Employment Rights Bill

Committee stage
Tuesday 24th June 2025 Lords Chamber

Committee (11th Day) (Continued)

20:28

Amendment 323C

Moved by

[Lord Norton of Louth]

323C: After Clause 150, insert the following new Clause—
“Review of the Act(1) The Secretary of State must—(a) carry out a review of the operation and effect of this Act,(b) set out the conclusions of the review in a report,(c) publish the report, and(d) lay a copy of the report before Parliament.(2) The report must be published before the end of the period of five years beginning with the day on which this Act is passed.(3) The report must, in particular—(a) assess the extent to which the objectives intended to be achieved by this Act have been achieved, and(b) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved more effectively in any other way.(4) In carrying out the review, the Secretary of State must publish an invitation for interested parties to make submissions on the operation of the Act.”

[Lord Norton of Louth (Con)]

My Lords, this amendment provides the means to check that the Bill, once enacted, achieves the purposes for which it is intended. It is a more comprehensive amendment than several that have been debated already, which provide for a review of certain provisions within 12 months of the Act coming into force. I shall argue that the relevance of the amendment goes beyond the Bill itself.

Too often in the past, legislative success for a Minister was seen as a Bill receiving Royal Assent. In evidence to the Constitution Committee’s 2004 inquiry into Parliament and the legislative process, former Clerk of the Parliaments Sir Michael Wheeler-Booth and Professor Vernon Bogdanor noted that,

“all too often, Parliament forgets about legislation once it has reached the statute book”.

Legislative success should be seen not as getting a Bill on the statute book but rather as delivering on what Parliament intended it to deliver.

As the then leader of the House of Commons, the noble Lord, Lord Hain, told the Constitution Committee,

“there is no point in passing legislation if it is not having the desired impact or it is having a different impact”.

Recognition of that point led the committee in its 2004 report to recommend that most Bills should be subject to post-legislative scrutiny within three years of their commencement or six years from their enactment, whichever was the sooner. In 2008, the Government accepted that Bills should normally be subject to review three to five years after enactment, a policy reiterated by Ministers in recent months. Indeed, in January this year, the noble Baroness, Lady Twycross, reported that the Cabinet Office had written to departments reminding them of the importance of post-legislative scrutiny.

In practice, not all Bills are subject to post-legislative review by departments. Some have undertaken thorough reviews, but the enthusiasm for completing them appears to differ between departments. Earlier this year, I asked whether the Government would encourage departments to emulate the Home Office, which had engaged in detailed post-legislative scrutiny of the Counter-Terrorism and Border Security Act 2019. There is a compelling case for ensuring that, in respect of certain Bills, post-legislative review is put beyond doubt through being embodied in the measures themselves.

There are precedents for including within a Bill a provision for post-legislative scrutiny. The most recent incidence is the Football Governance Bill. The Government, to their credit, accepted the argument that the Bill should provide for post-legislative scrutiny and brought forward their own amendment on Report to give effect to that proposal. The wording of my amendment may appear familiar to the Minister as it is taken from the Government’s amendment to the Football Governance Bill.

Bills that meet certain criteria should contain such a provision. The criteria I propose are that the Bill is large, is complex, makes substantial changes to the law, is contested and has not been subject to pre-legislative scrutiny. Bills that meet some but not all of the criteria may be considered for incorporating such a provision. A Bill that is not large but meets the other criteria should normally be considered for embodying provision for such scrutiny.

Each year your Lordships’ House usually appoints a special inquiry committee to engage in post-legislative scrutiny of an Act or group of Acts, such as the Mental Capacity Act or adoption legislation, that generally do not meet any of the criteria I have mentioned. That we select measures of this type for such scrutiny is not an argument against enshrining post-legislative scrutiny in some Bills but rather the reverse. We steer clear of Acts that are large and contentious. We are not likely to select the measure before us for post-legislative scrutiny in a few years’ time. Our scrutiny should complement that undertaken by government of measures covered by these criteria.

The arguments for post-legislative scrutiny of major Bills are several. There is the effect on drafting—knowing that a measure will subsequently be subject to review helps to concentrate the minds of Ministers and drafters in preparing the Bill. It serves to prompt a clear adumbration of purpose—of delineating the basis on which one will know whether the measure has achieved what it was designed to do. Perhaps most importantly, knowing that it will subsequently be reviewed may serve to reassure critics of the measure. That was especially helpful in the context of the Football Governance Bill. I think it applies in the case of this Bill.

Above all, providing the means of checking whether a measure has or has not met its aims and identifying what needs to be done to rectify any problems with its delivery contributes to good law. The Office of the Parliamentary Counsel has previously defined good law as law that is

“necessary, effective, clear, coherent and accessible”.

I have defined it as law that is well intentioned, well drafted and well implemented. Some of these features need to be checked during the Bill’s passage, but others, especially being effective or, in my terms, well implemented, are best tested through post-legislative scrutiny. As one Minister told this House’s Select Committee on the Mental Capacity Act 2005,

“while getting the Act onto the statute book had been a success, ensuring that it was fully implemented and understood was ‘work in progress’”.

This Bill clearly meets the criteria I have outlined. It is large, complex, makes a substantial change to employment law, is clearly contested and was not subject to pre-legislative scrutiny. The Committee has considered more than 330 amendments over 11 days. There are clearly disputes about the principles it embodies and its effect. Putting a provision for post-legislative scrutiny in the Bill, thus ensuring such scrutiny, meets the purposes I outlined.

The Minister may remind us that the Bill will be eligible for post-legislative review in any event, but this amendment puts it beyond doubt. If the Government have confidence in the Bill, they should have no problem in accepting the amendment. Critics may be reassured that, as with the Football Governance Bill, its effects will be reviewed. The amendment sets out the review to be undertaken before the end of a period of five years, and what the review in particular must assess. It also requires the Secretary of State to publish an invitation to interested parties to make submissions on the operation of the Act.

As I say, the provisions replicate those in the Football Governance Bill, omitting only the parts that are specific to football and do not lend themselves to replication in other measures. I urge the Government to build on what they have already achieved in the Football Governance Bill and establish best practice in embodying within this Bill provision for post-legislative scrutiny. Utilising the criteria I have detailed limits the number of Bills that merit such a dedicated provision. This Bill does merit such a provision, and I hope the Minister will demonstrate that the Government have the confidence to embrace it. I beg to move.

[Lord Hunt of Wirral (Con)]

My Lords, I welcome the opportunity to pay tribute to my noble friend Lord Norton of Louth. He is not only a great author and academic, but he is regarded as a world authority on constitutional issues, and he has certainly been described as the greatest living expert on Parliament, so we take very seriously his very constructive suggestion for post-legislative scrutiny.

However, I rise to speak to Amendment 335, standing in my name, which would introduce a sunset clause ensuring that the Act will expire after three years unless the Secretary of State demonstrates that it has led to a net increase in employment. I do so against a background of economic data emerging in recent months painting a deeply concerning picture of the UK labour market. The UK’s jobless rate ticked up to 4.6% in April, while payrolled employment has fallen sharply, according to official figures covering the period when the Budget tax hikes on businesses came into effect.

We had an understanding that some of us would attempt to put together an overall view of what is happening in the jobs market at present, but the response from the business community to this Bill has been unambiguous and deeply troubling. The Institute of Directors has published research showing that more than seven in 10 business leaders—72%—believe that the Bill will have a negative impact on the UK’s economic growth. This is not a marginal concern expressed by a vocal or unrepresentative minority; it represents a clear majority of all those who create jobs in our economy.

Even more alarmingly, half of business leaders reported that they would be less likely to hire new staff as a direct consequence of this legislation. Let that statistic sink in. We are therefore considering legislation that, according to those who make the hiring decisions, will directly reduce employment opportunities for British workers.

These employment figures do not exist in isolation. They form part of a broader pattern of economic decline that, sadly, has accelerated since this Government took office. The combination of increased employer national insurance contributions, the various tax rises announced by the Chancellor and now this additional regulatory burden create a perfect storm of disincentives to business investment and job creation.

We are now witnessing the practical consequences of economic policies cobbled together on the basis of wishful thinking and political prejudice by people with little or no first-hand experience or understanding of how businesses operate in practice. When costs rise, businesses must respond. They cannot simply absorb infinite increases in regulatory compliance, tax obligations and employment-related expenses. The rational response is to reduce costs where possible—and, unfortunately, employment costs are often the largest element in business operations as well as the most unpredictable.

Throughout the debates on this Bill, both the Ministers opposite and their colleagues in the other place have maintained that it will not harm employment. They have repeated this assertion with remarkable consistency, despite mounting evidence to the contrary. This represents either a fundamental misunderstanding of basic economic principles or a deliberate choice virtually to ignore inconvenient evidence.

The Government appear afflicted by a sustained delusion that they can simultaneously increase the costs and complexity of employment while maintaining that employment levels will be unaffected. This surely defies both economic logic and empirical evidence. It is rather like claiming that one can increase the price of a product while ensuring that demand will remain unchanged, simply by insisting that it must be so.

We have to entertain the possibility that we on these Benches are wrong. Perhaps the business community is wrong. Perhaps the Office for Budget Responsibility is wrong. Perhaps the employment statistics are, at best, misleading. Perhaps the correlation between increased business costs and reduced hiring is merely coincidental. Perhaps economic theory and established business common sense are for the birds. My amendment is designed to test the Government’s confidence. If Ministers are indeed confident that this Bill will benefit workers and boost employment, they should graciously accede to this amendment and demonstrate to us all their unshakeable iron confidence that this is not, after all, an unemployment Bill.

20:45

[Baroness Lawlor (Con)]

My Lords, I will pick up on a few of the points made by my noble friend Lord Hunt to support Amendment 335 wholeheartedly. In principle, I am in favour of sunset clauses because they help us to focus on a Bill not once but twice, as they will pass legislative scrutiny twice over, and they encourage us to make better law. There are very practical reasons for Amendment 335. We have a 4.4% unemployment rate—or we did up to November last year—and it is increasing, with 1.7 million people in this country unemployed.

This Bill, as we have heard time and again—I know the Government disagree, but the figures speak for themselves—will increase the cost of and burdens on employing people, restrict job entry and limit new posts being advertised. The number of job vacancy adverts is decreasing. Since the Government came to power, the tally I mentioned earlier—I am sorry to repeat it—is 115,000 jobs lost. At this rate, there is a very good reason to support such an amendment. I hope the Government will take on board that we must consider a sunset clause in case unemployment rises and employment levels go down significantly in three years’ time.

[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 the noble Lord, Lord Norton, for tabling Amendment 323C and the noble Lord, Lord Hunt, for Amendment 335. I pay tribute to the expertise of the noble Lord, Lord Norton, in this area. I reassure the noble Lord that, despite Amendment 323C’s positive intentions, it effectively repeats what the Government already intend to do.

Our impact assessment sets out a clear plan to monitor and evaluate the effects of the Bill and its secondary legislation, following standard government practice. This approach will help us assess how well the measures are delivering on their objectives, inform future policy-making and review the real-world impact on all stakeholders, whose contributions we recognise as vital to the strength of our economy. As is standard practice, in line with our Better Regulation Framework obligations, we also intend to conduct a post-implementation review of the Bill within five years of Royal Assent. This will provide sufficient time to assess the policy’s effectiveness and gather sufficient data for evaluation purposes.

In the case of the fair work agency, ongoing oversight of employment rights enforcement is provided for in Clauses 91 and 92. They require the Secretary of State to publish a three-year labour market enforcement strategy and annual reports, which must be laid before Parliament and the Northern Ireland Assembly. Secondary legislation made under the provisions in this Bill will also be subject to the requirements in the Small Business, Enterprise and Employment Act 2015 regarding proportionate monitoring and review.

In addition, where further detail will be set out in secondary legislation, the majority of statutory instruments will be subject to the affirmative procedure, allowing both Houses to consider them in detail and providing Parliament with sufficient opportunity for scrutiny and debate. Furthermore, the Government will consult on many of the details to be set out in secondary legislation, listening to the expertise of business, trade unions and civil society to ensure that the details of the regulations are appropriate to the current needs of the labour market.

On Amendment 335, in the name of the noble Lord, Lord Hunt, we want to ensure that workers have these rights for life and not just three years, as the noble Lord proposes. As a result, we oppose his amendment. As is typical with employment legislation, further details on many of the policies in the Bill will be provided through regulations after Royal Assent. We will begin consulting on these reforms in 2025, seeking significant input from all stakeholders. We anticipate this meaning that the majority of reforms will take effect no earlier than 2026. We are committed to getting the detail right. This means listening to and incorporating a wide range of views into our policy development.

While headline statistics, such as employment and unemployment rates, may appear strong by historical standards, millions of workers are stuck in low paid, insecure and poor-quality work that is detrimentally affecting their financial stability and health. The UK’s productivity slowdown is more severe than in other advanced economies. A fragmented labour market and too much insecure work are holding back growth and investment. We also lag behind the OECD average on employment protections, and we have paid the price. The UK economy has not grown at the average rate of other OECD economies in the last 14 years, missing out on £171 billion-worth of growth. Average salaries have barely increased from where they were 14 years ago, and the average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crisis.

This Bill will ensure a fairer, more equal labour market and deliver wider benefits to the business environment by improving well-being, incentivising higher productivity and creating a more level playing field for good employers. Consider a few of the changes it will bring: over 10 million workers in every corner of the country will benefit; increased well-being alone could be worth billions of pounds a year; there will be less workplace conflict, which costs UK employers about £30 billion a year; and up to 1.3 million employees will gain a new entitlement to statutory sick pay, increasing total sick pay by £400 million per year.

The noble Lord, Lord Hunt, spoke about the way businesses are perceiving this, but, as my noble friend Lord Leong said, business confidence is actually rising. The latest Lloyds Business Barometer survey shows business confidence at a nine-month high, with rising hiring expectations among businesses. I have to say to the noble Lord, Lord Hunt, that a sunset clause would create business uncertainty at the very time when we want to build on that confidence. The industrial strategy, which we published yesterday, has been welcomed by all sectors of business and will help to build that long-term strategy for growth.

Given the benefits the Bill will bring for workers over the long term, we oppose the noble Lord’s amendment and will continue to promote growth for businesses and the level playing field for good employers. With this in mind, I ask the noble Lord, Lord Norton, to withdraw Amendment 323C.

[Lord Norton of Louth (Con)]

My Lords, I am grateful to my noble friend Lord Hunt of Wirral and the Minister for their contributions to this short debate. Obviously, I am very grateful for their opening comments; it seems to be something on which I have united the two Front Benches.

I am very grateful for the Minister’s considered response. I would prefer it to be in the Bill for the reasons I have given, but I feel I have achieved something this evening as she has come to the Dispatch Box and made the commitment she has, which is valuable because it ensures the Bill will be subject to a review of the kind I seek. Although I would have preferred that to be in the Bill, this short debate has achieved something.

If the Bill is subject to post-legislative review, it picks up on the points made by my noble friend Lord Hunt of Wirral because, with the claims he has made about the Bill, it will be a chance to test whether it has delivered. It is important that post-legislative scrutiny is thorough in the way that some departments most definitely have done it for some Bills, which I welcome. My whole point is to encourage that. It is something I will return to, not necessarily on this Bill but on others, to ensure we achieve the same result. I am grateful to the noble Lord and to the Minister for what they said and beg leave to withdraw the amendment.

Amendment 323C withdrawn.

Amendment 323D not moved.

Amendment 323E

Moved by

[Lord Berkeley]

323E: After Clause 150, insert the following new Clause—
“Substitution clauses and the definition of “worker” in app-based work(1) The Employment Rights Act 1996 is amended as follows.(2) After section 207B, insert— “Substitution
207C Prohibition of substitution clauses in platform-based logistics work(1) A relevant company must not include a clause in its contractor agreements that permits substitution in the performance of services, unless—(a) the company can demonstrate that such substitution is operationally viable and genuinely offered to all contractors, and(b) the identity of any substitute is subject to the same training, vetting and approval standards as a directly contracted individual.(2) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).(3) In this section—“dependent contractor” means a person who—(a) performs services arranged through the company’s platform;(b) is paid per task or service delivered;(c) is not classified as an employee or worker by the company;“relevant company” means a company that—(a) provides services in relation to food and beverage delivery, postal and courier operations, or private hire transport via a digital or app-based platform, and(b) engages more than 250 workers or dependent contractors globally.(4) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).”(3) In section 230 (employees and workers), after subsection (3), insert—“(3A) For the purposes of subsection (3)(b), a requirement to perform work personally shall be deemed to exist unless the right to substitute—(a) is genuine, exercised in practice, and not fettered by contractual or practical limitations imposed by the contracting entity,(b) is not subject to prior approval or vetting by the company, either directly or indirectly, and(c) forms a meaningful part of the way in which services are actually delivered.(3B) Where the work involves the use of a digital platform to allocate real-time, location-based tasks in sectors including—(a) food and beverage delivery,(b) postal and courier services, and(c) taxi and private hire operations,any contractual clause purporting to allow for substitution shall be treated as void and of no effect, unless the company can demonstrate that the right of substitution is genuine, practical, and routinely exercised.(3C) A substitution clause in a contract for services of the type described in subsection (3B) shall not, by itself, be sufficient to establish that an individual is not a worker.””

[Lord Berkeley (Lab)]

My Lords, the new clause proposed in Amendment 323E in my name has been given the rather surprising title “Substitution”, and one or two noble Lords may be wondering what that means, so I will try and explain. It refers to the substitution of people with the intention of avoiding paying tax, national insurance or anything else. It is a problem that has grown like Topsy over the last five years.

Noble Lords will remember how many times in the last year we have debated whether electric scooters should go on the road or the pavement and whether we should have electric bikes. More recently, we have been debating electric bicycles with big trailers behind them, usually pulling Deliveroo or something like that. While many of us think that it is a great idea to have green transport, when you start looking behind the way that this part of the industry is created, it does not look quite so good.

I am not going to go into the road safety element, because we are not in a road safety debate tonight, but there are other safety implications concerning the people who drive these vehicles. There are questions concerning, first, the extent to which they should be in the country at all and, secondly, whether they are paying the right amount of tax—and that is before we get into any other thing that might be driver related.

Noble Lords may have read a big spread in the Sun today, which I think is coincidental. It reads:

“Asylum seekers are cheating the taxpayer—with illicit Deliveroo and Just Eat accounts offered to them within ten minutes of asking”.


It goes on to explain that there are people selling Deliveroo driver accounts to migrants even while they are on the rubber dinghy coming across the channel from Calais. That makes it very nice for them, because they know they are being taken on and do not have to look for a job. That is one problem. I am not going to repeat the rest of the article as it will take all night, but it is well worth reading the reasons behind this.

The other issue is that these drivers riding the bicycles seem to be very adept at getting their friends to substitute for them. The friends may have no qualifications, driving licence, residence or anything else, and are probably not recognised, so they carry on driving these things, frankly, illegally. That is before we get to the questions of why there is no enforcement in relation to these people’s driving ability or whether they should be here at all. I am not going to go into any greater depth on what is wrong. As we all know, this is a serious problem in London, but it is also a problem elsewhere.

The amendment is quite complicated, but then employment law is complicated. My friends in the cycling and walking community, who are really fed up with this, look upon this amendment as a matter of safety, but they also are asking, “Why should people get away with doing this when they probably are not paying tax or anything else?”

The wording of the amendment is designed to cover the most popular parts of the industry, such as food and beverage delivery, postal and courier delivery, and taxi and private hire operations, as well as probably many others. It is to make sure that, if people are hired by one of these companies to drive these vehicles and go on particular routes, they actually do it rather than subcontract the work to somebody else who has no qualifications at all. I have not yet seen any convictions for people found guilty of what you might call substitution, but I expect it will happen soon.

21:00

We have come up with a fairly complicated amendment for discussion this evening. If my noble friend the Minister, when he comes to reply, will accept that we need to go into this further, I hope he will be prepared to meet me and my advisers to say, if he does not like what is here, what we will do to make sure that everybody is operating in the best way legally.

I am afraid that my comment is against many comments from many Ministers of this Government and the last one, asking, “Why don’t you do something about the electric scooters and the people who go through red lights, knock down pedestrians and everything else?” The only answer we get is that it is too difficult. This is not the same as that; it is too difficult, but it is in a separate box, if you like. I still believe that, if Ministers were really keen to make sure that people paid their taxes and everything else, it might actually dissuade one or two people from trying to cross the channel. I know that this is something that the Prime Minister is very keen to do, and so am I.

So this falls between, “Can we get fewer people going across the channel?” and “Can we make the roads, pavements and everything safer, and make sure that those who obey the law benefit from it and those who do not get taken to the cleaners?” I beg to move.

[Lord Russell of Liverpool (CB)]

As a loyal member of the All-Party Parliamentary Group for Cycling & Walking—with an emphasis on the cycling rather than the walking—I support the noble Lord, Lord Berkeley, on this, and I will explain why. As he indicated, what is behind this amendment is partly what is leading certain noble Lords around the Chamber to pepper the noble Lord, Lord Hendy, with a series of curveballs about e-bikes in all sorts of shapes and illegal forms.

The All-Party Parliamentary Group for Cycling & Walking has just issued a rather alarming report called Unregulated and Unsafe: The Threat of Illegal E-Bikes. It has a specific chapter in it called:

“The role of delivery platforms and the gig economy”.


This evening, we are talking about two intertwined issues. First, there is an employment law issue. At the heart of the Bill is a wish by our new Government to rebalance what they view as an imbalance that has occurred during successive Conservative Administrations between the rights of workers, particularly unionised workers, and the rights and freedoms of employers. Whatever your view on that, what we are talking about today is a good example of an area of employment that is using slightly questionable tactics to avoid recognising its rights and responsibilities towards its workforce.

Your Lordships may recall that, a few years ago, when the phenomenon of Uber started taking over and assailing the black cab business here in London, there was a long debate and a big issue around Uber claiming again and again that the people who were driving for it were not its employees. In successive cases, it was taken to court and eventually it had to admit that the people who drive for it are actually employees and have some rights as employees.

We have a very similar situation with delivery platforms. These are the delivery platforms where, if you have a craving for a peanut butter and pineapple pizza at 3 o’clock in the morning—which, being married to an Italian, I certainly hope you do not—you can simply reach for your smartphone and it will be delivered to your door fairly quickly.

Those large platforms are basically doing what Uber did originally. They do not recognise the people who are driving for them as employees; they are said to be contractors—indeed, they allow the contractors to nominate people to substitute for them, people who have no commercial or contractual relationship with the company whatever. One of the larger delivery platforms, related to Deliveroo, successfully managed to win a case in the Supreme Court brought by the Independent Workers Union of Great Britain, which was aware that this particular arm delivered food around London and other cities, largely using unregulated and very fast e-bikes. The company successfully argued against the union that these were not employees, and it used the fact that the people who ride for it could substitute others as part of its defence, which was accepted by the High Court. So we clearly have a strange loophole here that is harmful for those workers and is driving all sorts of unfortunate behaviour.

In evidence, I turn back to the report of the all-party group and the issue about the role of delivery platforms and the gig economy. In its written evidence, London Councils said:

“Many delivery companies are set up as Platform companies, with riders classed as self-employed so companies are therefore not required to provide health and safety measures. Platform companies only take an advisory role in safety standards for riders, not mandating vehicle mode or collision reporting, therefore avoiding any financial implications. This means there are no checks and balances in place for the safety of the vehicles used for deliveries, the riders themselves and the impacts on other road users”.


In respect of evidence from one of the platforms—Just Eat, which noble Lords may have seen written on the back of mopeds with L-plates on or illegal e-bikes—the report said:

“Pay for riders per drop has declined in recent years, requiring ever longer shifts with ever more deliveries per hour in order for a rider to earn sufficient money”.


We see vehicles or e-bikes constantly jumping red lights, narrowly missing pedestrians and weaving in and out of traffic, but they are doing it because the way in which they are compensated requires them to make the maximum number of deliveries in the shortest possible time, which obviously encourages speeding and avoiding road traffic laws, red lights and things like that. I suspect that many noble Lords or members of their families have had experiences of looking around rather nervously even when they cross a zebra crossing because of what may suddenly assail them.

Lastly, this is written evidence—and it is a tribute to the noble Baroness, Lady Blake of Leeds, who is not in her place because this is not a Bill that she is involved in—from Leeds City Council, which has the same problems. It says:

“In addition to the safety of e-bikes, we would like to work with government to improve the industry’s employment and verification practices to address account sharing, where couriers can substitute deliveries to others who may not have a right to work in the UK. FDC [food delivery companies’] business models currently rely on riders themselves to confirm their eligibility to work, and this can enable illegal working. Alongside this, we would like to cover how to reduce the time pressure on riders to make deliveries, driving hours, and platforms’ responsibility for their riders’ safety”.


The councils have made a compelling case for this, as has the noble Lord, Lord Berkeley. I suggest that for the Government to look at this would align with much of their intent in this Bill.

[Lord Hendy (Lab)]

My Lords, I feel obliged to add a word to my noble friend Lord Berkeley’s amendment, because I was counsel for the union in the Deliveroo case which the noble Lord, Lord Russell, has mentioned. The issue in that case was slightly tangential to that raised by my noble friend; the question there was whether Deliveroo riders were among those entitled to the trade union rights and benefits of Article 11 of the European convention. We need not go into that.

The Supreme Court held that the presence of a right of substitution in the contracts between the Deliveroo riders and Deliveroo meant that they were not entitled to those trade union rights. That reflects the situation in English law under the definition of a worker in the Trade Union and Labour Relations (Consolidation) Act and the Employment Rights Act, which requires personal service. The courts have held that that excludes workers who have the right to engage a substitute, even in situations such as that with Deliveroo where the Central Arbitration Committee held that its use was rarely if ever put into operation. It was never used by those who brought the case.

The relevance of all this is that, as the noble Lord, Lord Russell, mentioned, the categorisation of workers—whether they are an employee, a limb (b) worker, which Uber drivers are and the Deliveroo riders wanted to be, or an independent contractor—determines what rights they are entitled to under the various statutes. I accept that my noble friend the Minister will say that the status of workers will be consulted on in future. I completely agree that it should be approached holistically. As someone who has put up two Private Members’ Bills on the status of workers, both of which succeeded in this House with all-party support, I am happy to offer him my drafts. The matter has to be dealt with holistically. However, my noble friend Lord Berkeley has a point. This use of substitution clauses is a device to deprive workers of the statutory rights that Parliament intended them to have. It is an abuse that could be addressed now in this Bill before we get to the consultation on the status of workers generally.

The noble Lord, Lord Russell, and my noble friend Lord Berkeley indicated some of the consequences of the abuse of these substitution clauses. I will articulate two more. First, as I have mentioned, where platform companies insert a substitution clause in the contract between the rider or the contractor and the platform company, the effect is to deprive them of all employment rights. When I say that the platform company inserts the clause, that is what happens—there is no agreement, consultation or collective bargaining; they are simply told, “If you want to work, you agree to the substitution clause”. It is a device. In the Deliveroo case, it was, in effect, accepted that that was the purpose of the insertion of the clause.

Noble Lords have already articulated the second problem. Since the Deliveroo case, substitution clauses have become extremely widespread and the use of actual substitutes, which was rare in the Deliveroo case, has now become very frequent and involves illegal working and so on. But—this is the final point I want to draw to your Lordships attention—think of the workers who are engaged as substitutes: they are being paid even less than the contracted riders; they are being exploited. They are the people who, as the noble Lord, Lord Russell, pointed out, speed through the traffic, risking their lives to make as many deliveries as possible. It is an abusive situation and this might be a moment to deal with it, in advance of the general consultation and the legislation that will be required to regulate the status of workers generally.

21:15

[Baroness Neville-Rolfe (Con)]

It is a pleasure to follow the noble Lord, Lord Hendy, and the thoughtful contributions from the noble Lords, Lord Berkeley and Lord Russell of Liverpool.

I think I was responsible for some of the curveballs on illegal e-bikes and e-scooters that have peppered this Chamber in recent years. I regard their operation as dangerous, especially for elderly people and the disabled—“a Wild West” is the phrase I used before I became a Minister and learned my P’s and Q’s.

I hope the Minister will agree to the request from the noble Lord, Lord Berkeley, for a discussion on what can be done to tackle the current loopholes, even if nothing can be done in this Bill. It is an important matter and we should try to progress a solution.

[Lord Palmer of Childs Hill (LD)]

My Lords, Amendment 323E, tabled by the noble Lord, Lord Berkeley, is a curious but important proposal, addressing a very real challenge in the evolving world of work. The noble Lord, Lord Russell, pointed this out, as has the noble Baroness, Lady Neville-Rolfe, and the noble Lord, Lord Hendy.

The amendment seeks to clarify that substitution clauses in app-based platform work, such as food delivery, courier services and private hire transport, are valid only where the right to substitute is genuine, viable and actually used in practice. As many of us will know, much of our employment legislation was developed in an era when the labour market looked very different. The rise of app-based platforms and the gig economy has created new forms of work that do not always fit into the traditional categories of employment or self-employment, as has been said by previous speakers.

This amendment seeks to clarify one such grey area: the use of substitution clauses in platform work. It rightly asks whether these clauses are, in practice, genuine and workable, or whether they are being used to deny individuals the worker status that they would otherwise be entitled to. The noble Lords, Lord Russell and Lord Hendy, and others have explained in detail how that works in practice.

The broader point is that the Government must ensure that our workers’ rights framework is not stuck in the past. It must be up-to-date and dynamic enough to reflect the modern patterns of work and provide reasonable security for those engaged in them.

Too often, the flexibility of gig work is celebrated without enough attention being paid to the insecurity that can come with it: uncertain hours, low pay—which has been mentioned, including lower pay than the normal driver—and limited recourse to rights. Ensuring that the legal definitions we rely on are not open to exploitation is a vital step in protecting workers and maintaining fairness in the labour market. As other noble Lords said, this amendment may not be the final word on the matter, but it makes an important contribution to a conversation—the noble Baroness, Lady Neville-Rolfe, used the word “discussion”.

I give my compliments to the noble Lords, Lord Hendy and Lord Russell, and the noble Baroness, Lady Neville-Rolfe, and others for this conversation—or discussion. I hope that the Minister and the Government will see that there is a gap in employment legislation that needs to be looked at. We ought to deal with people, such as couriers and drivers, who are substituting to people paid even lower wages—and then scooting in front of you at the traffic lights, trying to push up the number of deliveries or collections they are making—in primary legislation, not in a statutory instrument somewhere down the line. I hope that the Government will look at this before we get to Report.

[Lord Sharpe of Epsom (Con)]

My Lords, it is a pleasure to follow the noble Lord, Lord Palmer, with whom I agree pretty much entirely.

This has been a much more fascinating debate than I was anticipating, and that says a lot more about me than it does about the debate. I was particularly struck by the comments from the noble Lord, Lord Hendy; I had no idea that such practices had been accepted by the courts. That seems to be one of the cases, as we discussed in an earlier group, where the gig economy workplace is evolving rather faster than the law. That clearly needs to be looked at, otherwise we will end up with what seem to me, as a lay man, relatively perverse situations.

I have to say to the noble Lord, Lord Russell, that the thought of a peanut butter and pineapple pizza sends a rather nasty shiver down the spine. Do people really eat that? I would seriously hope not.

The gig economy and platform-based work are obviously integral parts of the modern labour market. We should not forget that the sector offers flexibility that many workers value, because it allows people to choose when, where, how much and how they work. For some, that flexibility is vital; it means they can balance their work with other commitments or supplement their income in ways that traditional employment models do not allow.

I completely agree with the noble Lord, Lord Berkeley, who introduced his amendment so eloquently, that there seems to be an incentive to come to this country. If we were able to control this, there would be an opportunity to help at least stem the flow of the boats, which is something that used to occupy a lot of my time.

On the amendment before us, which seeks to regulate the substitution clauses and redefine certain worker classifications, at this stage, we approach it with some caution, while acknowledging that it is clearly a subject to which we should all return and which demands further consideration. The intention to protect gig economy workers is commendable, but we should not make regulatory changes that unintentionally undermine the entire industry. With that in mind, I look forward to the Minister’s comments, but I do not believe that this subject will go away any time soon.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, I thank my noble friend Lord Berkeley for tabling Amendment 323E and everyone who contributed to this short but important debate on the issue of substitution clauses.

To be absolutely clear, the Government are very alert to the risks that my noble friends Lord Berkeley and Lord Hendy and the noble Lords, Lord Russell of Liverpool and Lord Palmer of Childs Hill, all raised on substitution. We recognise that substitution in the platform economy is an issue, and we share the concerns about the impact that it can have on working conditions and the prevalence of illegal working.

Some of the critiques that my noble friend Lord Berkeley made about e-bikes and e-scooters, and some of the comments made by the noble Baroness, Lady Neville-Rolfe, fall a little outside what we are talking about tonight. One only has to be in the Chamber at Oral Questions on a regular basis to understand that noble Lords across the whole House share concerns about the impact that e-bikes and e-scooters are having on general society, as well as their attitudes towards the noble pursuits of cycling, walking and sharing public spaces.

There is growing awareness of substitution clauses and their use to deny workers core protections, including the national minimum wage and holiday pay, as set out by many noble Lords this evening, particularly the noble Lord, Lord Russell of Liverpool. Clearly, in extremes this can lead to abusive and exploitative treatment of workers, and we are looking at it closely.

My noble friend Lord Berkeley raised the issue of illegal working as reported in today’s edition of the Sun. It is important in considering this issue to realise that the Government recently introduced an amendment to the Border Security, Asylum and Immigration Bill on Report in the other place to extend the scope of the requirement on employers to carry out right to work checks on limb (b) workers or individual subcontractors, such as those working in the platform economy.

We must remain in step with modern labour market models. The purpose of these changes is to require businesses that employ individuals in new labour markets to check that only those with a right to work in the UK are eligible to participate in these arrangements, and to enable Immigration Enforcement to issue penalties where they are not. This ensures that compliance is equivalent for traditional employers. That, as I understand it, is the core of the issue raised in the newspaper report described by my noble friend Lord Berkeley.

The links between substitution and employment status demonstrate how complex this area is. As my noble friend Lady Jones said earlier this evening in discussing Amendment 318, we are committed to consulting on a simpler employment status framework. My noble friend Lord Hendy said that we should look at this holistically. I am confident that this will provide an opportunity to hear views from a wide range of stakeholders on the use of substitution clauses and the interactions with employment status. This is an important issue, but I am also aware that there is a complex interplay with measures we are going to discuss shortly in Committee on the Border Security, Asylum and Immigration Bill. In that context, it might be useful for me to take this back to colleagues in the Home Office and see how best to pursue it further.

I therefore ask my noble friend Lord Berkeley to withdraw Amendment 323E. In so doing, as this will be my last opportunity to speak in Committee, I would like to take this opportunity to thank all noble Lords who have taken part in the wonderful 11 days in Committee on this Bill for their constructive engagement and, indeed, at times, stimulating debates—who would have thought we would get so many days in Committee? I take note of what the noble Lord, Lord Sharpe, said earlier about the pace of progress during immigration legislation. As I am going to be on the Front Bench for the Border Security, Asylum and Immigration Bill later this week, all I can say is: I simply cannot wait.

[Lord Berkeley (Lab)]

My Lords, I am really grateful to noble Lords who have taken part in this short debate and made many contributions, which indicate that it is a difficult subject and it would the better if the whole thing went away. But of course, it will not go away. When my noble friend the Minister said that this is his last appearance on the Bill, I thought, “Well, is it a sinking ship or is it going to the next stage?” I hope it is not a sinking ship, and that there is going to be another good stage.

[Lord Katz (Lab)]

To be clear, we are in Committee. Who knows what comes next?

[Lord Berkeley (Lab)]

We had a problem up in the Committee room last week with the mice eating through the electric cables. We have got a few problems here.

More seriously, it is a big problem. We only covered probably a small fraction of it tonight, but I would be very grateful if the Minister agreed to meet those of us who are interested, sometime between now and Report, to see how we can take it forward in one way or another. I am not sure which way “forward” would be; but otherwise, it is very tempting to put another amendment down on Report and have another debate like this. It would be much better if we could all sit around a table for half an hour and hear what the Government want to do, and hopefully agree—or hopefully not. Is my noble friend about to say yes to that?

[Lord Katz (Lab)]

Over many years now, I have had lots of interesting discussions with my noble friend, in different guises. It is always a pleasure to meet with him—and indeed with any other noble Lords who wish to engage on this important issue.

[Lord Berkeley (Lab)]

I am most grateful to my noble friend. On that basis, I beg leave to withdraw the amendment.

Amendment 323E withdrawn.

Amendment 324 not moved.

Clause 151: Power to make consequential amendments

Amendment 324A

Moved by

[Lord Hunt of Wirral]

324A: Clause 151, page 147, line 31, leave out subsection (2)

[Lord Hunt of Wirral (Con)]

My Lords, I rise to move Amendment 324A and to speak to Amendments 324B and 324C on behalf of my noble friend Lady Coffey; I will also speak to my opposition to Clause 151 standing part of the Bill.

21:30

Clause 151 bestows upon the Secretary of State a sweeping and, I submit, troubling power: the authority to make regulations that may revoke, repeal or amend any Act of Parliament, so long as such changes are deemed

“consequential on any provision made by this Act”.

The term “consequential” is notoriously broad. It is not, in law or logic, confined merely to provisions that directly contradict or are in express conflict with the provisions of the Bill. Rather, it might be interpreted to encompass a vast array of legislative measures, past and present, which in the subjective view of the Executive bear some peripheral or inferred relation to the matters herein.

This is no minor technicality; it is a direct affront to the fundamental democratic principle that underpins our constitutional order—the sovereignty of Parliament. It is this Parliament, and this Parliament alone, that may properly enact, amend or repeal primary legislation. Yet, under Clause 151, such powers may in effect be exercised by ministerial fiat through the medium of secondary legislation, often subject to minimal scrutiny and with little opportunity for meaningful challenge in either House. This is a constitutional sleight of hand. It is the shifting of legislative power from the elected Chamber and this revising Chamber to the Executive, on the back of an ambiguous and elastic phrase. We must not allow such erosions of parliamentary authority to pass unchecked beneath the veil of procedural convenience or legislative tidiness.

My noble friend Lady Coffey has tabled sensible amendments that provide some necessary safeguards, which I urge the Government seriously to consider. Under Clause 151(4), regulations that amend or repeal primary legislation are subject to the affirmative resolution procedure. This means that Parliament must actively approve such measures. However, Clause 151(5) states:

“Any other regulations under this section are subject to the negative resolution procedure”.

This raises the critical question: why are the rest of the regulations subject only to the negative procedure? What is the constitutional justification for this lower level of scrutiny?

If the Government are unwilling to accept my noble friend’s sensible recommendations, this clause should be removed from the Bill entirely. But first, I await the Minister’s response.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Hunt, for giving notice of his opposition to Clause 151 standing part, which gives me the chance to set out the purpose of that clause, and for speaking to Amendments 324A, 324B and 324C, which, as I understand it, are probing amendments.

Clause 151 grants the Secretary of State a power by regulations to make amendments to other legislation which are consequential on any provision made by the Bill. Consequential amendments are fundamental to ensuring that the statute book remains coherent and workable. It is a Henry VIII power similar to the ones used in previous legislation of similar size and complexity. It allows the amendment of Northern Ireland legislation, as it does Acts of the Scottish Parliament and the Senedd Cymru. This is necessary to allow the statute book across all UK jurisdictions to be maintained effectively.

None the less, the power in Clause 151 is appropriately constrained because it allows only amendments which are consequential to the substantive amendment already made in the Bill itself. For these reasons, we consider it both necessary and proportionate. I also remind noble Lords that the Delegated Powers and Regulatory Reform Committee did not raise concerns about the power in Clause 151 in its report, to which we will reply in due course.

I reassure noble Lords that, where possible, amendments to other pieces of primary legislation that are required as a result of the provisions made in this Bill have been made in the Bill itself, as my noble friend Lord Leong set out earlier. However, it is possible that further provisions could still be identified that require consequential amendment. Allowing these to be made by regulation will mean that they can be made without delay and with an appropriate level of parliamentary scrutiny. This is a standard power in a Bill of this size and complexity. There are multiple examples in legislation from recent Conservative Governments that took the same approach, including the Police, Crime, Sentencing and Courts Act 2022 and the Economic Crime and Corporate Transparency Act 2023.

Amending the clause so that any exercise of the power would be subject to the affirmative procedure would result in debates on every consequential amendment, which we believe would be disproportionate. For these reasons, the Government oppose these amendments, and I hope that I have reassured the noble Lord, Lord Hunt of Wirral, that the power this clause vests in the Secretary of State is proportionate. I therefore ask him to withdraw Amendment 324A.

[Lord Hunt of Wirral (Con)]

My Lords, I thank the Minister for her response to the concerns that I raised during this debate. However, I remain unconvinced by the Government’s justification for these sweeping powers. As we have said on several occasions already, there are far too many delegated powers in the Bill as it stands. To extend this approach to all consequential future provisions represents a qualitative leap in executive authority that goes well beyond what is necessary or constitutionally appropriate.

I recognise that the Minister has given assurances about responsible use of these powers, which, no doubt well-intentioned, cannot substitute for proper parliamentary oversight built into the legislative framework itself. We are being asked to sign a blank cheque, drawn on the account of parliamentary sovereignty. The breadth of these consequential powers, combined with the minimal oversight mechanisms, represents precisely the kind of constitutional overreach that this House exists to prevent.

I remind Ministers—like many noble Lords, I have painful first-hand experience of this—that the powers may not be indefinitely in the hands of Ministers of any one party. Power changes hands from time to time, and they ought possibly to reflect on the extraordinary legacy of centralised executive power they may find themselves bequeathing to a new Administration that is not of their political persuasion. Governments change, Ministers change and political priorities evolve. Constitutional safeguards must be designed to protect parliamentary sovereignty, regardless of who holds executive office. I urge noble Lords across the Chamber to reflect carefully on whether we are prepared to accept such a substantial erosion of parliamentary authority in the name of administrative convenience. Some principles are surely too important to compromise, and parliamentary sovereignty is surely paramount among them. But, in the meantime, I beg leave to withdraw the amendment.

Amendment 324A withdrawn.

Amendments 324B and 324C not moved.

Clause 151 agreed.

Clause 152 agreed.

Clause 153: Regulations

Amendment 325

Moved by

[Lord Sharpe of Epsom]

325: Clause 153, page 148, line 31, at end insert—
“(3A) The Secretary of State must have regard to the following objectives when making any regulations under this Act—(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 amendment would require the Secretary of State to have regard to the objective of the international competitiveness of the economy and its growth in the medium to long term when making any regulations under the Act.

[Lord Sharpe of Epsom (Con)]

My Lords, I will speak to my Amendments 325, 326A and 329B, and briefly allude to Amendments 330BA and 330E, tabled by my noble friend Lord Leigh of Hurley.

The Government have stated that this Bill represents the biggest upgrade to workers’ rights in a generation. Given the tremendous importance that the Government have placed on this piece of legislation, one would reasonably have expected them to have conducted a comprehensive and thorough impact assessment. Indeed, the noble Lord, Lord Leong, argued earlier that the Government had done just that. However, the fact remains that Regulatory Policy Committee has awarded the Government’s impact assessment a red rating, which encompasses several critical areas, including the Trade Union Act 2016 repeals, day-one rights provisions, flexible working arrangements, and measures addressing harassment by third parties. Such a rating indicates fundamental deficiencies in the Government’s analysis of this legislation’s potential consequences—a point that has been argued from this side of the Chamber on a number of occasions.

I will illustrate precisely how inadequate this impact assessment is by examining one particularly striking example. It states that:

“There could also be wider impacts on society, including … a reduction in days lost to strike action if Trade Union reforms lead to better industrial relations, which will prevent significant costs on the economy. Rail strikes alone are estimated to have cost the UK economy at least £1.7 billion over the eight-month period to January 2023”.


This statement exemplifies the superficial and speculative nature of the Government’s analysis. Rather than providing concrete evidence and detailed economic modelling, they have resorted to hypothetical scenarios and broad generalisations. They suggest that their reforms might lead to better industrial relations, which could potentially reduce strike action and in turn prevent economic costs. However, this chain of assumptions lacks any of the rigorous analysis which legislation of this magnitude demands.

Furthermore, although the Government cite the economic impact of rail strikes, they fail to provide a comprehensive analysis of how their specific proposals would address the underlying causes of industrial disputes. They offer no detailed examination of the potential unintended consequences of their reforms, nor do they adequately assess the costs that businesses and workers might face during the implementation of these new rights. The mention of implementation affords me an opportunity to again remind the noble Lord, Lord Leong, that we will very soon be delivered an implementation plan.

On Amendment 325, we have heard Ministers trumpet on a number of occasions PwC’s global CEO survey, which ranked the UK as the second most attractive destination for international investment. Unfortunately, that claim collapses under scrutiny. The survey was conducted before the current Chancellor’s first Budget and before the Government began systematically dismantling the pro-growth, pro-enterprise environment that we left in place. Since then, the UK’s position has collapsed to 29th in IMD’s world competitiveness rankings. We are now considered less competitive than Oman, Saudi Arabia and the Czech Republic. We are barely ahead of Kazakhstan and Kuwait. That is not a global powerhouse. What is the Government’s response? Instead of halting the slide, they are doubling down with a raft of measures that will make the UK even less attractive to investors, less hospitable to entrepreneurs and less viable for businesses that are looking to grow.

At the centre of this is the Employment Rights Bill. This legislation threatens to make Britain one of the most rigid and punitive labour markets in the developed world. Let us be clear: the Bill introduces day-one rights for employees to bring legal claims, dramatically increasing the litigation risk for employers from the moment a contract is signed. It expands rights around dismissal, probation and workplace disputes, turning even small staffing decisions into potential courtroom battles. It removes key flexibilities that employers rely on to respond to changing economic circumstances. This may all sound very appealing in the abstract. The Government will say that it is modernising employment rights, but in practice job creation will slow, entrepreneurial risk will drop and, crucially, offshoring will accelerate, because businesses can choose to hire in other jurisdictions —and they will.

We are already seeing warnings from business leaders that the cost of employing in Britain is simply becoming too high, not just financially but legally and procedurally. A recent survey by Saffery and Ward found that employers are planning layoffs and the relocation of operations abroad in direct response to increasing national insurance contributions and regulatory burdens, and now the spectre of hostile employment legislation. EY has warned that high energy costs and slow growth are deterring investment, while major employers are now reviewing UK operations due to the cumulative cost of doing business here.

21:45

That is not accidental; it is the consequence of deliberate policy. Yet the Government insist that this is about bringing us into line with Europe. Why would we want to emulate the slowest-growing region on the planet? Why are we importing continental sclerosis when we should be building a flexible, high-growth, innovation-driven economy?

This Government inherited a thriving environment for investment and innovation. They have now presided over collapsing competitiveness, a climate of legal uncertainty, and a looming exodus of jobs and capital. That is not levelling up; that is levelling down. It is the British worker who will pay the price. I urge Ministers to think again before more British businesses decide that they are better off elsewhere.

My noble friend Lord Leigh of Hurley is perfectly capable of speaking to the amendments that he has tabled himself. I am sure that I will agree and replicate much of what he is about to say.

I conclude by saying that, if the Government are confident in the righteousness of their reforms, let them subject them to proper scrutiny. If they wish to maintain credibility when they speak of reducing red tape, let them apply that logic consistently and not selectively. I beg to move.

[Lord Vaux of Harrowden (CB)]

My Lords, I will speak to Amendment 326A on behalf of the noble Baroness, Lady Penn, who apologises that she is unable to be here.

The amendment is simple: it would require the Secretary of State or the relevant devolved counterpart to have regard to the impact of any regulations made under the Bill on the economic growth and competitiveness of the United Kingdom. It is very similar to Amendment 325, just introduced by the noble Lord, Lord Sharpe of Epsom, which itself mirrors the wording of the secondary objective for financial regulators, which was introduced in the Financial Services and Markets Act 2023. I would support either one; they ultimately have the same goal.

As we heard on many occasions in Committee—we are reaching the end, at long last—this is a skeleton Bill, where an enormous amount of the detail will be added later by regulation. I counted 173 regulation-making powers in the Bill—a quite staggering number. Call me old-fashioned, but I rather think that we should do the work first and then legislate, not the other way around.

We also have an impact assessment that accompanies the Bill that, as we were just told, was described by the Regulatory Policy Committee as not fit for purpose. In many cases the impact assessment makes no effort at all to quantify the costs or benefits, precisely because it is not yet known what will be in the final regulations that follow the Bill. The Government themselves concede in the impact assessment that many of the measures in the Bill will have negative consequences. For example, the Government expect that, overall, the measures in the Bill will impose costs to business of around £5 billion. They also state very clearly that these costs will fall disproportionately on small businesses. The potential negative impact on growth and competitiveness from that is obvious.

Some of the negative aspects could be minimised if the regulations are well designed. To give just one example, I have been concentrating my efforts on the Bill on the introduction of day-one unfair dismissal rights. The impact assessment is very clear on the potential negative impacts from that on businesses and, in particular, on the potential hiring of employees who are seen as higher risk, such as younger people. That is my top concern in that respect.

After describing the potential negative consequences, the impact assessment rightly says:

“The impact of hiring and labour mobility will ultimately depend on the final regulations on what is permissible in the ‘initial statutory period’ of employment”.


I agree; a well-designed probationary period could negate many of the impacts that the Bill could cause, which is something that I hope the Minister will be prepared to discuss before Report. However, at the moment, we have no idea what the final regulations will be and neither, it appears, do the Government. They still have not carried out the relevant consultation.

That is a really good example of the importance of this amendment. The final consequences of the Bill will depend on the detail that is to be added later or amended by regulation. We should not just take that on trust. Although I of course have the greatest faith in the Minister, this Government cannot speak for or bind future Governments.

The Government have consistently stressed the importance of growth and competition, although it is fair to say that their actions have not always followed their rhetoric. To quote the Chancellor in January this year:

“Economic growth is the number one mission of this government … most of all … without economic growth … we cannot improve the lives of ordinary working people”.


Surely that last point is the main point of the Bill: to improve the lives of ordinary working people. It must be essential, and I assume agreed, that where the measures in the Bill could have negative impacts on growth, those negative impacts should be identified and taken into account when adding the details to the Bill by regulation.

In the same speech, the Chancellor went on to say:

“The strategy that I have consistently set out … is to grow the supply-side of our economy … recognising that first and foremost … it is businesses, investors and entrepreneurs who drive economic growth … a government that systematically removes the barriers that they face—one by one and has their back”.


It is hard to disagree with that, so surely we should ensure that the Bill does not do the opposite and create barriers for business.

There is a good precedent for including a growth and competitiveness objective in a Bill such as this. The Financial Services and Markets Act 2023 introduced a secondary objective for financial service regulators to facilitate international competitiveness and growth, something that the current Chancellor has been vocal in her support of and has rightly put pressure on regulators to follow, including through the issuing of new growth-focused remit letters to the regulators.

Having such an objective, or in the case of these amendments just to have regard to, is not new and is entirely consistent with stated government policy. Given the potential negative impacts the Bill may have—by the Government’s own admission—the sheer volume of detailed regulation that must follow and the difference that could be made to the consequences of the Bill if those regulations are well designed or badly designed, we must surely have some clear objectives for those regulations. All that these amendments would do is ensure that growth and competitiveness must be taken into consideration. Surely that is not too much for us to ask.

[Baroness Neville-Rolfe (Con)]

My Lord, I have added my name to Amendment 326A in the name of the noble Baroness, Lady Penn. I agree with all that has been said by the noble Lord, Lord Vaux of Harrowden, in introducing it, and, indeed, with the convincing analysis by my noble friend Lord Sharpe.

Noble Lords may recall that I come to the scrutiny of the Bill constructively, having worked for Tesco for many years and enjoyed excellent relations with the USDAW union, the noble Lord, Lord Hannett of Everton, and with the trade unions in general, under the noble Lord, Lord Monks, at that time. We always tried to treat people well, and the success of the business was a testimony to that. We complied with the law.

However, the law is now changing, and I am afraid that this Committee has shown that the Bill needs further work. As drafted, it will be a huge check on growth and will undermine the competitiveness of which we have rightly been very proud in the UK. My noble friend Lord Hunt of Wirral mentioned earlier the worrying research by the Institute of Directors that reveals that seven in 10 business leaders surveyed believe that the Employment Rights Bill will have a negative impact on UK economic growth.

I have two particular examples, which I hope the Minister will look at again. First, Ministers—or rather their civil servant agents, and possibly even the trade unions—will be able to take a legal case where an employee is unwilling to pursue a complaint. That is inappropriate and unfair; consent is such an important principle. It also risks putting further pressure on the already struggling tribunal system.

Secondly, and I apologise that this example has already been mentioned, the Bill will radically reduce the effectiveness of the labour market by giving employees the right to claim unfair dismissal from day one of their employment. Other employees will be disadvantaged, as those who are slack, do a poor job or play the system will not be able to be dislodged without a long tribunal case. This will hit good employees who need to cover for their fellows.

The Minister has very helpfully agreed that there should be a probation period during which suitable arrangements can be made in such circumstances, but we have no detail. All of that will go into regulations, which we will not be able to reverse. That is why I feel so strongly about this evening’s amendment on growth and competitiveness. This would apply when regulations were being made by Ministers. There is, unfortunately, a plethora—a cornucopia—of powers in the Bill. It is essential that Ministers, here and in the devolved Administrations, to which our amendment refers, should be required to look at the impact on UK economic growth and competitiveness when they are making regulations. Otherwise, I fear that the growth objective of this Government is for the birds.

[Lord Leigh of Hurley (Con)]

My Lords, I shall speak to the amendments in my name and in so doing support the other amendments in the group, all of which have been most eloquently described by my noble friends, Lord Sharpe of Epsom and Lady Neville-Rolfe, and the noble Lord, Lord Vaux. My noble friend Lord Sharpe of Epsom is right that the Government’s stated objective of growth, which is a commendable objective, is hampered by some aspects of this Bill. All I am asking for is some time for the real effect and impact of this Bill to be assessed, particularly in respect of small and medium-sized businesses, each and every one of which that I have spoken to to explain what is in this Bill is very unhappy about the consequences that it will have for their business, be it small or medium.

All credit to the Labour Government that, when instructing regulators and creating new regulations, particularly in the financial services market, they have been very clear to the regulators that they must not impede economic growth, and I commend them for that—it is absolutely right. I encourage them to take their own advice and allow this Bill to have an overriding principle that anything and everything in it is intended to promote and help growth. There does not seem to be anything controversial to be afraid of in that respect, and therefore I encourage them to accept the amendments tabled by my noble friends Lord Sharpe and Lady Penn.

My amendments are just asking for time to consider matters. They cover two areas: business and union funding. Very many small and medium-sized businesses will have read the Times comment a few days ago, which I will repeat to your Lordships because it is bang on. It points out that:

“Four in five businesses expect their costs to rise in the wake of the reforms, though ministers have shown little interest in their views. The inevitable result will be a wave of redundancies, hiring freezes, curbs on training and a rise in automation”.


A rise in automation is, of course, a good thing, but it will inevitably lead to greater unemployment. There is no question about it. Every single business I have been talking to has said it is freezing hiring people until they get to understand this Bill better. As the Times points out:

“That is a counterintuitive way to buttress workers’ rights, to say the least”.


and the fact that, as my noble friend Lady Neville-Rolfe explained,

“taxpayers will be called upon to foot the bill, size yet unknown, for the FWA’s operations adds insult to economic injury”.

The Times points out that:

“It is an irony that Labour’s reforms will harm the very individuals they are designed to help. Labour should recognise that in requiring the taxpayer to potentially underwrite the activities of trade unions, they are not only recklessly introducing unnecessary frictions to the labour market, but making inappropriate demands on public money”,


because that is where it will fall. The Times is quite clear when it says:

“Labour ought to think again”.

22:00

In respect of the union funds, on which I also ask for a deferment, we are told that the Government are committed to reducing red tape and increasing accountability. However, they seem committed to doing this only when it comes to making disruptive behaviour by unions easier. They have failed to provide a clear, justifiable reason as to why they have chosen an opt-out model for trade union political funds rather than the opt-in model that ensures active consent from members.

Trade unions are institutions with significant—indeed, enormous—political influence, and this Government are allowing a lack of transparency. While businesses are being burdened with new reporting duties, additional compliance costs and even more bureaucratic obligations, it seems that the unions have been given a free pass: exempted from scrutiny, insulated from the very standards expected elsewhere in our economy.

My amendment is a modest one. It is reasonable and essential. It simply asks that Clauses 58, 59 and 60—which we debated earlier, all of which pertain to union political funds—should not come into force until, first, a comprehensive impact assessment is laid before Parliament, secondly, a clear public plan is published, outlining measures to ensure member consent, transparency and safeguards, and, thirdly, a Written Ministerial Statement is produced specifying the oversight and audit mechanisms that will govern these political funds under the new regime.

These are not radical demands; they are basic democratic protections—the same protections we would demand from any other political actor or funding structure. The Government’s failure to address these questions, to provide adequate justification for their approach, or even to consult on the consequences, really does undermine confidence, not only in this legislation but, frankly, in standards of public life more generally. If the Government are confident in the righteousness of their reforms, then let us subject them to proper scrutiny. If they believe that union members are truly and actively consenting to the use of their dues for political ends, then let them ensure that consent is informed, transparent and auditable. If they wish to maintain credibility when they speak of reducing red tape, then let them apply logic consistently, not selectively.

The Minister will recall that, when we were debating Clauses 58, 59 and 60, there was an interesting, healthy and full debate, principally between myself and the noble Baroness, Lady Bousted. We did not reach agreement; I thought that the noble Baroness was talking about something completely different from what I was talking about. The Minister said at the end of the debate that she hoped assurance had been provided that the question had been answered, and that we had made significant progress towards clarity. But it was not, and we have not. I am sure that there is significant clarity in her mind, but there definitely is not in my mind or in the minds of other people who read the debate. I have therefore asked for a pause while this matter is properly considered and properly debated among actors on whom it will have an impact.

Obviously, this will come back on Report. I am reasonably confident that, once it is properly explained to the House, the House will agree, it will get much more public exposure, as the Times has already picked up, and it will become an issue. To save a lot of unnecessary toing and froing and ill-informed debate, I very much hope that the Government will spend time between now and Report considering the matter in great detail, ideally in consultation with their own advisers, and that they will allow this amendment to go through at that stage.

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the noble Lord, Lord Sharpe, and all noble Lords who have spoken in this debate.

I begin with Amendment 326B in the name of the noble Baroness, Lady Coffey, which was moved by the noble Lord, Lord Sharpe. In accordance with procedure, the other place has passed a money resolution authorising the payment, out of money provided by Parliament, of expenditure incurred as a result of this Bill by any government department. In practice, the authorisation of any additional government expenditure, for example in relation to the fair work agency, will be approved by the elected Chamber in accordance with its Estimates procedure. As noble Lords will know from the previous debate, our impact assessment for establishing the fair work agency set out the current running costs of the enforcement bodies and initial estimates of set-up costs for the fair work agency.

I turn to Amendment 329A, tabled by the noble Lord, Lord Leigh. As your Lordships’ House will be aware, the Government have committed to ongoing, detailed engagement with businesses of all sizes as we develop the details of regulations under this Act. In addition, our published impact assessments evaluate a range of evidence on the impacts on small and medium-sized enterprises. They also outline a plan for monitoring and evaluating the impact of the Bill and subsequent secondary legislation, which will involve reviewing how the reforms have impacted SMEs.

The Government value the insights that SMEs and their representatives can bring in ensuring the particulars of this Bill strike the right balance. To recognise that, Ministers and officials have hosted and continue to host a range of SMEs and their representatives, including and beyond those stipulated by the noble Lord’s amendment, to discuss the Bill. Such engagement and consultation will continue following Royal Assent, and SMEs will always feature in such engagement and consultation without the need for a formal requirement.

Amendment 329B from the noble Lord, Lord Sharpe, and Amendments 330BA and 330E from the noble Lord, Lord Leigh, cover impact assessments. I will not repeat the points made earlier by my noble friend Lord Leong on the steps the Government have and will continue to take to ensure impacts are properly understood and assessed. The Government have noted the Regulatory Policy Committee’s opinion on our impact assessments, but it has always been our intention to refine our analysis as policy development continues, working closely with external experts, businesses and trade unions.

To reassure the noble Lord, Lord Leigh, on political funds, I reiterate the point that the Bill will ensure that political funds operate in a transparent manner that is clear to union members. Sections 32 and 32A of the Trade Union and Labour Relations (Consolidation) Act 1992 will not be amended via this Bill. It will continue to require that unions provide details of their total income and expenditure in their annual returns to the certification officer, which are made publicly available, and that all members of a union receive information on the total income and expenditure of a political fund through the annual statement to members.

Members of a union are also part of a collective of workers, and political funds should be considered in that light. If a union has a political fund, its members have control over how it is spent through the democratic structures of the union. Unions put considerable effort into raising engagement in their democratic processes, which any member is free to participate in, meaning they are able to decide how their political fund is used. If union members want more information on political fund expenditure, or if they disagree with how that expenditure is being directed, they can take steps to change it. Union members are ultimately members of a voluntary organisation and are free to opt out of political fund contributions if they have objections to how a political fund is operated.

The amendments from the noble Lord, Lord Sharpe, and the noble Baroness, Lady Penn, would require the Secretary of State to have regard to the UK’s international competitiveness and UK growth when making any regulations under the Bill. First, it is worth noting that the UK already lags the OECD average on most employment protections, yet the UK economy has not grown at the average rate of other OECD economies in the last 14 years, missing out, as I said earlier, on £171 billion in growth. The Government’s impact assessment notes that the Bill could have a “direct and positive impact” on economic growth and

“will help to raise living standards across the country and create opportunities for all”,

supporting the Government’s mission for growth. We will continue to pay close attention to the potential impacts as we develop regulations to implement the measures in the Bill and produce further impact assessments in line with our Better Regulation requirements.

This Government know the impact of the UK being internationally competitive. Our country has great strengths, but we have lacked the dynamism required to seize new opportunities, and businesses have needed long-term stability. Meanwhile, the global trading environment has become unpredictable, supply chains fragile and other economies more assertive in protecting their security and promoting their strategic strengths. That is why we have a clear goal: driving growth domestically. Making work pay is just one aspect of our mission to boost growth and break down the barriers to opportunity which have been holding our country back.

Our plan for change is already delivering benefits. We had the fastest growth in the G7 at the start of the year. Interest rates have been cut by the Bank of England four times since the election. A record £63 billion of private investment was announced at the investment summit last year, with £40 billion announced by Amazon just today, and 500,000 more people are in work. We have three trade deals with global economic powerhouses, and business confidence is at a nine-month high. This is a Government delivering for working people, and this Bill will help more people stay in work, support workers’ productivity and improve living standards across the country.

To wrap up this lengthy Committee stage, I want to say that it is with great pleasure that I conclude our final group of this Committee. The Government were elected on a manifesto that committed to implementing Labour’s plan to make work pay in full, in order to put more money into working people’s pockets. Our first mission as a Government is to deliver economic growth in every part of the country. However, securing that growth can only be worth doing if working people actually feel the benefits. While workers are subject to unethical fire and rehire practices, exploitative zero-hours contracts or last-minute shift cancellations, that certainly will not be the case. That is why this Bill is at the centre of the Government’s plans. It will protect workers from these practices and provide economic safety for the lowest paid in the labour market.

Just consider a few of the changes it brings. It means that 9 million employees will gain protection from unfair dismissal—not after two years, but from day one. It means that workers in some of the most deprived parts of the country will be spared up to £600 in lost income from the hidden costs of insecure work, and it means that at least 900,000 workers every year will benefit from bereavement leave following the death of a loved one.

In conclusion, my noble friends Lord Katz and Lord Leong and I very much look forward to engaging with noble Lords further on the Bill as it progresses to Report. I thank the Official Opposition, the Liberal Democrat Front Bench and noble Lords across the Committee for their contributions throughout this Committee. I must ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 325.

[Lord Leigh of Hurley (Con)]

Before the noble Baroness sits down, I thank her for her answer. Clearly, the feedback from the organisations she has met is not in parallel with the feedback I have had from similar organisations. I appreciate that the meetings she has had may have been in confidence. But if not, would it be possible to publish the notes of those meetings and of any future meetings with representative organisations such as those in my amendment, and of meetings with the other organisations that, I am pleased to hear, she has also met?

[Baroness Jones of Whitchurch (Lab)]

We on these Benches meet with members of the SME sector all the time for various purposes. As well as the formal meetings, we meet them in all sorts of guises—for example, to discuss the industrial strategy and some of the digital growth policies. I do not think it practical to do what the noble Lord has asked, but I can assure him that the more formal consultation meetings happen regularly.

[Lord Sharpe of Epsom (Con)]

I thank the Minister for her response. It is clear that there is significant disagreement on this subject. Indeed, there is a degree of disagreement on the statistics. We seem to be quoting statistics that contradict each other. I have to say that I think ours are rather more up to date—but I would say that.

I thank the noble Lord, Lord Vaux of Harrowden. I completely agree with everything he said, as I do with everything said by my noble friends Lord Leigh of Hurley and Lady Neville-Rolfe. It is very concerning that, in the other House, the Government tabled further amendments with no meaningful assessment of their economic or practical impact, and no proper consultation with the stakeholders that this will affect. This is not how good legislation is made. It is not the standard Parliament or the country should accept.

The Minister just described the Bill as the biggest upgrade to workers’ rights in a generation. If that is the case, one might reasonably expect a thorough and credible impact assessment, not one that is rated red by the Regulatory Policy Committee. That is not a minor procedural footnote; it is a warning and a signal that the economic, legal and operational consequences of this legislation have not been properly understood.

22:15

We should be the home of start-ups, scale-ups and global enterprise. We will not achieve that by making it harder to hire, easier to sue and riskier to grow. Once the country’s competitiveness is not guaranteed, it is not easily regained. The decisions we make now in the Bill and in this House will determine whether the UK remains an attractive destination for business and opportunity or whether we continue to slide down the global league tables.

The truth is that this legislation is incomplete; the evidence base is inadequate, and the consultation has been insufficient. I second the comments from my noble friend Lord Leigh of Hurley. To be clear, we have seen multiple tens of organisations that represent businesses in this country and not one, including all the major employment organisations, says that it has been consulted by this Government or that it supports the Bill. The consultation has been insufficient and the consequences—economic, legal and reputational—have not been properly considered.

I will briefly digress, because we are again getting to the stage where we need to bring up the subject of the implementation strategy. I appreciate the commitment of the noble Lord, Lord Leong, to make sure that we get it very, very, very soon. I also appreciate that the Minister says she is going to plan more engagement with businesses. That is good because, as I say, currently we cannot see that there has been very much at all. There is also an awful lot that is going to be left to further consultations as regards the implementation plan.

I happened to have been reading a union magazine today, the Unison Magazine from June. I will quote directly from the end of an article about the Bill, where Unison staff talk about secondary legislation and codes of practice:

“our job as a union will not end when the bill is passed. There is still a massive piece of work to be done, because there will be consultations with government departments on how different parts of the legislation are to be implemented, what the secondary legislation will look like, what the codes of practice will look like—ensuring that it’s all in the best interests of the union”.

I think there we get to the heart of the matter: it is in the best interests of the union and not in the best interests of the UK. It is not in the best interests of the economy or economic growth—which is so essential to deliver the Government’s growth agenda—and it is certainly not in the interests of those people who deliver that economic growth: businesses and their workers.

We need to be very careful about the Bill. On Report we will return to many of the issues that we have described during Committee, but I urge the Government, when they do consult, to do it properly and not just on one very considered and careful interest. With that, I beg leave to withdraw my amendment.

Amendment 325 withdrawn.

Amendments 326 and 326A not moved.

Clause 153 agreed.

Clause 154: Financial provision

Amendment 326B not moved.

Clause 154 agreed.

Clause 155 agreed.

Clause 156: Commencement

Amendments 327 to 330D not moved.

[The Deputy Chairman of Committees (Baroness Morris of Bolton) (Con)]

My Lords, there is an error in the page numbering of Amendment 334A, which means that it was marshalled incorrectly. It should have been marshalled as Amendment 330DA, so I will now dispose of Amendment 334A, which was already debated. The noble Lord, Lord Sharpe, will just have to trust me on this one.

Amendment 334A not moved.

Amendments 330E to 334 not moved.

Clause 156 agreed.

Amendment 335 not moved.

Clause 157 agreed.

House resumed.

Bill reported with amendments.

House adjourned at 10.21 pm.