Monday 21st July 2025
(2 days, 4 hours ago)
Lords ChamberEmployment Rights Bill 2024-26 View all Employment Rights Bill 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 113-III(a) Amendments for Report (Supplementary to the Third Marshalled List) - (21 Jul 2025)
18:12 - Division on Amendment 111B - Ayes: 266 / Noes: 162 - Amendment 111B agreed.
19:38 - Division on Amendment 126 - Ayes: 216 / Noes: 143 - Amendment 126 agreed.
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 will begin with Amendment 111ZA, moved by the noble Lord, Lord Clement-Jones, and Amendments 168, 169, 171, 172, 175 and 176, tabled by the noble Lord, Lord Holmes, whom I thank for his engagement on these important issues.
I start by reassuring all noble Lords that we agree that AI should be deployed and used responsibly, including within the workplace. As the noble Lord knows, in January 2025, we published the AI Opportunities Action Plan, which included a commitment to
“support the AI assurance ecosystem to increase trust and adoption”
of AI. One of the key deliverables in this area is the AI management essentials tool. We are developing this tool to support businesses, particularly SMEs, to implement good AI governance practices. Following public consultation earlier this year, I hope to update your Lordships’ House on the consultation response and an updated version of that tool soon.
Regarding these amendments, I remind noble Lords that our plan to make work pay makes it clear that workers’ interests will need to inform the digital transformation happening in the workplace. Our approach is to protect good jobs, ensure good future jobs, and ensure that rights and protections keep pace with technological change.
To be clear, we are committed to working with trade unions, employers, workers and experts to examine what AI and new technologies mean for work, jobs and skills. We will promote best practice in safeguarding against the invasion of privacy through surveillance technology, spyware and discriminatory algorithmic decision-making. In response to the noble Lords, Lord Freyberg and Lord Hunt, of course we will put ethics and fairness at the heart of that.
I am keen to stress that we are taking steps to enhance our understanding of this area. This has included engagement and round-table events with a wide range of stakeholders and experts to help enrich our understanding. I reaffirm that we will consult on the make work pay proposals in due course.
The noble Lord, Lord Clement-Jones, asked what would be in the scope of the consultation. The consultation plan includes examining: what AI and new technologies, including automation and AI, mean for work, jobs and skills; how to promote best practice in safeguarding against the invasion of privacy through surveillance technology, spyware and discriminatory algorithmic decision-making; and how best to make the introduction of surveillance technology in the workplace subject to consultation and negotiation with trade union or employee representatives.
The noble Lord, Lord Holmes, asked whether or not this was going to be domain-specific. As the noble Lord, Lord Hunt, just reminded us, this was dealt with in an Oral Question earlier this afternoon, when my noble friend Lord Vallance said that existing regulators will oversee most AI systems, supported by enhanced AI skills and cross-regulatory co-ordination through forums such as the Regulatory Innovation Office. Some cross-cutting issues will be addressed also in the planned consultation on AI.
Looking specifically at Amendment 171, let me reassure the noble Lord that we believe that data protection legislation provides sufficient protection for workers and individuals where their personal data is being used in line with the key data protection principles, including lawfulness, fairness and transparency. Consent is a lawful ground to process personal data. However, due to the power imbalance between the employee and employer, it is often inappropriate for employers to rely on consent from employees to process their data. This is why we have an additional lawful ground to carry out such processing, such as legitimate interest under the data protection law. Therefore, we do not wish to limit data processing in these situations to consent alone. I also point out that while data protection principles establish the requirements that we expect the use of AI systems to adhere to, AI assurance provides ways to evidence that these requirements have been met in practice.
Amendment 170 tabled by the noble Lord, Lord Holmes, would require workers and employers to maintain records of data and intellectual property used in AI training and to allow independent audits of AI processes. As he will know, this issue was debated extensively during the passage through your Lordships’ House of the Data (Use and Access) Act 2025. Only last month I confirmed that we will publish a report, including on transparency in the use of intellectual property material in AI training, within nine months of Royal Assent to the Act, which will be due by 18 March next year. The Government have also committed to setting up expert stakeholder working groups to help drive forward practical, workable solutions in this area, alongside a parliamentary working group to engage with policy development.
Amendment 174 tabled by the noble Lord, Lord Holmes, proposes a review of the use of AI in recruitment and employment. As the noble Lord will be aware, last year the previous Government published detailed guidance on responsible AI in recruitment, which covers governance, accessibility requirements and testing. This was developed with stakeholders and relevant regulators, such as the Information Commissioner’s Office and the Equality and Human Rights Commission. Employers and recruiters may find this guidance useful to help integrate AI into their recruitment practices in a responsible way.
Furthermore, I am excited about the opportunities of AI in supporting the UK’s workforce, as well as creating jobs and growing our economy. However, we must also understand how it may affect the labour market, including any potential disruption. The AI Security Institute has begun assessing this issue, and I hope to be able to update your Lordships’ House on this as work progresses.
Regarding our position on general AI regulation and the establishment of a new AI regulator, we believe that AI is best regulated at the point of use by the UK’s existing sectoral regulators. As experts in their sector, they are in the best place to understand the uses and risks of AI in their relevant areas, and we will support them to do this. I emphasise that in response to the AI Opportunities Action Plan, we have committed to supporting regulators in evaluating their AI capabilities and understanding how they can be strengthened. I assure your Lordships’ House that we are committed to making sure that workers’ interests inform the digital transformation taking place in the workplace.
I am grateful to my noble friend Lord Pitkeathley for raising non-compete clauses. There has been extensive research and analysis in recent years looking at the prevalence of non-compete clauses in the UK labour market and their impact on both workers and the wider economy. Government research published in 2023 found that non-compete clauses were widely used across the labour market, with around 5 million employees in Great Britain working under a contract that contained a non-compete clause, with a typical duration of around six months. As my noble friend identified, this can adversely impact both the worker affected, through limiting their ability to move between jobs, and the wider economy, due to the impacts on competition.
It is often assumed that non-compete clauses are found only in contracts of high earners. However, research published last year by the Competition and Markets Authority found that while non-competes are more common in higher-paid jobs, even in lower-paid jobs 20% to 30% of workers believe that they are covered by non-compete clauses. The Government have been reviewing the research and work done to date on non-compete clauses, and I am pleased to be able to confirm that we will be consulting on options for reform of non-compete clauses in employment contracts in due course.
Finally, the noble Lord, Lord Hunt, asked for my suggested reading list following my noble friend’s kind offer earlier this afternoon. I can do no better than to recommend the excellent book by the noble Lord, Lord Clement-Jones, on AI. In that spirit, I ask the noble Lord, Lord Clement-Jones, to withdraw his Amendment 111ZA.
Lord Clement-Jones (LD)
The noble Baroness nearly won me over at that point. I thank her. I feel like someone who was expecting a full meal but receives a rather light snack. I will explain why as we go through.
I thank the noble Lord, Lord Holmes. I feel that I am somewhat upstaging him by putting an amendment at the front of the group, but we have many common themes that we both have pursued over the years together. I agree with him on the desirability of a cross-sector approach. He is much more patient than I am and, in putting down individual amendments and hoping that the Minister will give satisfactory answers, he is clearly more optimistic than I am. Whether his optimism has been justified today, I am not so sure.
The Minister could not even acknowledge the work done by the TUC, which has been ground-breaking in so many ways. It has taken four years, so it is extraordinary that the Government are doing what they are doing. I acknowledge what the noble Lord, Lord Pitkeathley, had to say. I was not quite sure how it connected to AI, but he very cunningly linked the subject of non-compete clauses to innovation, which does link to AI. I was encouraged by what the Minister had to say about consultation on reform.
The noble Lord, Lord Hunt, reminded me that I was a solicitor. Unlike him, I do not still have a practising certificate still, but there we are. He has much more stamina than I have. Non-compete clauses can be extremely important in making sure that know-how is preserved within an existing business. I thank the noble Lord, Lord Freyberg, for what he had to say on making sure that AI ensures human flourishing and that we preserve agency. That is what the amendments tabled by the noble Lord, Lord Holmes, and me are all about.
The Minister talked about an AI assurance ecosystem and AI management essential tools that there will be a consultation on, but I could not sense any intention to do anything other than a sort of voluntary approach. We have a lot of employment law that has developed over the years, but the Government seem to be allergic to doing anything with any teeth. She mentioned recruitment practices, but that again seems to be very much a voluntary approach. The AI Security Institute is not a regulator. I cannot feel that the Minister has given much more than the noble Lord, Lord Leong, gave last time. For instance, the Minister talked about consultation over make-work proposals. This involved talking about best practice on the adoption of AI and how best to deal with surveillance technology. Again, I did not sense any real intent to make sure that we have a new set of protections in the workplace in the face of AI.
I very much hope that, as time goes on, the Government will develop a much more muscular approach to this. As many noble Lords have said, AI presents a great number of opportunities in the workplace, but we absolutely do not want to see the opportunities overwhelmed by mistrust and a belief that AI presents unacceptable risks on the part of those employees. We want to see employees understanding that in the face of AI adoption, they have the right to be consulted and there is proper risk assessment of the introduction of these systems into the workplace, so that there is a proper, consensual approach to AI adoption.
I really do not feel that the Government are keeping up to date with the issues in this respect, and I am afraid that is rather reflected in some of the issues that we are going to talk about on Wednesday as well. In the meantime, however, I beg leave to withdraw the amendment.
Lord Goddard of Stockport (LD)
My Lords, we are dancing on the head of a pin with these amendments. The noble Lord, Lord Hendy, is right that these are welcome amendments that begin to address something I never knew anything about, which is that support staff have never had a baseline figure. That should be addressed.
I spoke to the Minister the day before yesterday or today—time flies—and the fact is that there are 520,000 of them. That is 52% of everybody employed at schools. That is more than teachers. Those support staff have a whole range of duties and the majority are tailored to their specific needs, as other speakers have said. Government Amendment 114 provides that, where an SSSNB
“has been unable to reach an agreement about a matter and the Secretary of State makes regulations about the matter, the regulations cannot alter a person’s terms and conditions of employment to make the person worse off, and do not prevent an employer from offering more favourable terms and conditions than those provided for by the regulations”.
We agree with that.
All that the amendment by the noble Baroness, Lady Barran, would change is that it would prevent
“the SSSNB from blocking employers who wish to adopt new or improved employment terms and conditions”,
provided that they meet the standards of minimum support. What we are trying to say here is, where they cannot come to a negotiation, the Government can step in by regulation, if that is what they want to do, but, where a body comes to an arrangement, why should you stop somebody wanting to offer more, above the floor and above the base—there is no argument about that; we all agree to the base—and say, actually, why would an SSSNB want to block some employer offering an employee better terms? If the Government reject this amendment, that is the alternative to what we are arguing.
If somebody wants to pay somebody more, above the base, that is surely better for the employee. Surely that is better than somebody saying, “Well, you can’t”, which is what the Government might do. The difference is quite subtle. Sooner or later, somebody will have to work out the maths for 520,000 people and then go to all those local authorities, academies and private schools, all of a sudden, as I have said before, there are bound to be winners and losers, unless you make set the level at a sufficiently high so there are no winners and losers. I cannot imagine what that number will be, because it will be a high number.
If this is about empowering people and lifting society, I am all for that. But, again, there is a level of detail. This is not a small group of people; it is an enormous number of people. It is more than the number of teachers. The teachers have had pay, and more pay, and are now going on strike for more money. Support staff do not do that. Support staff are vulnerable. They do not have that power to take industrial action to fight their corner. They negotiate their terms individually with local authorities and academies and, by and large, none of these people is paid below the minimum wage or the living wage. So, this is a bit of a sledgehammer to crack a nut.
I get the principle. I understand that there has been no base figure, and that should be addressed. But, if the Government are addressing that, and it is a philosophical Labour belief, they must put a price tag on it, because people need to know what the costs are, not only for their local authority but for every local authority and every academy in the country. If the noble Baroness is willing to push this to a vote—I do not know whether she will or will not—we on these Benches will support her.
Lord Sharpe of Epsom (Con)
My Lords, it is a pleasure to follow the noble Lord, Lord Goddard. I agree with pretty much all that he said. I thank my noble friend Lady Barran for her amendments. I thank my noble friend Lord Agnew for his interesting and timely perspective, and I salute the teaching assistant whom he mentioned.
Amendment 111B would ensure that the establishment of national frameworks does not, by accident or design, limit the ability of employers to go further in improving conditions for their staff. It makes it clear that, while national terms may set the floor, they must not become the ceiling.
As we have heard, we must leave space for innovation and ambition at the local level, particularly for those schools, academies and trusts that are actively seeking to lead in areas such as flexible working, staff well-being or enhanced support for recruitment and retention. This amendment does not undermine the national framework. On the contrary, it reinforces it, because it allows it to act as a strong foundation on which more can be built, where employers have the capacity and willingness to do so.
We should not inadvertently create a situation where the national body becomes a constraint rather than a support. I therefore welcome the clarity that this amendment brings. I commend my noble friend for bringing it forward and, if she decides to press it to a vote, we will support her.
Baroness Jones of Whitchurch (Lab)
My Lords, I will speak first to government Amendments 112 to 116. The school support staff negotiating body will recognise the essential roles and responsibilities of over 800,000 support staff working in our schools, supporting our children to achieve and thrive. Like the noble Lord, Lord Sharpe, I very much pay tribute to the teaching assistant whom the noble Lord, Lord Agnew, mentioned. We all know examples of support staff who have played significant interventionist roles in helping to run a school—roles that are often underrewarded and unrecognised. It is about time we put them and their pay and conditions on a proper footing.
It is right that we have a mechanism for employer and employee representatives to come together to negotiate and to agree pay and conditions that reflect the varied and vital role that support staff undertake. We have heard arguments made across the House that we must make the legislation itself clearer, that the SSSNB will not mandate a one-size-fits-all approach and that individual employees will be protected from any moves to their detriment as a result of the SSSNB process. We have listened to noble Lords on this issue and, while we have always been clear that this is the Government’s intent and can be achieved through existing provisions, we have decided to amend the SSSNB provisions to ensure that both principles are established in primary legislation.
This change will mean that all school support staff will benefit from a minimum offer—or floor—for pay and conditions, and that there will be no ceiling to prevent employers offering better pay or conditions. This protects individual employees and allows employers to go beyond agreements reached, should they choose to do so in response to their local circumstances. That was the argument made in Committee. A number of noble Lords argued that, particularly in academies, employers want to pay more and provide better conditions. We are making it clear that that is absolutely the right thing to do, and our amendments will deliver that.
I turn to the amendments tabled by the noble Baroness, Lady Barran. Amendment 111A would change the SSSNB’s remit for academies so that academy employers would be required to have regard only to the framework. As outlined in response to this amendment in Committee, it would be wrong to create a two-tier system for support staff. Since roughly half of the 22,000 state-funded schools in England are now academies, it is right that academies are included in the SSSNB’s statutory remit in the same way as maintained schools. There is no need to take a different approach for academies when there will be ample room for innovation for all schools, irrespective of their structure.
I hope the noble Baroness understands and agrees that all school support staff deserve to know what they can expect as a minimum for pay and conditions, and that they can continue to benefit from more favourable terms where employers offer them. However, her amendment risks creating a two-tier system that undermines the role of the new negotiating body in establishing minimum standards which will work for all schools and recognise the vital roles that support staff undertake.
“(6) Subsections (2) to (5)—(a) do not apply in relation to a term or condition of a person’s employment if, and to the extent that, giving effect to the agreement would alter the term or condition to the person’s detriment; (b) do not prevent the terms and conditions of a person’s employment from including a term or condition that is more favourable to the person than that which would otherwise have effect by virtue of those subsections.”Member's explanatory statement
This amendment provides that an agreement of the School Support Staff Negotiating Body cannot alter a person’s terms and conditions of employment to make the person worse off, and does not prevent an employer from offering more favourable terms and conditions than those provided for by the agreement.
“(5) Subsections (2) to (4)—(a) do not apply in relation to a term or condition of a social care worker’s employment if, and to the extent that, giving effect to the agreement would alter the term or condition to the social care worker’s detriment;(b) do not prevent the terms and conditions of a social care worker’s employment from including a term or condition that is more favourable to the social care worker than that which would otherwise have effect by virtue of those subsections.” Member's explanatory statement
This amendment provides that an agreement of a Social Care Negotiating Body cannot alter a person’s terms and conditions of employment to make the person worse off, and does not prevent an employer from offering more favourable terms and conditions than those provided for by the agreement.
Member's explanatory statement
This amendment is consequential on my amendment of clause 45 at page 67, line 10.
“(3A) Regulations under this section that by virtue of subsection (2)(b) make provision about the consequences of a failure to comply with a duty imposed by the regulations in relation to a provision of guidance or a code of practice must provide for the guidance or code to be laid before the appropriate legislature and subject to the procedure specified.”Member's explanatory statement
This amendment provides that, where regulations under clause 46 provide for the issuing of guidance or a code of practice by the Secretary of State, and make provision about the consequences of a failure to comply with a duty imposed in relation to the guidance or code, the regulations must provide for the guidance or code to be laid before Parliament and to be subject to the procedure specified in the regulations. The amendment also imposes an equivalent duty in relation to regulations made by the Welsh Ministers or Scottish Ministers.
Member's explanatory statement
This amendment is consequential on my amendment of clause 45 at page 67, line 10.
Lord Davies of Brixton (Lab)
Having raised these issues at the beginning of Committee, I just want to say that, following the favourable response of the Front Bench to the idea of arranging a meeting at which they can be discussed, I very much look forward—at least, I hope I can—to the reply of my noble friend the Minister.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank my noble friend Lord Hendy for moving his amendment.
Amendments 123 and 124 in my name relate to Clause 54, which provides powers to make regulations giving effect to two named international conventions and to give effect to international agreements as they relate to maritime employment. I thank the Delegated Powers and Regulatory Reform Committee for its thoughtful consideration of these powers, and its recommendation to amend the procedure for new Section 84A(2) from first-time affirmative to affirmative for all uses. I wrote to the committee on 7 July, setting out our response in full.
These amendments will change the parliamentary procedure applicable to regulations made under the power in new Section 84A(2) of the Merchant Shipping Act 1995, giving effect to international agreements as they relate to maritime employment. The amendments mean that all uses of the power to give effect to future or unspecified international agreements will now be subject to the affirmative procedure, and not just the first use. They will mean that Parliament has greater oversight of these agreements and amendments to them.
I turn to Amendment 122A tabled by my noble friend Lord Hendy. The amendment would specify that the statutory rights to which shore-based workers in the UK are entitled also apply to ships’ crews working aboard services that enter ports in Great Britain 120 or more times per year, or that operate
“between a place in Great Britain and another place in the United Kingdom”.
The scope of services covered follows the approach taken in Clause 29, where the Government have sought to ensure that those employed aboard these services are captured by the requirement to provide proposed notification of collective redundancy.
I thank my noble friend for this amendment on the application of employment rights to seafarers, and the maritime trade unions for their continuing engagement on these issues. I hope to be able to provide some clarity today, but we can also commit to continuing ongoing discussion about how we can ensure that seafarers are receiving robust protections.
The Government want to see stronger employment rights for seafarers. That is why, in addition to the broader changes to employment rights, we have included a package of maritime-specific measures in this Bill. As my noble friend knows, we are closing the loophole that meant that P&O Ferries could avoid prosecution for failing to provide advance notice of proposed collective redundancies. We are also providing powers for a mandatory seafarers’ charter, which will allow us to set a higher minimum standard for wages and for how long seafarers can spend at sea without a break. This will establish a level playing field that will help prevent the undercutting of working conditions in the way that P&O Ferries sought to do.
The new power to give effect to the Maritime Labour Convention, and other international agreements as they relate to maritime employment, is also important. Where international agreement is needed to improve protections, we can implement those changes.
Member’s explanatory statement
This amendment, together with my other amendment of this clause, provides that regulations under new section 84A(2) of the Merchant Shipping Act 1995 giving effect to international agreements relating to maritime employment will be subject to the affirmative resolution procedure.
Lord Sharpe of Epsom
“Right to opt out of collective agreements(1) A worker who is not a member of a trade union may elect, in writing, to opt out of the terms of a collective agreement that would otherwise apply to them under this Act. (2) In such a case, the worker shall be entitled to rely on the statutory rights conferred by this Act without reference to the collective agreement.”Member’s explanatory statement
This amendment provides non-union workers with the right to opt out of collective agreements, reinforcing individual freedom of contract and protecting access to statutory entitlements.
Lord Sharpe of Epsom (Con)
My Lords, Amendment 125 in my name speaks to a fundamental principle that we should run through every piece of employment legislation that we consider, and that it is the right of the individual to determine their own path.
Too much of the Bill rests on an implicit and rather patronising assumption that workers are somehow incapable of managing their own affairs—that they must be corralled, collectively represented, spoken for and ultimately told what is best for them. This amendment challenges that assumption head on. It affirms the right of a worker who is not a union member to say that they wish to stand on their own two feet and do not wish to be bound by collective agreements that they had no part in negotiating and no say in accepting. That is not anti-union; it is pro-choice and pro-individual. If we believe in personal responsibility then we must also believe in personal freedom. Some workers are independent-minded individuals, who want to make their own decisions about their pay and their terms and conditions.
We have to be clear: statutory rights remain in place. This amendment would do nothing to undermine minimum standards; it would simply allow the worker to rely on those rights without being bound by a collectivist framework that they never opted into. That is not a threat to fairness but the definition of fairness.
The Government treat workers as a monolith. They are defined not by merit or initiative but by membership and conformity. This proposed clause offers a quiet but powerful alternative: that the individual workers matter, that their preferences matter, and that freedom of contract is not some abstract legal concept but a cornerstone of liberty. I beg to move.
Lord Hendy (Lab)
My Lords, before I speak to my Amendment 127, I will say a few words about Amendment 125, from the noble Lord, Lord Sharpe. He and other noble Lords on that side of the House often accuse those on this side of ignorance of business, but his amendment shows ignorance of what happens in industrial relations on the ground.
I will make three points. First, there is nothing in the law to prevent an employer and an individual employee agreeing an improvement to terms and conditions on an existing collective agreement, save in exceptional circumstances such as that illustrated by the case of Wilson and Palmer v the United Kingdom, where the employer offered to pay workers a higher rate of pay if they surrendered their union membership. That principle would also apply to prevent the penalisation of workers on the grounds of any other protected characteristic. However, as a general principle, workers and employers can agree to improve on an existing collective agreement.
Secondly, why would an individual employee agree to detrimental terms worse than an existing collective agreement—lower wages, longer hours, fewer holidays, fewer breaks, and worse terms and conditions? There can be no reason why a worker would wish not to abide by the existing collective agreement. Employees need protection against bad employers who might otherwise exploit the proposed loophole by saying to an individual employee, “I want you to opt out of the collective agreement”, hence undermining it.
Thirdly, collective agreements are not dictated by the trade unions but are agreed by an employer and, usually, by a vote of the employees. We need more negotiation and less litigation.
With that, I turn to my Amendment 127, which is intended to provide my noble friend the Minister and the Secretary of State with a mechanism to promote and encourage collective bargaining on a sector-wide basis without prescribing in detail the model to be deployed. It would be used when needed and would not compel the Government to put it into operation. I will not repeat the arguments about collective bargaining that I developed in Committee over the course of three speeches, but I think I may be permitted to summarise the gist of those arguments in six points.
First, the Bill makes commendable reforms to the legal machinery to establish collective bargaining between trade unions and a single employer, but there is no mechanism in the Bill or anywhere else for multi-employer collective agreements or sector-wide collective agreements.
Secondly, sectoral collective bargaining was the norm for the United Kingdom from 1918 until 1990. It established a coverage of over 80% of British workers between 1945 and the late 1980s. The percentage of workers covered by collective agreement has now declined to 25%. That means that three-quarters of our workforce are employed on “take it or leave it” terms, without any possibility of negotiating anything better than that which the employer offers.
Thirdly, 80% collective bargaining coverage is curiously—or coincidentally—the level now set for the 27 member states of the European Union, after two decades during which the EU undermined sectoral collective bargaining. That policy was reversed in 2024 by means of a directive. Collective bargaining is now advocated by the OECD, since 2017, the IMF and, of course, the ILO.
Fourthly, Labour’s Green Paper, A New Deal for Working People; its subsequent publication on making work pay, implementing the new deal for working people; Labour’s election manifesto; and the King’s Speech all endorsed the extension of collective bargaining.
Fifthly, I come to the benefits of sectoral collective bargaining, which need spelling out again. There are at least eight benefits, as I identify them. The first is that sectoral collective bargaining increases wages. Let us recall that the real value of wages has risen only 0.5% in the past 20 years. Secondly, a rise in wages increases demand in the economy—demand for the goods and services produced by employers. Thirdly, collective bargaining contracts the differentials that have emerged: the gender pay gap, the ethnic-minority pay gap, the disability pay gap and so on. Fourthly, by increasing wages, collective bargaining diminishes the need for state benefits by way of subsidy to low wages. Let us not forget that 31% of those in receipt of universal credit are in work, which gives an indication of the lowness of wages in this country. Fifthly, increasing wages increases the Government’s tax take, which diminishes the need to find money elsewhere. Sixthly, sectoral collective bargaining prevents employers undercutting each other on labour costs. Seventhly, the other side of that coin is that it encourages employers to compete on productivity, investment, efficiency and innovation. Eighthly—this is an important point—it achieves a form of democracy at work. It gives workers a say in the terms and conditions on which they work.
I said there were six points, and the sixth and final point is one of particular interest to me as a lawyer. It is the observation that the rule of law plays a part here. The rule of law, Lord Bingham’s eighth principle, is that states must abide by the treaties they have ratified. That principle has been endorsed in almost every speech I have heard my noble and learned friend Lord Hermer KC, the Attorney-General, give since his appointment to that office. This is significant because International Labour Organization Convention No. 98 and Article 6.2 of the European Social Charter 1961 impose the duty on ratifying states, which includes the United Kingdom, not just to permit collective bargaining but to promote and encourage it. The Bill was the opportunity to promote and encourage collective bargaining at sectoral level, but it does nothing to do so in any sector of the economy.
Lord in Waiting/Government Whip (Lord Leong) (Lab)
My Lords, I thank all noble Lords who spoke—my noble friends Lord Hendy, Lady O’Grady, Lord Monks and Lord Berkeley, and the noble Baroness, Lady Verma.
The noble Lord, Lord Sharpe of Epsom, tabled Amendment 125, which seeks to give workers the right to opt out of collective agreements. Workers are free to join or not to join a trade union. It is their choice. They are not compelled to pay any union subscriptions, or any part thereof, where a union is recognised by the employer for collective bargaining purposes—so they do not need to pay any union subscription or join a union.
Many employers choose to recognise a union voluntarily. One advantage of trade union recognition is that this enables the employer to negotiate collective agreements, the terms of which may apply to all workers in a workplace. My noble friend Lord Hendy explained so clearly the principles of collective agreements—he said all that I needed to say.
The application of the terms of collective agreements to workers generally depends, in any event, on incorporation of those terms into the workers’ contracts, either expressly or by implication. That is the normal position. But providing some individual workers with a new statutory right to withdraw from the provisions agreed under a collective agreement, even where they can rely on statutory entitlements, would create an unnecessary risk of a multi-tier system, with workers on different terms and conditions of employment. We believe that this would not be beneficial to employers as it would likely create more red tape and confusion. We cannot, therefore, support this amendment.
Amendment 127 was tabled by my noble friend Lord Hendy. We welcome any support for sectoral collective bargaining and we appreciate the informed and wide-ranging debate we had in Committee on these points. We are demonstrating our commitment to sectoral collective bargaining with the social care and school support staff sectors, as was debated on the earlier group.
We believe that bespoke primary legislation will be required to allow such bodies to operate as effectively as possible. This will allow Parliament to fully consider any such sectors and scrutinise the frameworks for the new bargaining processes. We welcome all representation regarding next steps on sectoral collective bargaining, and we are working hard to consider the groundwork required for future models. However, before this work is done, we do not seek the sweeping powers that my noble friend’s amendment aims to give the Secretary of State without a sufficiently clear purpose or plan.
I say to my noble friend Lord Hendy that we are committed to supporting sectoral collective bargaining where appropriate, and we recognise the positive contribution it can make to Britain’s economy. However, different sectors will have different needs, so we need to ensure that any legislation on collective bargaining is fit for purpose for each of the specific sectors. Developing the legislation in collaboration with the sector and workers will be key to success. I hope this offers my noble friend some comfort and that he will not go further with this amendment.
I referred to my noble friend Lady O’Grady, and I will ensure that I mention this to my noble friend Lady Anderson of Stoke-on-Trent, the Cabinet Office Minister, so that she can organise meetings for her with officials in the department. I totally agree with the point of the noble Baroness, Lady Verma, about ethnic minority business. Most businesses are good businesses. What this Bill does is go after those minority unscrupulous businesses that exploit workers. I therefore respectfully ask the noble Lord, Lord Sharpe of Epsom, to withdraw Amendment 125.
Lord Sharpe of Epsom (Con)
My Lords, I thank all noble Lords who spoke in this brief debate. I confess that I will have to go back and bone up on my Stanley Baldwin history—I was not expecting that. The noble Lord, Lord Hendy, accused me of ignorance of industrial relations. He asked why anyone would agree to detrimental terms, but that is missing the point, I fear. We are saying that they should be allowed to agree to different terms. Why should a worker not be allowed to trade some holiday entitlement for extra pay, for example?
We agree that we need significantly less litigation. We have been discussing that throughout the passage of the Bill. Unfortunately, as we have also discussed, so much of the Bill is likely to lead to rather more. I was very interested in the noble Lord’s comments about the workforce up until 1990, but my noble friend Lady Verma hit the nail on the head when she talked about small businesses. The fact is that the workplace has changed so dramatically in the last 35 years that I do not think that necessarily remains a valid comparison.
We have argued that free negotiation between employers and employees must be the foundation of any fair and modern employment framework. But we regret that what we see here is a model rooted in uniformity and prescription. That is flawed not just in detail but in principle, because a one-size-fits-all approach flattens the complexity and diversity of real working life and ignores the dignity and agency of the individual. Having said that, I have listened to the noble Lord, Lord Leong, carefully and, on this occasion, I beg leave to withdraw my Amendment 125.