person appointed under this section may exercise any powers of an enforcement officer to the extent specified in the appointment”.
As the noble Lord, Lord Carter, informed us, there is no notion in there of independence, skills or anything else. That argument as to why our amendment is not necessary falls based on what is in the Bill.
Baroness Jones of Whitchurch (Lab)
Just before we move on, I wanted to clarify to the noble Baroness, Lady Verma, that I have now found the note in my speaking notes. I confirm that I did say that the fair work agency will have a clear and transparent complaints procedure modelled on the procedures of the current bodies, including the Gangmasters and Labour Abuse Authority.
Lord Davies of Brixton
“Pensions Act 2004
26A Section 259 of the Pensions Act 2004 (Consultation by employers: occupational pension schemes).” Member's explanatory statement
This amendment, together with another amendment to Schedule 7, seeks to include employer obligations to their employees relating to pensions within the scope of legislation subject to enforcement under Part 5.
Lord Davies of Brixton (Lab)
My Lords, it is a real pleasure to come on to the subject of pensions at 10.30 pm. However, I know not to try the patience of my noble friends or even the noble Opposition. In truth, the amendment, although it comes up here and refers to enforcement and the fair work agency, is really about the place of pensions within the Bill. My contention is that pensions are not given adequate consideration, and I am using this as a mechanism to press my noble friend the Minister to expand on how the legislation will reflect on pensions.
Of course, we get the Bill. One wonders how legislators coped before the introduction of “word search”, because there are 300 pages, 157 clauses and 12 schedules; and a use of word search tells us that “pension” appears 19 times in such a massive piece of legislation, and quite a few of those are where it forms part of “suspension”. The Bill fails to give any serious consideration, as far as I can see, to the place of pensions as an important element in the terms and conditions of employment.
That is where I started from. I looked at particular ways that pensions should be addressed in the Bill. The amendments we are considering now—Amendments 264, 265 and 324—are tabled as a sample to press my noble friend to explain.
Amendments 264 and 265 relate to Schedule 7 and enforcement of labour legislation. There is labour legislation on pensions: there are obligations on employers to consult trade unions in certain circumstances—that is covered by Amendment 264. Amendment 265 in effect applies to automatic enrolment, where it is an inherent part of the labour contract that people have that pension. Enforcement agents are going into companies. If they are going in, it seems a wasted opportunity if they do not check for compliance on these particular issues as well as the other issues specified in the Bill. At heart, my amendments are a request for my noble friend to explain whether these issues and pensions more generally should not be included throughout the Bill.
My Amendment 324 appears very late on; it has been promoted from the “miscellaneous and general” part of the Bill. It seeks a definition of “remuneration”, which appears 75 times in the Bill but is not defined anywhere. It could well be defined by other legislation and judgments in the courts, but there seems to be a total lack of consistency. I could point to particular judgments and international standards where remuneration is defined in one way or another, but there is no overall consistency. Yet remuneration is clearly a crucial part of the Bill and there is a lack of clarity about what it means. I really hope that it is obvious; I am raising the issue only because I want the Bill to include pensions. You cannot understand someone’s remuneration if you do not know what pension they are being offered; it is part and parcel of the package. To look at some elements but not pensions seems wrong.
I urge my noble friend to make a positive response that the Bill will be looked at in detail again for places where pensions should have their proper role. I beg to move.
Lord Hunt of Wirral (Con)
I always have tremendous respect for the noble Lord, Lord Davies of Brixton, in particular his knowledge of pensions, because he, like me, is an actuary. Whereas he is a true actuary, I am just an honorary fellow of the Institute and Faculty of Actuaries, so I always respect his views.
I am not sure there is very much I can say in intervening between him, his Secretary of State and the Minister. All I will say is that his amendments represent a shift from a consultative culture to a more legalistic and punitive model. That would be a shift at great cost. Like him, I believe that people are entitled to proper pensions and proper security. Like him, I fought on many occasions to ensure that that is an enforceable right.
I do not want to anticipate what the Minister will say, but we have to consider the employer’s perspective. We all want to see businesses offer generous, flexible benefit schemes—things such as pension contributions, healthcare and travel allowances—but if those are brought into tight regulatory definitions and packages, and enforcement frameworks, I worry that some employers might feel discouraged from offering them at all. I await the response of the Minister.
Lord Leong (Lab)
My Lords, I thank the noble Lord, Lord Hunt, for his contribution, and my noble friend Lord Davies of Brixton for tabling Amendments 264, 265 and 324.
I respect my noble friend’s concern for upholding rights relating to pensions. The power in Part 2 of Schedule 7 would allow us to extend the fair work agency’s remit to cover enforcement of pensions legislation in the future, but it would not be appropriate to make this expansion to the fair work agency’s remit at this time. Changing how pensions are enforced would be a significant undertaking, requiring careful consideration, consultation and planning, not least regarding how the fair work agency would interact with the current Pensions Regulator. Therefore, I must respectfully resist these amendments.
Amendment 324, also in the name of my noble friend Lord Davies of Brixton, seeks to ensure that pension arrangements are covered by the definition of remuneration. While I understand my noble friend’s concern here, this amendment is not necessary and its introduction would have far-reaching implications across the Bill. While pension arrangements are already covered by some of the provisions in the Bill, it brings forward issues around sectoral collective arrangements, which I am sure my noble friend would not want to frustrate. So while I appreciate the intentions of my noble friend Lord Davies of Brixton, I respectfully ask him to withdraw Amendment 264.
Lord Davies of Brixton (Lab)
I thank my noble friend the Minister for his remarks. I am unpersuaded but, at this stage, I beg leave to withdraw the amendment.
Baroness Coffey
Member’s explanatory statement
This amendment seeks to probe the scope of enforcement actions.
Baroness Coffey (Con)
My Lords, we are now considering Schedule 7, which is the scope of the legislation that the enforcement officers will be considering in applying their powers and the prosecution for offences. I picked out one of the Acts that this is looking to. I will be happy to hear from the Minister, but I am interested that this is now extending into fraud.
We have gangmasters, working time, holiday pay, the question of whether the employer is keeping details of annual leave, and so on and so forth. I wonder at what point we will end up relying on this agency, which we have already heard has probably unique powers for any Secretary of State. Where is the balance between this agency and the organisation—a non-ministerial department—that we would expect to start prosecuting criminal offences in areas such as fraud, the Crown Prosecution Service? I am trying to get a sense of where this stops. I think that is also the purpose of my noble friend’s Amendment 266. We are getting into trying to work out where on earth we will be turning to. There is a combination here of investigation and being able to get lots of information, but why is the Crown Prosecution Service not involved?
I appreciate that the hour is late, but time was not given at the other end to consider the detail of this legislation. That has increasingly become the role of this House. I am concerned specifically about the Fraud Act, but there needs to be a wider conversation—I am thinking particularly of paragraph 35 of Schedule 7 —to work out at what point we hand over to the police or to the Crown Prosecution Service to investigate potential crimes.
The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
I advise the Committee that if this amendment were agreed to, it would not be possible for me to call Amendment 264A for reason of pre-emption.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendment in this group and for her introduction. I will speak to Amendments 266 and 267 in my name. These amendments are not presented in opposition to the spirit or general objectives of the Bill. Indeed, we fully support the aims of enforcing employment rights and ensuring that bad employers do not undercut fair ones. These amendments respond to a real and serious concern about the breadth of the power that the Bill currently gives to Ministers—a power that, if left unchecked, would allow a future Government to expand the remit of the fair work agency with far-reaching consequences but only the most minimal parliamentary oversight.
Paragraph 35 of Schedule 7 allows the Secretary of State to add to the list of enactments that fall under the enforcement remit of the fair work agency by way of regulations. That list, set out in Part 1 of Schedule 7, includes a range of statutory rights covering pay, working time, sick pay and protections against exploitation. The current drafting allows for the addition of any enactment that relates to employees, workers, employers or trade unions. That is an extraordinarily broad formulation. It would allow the Secretary of State to bring into the fair work agency’s scope virtually any area of employment or labour law, potentially even those governing union recognition, industrial action or collective bargaining, by secondary legislation and with no meaningful boundary in statute.
Amendment 266 seeks to address this by narrowing the scope of this delegated power. It would limit the types of enactments that can be added to those that relate to hours, pay or holidays. These are, after all, the core minimum terms and conditions of the employment relationship. They are well understood, capable of objective enforcement and already subject to statutory minima in other parts of the Bill. They also reflect the matters over which the recognised trade unions typically have statutory bargaining rights. There is, therefore, a clear and principled rationale for limiting the fair work agency’s enforcement jurisdiction to these domains.
We put forward this amendment on the grounds that it is both reasonable and proportionate. It would still allow Ministers to respond to emerging issues in labour markets, such as new forms of pay abuse or evasion of working time rules. It would, however, prevent this power being used to draw the FWA into controversial or contested areas of employment law, or into territory where individual enforcement through tribunals is more appropriate than systemic enforcement by a regulator. It would preserve the coherence of the agency’s function and protect against mission creep over time.
We anticipate that Ministers will argue that this amendment is too prescriptive and does not allow sufficient flexibility to bring in related rights that may not neatly fall into the categories of pay, hours or holidays, but that are none the less important for fair work—for example, information rights, certain protections from detriment or emerging contractual abuses not yet addressed by current law. The Government may say that drawing such hard lines in primary legislation is undesirable and that a degree of discretion is necessary for effective future-proofing.
If the Government do not accept Amendment 266 on the grounds that it is too narrow, it follows that the strength of Amendment 267 becomes even more essential. This amendment would require that any regulations made under paragraph 35 be subject not merely to the affirmative resolution procedure but to the super-affirmative resolution procedure, which I know the noble Baroness, Lady Jones, is fond of, as defined in Section 18 of the Legislative and Regulatory Reform Act 2006.
The super-affirmative procedure is not some theoretical or obscure mechanism. It exists precisely for circumstances such as this, where Parliament grants the Executive a broad power to amend the application of primary legislation by secondary means. The procedure ensures that Parliament is properly consulted, that draft regulations are subject to scrutiny before they are laid and that there is an opportunity for representations to be made, considered and reflected in the final statutory instrument.
The two amendments offer a choice. If the Government agree with us that the power to amend Schedule 7 should be tightly confined, they can accept Amendment 266. If they prefer to retain flexibility, they must accept that that comes with the responsibility of subjecting that power to a higher standard of parliamentary scrutiny, in which case Amendment 267 is the minimum safeguard necessary. What would be constitutionally unacceptable is for the Government to reject both amendments, leaving in place a broad and undefined power exercisable by ordinary affirmative resolution. That would be to hand the Executive a blank cheque over the shape and scope of labour-market enforcement in this country, without adequate safeguards in place.
To conclude, I urge the Government to consider carefully the implications of paragraph 35 as currently drafted. It is not enough to say that Ministers do not intend to use this power in a wide-ranging or politically contentious way. We are legislating not just for the current Secretary of State but for future ones, too. If the Government want discretion, Parliament must have oversight, and if they want latitude, we must have safeguards. The amendments give the Government the opportunity to make a choice: define the limits of this power clearly or accept the heightened scrutiny that wide powers properly demand.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for tabling Amendment 264ZA, which concerns the fair work agency’s remit. I also thank the noble Lord, Lord Sharpe of Epsom, for Amendments 266 and 267, which seek to alter the delegated powers in Part 2 of Schedule 7.
Amendment 264ZA would seriously restrict the fair work agency’s ability to tackle labour exploitation of a more serious nature where the threshold does not meet the requirement under the Modern Slavery Act. There are no other enforcement provisions in the Bill that would cover this scenario. Currently, a number of Gangmasters and Labour Abuse Authority investigations have to be abandoned when the modern slavery threshold is not met. Since 2023, 104 cases have been dropped. That is bad for labour abuse victims and for taxpayers.
We are adding elements of the Fraud Act to the fair work agency’s remit precisely to address this issue. It will allow the fair work agency to investigate cases of financial fraud by abuse of position. That has specifically been included within the Bill following extensive discussions with stakeholders, including the Gangmasters and Labour Abuse Authority and the Home Office. Removing the Fraud Act offences from the fair work agency’s scope would truly limit the agency’s effectiveness, and I must therefore respectfully resist this amendment.
Amendment 266, tabled by the noble Lord, Lord Sharpe, would drastically narrow the scope of the power. This would undermine the very purpose of the fair work agency, which is to simplify and consolidate the enforcement of labour market legislation. The fair work agency will be greater than the sum of its parts as its remit is further expanded. This will relieve pressure on a struggling employment tribunal system, which I have heard many times from noble Lords across the aisle.
The power to expand the fair work agency’s remit has appropriate safeguards and limitations. Any expansion of its scope will be informed by the advice from the agency’s tripartite advisory board, and with consideration of the overall enforcement strategy. Furthermore, any changes to the remit will be through affirmative-resolution regulations that will be laid before Parliament and, where relevant, will require the consent of the relevant Northern Ireland department. This power is crucial to the long-term flexibility of the fair work agency. By enabling the remit to expand over time, it can respond to developments in the labour market. If we were to restrict the power to such a narrow range of issues, we would be tying our own hands.
Amendment 267, also in the name of the noble Lord, Lord Sharpe of Epsom, would require that a super-affirmative resolution procedure be used when the Secretary of State exercises the delegated power in Part 2 of Schedule 7. In my almost three years in this House when the party opposite was in government, I never heard them bring any super-affirmative resolution in any of the Bills they brought before this House, so I do not understand the sudden change of heart.
This amendment is unnecessary. The Bill provides for appropriate parliamentary scrutiny as use of this power will be subject to the affirmative resolution procedure. I also highlight that the recent report by the Delegated Powers and Regulatory Reform Committee did not raise any concern with this power as currently drafted. The additional scrutiny this amendment calls for would place unneeded burdens on parliamentary time, which is currently stretched. With this point in mind, I ask the noble Baroness to withdraw Amendment 264ZA.
Baroness Coffey (Con)
I thank the Minister for that comprehensive response to my amendment. To be candid, if that had been in the Bill’s Explanatory Notes, it might have made life easier. As the Minister knows, the creation of this fair work agency, with the novel powers it is going to have, is one of the reasons why my noble friends on the Front Bench have been pushing for the super-affirmative procedure. We will briefly get into a bit more discussion about the advisory board, but it is those elements—recognising the novel powers—that we are concerned about. With that, I withdraw my amendment.
Member’s explanatory statement
This amendment is consequential on the definition of “worker” being inserted into Part 5 by my amendment of clause 148 at page 147, line 9.
Baroness Jones of Whitchurch (Lab)
My Lords, I beg to move Government Amendment 264A, and will speak to Government Amendments 265A, 271A, 272A, 273M, 273P, 273S, 279A, 279B, 279C, 279D, 279E, 279F and 279G. I thank all noble Lords who attended the all-Peers briefing on these amendments that I gave on 8 May. As was explained at that time, the amendments aim to make the creation of the fair work agency effective, including by ensuring a smooth transition from the current arrangements, and they are not new policy.
Without the correct information-sharing gateways, the fair work agency will not be able to do its job; Clause 132 is vital to making sure that it can. Government Amendment 273M makes a minor drafting change to Clause 132(3). Specifically, it clarifies that information obtained by the fair work agency in connection with an enforcement or civil proceedings function under Part 5 of the Bill can be used for other functions under Part 5. This change ensures that the benefits of bringing together responsibility for enforcing a range of rights are fully realised.
Government Amendment 273P adds the Security Industry Authority to the list of persons in Schedule 9. This will enable the fair work agency enforcement officers to disclose information obtained under the enforcement functions in Part 5 of the Bill with the Security Industry Authority, where that information relates to its statutory functions. Any disclosure will be subject to other restrictions in the Bill and existing safeguards. For example, a disclosure will not be authorised under Clause 132 if it would constitute a breach of data protection legislation or is otherwise prohibited by certain provisions of the Investigatory Powers Act 2016.
Government Amendment 279A clarifies that the information captured by the definition of “HMRC information” in Clause 134 will be subject to appropriate safeguards regarding onward disclosure where specified conditions are met. This will ensure that there will be continuity as we set up the fair work agency and that all information is handled with the appropriate sensitivities.
Government Amendment 271A is a minor technical amendment to Clause 111. It sets out that where a liable party has failed to comply with the requirement in a notice of underpayment to repay arrears to an individual, the fair work agency can make an application to court for an order. Sub-paragraph (6) defines “a court” for the purposes of this section. This amendment clarifies that summary sheriffs can also have jurisdiction to hear these applications in Scotland.
Lord Hunt of Wirral (Con)
My Lords, I thank the Minister not only for her speech but for the briefing she held for all Peers to explain the background to these amendments. We fully appreciate that from time to time, there may be technical issues with legislation that necessitate amendments being brought at a later stage. Such occurrences are of course all part of the legislative process. In this instance, however, it is disappointing that these matters were not addressed and dealt with from the outset.
Ideally, these amendments should have been tabled and thoroughly considered in the other place. Instead, we have seen the Government bring forward a number of policy-related amendments at a relatively late stage—amendments which, regrettably, received limited scrutiny in the Commons. I do not believe that this approach lends itself to the transparency and rigorous examination that effective lawmaking demands. We sincerely hope that in future, the Government will engage with the legislative process in a more considered and structured manner. Proper scrutiny at all stages is not just a formality; it is essential in ensuring that the laws we pass are sound, effective and in the public interest.
Baroness Jones of Whitchurch (Lab)
My Lords, I agree with the noble Lord that in good legislative processes it is not ideal to have technical amendments at this stage. However, it is better to identify them now rather than later in the process, and we have bent over backwards to engage Peers to explain why they are necessary. In a previous role on the Opposition Benches, I spent a lot of time in secondary legislation sessions correcting technical issues that should have been identified in primary legislation by the previous Government, but that debate may be for another day. In the meantime, of course we aspire to better legislative processes in future, and I agree with the noble Lord. I beg to move.
Member's explanatory statement
This amendment is consequential on the definition of “worker” being inserted into Part 5 by my amendment of clause 148 at page 147, line 9.
Baroness Coffey
Baroness Coffey (Con)
My Lords, I will also speak to Amendments 267ZA, 267AA and 267AB in my name in this group. Schedule 7 tries to bring together a whole bunch of legislation in a meaningful and sensible way so that it can handily be used in future. I could have extended some of these amendments, but I decided to focus Amendment 266A on paragraph 35(5)(b) of Schedule 7, which relates to Clause 89 on the delegation of functions. I could have considered a whole number of these, because this is a classic Henry VIII clause—put something in primary, shove something through regulations and, hey presto, a whole Act can change before our very eyes. In particular, Clause 89(6), which I address in Amendment 267AB, stood out to me.
My concern is that we start off with this agency, the enforcement officers and all these different things, but Clause 89(1) says:
“The Secretary of State may make arrangements with a public authority”.
I do not think “a public authority” is defined anywhere else in legislation at all. This is the first time I have seen it defined, as
“a person certain of whose functions are functions of a public nature”.
That could be a whole bunch of people. What does it really mean? Are they seeking to act in the public interest, or in a different way?
The Explanatory Notes do say what they are, but, as the Minister and the Committee will know, they are not part of legislation. One of the reasons for bringing this out is to try to understand from the Minister precisely what it means. The consequence of these bits of the legislation is that, by statutory instrument, this novel area that we are getting into could be changed very quickly, away from what might have seemed a sensible agency, though I appreciate that the noble Lord, Lord Carter of Haslemere, would rather have operational independence.
This is why I have peppered through my amendments in this group the very specific point that it should be a public authority that has civil servants in it and is not a non-ministerial department. I think that there are about 24 non-ministerial departments. Perhaps really only two—the Supreme Court and the Crown Prosecution Service—should be non-ministerial, recognising the accountability that, understandably, Parliament and the public expect.
The difference of a non-ministerial department is that it is accountable to Parliament. The device to do that is principally through the Select Committee in the House of Commons, perhaps the Public Accounts Committee, not so much in the House of Lords. Therefore, significant parts of the work being done are left to an occasional accountability meeting, whereas if civil servants are not in a non-ministerial department, the Secretary of State is directly responsible and can be held to account by Parliament and can hold those civil servants to account. I am therefore very nervous about how easy it will become to change Clause 89(6) and what that then means. It would be better for the Government to have more in the Bill about what it is.
As we are starting to get into Part 5, could it be that the public authority starts to become not-for-profit groups of solicitors who start to have these enforcement functions? Could arms of trade unions suddenly start enforcing and be able do all these different elements and to take employers to court so this starts to spread? The reason for my amendments is to try to get better legislation about what this is supposed to be. I am desperately trying to make sure that the only people to whom these things can be delegated will be civil servants who honour what the Government have set out in Part 5 and that the variety of enforcement officers and the fair work agency will be directly accountable and have the executive powers of the Secretary of State. That can be done only if people are civil servants and they are not in a non-ministerial department. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I thank my noble friend Lady Coffey for her amendments that comprise this group, and I speak in support of them. They bring much needed clarity and constitutional discipline to the question of to whom the Secretary of State may delegate important public functions.
Clause 89, as drafted, grants the Secretary of State, as my noble friend has explained, broad discretion to delegate enforcement and other key responsibilities to a public authority. However, the current definition of that term is overly expansive. It could include not only departments under direct ministerial control, but also non-ministerial departments and other bodies with a degree of operational independence from the Government, which raises fundamental issues of accountability.
If enforcement powers, which could be potentially intrusive and far-reaching, are to be delegated, they should be exercised by those within the direct chain of ministerial responsibility. They are civil servants who operate under the authority of Ministers and who are, in turn, accountable to Parliament. Amendment 267ZA, therefore, rightly confines the scope of Clause 89 to public authorities that are comprised of civil servants and are not non-ministerial departments. That would ensure such functions are not handed to bodies that lack clear ministerial oversight or democratic accountability.
Amendment 267AA serves as a necessary consequential safeguard because it ensures that any legal substitution of the Secretary of State with another authority in the eyes of the statute is similarly limited to such core public bodies. Without this clarification, we risk a situation where statutory references to ministerial powers are extended, potentially without scrutiny, to entities with a more ambiguous constitutional status. This is not about casting aspersions on the competence or integrity of non-ministerial departments. Many do good work, but they are deliberately designed to operate at arm's length from Ministers. They should not be the recipients of powers that the public rightly expects to be exercised under ministerial responsibility.
Lord Leong (Lab)
My Lords, I thank the noble Baroness, Lady Coffey, for Amendment 266A, 267ZA, 267AA and 267AB.
Baroness Coffey (Con)
I thank the Minister for his response. I am interested in his answer that, “Oh, well, they are already a non-departmental public body, so why am I bothered?” Well, why are the Government bothering to make this an executive agency and bring the powers under the Secretary of State? They are doing this themselves. I am struck that a lot of the legislation here is getting rid of non-departmental public bodies. By the way, they are not directly accountable to Ministers, and Ministers cannot direct them. That might satisfy the noble Lord, Lord Carter of Haslemere, but at no point did the Minister address Amendment 267AB, which talks about subsection (6). He did not address what is probably my key point in the group of amendments about the definition of a public authority. I am concerned about that and will certainly revisit it on Report. Given the late hour and that there are still two groups to go, I would be happy if the Minister would write to me and the Committee before then on that issue, as it was the key part of what I wanted to talk about. I will not trouble the Committee any further at this point and I beg leave to withdraw Amendment 266A.
Lord Hunt of Wirral
“(b) the conduct of, but not the decision as to whether the Secretary of State will bring, proceedings by virtue of section 113 (power to bring proceedings in employment tribunals).” Member's explanatory statement
This amendment seeks to ensure that the Secretary of State cannot delegate the decision to bring proceedings on behalf of employees.
Lord Hunt of Wirral (Con)
My Lords, these amendments address important gaps in the Bill, ensuring fairness, clarity and accountability in the enforcement of employment rights. Amendment 267A relates to Clause 89 and the delegation of the Secretary of State’s functions. Currently, the Bill allows delegation of functions, including enforcement, but does not explicitly restrict the delegation of the decision to bring proceedings to employment tribunals.
This amendment would ensure that while the Secretary of State is delegating the conduct of proceedings, the crucial decision to initiate legal action remains with the Secretary of State. Without this safeguard, delegated bodies could independently decide whether to bring legal claims, potentially leading to inconsistent decisions, lack of ministerial accountability and confusion about who holds ultimate responsibility. Maintaining ministerial control over such decisions is essential to preserve political accountability and to ensure decisions are made with proper oversight.
Amendment 271B focuses on Clause 113 and seeks to clarify the scope of claims that the Secretary of State may bring. The Bill currently refers broadly to “any enactment”, which risks allowing the Secretary of State to bring claims on a wide range of employment issues, including individual employment rights traditionally pursued by workers themselves. This amendment narrows that scope to relevant labour market legislation and Parts 1 to 4 of the Employment Rights Act 1996, ensuring that government enforcement targets systemic labour market regulation issues such as pay and working conditions, rather than individual employment rights or disputes. Without this restriction, there is a risk of governmental overreach into private employment matters, diluting resources and causing confusion about the limits of state intervention.
Amendment 271C addresses a practical and vital issue regarding claims that workers have already lawfully settled. Under current law, individuals can settle employment claims following independent legal advice, providing certainty to both employers and employees. This amendment prevents the Secretary of State bringing claims that had been settled in accordance with Section 203 of the Employment Rights Act 1996. Without this amendment, there is a danger that settled claims could be reopened by the Government, undermining the finality of agreements and subjecting employers to repeated litigation, even after fulfilling their obligations. Such uncertainty would damage trust in settlement processes and could discourage both workers and employers from entering into settlements.
Amendment 272ZA concerns the financial protection of workers in tribunal proceedings brought or conducted by the Secretary of State. It ensures that where an employment tribunal orders costs against a worker, such as legal costs or wasted costs, these costs must be met by the Secretary of State rather than the individual worker. This protection is critical, because workers who had not themselves initiated proceedings should not bear the financial burden of litigation costs. Without this safeguard, workers could face significant personal financial risk, deterring them from seeking support from the Secretary of State and ultimately restricting access to justice. Employers might then attempt to recover costs from these workers, imposing unfair hardship and undermining the purpose of public enforcement. I beg to move.
Baroness Noakes (Con)
My Lords, I have Amendment 272 in this group. When an Act of Parliament creates rights and duties, it usually then allows those who benefit from the rights and duties to enforce them in law, which in the case of employment matters is via the employment tribunal.
This Bill fundamentally changes that and inserts the Secretary of State whenever he or she wants to intervene to take up cases that employees do not themselves want to pursue. It also interferes in the order of things by providing a back door route to legal aid for employees, which is not covered by the normal legal aid system. This part of the Bill is simply going to increase the number of cases heading towards the employment tribunal. As has been debated on several occasions, that system is already under massive stress, and it does not make any sense to stress it any further. I therefore support all the amendments in this group.
My own Amendment 272 merely states that the Secretary of State has to meet a public interest test if he or she wants to use the Clause 91 power to take over a case that an employee does not wish to pursue themselves. As drafted, there is no constraint whatsoever on the Secretary of State’s use of the power. The Secretary of State can simply find out one morning that an employee has a potential case and is not going to do anything about it, and decide to take it over. A public interest test would at least make sure that the Secretary of State intervenes in matters where there is a genuine national interest in the case being pursued.
I suspect that the Secretary of State will be pursued and lobbied by various organisations, quite possibly trade unions, who will see this provision as another weapon in their armoury to have a go at certain large employers, particularly where those employers have not been particularly interested in playing along with whatever trade unions want to do with them. The power is an important departure from the normal way of enforcing rights and duties, so guardrails in the legislation surrounding the use of the power are essential. There is absolutely nothing in the current Bill.
My first instinct was to delete Clause 91 entirely. As far as I can tell, no case has been made for its existence. But I can just about construct a scenario in which the Secretary of State concludes that there is a genuine public interest in overriding the wishes of an employee and pursuing the case in the circumstances I have described. I would expect such a case to be very unusual, and I hope the Minister agrees. Because of that, we should be looking to restrain the power in some way. The words I have used may not be the right words, but the essence of what I am trying to achieve is to reduce into something more reasonable an unconstrained power to completely subvert the normal way in which rights and duties are specified by Parliament and open to enforcement.
Baroness Coffey (Con)
I will speak to Amendments 272B and 272C in this group in the name of my noble friend Lord Jackson of Peterborough. I will also speak to the other amendments, particularly Amendment 272, which has just been spoken to by my noble friend Lady Noakes. She has hit the nail on the head: how often is this going to be used to go beyond what has been requested—for example, a worker not intending to take a case forward, such that it could still end up in a tribunal?
I am conscious that we will return to Clauses 113 and 114 on Wednesday, so I will be brief on Amendments 272B and 272C. Even if the Minister cannot respond today on Amendment 272C, can she say what is meant by
“any other form of assistance”?
“Legal advice” and “legal representation” are pretty well understood, but what else? There are genuine concerns about this starting to become a blank cheque for almost anything with regard to employment law. While of course the House of Lords does not have financial privilege, it is important to still be mindful of where this could go.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lords, Lord Sharpe and Lord Jackson, and the noble Baroness, Lady Noakes, for tabling their amendments. This Government are committed to ensuring a fair playing field for all employees and businesses. This is why the Secretary of State will have the power to bring proceedings in place of a worker: it will mean that all employers are held to the same standards.
Amendments 267A, 271B, 271C and 272ZA have been tabled by the noble Lord, Lord Sharpe of Epsom. While I appreciate the noble Lord’s intentions behind them—seeking fairness, clarity and accountability—I believe that they undermine those objectives. I have major concerns about Amendment 267A. A fundamental principle of the fair work agency is that it will have operational independence. As we have debated, the Secretary of State’s involvement will be at strategic level only. This amendment would undo all that; it would explicitly make any use of the civil proceedings powers dependent on a political decision. This goes against the whole thrust of what we have been debating up to now, and we therefore cannot support the amendment.
Amendment 271B would exclude legislation, such as on family leave, unfair dismissals or redundancies, from the scope of this power. These issues can have a substantial impact on people’s working lives and they are part of the employment package. It is right that the fair work agency has the discretion to support enforcement in these areas and to ensure that employees get what they are entitled to.
Amendment 271C is unnecessary. The Bill already builds in appropriate safeguards to prevent cases being relitigated. In considering whether a worker will bring proceedings, the Secretary of State will have to consider whether a worker has already contacted ACAS. If they have, it would serve as a strong indicator that they are contemplating proceedings. Therefore, where a settlement is being discussed, or has already been reached through ACAS, it is highly unlikely that the Secretary of State would pursue a claim. This amendment would create a rigid prohibition that may have unintended consequences. The Government would be restricted from acting where new evidence shows that a settlement was reached under duress.
On Amendment 272ZA, tabled by the noble Lord, Lord Sharpe of Epsom, the Bill already makes it clear that any reference to a worker in proceedings brought by the Secretary of State should be read as including the Secretary of State. In practice, this means that, while it is for the tribunal to decide whether or not to award costs, a costs order could be made only in respect of a party to the case. This would be the Secretary of State, where they are the party that has brought this case. Therefore, this makes this amendment unnecessary.
On Amendment 272, tabled by the noble Baroness, Lady Noakes, in the worst cases of serious exploitation and intimidation, a worker may want to bring proceedings but fear the repercussions they may face from the employer should they be de-anonymised. Allowing the Secretary of State to take a case forward without consent would make it harder for employers to attribute blame to individual employees and also ensure that action could be taken against exploitation. Ultimately, I agree with the noble Baroness that this will take place only in exceptional circumstances, not least because it is more difficult to argue a case without the assistance of the worker. Nevertheless, where there is a breach of employment rights, there should be consequences. The fair work agency will decide the most appropriate route of enforcement, and it is important that in the most serious cases we allow this power as an option.
Finally, on the Amendments to Clause 114 from the noble Lord, Lord Jackson, the existing drafting of Clause 114 states:
“The Secretary of State may assist a person”.
This drafting was carefully thought through and is deliberately broad and inclusive. It includes both natural and legal persons, so it already covers both employers and their legal advisers. This amendment does not alter the substance of the clause, but merely restates what is already covered and therefore risks introducing confusion.
On the noble Lord’s Amendment 272C, Clause 114 has been carefully monitored against the provisions found in Section 28 of the Equality Act 2006, which also provides for any other form of assistance. This language has been used to ensure flexibility and inclusivity in the types of support that may be provided. This is neither novel nor excessive and is limited to assistance in the context of civil proceedings. To narrow the clause in the way this amendment does would compromise its effectiveness and undermine its accessibility. On that basis, I hope noble Lords will not pursue their amendments and I ask the noble Lord, Lord Sharpe, to withdraw his Amendment 267A.
Lord Hunt of Wirral (Con)
My Lords, I thank my noble friend Lady Noakes for providing an important guardrail: the idea that the Secretary of State has to pass a public interest test. I do not think the Minister gave us a direct answer to that suggestion. So far as my noble friends Lady Coffey and Lord Jackson of Peterborough are concerned, there are huge concerns about the way this will affect small businesses in particular. Again, I do not think the Minister addressed that particular point. I regret the fact that the Minister has not acknowledged the importance of these significant gaps in the Bill.
It is concerning that the challenges inherent in delegating the Secretary of State’s enforcement functions to others who may lack the necessary competence or accountability are not being fully recognised at the present time. How does such delegation genuinely serve the interests of workers if it risks inconsistent decision-making and a lack of clear responsibility?
Moreover, the Bill fails to address the very real issue of claims that have already been settled. Employment tribunals are already struggling with an overwhelming backlog, and reopening settled cases would only exacerbate this problem. Surely, we have got to avoid a situation where the Secretary of State is empowered to reopen disputes that workers and employers believed were finally resolved. This not only causes unnecessary anxiety and uncertainty for all parties involved but threatens to damage the fragile trust and relations between employers and employees. If this Bill is to be truly effective and fair, it has got to acknowledge these realities: —ignoring them will only undermine the very goals it seeks to achieve. In the meantime, I beg leave to withdraw the amendment.
Baroness Coffey
“(1A) The Secretary of State must appoint a Chair of the Advisory Board who must be qualified to practice as a barrister and have been made King's Counsel.(1B) The term of the Chair’s appointment must be for a maximum of four years, with a maximum appointment of two terms, and with other conditions as may be specified by the Secretary of State.(1C) The Chair’s appointment must be approved by a relevant select committee of the House of Commons.”
Baroness Coffey (Con)
My Lords, I shall speak also to Amendments 267BA, 267BB and 267D in my name. This is where we get to the composition of the board. In this group of amendments, the most important that I have tabled is probably Amendment 267D. It would remove the words “trade unions” but would insert “employees”. I am conscious that, of course, trade unions represent employees, but I was surprised by the composition of the board: that the word “employee” did not turn up as to who the members of the board were supposed to represent. To that end, one reason why I laid Amendment 267D is that we should remember that only 22% of UK workers belong to a trade union. That leaves 78% who, at the moment, may not necessarily be represented in the consideration of the advisory board. I think it is important that we rectify that.
It is possible that independent experts and others may be involved. By the way, this happens on a variety of other bodies—I think it is so on the Health and Safety Executive. Usually, the organisations representing employees are trade unions, but the point is made that it does not have to necessarily be trade unions. It could be professional associations—that has happened in the past as well, from my recollection.
In looking at the composition of the board, I noticed that my noble friends on the Front Bench have come up with a slightly different approach. Mine has tried to be pretty straightforward and to, in effect, insert an independent chair, who should be put forward to the relevant committee in the House of Commons for consideration before their appointment.
Deliberately, I have put in some specifications as to who should chair the board. Recognising that this is all going to be about enforcement of legislation, considering a wide range of issues including taking legal action when it has not been requested by people, by workers, I have specified that we should consider this board, which is going to be very important to the Secretary of State because there are a number of situations where the legislation says that the Secretary State “must” consult the advisory board. To that end, it would be worth while to have somebody who is a qualified barrister, a KC, but who shows a particular level of accomplishment without needing to look to tribunal judges or similar to chair that board. I beg to move.
Lord Sharpe of Epsom (Con)
My Lords, I shall speak to Amendments 267B, 267C and 268A standing in my name, and I also thank my noble friend Lady Coffey for introducing her amendment, and, of course, my noble friend Lady Noakes for signing them. Amendments 267B and 267C are not mere technicalities; they are a matter of principle. They are a matter of representation and ensuring that the new fair work agency advisory board truly reflects the full diversity and complexity of the modern UK labour market.
As drafted, Clause 90(4) proposes a tripartite board composed equally of individuals representing trade unions, employers and so-called independent experts. While the intention of the balance is commendable, the provision as it stands is both overly simplistic and insufficiently representative of the contemporary workface. As my noble friend highlighted, trade unions, for all their historic importance, now represent only 22.4% of employees across the United Kingdom, 12.3% of the private sector—so the bulk of those are in the public sector.
As my noble friend also pointed out, that leaves a staggering 77.6% of working people whose voices, interests and concerns are not captured through union representation. To restrict employee representation on this advisory board solely to trade union nominees is to exclude the overwhelming majority of the workforce. That is neither democratic nor representative. It is outdated.
This amendment seeks to rectify that imbalance by introducing a more inclusive and nuanced structure. It proposes that the board includes two representatives from the trade unions, rightly acknowledging their important role; three representatives of employees beyond the trade union movement, an expansion that ensures that the voices of non-unionised workers, gig economy participants, freelancers and precarious workers are also heard; five employer representatives to be appointed only after the Secretary of State has sought advice and recommendations from recognised business representative organisations, a process that will ensure that these appointments are rooted in sectoral legitimacy rather than political expediency; and three independent experts to provide critical objective insight grounded in academic, legal or practical labour market expertise. That structure would do three things. It would broaden representation, professionalise appointments and future-proof the board against the ever-evolving nature of work.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to all noble Lords for tabling these amendments. I will begin by addressing Amendments 267AC and 267BB, which relate to the chair of the advisory board. The Bill already provides for a strong and credible chair, and we are confident that appropriate appointments can be made under the current drafting. These amendments would significantly narrow the pool of qualified candidates and exclude highly capable candidates. There is no precedent for such restrictions among similar bodies.
For example, the current chair of the Equality and Human Rights Commission is the noble Baroness, Lady Falkner of Margravine. She brings deep expertise in public policy, regulation and public service to the role, but she is not a practising barrister. The focus should be on appointing the best candidate through a rigorous merit-based process, not restricting eligibility by profession. Moreover, there is no precedent for these amendments. Similar bodies, such as the Low Pay Commission and the Advisory, Conciliation and Arbitration Service, do not impose this level of restriction or require parliamentary approval. These models work precisely because they allow the Secretary of State to appoint individuals with diverse and complementary expertise. We fully support a strong, credible chair, but that is best achieved through a robust and flexible appointments process, not through rigid statutory constraints or exclusions.
On Amendments 267B and 267BA, tabled by the noble Lord, Lord Sharpe, and the noble Baroness, Lady Coffey, we have no objection in principle to a larger advisory board, but this should be balanced against an increased cost to the taxpayer. In practice, we anticipate there will be nine members of the board mirroring the make-up of the Low Pay Commission, which has operated successfully for 25 years. The current drafting provides flexibility so that the Secretary of State may appoint more than nine members, but it is unwise to lock a specific number into primary legislation without operational justification. The amendment would create a fixed number of advisory board members. Clause 90 already provides for what the amendment seeks to achieve.
Turning to Amendments 267C and 267D, these amendments risk compromising the balanced representation of the advisory board. The current drafting has been carefully chosen to reflect the social partnership model that has served the Low Pay Commission and ACAS well for so many years with a mixture of employer, union and independent representation. Amendments 267C and 267D also seek to broaden employee representation on the advisory board by reducing the emphasis on trade unions. Let me be clear: trade unions serve to protect and advance the interests of all workers, and they are best placed to represent workers’ interests on the advisory board. Moreover, the Secretary of State has broad discretion to appoint members with relevant expertise as independent experts. The Government are also committed to ongoing engagement with relevant stakeholders through a variety of formal and informal means, so the advisory board is only one part of the landscape.
This leads me on to Amendment 268A, also in the name of the noble Lord, Lord Sharpe. The independent experts are intended to bring deep subject matter expertise and a perspective not already captured by the other members of the advisory board. The existing drafting already protects against partiality, as an independent expert is a person who does not fall within the groups mentioned in Clause 94. The Bill already provides a sound and balanced framework for the board’s composition, one that is adaptable, proportionate and future-proof. I must therefore resist these amendments.
I must also respectfully resist Amendment 269, tabled by the noble Baroness, Lady Noakes, which risks undermining the very purpose of the advisory board. Transparency in governance is vital, and the Government share the commitment to ensuring appropriate parliamentary scrutiny. Placing a statutory duty on the advisory board to publish its advice could compromise that level of confidentiality and flexibility which we believe is essential for it to carry out its role effectively. Mandating a separate annual report also risks formalising what should remain a responsive advisory relationship, potentially limiting the board’s ability to offer genuine, timely and informal guidance on emerging issues.
Introducing even more reporting requirements would place a confusing and unnecessary reporting burden on enforcement teams, potentially diverting staff and resources away from front-line inspection and enforcement work, where they are most needed.
With this in mind, I therefore ask the noble Baroness to withdraw Amendment 267AC.
Lord Sharpe of Epsom (Con)
My noble friend Lady Coffey and I raised the increasing statistical irrelevance of the trade unions. I do not think the Minister addressed that point. She also seemed to write off the idea of the advisory board amendments that we proposed, on the basis that they would be expensive to the taxpayer. But Clause 90(6) says:
“The Secretary of State may pay such remuneration or allowances to members of the Board as the Secretary of State may determine”.
They could determine to pay nothing, presumably, so why would that be an expense to the taxpayer?
Baroness Jones of Whitchurch (Lab)
I thought I covered those points. As I said, we anticipate that the advisory board will have nine members, but we are building in some flexibility. We were trying to avoid locking a specific number into the primary legislation without any operational justification. I think that answers that point.
On the point about the unions, of course, if we stick with the social partnership model, they will be in a minority anyway. They will have the expertise and the knowledge to represent all employment issues on behalf of the workers.
Baroness Coffey (Con)
My Lords, we heard from the Minister justification for keeping it as it is, but I reiterate the point that employees are not mentioned anywhere. In terms of the social partnership, it may be worth her looking at the Health and Safety Executive board in that regard. Ultimately, this should be extended to make sure it is about not just trade unions representing workers but a wider range of other bodies that do that very adequately. I beg leave to withdraw the amendment.